- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

------------------------

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
COMMISSION FILE NUMBER 001 - 12231

------------------------
CB RICHARD ELLIS SERVICES, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE 52-1616016
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)

200 NORTH SEPULVEDA BOULEVARD 90245-4380
EL SEGUNDO, CALIFORNIA (Zip Code)
(Address of principal executive offices)

(310) 563-8611
(Registrant's telephone number, including area code)

------------------------------

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------

COMMON STOCK $.01 PAR VALUE NEW YORK STOCK EXCHANGE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE

------------------------

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /.

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. /X/

The aggregate market value of the Registrant's common stock held by
non-affiliates of the Registrant on February 28, 2001 was $164,766,061.

Number of shares of common stock outstanding at February 28, 2001 was
20,635,300.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART I

ITEM 1. BUSINESS

COMPANY OVERVIEW

ORGANIZATION. CB Richard Ellis Services, Inc., or our Company, was founded
in 1906. We were formerly known as CB Commercial Real Estate Services
Group, Inc. or CB Commercial, a holding company, organized on March 9, 1989
under the laws of the state of Delaware to acquire Coldwell Banker Commercial
Group, Inc. This acquisition occurred on April 19, 1989. On November 25, 1996,
CB Commercial completed an initial public offering of 4,347,000 shares of common
stock. Prior to this public offering, CB Commercial was a reporting company as a
result of an offering to employees under the Securities and Exchange Act of
1933, as amended. On February 24, 2001, we announced that our Company had
entered into an Agreement and Plan of Merger whereby members of senior
management, Ray Wirta, our CEO, and Brett White, our Chairman, The Americas,
together with director, Fred Malek and directors, Richard Blum, Bradford Freeman
and Donald Koll and their respective affiliates will acquire all of our
Company's outstanding shares which they do not own at a price of $16.00 per
share. The merger is subject to the approval of two-thirds of the outstanding
shares held by disinterested stockholders, the expiration of anti-trust waiting
periods and a successful tender for at least 51% of our outstanding 8 7/8%
Senior Subordinated Notes.

As part of our growth strategy, CB Commercial has undertaken various
strategic acquisitions. In 1995, we purchased Westmark Realty Advisors, L.L.C.,
which has been renamed CB Richard Ellis Investors, L.L.C., or CBRE Investors.
CBRE Investors is a management and advisory business with approximately
$10.0 billion of assets under management. In 1996, CB Commercial acquired L.J.
Melody & Company, or L.J. Melody, a nationally-known mortgage banking firm. Then
in 1997, we acquired Koll Real Estate Services, or Koll, a real estate services
company primarily providing property management services, corporate and
facilities management services, and asset and portfolio management services. The
following year, we purchased all of the outstanding stock of REI Limited, or
REI, which owned and operated the internationally known real estate services
firm of Richard Ellis in all the major commercial real estate markets in the
world, other than the United Kingdom, or UK. REI's principal operations were in
the Netherlands, France, Spain, Brazil, Australia, Hong Kong, including Taiwan
and the People's Republic of China, and Singapore. In 1998, we also acquired the
business of Hillier Parker May and Rowden, now known as CB Hillier Parker
Limited, or Hillier Parker, a commercial property services partnership operating
in the UK. That same year, we purchased the approximately 73.0% interest that we
did not already own in CB Commercial Real Estate Group of Canada, Inc. In 1998,
we also acquired the remaining ownership interests in Richard Ellis Australia
and New Zealand.

On May 19, 1998, CB Commercial changed its name to CB Richard Ellis
Services, Inc.

NATURE OF OPERATIONS. CB Richard Ellis Services, Inc. is a holding company
that conducts its operations primarily through approximately 75 direct and
indirect operating subsidiaries. In the United States, or US, we operate through
CB Richard Ellis, Inc. and L.J. Melody, in the UK through Hillier Parker and in
Canada through CB Richard Ellis Limited. CBRE Investors and its foreign
affiliates conduct business in the US, Europe and Asia. We operate through
various subsidiaries in approximately 44 countries and pursuant to cooperation
agreements in several additional countries. Approximately 78% of our revenues
are from the US and 22% from the rest of the world.

Our operations are reported through three geographic regions:

- The Americas consist of the United States, Canada, Mexico and operations
located in Central and South America. We also refer to the operations in
Mexico, Central and South America as our Latin America operations.

- EMEA is an acronym for Europe, the Middle East and Africa. This operating
group became part of our company through a series of acquisitions; most
significantly Hillier Parker and REI.

- Asia Pacific consists of operations in Asia, Australia and New Zealand.
These operations were acquired in part through the REI acquisition and in
total through subsequent acquisitions.

See Note 11 of the Notes to Consolidated Financial Statements for financial
data relating to our geographic regions, which are incorporated herein by
reference.

BUSINESS SEGMENTS

In July 1999, our Company undertook a reorganization to streamline our US
operations, which resulted in a change in our segment reporting from four to
three segments. We have eight primary lines of business which are aggregated,
reported and managed through these three segments: Transaction Management,
Financial Services and Management Services. The Transaction Management segment
is the largest generator of revenue and operating income, and includes Brokerage
Services, Corporate Services and Investment Property activities. Brokerage
Services includes activities that provide sales, leasing and consulting services
in connection with commercial real estate and is our primary revenue source.
Corporate Services focuses on building relationships with large corporate
clients which generate recurring revenue. Investment Property activities provide
brokerage services for commercial real property marketed for sale to
institutional and private investors. The Financial Services segment provides
commercial mortgage, valuation, investment management and consulting and
research services. The Management Services segment provides facility management
services to corporate real estate users and property management and related
services to owners.

Information regarding revenues and operating income or loss, attributable to
each of our business segments is included in "Segment Operations" within the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and within Note 11 of our Notes to Consolidated Financial
Statements, which are incorporated herein by reference. Information concerning
the identifiable assets of each of our Company's business segments is set forth
in Note 11 of the Notes to Consolidated Financial Statements, which is
incorporated herein by reference.

TRANSACTION MANAGEMENT

Under Transaction Management we operate the following lines of business:

- THE BROKERAGE SERVICES LINE OF BUSINESS provides sales, leasing and
consulting services relating to commercial real estate. The Brokerage
Services business line is the largest business unit in terms of revenue,
earnings and cash flow. This line of business is built upon relationships
that its employees establish with customers. This business does not
require significant capital expenditures on a recurring basis. However,
due to the low barriers to entry and strong competition, it strives to
retain top producers through an attractive compensation program that
motivates its sales force to achieve higher revenue production. Therefore,
the most significant cost is commission expense, which can be as high as
70% of the revenue generated by Brokerage Services. We are the largest and
most recognized competitor in the commercial brokerage business, and we
believe that the CB Richard Ellis brand provides our Company with a
competitive operating advantage. This line of business employs
approximately 2,200 individuals

in offices located in most of the largest metropolitan areas in the US and
approximately 1,200 individuals in the rest of the world.

OPERATIONS. Our Company maintains a decentralized approach to
Transaction Management other than investment properties by bringing
significant local knowledge and expertise to each assignment. Each local
office draws upon the broad range of support services provided by the
other business groups around the world, including an international network
of market research, client relationships and transaction referrals which
we believe provides this business line with significant economies of scale
over local, national and international competitors. While day-to-day
operations are decentralized, most accounting and financial functions are
centralized.

Compensation. Under a typical brokerage services agreement, Brokerage
Services is entitled to receive sale or lease commissions. Sale
commissions, which are calculated as a percentage of sales price, are
generally earned by this business line at the close of escrow.
Internationally, sales commissions are earned upon completion of work with
no existing contingencies. Sale commissions in the US typically range from
approximately 1% to 6% with the rate of commission declining as the price
of the property increases. In the case of large investment properties with
prices over $20 million, the commission is generally not more than 2%,
declining to .5% for properties with prices greater than $75 million. In
the UK, commissions of 0.75% for a sale to 1% for a purchase are typical.
Lease commissions in the US and Canada, typically calculated either as a
percentage of the minimum rent payable during the term of the lease or
based upon the square footage of the leased premises, are generally earned
by Brokerage Services at the commencement of a lease, which typically
occurs on tenant move-in and are not contingent upon the tenant fulfilling
the terms of the lease. In cases where a third-party brokerage firm is not
involved, lease commissions earned by this business line for a new lease
typically range between 2% and 6% of minimum rent payable under the lease
depending upon the value of the lease. In the UK, the leasing commission
is typically one month's rent or 15% of the first year's rent. For renewal
of an existing lease, these fees are generally 50% of a new lease
commission. In sales and leases where a third-party broker is involved,
Brokerage Services must typically share 50% of the commission with the
third-party broker. In the US, Canada and much of Australia, brokerage
sales professionals generally will receive a 40% to 60% share of
commissions before costs and expenses. In most other parts of the world,
brokerage professionals generally receive a salary and a bonus,
profit-share or a small commission, which in the aggregate approximate a
50% share of commissions earned by this business line.

- THE INVESTMENT PROPERTIES LINE OF BUSINESS provides brokerage services for
commercial real estate property marketed for sale to institutional and
private investors.

OPERATIONS AND COMPENSATION. This line of business employs
approximately 500 individuals in offices located in the US and about 300
individuals in the rest of the world. Compensation for this operation is
similar to the Brokerage Services line of business.

- THE CORPORATE SERVICES LINE OF BUSINESS focuses on building relationships
with large corporate clients. The objective is to establish long-term
relationships with clients that could benefit from utilizing Corporate
Service's broad suite of services and/or global presence. These clients
are offered the opportunity to be relieved of the burden of managing their
commercial real estate activities at a lower cost than they could achieve
by managing these activities themselves. This business has experienced a
high rate of growth, as more corporations focus on outsourcing their
non-core functions. We believe that this business line's worldwide
platform and array of services uniquely positions it to seize additional
market share in this area. During 2000, the Facilities Management line of
business began operating under the same leadership as Corporate Services
(see Management Services).

OPERATIONS. This business line employs approximately 400 individuals
within the US and over 50 individuals in the rest of the world. Corporate
Services include research and consulting, structured finance, project
management, lease administration and transaction management. These
services can be delivered on a bundled or unbundled basis involving other
lines of business in a single market or in multiple markets around the
globe. A typical corporate services agreement includes a stated term of at
least one year and normally contains provisions for extension of the
agreement.

COMPENSATION. A typical corporate services agreement gives it the
right to execute some or all of the client's future sales and leasing
transactions and to receive other fees on a negotiated basis. The
commission rate with respect to these transactions frequently reflects a
discount for the captive nature and large volume of the business. This
business line is developing worldwide pricing to maximize integrated
service delivery.

All of these business lines provide sales brokerage, leasing and real estate
consulting services. Additionally, these business lines are motivated to
cross-sell products and services from our other business segments.

FINANCIAL SERVICES

The Financial Services business segment is focused on providing commercial
mortgage, valuation, investment advisory and research and consulting services.
We believe that these business lines generally are complementary to the core
businesses in the Transaction Management segment, offering reliable returns. A
description of the principal lines of business in the Financial Services segment
are as follows:

- THE COMMERCIAL MORTGAGE BUSINESS LINE provides commercial loan origination
and loan servicing through our wholly-owned subsidiary, L.J. Melody. The
Commercial Mortgage business focuses on the origination of commercial
mortgages without incurring principal risk. As part of its activities,
L.J. Melody has established correspondent relationships and conduit
arrangements with investment banking firms, national banks, credit
companies, insurance companies, pension funds and government agencies.

Under these arrangements, L.J. Melody originates mortgages into
conduit programs where it makes limited representations and warranties
based upon representations made by the borrower or another party. In some
situations, L.J. Melody originates mortgages in its name and immediately
sells them into a conduit program (so-called "table funding") without
principal risk. Mortgages originated for conduits may or may not have
servicing rights. L.J. Melody originates in its name (without principal
risk) and services loans for Federal Home Loan Mortgage Corporation
(Freddie Mac) and Federal National Mortgage Association (Fannie Mae). L.J.
Melody is also a major mortgage originator for insurance companies and
pension funds having the right, as correspondent, to originate loans in
their names and subsequently services the mortgage loans it originates. At
December 31, 2000, L.J. Melody serviced mortgage loan portfolios of
approximately $16.7 billion.

OPERATIONS. L.J. Melody employs approximately 300 people located in
32 offices in the US. L.J. Melody has no material mortgage banking
operations outside of the US. Its mortgage loan originations take place
throughout the US, with support from L.J. Melody's headquarters in
Houston, Texas. The mortgage loan servicing primarily is handled from the
Houston, Texas headquarters with support from regional offices in Atlanta,
Georgia; Minneapolis, Minnesota; Seattle, Washington; Boston,
Massachusetts; and Los Angeles, California.

COMPENSATION. L.J. Melody typically receives origination fees,
ranging from 0.5% for large insurance company and pension fund mortgage
loans to 1.0% for most conduit and agency mortgage loans. In situations
where L.J. Melody services the mortgage loans it originates, L.J.

Melody also receives a servicing fee between .03% and .25%, calculated as
a percentage of the outstanding mortgage loan balance. These servicing
agreements generally contain an evergreen provision which provides that
the agreement remains in effect for an indefinite period, but enables the
lender to terminate the agreement upon 30 days prior written notice, which
L.J. Melody believes to be a customary industry termination provision.
During 2000, a majority of the mortgage loan origination revenue was from
agreements which entitled L.J. Melody to both originate and service
mortgage loans. L.J. Melody also originates mortgage loans on behalf of
conduits and insurance companies for whom it does not perform servicing.
Its client relationships have historically been long-term. L.J. Melody
pays its mortgage banking professionals a combination of salary,
commissions and incentive-based bonuses, which typically average
approximately 50% of loan origination fees earned.

- THE VALUATION LINE OF BUSINESS provides valuation and appraisal services,
and market research. These services include market value appraisals,
litigation support, discounted cash flow analysis and feasibility and
fairness opinions.

OPERATIONS. The Valuation Business line is one of the largest in its
industry in the United States. Additional valuation services are provided
internationally. At December 31, 2000 this business line had nearly 200
employees on staff in the United States and approximately 350
internationally. During 2000, it developed proprietary technology for
preparing and delivering valuation reports to its clients. We believe that
this technology provides the Valuation Business line with competitive
advantages over its rivals.

COMPENSATION. The Valuation Business line earns most of its fees on a
fixed-fee basis. Some consulting revenue is earned on an hourly basis.

- THE INVESTMENT MANAGEMENT LINE OF BUSINESS provides investment management
and advisory services through our wholly-owned affiliate, CBRE Investors.
CBRE Investors focuses on pension plans, investment funds, insurance
companies and other organizations seeking to generate returns through
investment in real estate related assets. CBRE Investors is often
requested to "co-invest" with its clients for a percentage of the total
fund. These co-investments range from 2-10% of the fund.

OPERATIONS. Operationally, each investment strategy is executed by a
dedicated team with the requisite skill sets. At the present time there
are seven dedicated teams. In the US, they are Fiduciary Services, low
risk/return strategies, Strategic Partners, L.P. a value-added fund,
Corporate Partners, LLC, corporate real estate strategies, and Global
Innovation Partners, technology driven real estate and entry level
strategies. Internationally they are CB Hillier Parker Investors (UK), low
risk/return strategies, CBRE Investors Asia, value-added, and CBRE
Investors Europe, value-added. Each team's compensation is driven largely
by the investment performance of its particular strategy/team. This
organizational structure is designed to align the interests of team
members with those of its investor clients/partners, determine
accountability, and make performance the priority.

Dedicated teams share resources such as accounting, financial
controls, information technology, investor services and research. In
addition to the research within the CB Richard Ellis platform, which
focuses primarily on market conditions and forecasts, CBRE Investors has
an in-house team of research professionals that focuses on investment
strategy and underwriting. CBRE Investors and its foreign affiliates have
approximately 120 employees located in the Los Angeles headquarters and in
regional offices in Boston, and over 30 employees internationally.

We believe that this business line provides strategic benefits to all
of our lines of business, by providing brokerage opportunities for assets
under management and by being a natural fit for

the full range of services that our Company offers, including mortgage
lending, appraisal and property management.

A key validation of this business occurred during the fourth quarter
of 2000 when CBRE Investors was awarded the assignment to manage the
CalPERS $500 million Joint Real Estate and Alternative Investment
Management Technology Program in which our Company will be making a
co-investment of approximately $25 million. Under the program, the fund
will make investments in real estate and real estate-related entities, and
capitalize on opportunities created from the convergence of the technology
and real estate industries. We anticipate that our Company may benefit
from the opportunity in several ways, including fees, return on our
co-investment, return on a carried interest and significant cross-selling
of services in relation to this program.

COMPENSATION. Investment management fees can have up to three
components. In chronological order, they are (i) acquisition fees,
(ii) annual portfolio management fees and (iii) incentive fees or profit
sharing. Each fund or account will have two or three of these components.
Fees are typically higher for sponsoring funds or joint ventures than
managing separate accounts. Acquisition and annual portfolio management
fees usually range between 0.5-1.0% of purchase price in the US and Asia.
In the UK, annual fees on separate accounts are typically 0.05-0.1% of
asset value. Incentive fees usually range between 10-20% of profit in
excess of an agreed upon threshold return. With respect to CBRE Investors'
new funds in the US and all international investments, our Company also
derives fees for ancillary services including purchase and sale brokerage,
mortgage origination, property management and leasing brokerage.

MANAGEMENT SERVICES

The Management Services segment provides property, facility and construction
management services through two lines of businesses:

- THE ASSET SERVICES LINE OF BUSINESS provides value-added asset and related
services for income-producing properties owned primarily by institutional
investors and, at December 31, 2000, managed approximately 200 million
square feet of commercial space in the US and approximately 200 million
square feet in the rest of the world. Asset Services include maintenance,
marketing and leasing services for investor-owned properties, including
office, industrial, retail and multi-family residential properties.
Additionally, Asset Services provides construction management services,
which relate primarily to tenant improvements. Asset Services works
closely with its clients to implement their specific goals and objectives,
focusing on the enhancement of property values through maximization of
cash flow. Asset Services markets its services primarily to long-term
institutional owners of large commercial real estate assets. An Asset
Services agreement puts our Company in a position to provide other
services for the owner including refinancing, appraisal and lease and
sales brokerage services.

OPERATIONS. Asset Services employs approximately 1,100 individuals in
the US and an estimated 700 individuals internationally, part of whose
compensation is reimbursed by the client. Most asset services are
performed by management teams located on-site or in the vicinity of the
properties they manage. This provides property owners and tenants with
immediate and easily accessible service, enhancing client awareness of
manager accountability. All personnel are trained and are encouraged to
continue their education through both internally-sponsored and outside
training. We provide each local office with centralized corporate
resources including investments in computer software and hardware. Asset
Services personnel generally utilize state-of-the-art computer systems for
accounting, marketing, and maintenance management.

- THE FACILITIES MANAGEMENT LINE OF BUSINESS, now under the same leadership
as Corporate Services, specializes in the administration, management and
maintenance of properties that are occupied by large corporations and
institutions, including corporate headquarters, regional offices,
administrative offices and manufacturing and distribution facilities, as
well as tenant representation, capital asset disposition, project
management, strategic real estate consulting and other ancillary services
for corporate clients. At December 31, 2000, Facilities Management had
approximately 115 million square feet under management in the US. While
most of the properties for which it provides facilities management
services are located within the US, it also manages approximately
11 million square feet internationally, and expect the facilities
management business both inside and outside of the US to continue growing
in 2001.

OPERATIONS. The Facilities Management business line employs nearly
1,000 individuals in the US and over 100 individuals internationally, most
of whose compensation is reimbursed by the client. The Facilities
Management operations in the US are organized into three geographic
regions in the Eastern, Western and Central areas, with each geographic
region comprised of consulting, corporate services and team management
professionals who provide corporate service clients with a broad array of
financial, real estate, technological and general business skills.
Facilities Management teams are also in place internationally. In addition
to providing a full range of corporate services in a contractual
relationship, the Facilities Management group will respond to client
requests generated by our Company's other business lines for significant,
single-assignment acquisition, disposition and consulting assignments that
may lead to long-term relationships.

COMPENSATION. Under a typical Facilities Management agreement, it is
entitled to receive management fees and reimbursement for its costs
including costs of wages of on-site employees, capital expenditures, field
office rent, supplies and utilities that are directly attributable to
management of the facility. Payments for reimbursed expenses are netted
against those expenses and not included in revenue. Under certain
Facilities Management agreements, it may also be entitled to an additional
incentive fee which is paid if it meets select performance criteria, for
example, a reduction in the cost of operating the facility, which is
established in advance with the client.

COMPETITIVE ENVIRONMENT

The market for the transaction management business is both highly fragmented
and competitive. Thousands of local commercial real estate brokerage firms and
hundreds of regional commercial real estate brokerage firms have offices
throughout the world. Most of our competitors in brokerage, and to a significant
extent, asset services, are local or regional firms that are substantially
smaller than us on an overall basis, but in some cases may be larger locally. We
believe that the following companies have the ability to compete on a national,
and in some cases, international basis with our brokerage, investment or
corporate services businesses: Jones Lang Lasalle Incorporated, Trammell Crow
Company, Cushman and Wakefield, Inc., Grubb and Ellis and Insignia Financial
Group.

We have several competitive advantages which have established us as a leader
in the commercial real estate services industry. These advantages include:

GLOBAL PRESENCE. Many corporations, based both in the US and
internationally, have pursued growth opportunities on a global basis. As a
result, these corporations favor real estate providers who are capable of
providing services around the world. With approximately 250 offices in 44
countries around the world, we combine global reach with localized knowledge
that enables us to provide world-class service to our numerous multi-national
clients.

RESOURCES THAT EMPOWER. Our proprietary data network gives our
professionals instant access to the local and global market knowledge that meet
their clients' needs. It also enables professionals to build

cross-functional teams to work collaboratively on projects. With real-time
access to state-of-the-art information systems, our professionals are empowered
to support clients in achieving their own business goals.

DIVERSE RANGE OF SERVICES. We offer a variety of complementary services
ranging from real estate brokerage and related services to mortgage banking and
investment management. We can combine a variety of services to expand and
execute real estate strategies that meet and satisfy the needs of a diverse
client base. In addition, our various lines of businesses can develop revenue
synergies with other units within our Company.

BRAND NAME. Our reputation as one of the leading worldwide commercial real
estate services firms is a major advantage for us in winning new business and
further expanding our existing client base. We believe that generally large
corporations, institutional owners and users of real estate recognize us as a
provider of high quality, professional and multi-functional real estate
services.

L.J. Melody competes in the US with a large number of mortgage banking firms
and institutional lenders as well as regional and national investment banking
firms and insurance companies in providing its mortgage banking services.
Appraisal and valuation services are provided by other international, national,
local and regional appraisal firms and some international, national and regional
accounting firms. CBRE Investors has numerous competitors including other fund
managers, investment banks and commercial banks.

Our management services business competes for the right to manage properties
controlled by third parties. The competitor may be the owner of the property,
who is trying to decide the efficiency of outsourcing, or another management
services company. Increasing competition in recent years has resulted in our
having to provide additional services at lower rates, thereby eroding margins.
However, management services enjoys synergies with our other lines of
businesses, especially those within the transaction management segment.

RISK FACTORS

THE SUCCESS OF OUR BUSINESS IS SIGNIFICANTLY RELATED TO GENERAL ECONOMIC
CONDITIONS, AND ACCORDINGLY, OUR BUSINESS COULD BE HARMED IN THE EVENT OF AN
ECONOMIC SLOWDOWN OR RECESSION.

Periods of economic slowdown or recession in the US and in other countries,
rising interest rates or declining demand for real estate, or the public
perception that any of these events may occur, can harm many segments of our
overall business. These economic conditions could result in a general decline in
rents which in turn would reduce revenues from property management fees and
brokerage commissions derived from property sales and leases. In addition, these
conditions could lead to a decline in sale prices as well as a decline in demand
for funds invested in commercial real estate and related assets. An economic
downturn or significant increase in interest rates also may reduce the amount of
loan originations and related servicing by our commercial mortgage banking
business. If our brokerage and mortgage banking businesses are negatively
impacted, it is likely that other segments of our business will also suffer, due
to the relationship among our various business segments.

The sharp downturn in the commercial real estate market beginning in the
late 1980s in the US caused, and downturns in the future may again cause, some
property owners to dispose of or lose their properties through foreclosures and
has caused many real estate firms to undergo restructuring or changes in
control. These changes in the ownership of properties may be accompanied by a
change in property and investment management firms and could cause us to lose
management agreements or make the agreements we retain less profitable.

IF THE PROPERTIES THAT WE MANAGE FAIL TO PERFORM, THEN OUR FINANCIAL CONDITION
AND RESULTS OF OPERATIONS COULD BE HARMED.

The revenue we generate from our property and facilities management services
segments is generally a percentage of aggregate rent collections from
properties, with many management agreements providing for a specified minimum
management fee. Accordingly, our success will be dependent in part upon the
performance of the properties we manage and the performance of these properties
will depend upon the following factors, among others, many of which are
partially or completely outside of our control:

- our ability to attract and retain creditworthy tenants;

- the magnitude of defaults by tenants under their respective leases;

- our ability to control operating expenses;

- governmental regulations, local rent control or stabilization ordinances
which are or may be put into effect;

- various uninsurable risks;

- financial conditions prevailing generally and in the areas in which these
properties are located;

- the nature and extent of competitive properties; and

- the real estate market generally.

WE HAVE NUMEROUS SIGNIFICANT COMPETITORS, MANY OF WHICH MAY HAVE GREATER
FINANCIAL RESOURCES THAN WE DO.

We compete across a variety of business disciplines within the commercial
real estate industry, including investment management, tenant representation,
corporate services, construction and development management, property
management, agency leasing, valuation and mortgage banking. In general, with
respect to each of our business disciplines, we cannot assure you that we will
be able to continue to compete effectively, maintain our current fee
arrangements or margin levels or not encounter increased competition. Each of
the business disciplines in which we compete is highly competitive on an
international, national, regional or local level. Although we are one of the
largest real estate services firms in the world, our relative competitive
position varies significantly across product and service categories and
geographic areas. Depending on the product or service, we face competition from
other real estate service providers, institutional lenders, insurance companies,
investment banking firms, investment managers and accounting firms. Many of our
competitors are local or regional firms, which are substantially smaller than
us. However, they may be substantially larger on a local or regional basis. We
are also subject to competition from other large national and multinational
firms.

In addition to our historical competitors, the advent of the Internet has
introduced new ways of providing real estate services, as well as new
competitors to the industry. We cannot currently predict who these competitors
will be, nor can we predict what our response to them will be. Our response to
competitive pressures could require significant capital resources, changes in
our organization or technological changes. If we are not successful in
developing a strategy to address the risks and to capture the related
opportunities presented by technological changes and the emergence of
e-business, our business, financial condition or results of operations could be
harmed.

OUR INTERNATIONAL OPERATIONS SUBJECT US TO SOCIAL, POLITICAL AND ECONOMIC RISKS
OF DOING BUSINESS IN FOREIGN COUNTRIES.

We conduct a substantial portion of our business, and a substantial number
of our employees are located, outside of the US. In 2000, we generated
approximately 22% of our revenue from operations outside the US. The
international scope of our operations may lead to volatile financial results and
difficulties in managing our businesses. Circumstances and developments related
to international operations that could negatively affect our business, financial
condition or results of operations include the following factors:

- difficulties and costs of staffing and managing international operations;

- currency restrictions, such as those in Brazil, which may prevent us from
transferring capital and profits to the US;

- unexpected changes in regulatory requirements;

- potentially adverse tax and tariff consequences;

- the burden of complying with multiple and potentially conflicting laws;

- the impact of regional or country-specific business cycles and economic
instability;

- the geographic, time zone, language and cultural differences between
personnel in different areas of the world;

- greater difficulty in collecting accounts receivable in some geographic
regions such as Asia, where many countries have underdeveloped insolvency
laws and clients often are slow to pay, and Europe, where clients in some
countries also tend to delay payments;

- political instability in the nature of what has occurred in recent years
in Indonesia and the Philippines, but which may arise in any particular
region; and

- foreign ownership restrictions with respect to operations in countries
such as Indonesia, India and China.

We have committed additional resources to expand our worldwide sales and
marketing activities, to globalize our service offerings and products in
selected markets and to develop local sales and support channels. If we are
unable to successfully implement these plans, to maintain adequate long-term
strategies which successfully manage the risks associated with our global
business or to adequately manage operational fluctuations, our business,
financial condition or results of operations could be harmed.

In addition, our international operations and, specifically, the ability of
our non-US subsidiaries to dividend or otherwise to transfer cash among our
subsidiaries, including transfers of cash to us to pay interest and principal on
our senior notes, may be affected by limitations on imports, currency exchange
control regulations, transfer pricing regulations and potentially adverse tax
consequences, among other things.

OUR REVENUES AND EARNINGS MAY BE ADVERSELY AFFECTED BY FOREIGN CURRENCY
FLUCTUATIONS.

Our revenues from non-US operations have been primarily denominated in the
local currency where the associated revenues were earned. During our fiscal year
ended December 31, 2000, approximately 22% of our business was transacted in
currencies of foreign countries, the majority of which included the British
Pound Sterling, the French Franc, the Hong Kong Dollar and the Australian
Dollar. Thus, we may experience significant fluctuations in revenues and
earnings because of corresponding fluctuations in foreign currency exchange
rates.

We have made significant acquisitions of non-US companies since the
beginning of 1998, including Hillier Parker, REI, CB Commercial Real Estate of
Canada, Inc. and Richard Ellis Australia and New Zealand. We may acquire
additional foreign companies in the future as well. As we increase our foreign
operations, fluctuations in the value of the US Dollar relative to the other
currencies in which we may generate earnings could materially adversely affect
our business, operating results and financial condition. In addition,
fluctuations in currencies relative to the US Dollar may make it more difficult
to perform period-to-period comparisons of our reported results of operations.
Due to the constantly changing currency exposures to which we will be subject
and the volatility of currency exchange rates, we cannot assure you that we will
not experience currency losses in the future, nor can we predict the effect of
exchange rate fluctuations upon future operating results.

Our management may decide to use currency hedging instruments including
foreign currency forward contracts, purchased currency options where applicable
and borrowings in foreign currency. Economic risks associated with these hedging
instruments include unexpected fluctuations in inflation rates impacting cash
flow relative to paying down debt, and unexpected changes in the underlying net
asset position. These hedging activities may not be effective.

WE HAVE GROWN SIGNIFICANTLY DURING THE PAST FIVE YEARS WHICH HAS PLACED
SIGNIFICANT DEMANDS ON OUR RESOURCES, AND WE MAY NOT BE ABLE TO EFFECTIVELY
MANAGE THIS GROWTH OR FUTURE GROWTH.

We have grown significantly in recent years from total consolidated revenues
of approximately $583 million in fiscal year 1996 to approximately $1.3 billion
in fiscal year 2000. In addition, we intend to continue to pursue an aggressive
growth strategy in the future. This historical growth and any significant future
growth will continue to place demands on our resources. Accordingly, our future
success and profitability will depend, in part, on our ability to enhance our
management and operating systems, manage and adapt to rapid changes in
technology, obtain financing for strategic acquisitions and investments, retain
employees due to policy and procedural changes and retain customers due to our
ability to manage change. We may not be able to successfully manage any
significant expansion or obtain adequate financing on favorable terms to manage
our growth.

BECAUSE A SIGNIFICANT PORTION OF OUR OPERATIONS ARE CONCENTRATED IN CALIFORNIA,
OUR BUSINESS COULD BE HARMED IF AN ECONOMIC DOWNTURN OCCURS IN THE CALIFORNIA
REAL ESTATE MARKET.

For the year ended December 31, 2000, approximately $285.7 million, or 31%,
of our $929.2 million in total sale and lease revenue, including revenue from
investment property sales, was generated from transactions originated in the
State of California. As a result of the geographic concentration in California,
a material downturn in the California commercial real estate markets or in the
local economies in San Diego, Los Angeles or Orange County could harm our
results of operations.

OUR RESULTS OF OPERATIONS VARY SIGNIFICANTLY AMONG QUARTERS, WHICH MAKES
COMPARISON OF OUR QUARTERLY RESULTS DIFFICULT.

Our operating income and earnings have historically been substantially lower
during the first three calendar quarters than in the fourth quarter. The reasons
for the concentration of income and earnings in the fourth quarter include a
general, industry-wide focus on completing transactions by calendar year end, as
well as the constant nature of our non-variable expenses throughout the year
versus the seasonality of our revenues. This has historically resulted in a
small loss in the first quarter, a small profit or loss in the second and third
quarters and a larger profit in the fourth quarter, excluding the recognition of
investment generated performance fees. As a result, quarter-to-quarter
comparisons may be difficult to interpret.

OUR GROWTH HAS DEPENDED SIGNIFICANTLY UPON ACQUISITIONS, AND WE HAVE EXPERIENCED
DIFFICULTIES INTEGRATING THESE ACQUIRED BUSINESSES WITH OUR BUSINESS.

A significant component of our growth from 1996 to 1998 was, and part of our
principal strategy for continued growth is, through acquisitions. Our strategic
acquisitions since 1995 have included Hillier Parker, REI, Koll, L.J. Melody and
Westmark Realty Advisors, L.L.C. Recent tactical acquisitions have included
Cauble and Company, North Coast Mortgage and Shoptaw-James. We expect to
continue our acquisition program. Any future growth by us through acquisitions
will be partially dependent upon the continued availability of suitable
acquisition candidates at favorable prices and upon advantageous terms and
conditions. However, future acquisitions may not be available at advantageous
prices or upon favorable terms and conditions. In addition, acquisitions involve
risks that the businesses acquired will not perform in accordance with
expectations and that business judgments concerning the value, strengths and
weaknesses of businesses acquired or whether the consequences of any acquisition
will prove incorrect.

We have had, and may experience in the future, significant difficulties in
integrating operations acquired from other companies, including the diversion of
management's attention from other business concerns and the potential loss of
our key employees or those of the acquired operations. For example, in the
Westmark Realty Advisors, L.L.C. acquisition, serious differences in corporate
culture resulted in the loss of several key employees. In the L.J. Melody
acquisition it took over a year to blend out loan servicing operations with
those of L.J. Melody. The integration of Koll and our property, facilities and
corporate accounting systems took almost nine months to complete. We believe
that most acquisitions will have an adverse impact on operating income and net
income during the first six months following the acquisition. In addition,
during this time period, we believe there are generally significant one-time
costs relating to integrating information technology, accounting and management
services and rationalizing personnel levels. Accordingly, we may not be able to
effectively manage acquired businesses and some acquisitions may not benefit us
overall.

We will require additional financing to sustain our acquisition program. We
expect to finance future acquisitions and internal growth through a combination
of funds available under our new revolving credit facility, cash flow from
operations and additional indebtedness incurred by us. However, covenants in the
new CB Richard Ellis Services, Inc. credit agreement and the indenture governing
our senior notes will restrict our ability to raise additional capital in many
respects. Accordingly, we may not be able to obtain financing to complete
acquisitions that we believe would benefit our business and financial condition,
resulting in lost business and growth opportunities.

OUR CO-INVESTMENT ACTIVITIES SUBJECT US TO REAL ESTATE INVESTMENT RISKS WHICH
COULD CAUSE FLUCTUATIONS IN OUR EARNINGS AND CASH FLOW.

An important part of the strategy for our investment management business
involves investing our own capital in certain real estate investments with our
clients. As of December 31, 2000, we had committed an additional $37.7 million
to fund future co-investments. Our participation in real estate transactions
through co-investment activity could increase fluctuations in our earnings and
cash flow. Other risks associated with these activities include:

- loss of our investments;

- difficulties associated with international co-investment described in
"--Our international operations subject us to social, political and
economic risks of doing business in foreign countries" and "--Our revenues
and earnings may be adversely affected by foreign currency fluctuations";
and

- our potential lack of control over the disposition of any co-investments
and the timing of the recognition of gains, losses or potential incentive
participation fees.

WE MAY INCUR LIABILITIES RELATED TO OUR SUBSIDIARIES BEING GENERAL PARTNERS OF
NUMEROUS GENERAL AND LIMITED PARTNERSHIPS.

We have subsidiaries which are general partners in numerous general and
limited partnerships that invest in or manage real estate assets in connection
with our co-investments, including several partnerships involved in the
acquisition, rehabilitation, subdivision and sale of multi-tenant industrial
business parks. Any subsidiary that is a general partner is potentially liable
to its partners and for the obligations of its partnership, including those
obligations related to environmental contamination of properties owned or
managed by the partnership. If our exposure as a general partner is not limited,
or if our exposure as a general partner expands in the future, any resulting
losses may harm our business, financial condition or results of operations. We
own our general partnership interests through special purpose subsidiaries. We
believe this structure will limit our exposure to the total amount we have
invested in and the amount of notes from, or advances and commitments to, these
special purpose subsidiaries. However, this limited exposure may be expanded in
the future based upon, among other things, changes in our operating practices,
changes in applicable laws or the application of additional laws to our
business.

OUR JOINT VENTURE ACTIVITIES INVOLVE UNIQUE RISKS THAT ARE OFTEN OUTSIDE OF OUR
CONTROL WHICH, IF REALIZED, COULD HARM OUR BUSINESS.

We have utilized joint ventures for large commercial investments,
initiatives in Internet-related technology and local brokerage partnerships. In
the future, we may acquire interests in additional limited and general
partnerships and other joint ventures formed to own or develop real property or
interests in real property. We have acquired and may acquire minority interests
in joint ventures and we may also acquire interests as a passive investor
without rights to actively participate in management of the joint ventures.
Investments in joint ventures involve additional risks, including the following:

- the other participants may become bankrupt or have economic or other
business interests or goals which are inconsistent with our own; and

- we may not have the right or power to direct the management and policies
of the joint ventures and that other participants may take action contrary
to our instructions or requests and against our policies and objectives.

If a joint venture participant acts contrary to our interest, it could harm our
business, results of operations and financial condition.

OUR SUCCESS DEPENDS UPON OUR SENIOR MANAGEMENT, AS WELL AS OUR ABILITY TO
ATTRACT AND RETAIN OTHER QUALIFIED EMPLOYEES.

Our continued success is highly dependent upon the efforts of our executive
officers and key employees. After the consummation of the transactions, the only
members of our senior management that will be parties to employment agreements
with us are Raymond Wirta, our Chief Executive Officer, and W. Brett White, our
Chairman of the Americas. If any of our key employees leaves and we are unable
to quickly hire and integrate a qualified replacement, our business and results
of operations may suffer. In addition, the growth of our business is also
largely dependent upon our ability to attract and retain qualified personnel in
all areas of our business, including brokerage and property management
personnel. If we are unable to attract and retain these qualified personnel, our
growth may be limited, and our business and operating results could suffer.

IF WE FAIL TO COMPLY WITH LAWS AND REGULATIONS APPLICABLE TO REAL ESTATE
BROKERAGE AND MORTGAGE TRANSACTIONS AND OTHER SEGMENTS OF OUR BUSINESS, WE MAY
INCUR SIGNIFICANT FINANCIAL PENALTIES.

Due to the broad geographic scope of our operations and the numerous forms
of real estate services we perform, we are subject to numerous federal, state
and local laws and regulations specific to the services we perform. For example,
our brokerage of real estate sales and leasing transactions requires us to
maintain brokerage licenses in each state in which we operate. If we fail to
maintain our licenses or conduct brokerage activities without a license, we may
be required to pay fines or return commissions received or have our license
suspended. In addition, because the size and scope of real estate sale
transactions has increased significantly during the past several years, both the
difficulty of ensuring compliance with the numerous state licensing regimes and
the possible loss resulting from non-compliance have increased. Further, the
laws and regulations applicable to our business, both in the US and in foreign
countries, also may change in ways that materially increase our costs of
compliance.

WE MAY HAVE LIABILITIES IN CONNECTION WITH REAL ESTATE BROKERAGE AND PROPERTY
MANAGEMENT ACTIVITIES.

As a licensed real estate broker, we, and our licensed employees, are
subject to statutory due diligence, disclosure and standard-of-care obligations
in connection with brokerage transactions. Failure to fulfill these obligations
could subject us or our employees to litigation from parties who purchased, sold
or leased properties they brokered or managed. We may become subject to claims
by participants in real estate sales claiming that we did not fulfill our
statutory obligations as a broker.

In addition, in our property management business, we hire and supervise
third party contractors to provide construction and engineering services for our
properties. While our role is limited to that of a supervisor, we may be
subjected to claims for construction defects or other similar actions. Adverse
outcomes of property management litigation could negatively impact our business,
financial condition and results of operations.

GROWTH STRATEGIES

We intend to take advantage of our global presence, extensive client base,
and brand name to pursue the following growth strategies:

STRENGTHEN RELATIONSHIPS WITH CORPORATE CLIENTS. We are seeking to build
comprehensive relationships with new and existing clients which satisfy the need
for a global service provider to service their real estate needs. Our Company
believes that we are well positioned to capitalize on this strategy. Our
Corporate Services business is focussed on this strategy and had good success
during the year 2000.

CORPORATE OUTSOURCING TRENDS. Shareholder pressure for higher performance
and return on equity within most publicly held corporations around the globe has
heightened corporate management's awareness that corporate real estate assets
are a major component of corporate net worth. Simultaneously, with competitive
pressures encouraging greater focus on core businesses, companies have
emphasized leaner staffing in non-core activities and, as a result, outsourced
some non-core activities to third parties. As a consequence, the demand for
multi-disciplined, multi-market global professional real estate service firms
that provide integrated services capable of supplementing a corporate real
estate department has increased significantly. We are able to provide these
services. While corporate outsourcing is only a modest revenue source at this
time, we believe that the factors described above should accelerate the
outsourcing trend.

STREAMLINING OF OPERATIONS. We are focussed on streamlining our operations
to improve our margins and profitability. Our approach is currently focused on
(i) reducing back office costs, (ii) utilizing technology for greater efficiency
and (iii) utilizing internet solutions to reduce the time and expense of
completing transactions and procuring supplies.

PURSUING CO-INVESTMENT AND OTHER INVESTMENT OPPORTUNITIES. We intend to
continue our strategy of co-investing with our investment management clients.
During 2000, our wholly-owned affiliate, CBRE Investors completed the final
closing of CB Richard Ellis Strategic Partners, L.P. with equity commitments
totaling $324 million from 16 US and international investors. This investment
partnership will invest in repositioning, leasing and development transactions
involving institutional quality properties in the US. In addition, we acquired a
20% interest in Ikoma CB Richard Ellis K.K. or Ikoma CBRE, by merging our Japan
operations with Ikoma Shoji K.K. in April 1999. We have an option to acquire a
controlling interest in Ikoma CBRE which operates through 22 sales offices
throughout Japan.

EMPLOYEES

At December 31, 2000, we had approximately 9,600 employees. We believe that
relations with our employees are good.

ITEM 2. PROPERTIES

We lease the following offices:

LOCATION SALES OFFICES CORPORATE OFFICES TOTAL
- -------- ------------- ----------------- --------

North America............................................... 170 4 174
Latin America............................................... 4 -- 4
Europe, Middle East and Africa.............................. 42 1 43
Asia Pacific................................................ 28 1 29
--- -- ---
Total....................................................... 244 6 250
=== == ===

We do not own any offices, which is consistent with our strategy to lease
instead of own. In general, these offices are fully utilized. There is adequate
alternative office space available at acceptable rental rates to meet our needs,
although rental rates in some markets may negatively affect our profits in those
markets. In addition, these offices are generally used by several segments of
our Company.

ITEM 3. LEGAL PROCEEDINGS

In December 1996, GMH Associates, Inc. (GMH) filed a lawsuit against
Prudential Realty Group (Prudential) and our Company in Superior Court of
Pennsylvania, Franklin County, alleging various contractual and tort claims
against Prudential, the seller of a large office complex, and our Company, its
agent in the sale, contending that Prudential breached its agreement to sell the
property to GMH, breached its duty to negotiate in good faith, conspired with
our Company to conceal from GMH that Prudential was negotiating to sell the
property to another purchaser and that Prudential and our Company misrepresented
that there were no other negotiations for the sale of the property. Following a
non-jury trial, the court rendered a decision in favor of GMH and against
Prudential and us, awarding GMH $20.3 million in compensatory damages, against
Prudential and our Company jointly and severally, and $10.0 million in punitive
damages, allocating the punitive damage award $7.0 million as against Prudential
and $3.0 million as against our Company. Following the denial of motions by
Prudential and us for a new trial, a judgment was entered on December 3, 1998.
Prudential and our Company filed an appeal of the judgment. On March 3, 2000,
the appellate court in Pennsylvania reversed all of the trial courts' decisions
finding that liability was not supported on any theory claimed by GMH and
directed that a judgment be entered in favor of the defendants including our
Company. The plaintiff filed an appeal with the Pennsylvania Supreme Court which
was denied. The plaintiff has

exhausted all appeal possibilities and judgment is expected to be entered
shortly in favor of all defendants.

In August 1993, a former commissioned sales person of our Company filed a
lawsuit against us in the Superior Court of New Jersey, Bergen County, alleging
gender discrimination and wrongful termination by us. On November 20, 1996, a
jury returned a verdict against our Company, awarding $1.5 million in general
damages and $5.0 million in punitive damages to the plaintiff. Subsequently, the
trial court awarded the plaintiff $0.6 million in attorneys' fees and costs.
Following denial by the trial court of our Company's motions for a new trial,
reversal of the verdict and reduction of damages, we filed an appeal of the
verdict and requested a reduction of damages. On March 9, 1999 the appellate
court ruled in our Company's favor, reversed the trial court decision and
ordered a new trial. On February 16, 2000 the Supreme Court of New Jersey
reversed the decision of the appellate court, concluded that the general damage
award in the trial court should be sustained and returned the case to the
appellate court for a determination as to whether a new trial should be ordered
on the issue of punitive damages. In April 2000, we settled the compensatory
damages claim, including interest, and all claims to date with respect to
attorneys fees by paying to the plaintiff the sum of $2.75 million leaving only
the punitive damage claim for resolution. The plaintiff also agreed, with very
limited exceptions, that no matter what the outcome of the punitive damage claim
our Company would not be responsible for more than 50% of the plaintiff's future
attorney fees. In February 2001, our Company settled all remaining claims for
the sum of $2.0 million and received a comprehensive release.

We are a party to a number of pending or threatened lawsuits arising out of,
or incident to, our ordinary course of business. Based on available cash and
anticipated cash flows, we believe that the ultimate outcome will not have an
impact on our Company's ability to carry on our operations. Management believes
that any liability that may result from disposition of these lawsuits will not
have a material effect on our consolidated financial position or results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(1) Our Company's common stock commenced trading on the New York Stock
Exchange (NYSE) on November 7, 1997 under the symbol "CBG." The following table
sets forth, for the periods indicated, the high and low sales price per share of
the common stock on the NYSE.

HIGH LOW
-------- --------

YEAR ENDED DECEMBER 31, 2000
First Quarter............................................ $ 13 1/2 $10 3/16
Second Quarter........................................... 11 7/16 9 1/8
Third Quarter............................................ 13 3/16 9 3/8
Fourth Quarter........................................... 15 5/8 11 13/16

YEAR ENDED DECEMBER 31, 1999
First Quarter............................................ $19 13/16 $ 14 5/8
Second Quarter........................................... 24 7/8 14 7/16
Third Quarter............................................ 24 7/16 12 1/2
Fourth Quarter........................................... 14 13/16 10 11/16

(2) At February 28, 2001, our Company had 893 record holders of its common
stock.

(3) In October 2000, our Company sold 50,000 shares and 285,000 shares of
common stock to our key executives under our 1996 and 1999 Equity Incentive
Plan, respectively. The shares were issued at a purchase price of $12.88 per
share which represents fair market value on the date of issuance. The par value
of the purchase price for these shares was paid in cash, while promissory notes
were received as consideration for the balance. The related promissory notes are
also included in the consolidated statements of stockholders' equity. The sale
was made by private placement in reliance on the exemption from registration
provisions provided for in Section 4(2) of the Securities Act of 1933, as
amended. A registration statement will be filed for the plan which allows the
shares to be sold freely once vested and paid for.

(4) Since the incorporation of our Company in March 1989, we have not
declared any cash dividends on our common stock. Our existing credit agreement
restricts our ability to pay dividends on common stock, and we do not expect to
pay dividends in the near future.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data has been derived from the consolidated
financial statements. The information set forth below is not necessarily
indicative of results of future operations, and should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes thereto
included elsewhere in this Form 10-K.

SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

YEAR ENDED DECEMBER 31
--------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------

STATEMENT OF OPERATIONS DATA:(1)
Revenue............................ $1,323,604 $1,213,039 $1,034,503 $ 730,224 $ 583,068
Operating income................... $ 107,285 $ 76,899 $ 78,476 $ 59,088 $ 48,429
Interest expense, net.............. $ 39,146 $ 37,438 $ 27,993 $ 13,182 $ 22,620
Net income......................... $ 33,388 $ 23,282 $ 24,557 $ 24,397 $ 70,549
Basic EPS(2)....................... $ 1.60 $ 1.11 $ (0.38) $ 1.34 $ 5.05
Weighted average shares outstanding
for basic EPS(2)................. 20,931,111 20,998,097 20,136,117 15,237,914 13,783,882
Diluted EPS(2)..................... $ 1.58 $ 1.10 $ (0.38) $ 1.28 $ 4.99
Weighted average shares outstanding
for diluted EPS(2)............... 21,097,240 21,072,436 20,136,117 15,996,929 14,126,636

OTHER DATA:
EBITDA(3).......................... $ 150,484 $ 117,369 $ 127,246 $ 90,072 $ 62,003
Net cash provided by operating
activities....................... $ 84,112 $ 74,011 $ 76,614 $ 80,835 $ 65,694
Net cash used in investing
activities....................... $ (35,722) $ (26,767) $ (223,520) $ (18,018) $ (10,906)
Net cash (used in) provided by
financing activities............. $ (53,523) $ (37,721) $ 119,438 $ (64,964) $ (28,505)

DECEMBER 31
--------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------

BALANCE SHEET DATA:
Cash and cash equivalents.......... $ 20,854 $ 27,844 $ 19,551 $ 47,181 $ 49,328
Total assets....................... $ 963,105 $ 929,483 $ 856,892 $ 500,100 $ 278,944
Long-term debt..................... $ 303,571 $ 357,872 $ 373,691 $ 146,273 $ 148,529
Total liabilities.................. $ 724,018 $ 715,874 $ 660,175 $ 334,657 $ 280,364
Total stockholders' equity
(deficit)........................ $ 235,339 $ 209,737 $ 190,842 $ 157,771 $ (1,515)
Number of shares outstanding....... 20,605,023 20,435,692 20,636,134 18,768,200 13,232,063

RATIOS:
Debt/equity........................ 1.33 1.74 2.04 0.97 (109.80)
Debt/EBITDA........................ 2.09 3.11 3.06 1.70 2.68
EBITDA/net interest expense(3)..... 3.84 3.14 4.55 6.83 2.74
Operating expense as a percentage
of revenue....................... 40.7% 44.2% 43.4% 37.8% 39.2%
EBITDA as a percentage of
revenue(3)....................... 11.4% 9.7% 12.3% 12.3% 10.6%
Net income as a percentage of
revenue.......................... 2.5% 1.9% 2.4% 3.3% 12.1%
International revenue as a
percentage of consolidated
revenue.......................... 22.4% 22.5% 14.5% -- --

- ------------------------

(1) The results include the activities of Koll from August 28, 1997, REI from
April 17, 1998 and Hillier Parker from July 7, 1998. For the year ended
December 31, 1998, basic and diluted loss per

share include a deemed dividend of $32.3 million on the repurchase of our
Company's preferred stock. For the year ended December 31, 1996, net income
includes a tax benefit of $55.9 million due to a reduction in our deferred
tax asset valuation allowance.

(2) EPS represents earnings (loss) per share. See Per Share Information in
Note 9 of Notes to Consolidated Financial Statements.

(3) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization of intangible assets relating to acquisitions,
merger-related and other nonrecurring charges. Management believes that the
presentation of EBITDA will enhance a reader's understanding of our
operating performance and ability to service debt as it provides a measure
of cash generated (subject to the payment of interest and income taxes) that
can be used by us to service our debt and for other required or
discretionary purposes. Net cash that will be available to us for
discretionary purposes represents remaining cash, after debt service and
other cash requirements, such as capital expenditures, are deducted from
EBITDA. EBITDA should not be considered as an alternative to (i) operating
income determined in accordance with GAAP or (ii) operating cash flow
determined in accordance with GAAP. Our calculation of EBITDA may not be
comparable to similarly titled measures reported by other companies.

(4) We have not declared any cash dividends on our common stock for the periods
shown.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INTRODUCTION

Management's discussion and analysis of financial condition, results of
operations, liquidity and capital resources contained within this report on
Form 10-K is more clearly understood when read in conjunction with the Notes to
the Consolidated Financial Statements. The Notes to the Consolidated Financial
Statements elaborate on certain terms that are used throughout this discussion
and provide information about our Company and the basis of presentation used in
this report on Form 10-K.

We are one of the world's largest providers of commercial real estate
services. Operations are conducted through 250 offices located in 44 countries
with approximately 9,600 employees. We provide a comprehensive array of services
to owners, users and investors of commercial real estate. Our Company has
worldwide capabilities to assist buyers in the purchase and sellers in the
disposition of commercial property, assist tenants in finding available space
and owners in finding qualified tenants, provide valuation and appraisals for
real estate property, assist in the placement of financing for commercial real
estate, provide commercial loan servicing, provide research and consulting
services, help institutional investors manage portfolios of commercial real
estate, provide property and facilities management service and serve as the
outsource service provider to corporations seeking to be relieved of the burden
of managing their real estate operations.

Our operations are reported through three geographic regions:

- The Americas consist of the United States (US), Canada, Mexico and
operations located in Central and South America. We also refer to the
operations in Mexico, Central and South America as our Latin America
operations.

- EMEA is an acronym for Europe, the Middle East and Africa. This operating
group became part of our Company through a series of acquisitions; most
significantly CB Hillier Parker Limited (Hillier Parker) and REI Limited
(REI).

- Asia Pacific consists of operations in Asia, Australia and New Zealand.
These operations were acquired in part through the REI acquisition and in
total through subsequent acquisitions.

Revenue from Transaction Management, which constitutes a substantial
majority of our revenue, is subject to economic cycles. However, our significant
size, geographic coverage, number of transactions and large continuing client
base tend to minimize the impact of economic cycles on annual revenue and create
what we believe is equivalent to a recurring stream of revenue. Approximately
57% of the costs and expenses associated with Transaction Management are
directly correlated to revenue while approximately 25% of the costs and expenses
of Management Services and Financial Services, are directly correlated to
revenue.

A significant portion of our Company's revenue is seasonal. Historically,
this seasonality has caused our revenue, operating income, net income and cash
flow from operating activities to be lower in the first two quarters and higher
in the third and fourth quarters of each year. The concentration of earnings and
cash flow in the fourth quarter is due to an industry-wide focus of completing
transactions at year-end while incurring constant, non-variable expenses
throughout the year. This has led to lower profits or a loss in the first
quarter, with profits growing in each subsequent quarter. In addition, our
operations are directly affected by actual and perceived trends in various
national and economic conditions, including interest rates, the availability of
credit to finance commercial real estate transactions and the impact of tax
laws. Our international operations are subject to political instability,
currency fluctuations, and changing regulatory environments. To date, we do not
believe that general inflation has had a material impact upon our operations.
Revenues, commissions and other variable costs related to revenues are primarily
affected by real estate market supply and demand rather than general inflation.

RESULTS OF OPERATIONS

The following table sets forth items derived from our consolidated
statements of operations for the years ended December 31, 2000, 1999 and 1998,
presented in dollars and as a percentage of revenue:

YEAR ENDED DECEMBER 31
------------------------------------------------------------------
2000 1999 1998
-------------------- -------------------- --------------------
(DOLLARS IN THOUSANDS)

Revenue:
Leases................................ $ 539,419 40.8% $ 448,091 36.9% $ 371,300 35.9%
Sales................................. 389,745 29.4 394,718 32.5 357,718 34.6
Property and facilities management
fees................................ 110,654 8.4 110,111 9.1 86,379 8.4
Consulting and referral fees.......... 78,714 5.9 73,569 6.1 72,586 7.0
Appraisal fees........................ 75,055 5.7 71,050 5.9 48,082 4.6
Loan origination and servicing fees... 58,190 4.4 45,940 3.8 39,402 3.8
Investment management fees............ 42,475 3.2 28,929 2.4 33,145 3.2
Other................................. 29,352 2.2 40,631 3.3 25,891 2.5
--------- ----- --------- ----- --------- -----
Total revenue......................... 1,323,604 100.0 1,213,039 100.0 1,034,503 100.0
Costs and expenses:
Commissions, fees and other
incentives.......................... 634,639 47.9 559,289 46.1 458,463 44.3
Operating, administrative and other... 538,481 40.7 536,381 44.2 448,794 43.4
Merger-related and other nonrecurring
charges............................. -- -- -- -- 16,585 1.6
Depreciation and amortization......... 43,199 3.3 40,470 3.3 32,185 3.1
--------- ----- --------- ----- --------- -----
Operating income........................ 107,285 8.1 76,899 6.4 78,476 7.6
Interest income......................... 2,554 0.2 1,930 0.2 3,054 0.3
Interest expense........................ 41,700 3.2 39,368 3.3 31,047 3.0
--------- ----- --------- ----- --------- -----
Income before provision for income
tax................................... 68,139 5.1 39,461 3.3 50,483 4.9
Provision for income tax................ 34,751 2.6 16,179 1.3 25,926 2.5
--------- ----- --------- ----- --------- -----
Net income.............................. $ 33,388 2.5% $ 23,282 2.0% $ 24,557 2.4%
========= ===== ========= ===== ========= =====
EBITDA.................................. $ 150,484 11.4% $ 117,369 9.7% $ 127,246 12.3%
========= ===== ========= ===== ========= =====

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

We reported consolidated net income of $33.4 million, or $1.58 diluted
earnings per share for the year ended December 31, 2000, on revenues of
$1,323.6 million compared to a consolidated net income of $23.3 million on
revenues of $1,213.0 million for the year ended December 31, 1999. The 2000
results include a $4.7 million non-recurring pre-tax gain from our sale of
certain non-strategic assets. The 1999 results include non-recurring pre-tax
gains from the sale of five non-strategic offices and a risk management
operation totaling $8.7 million, as well as one time charges of approximately
$10.2 million, the majority of which were severance costs related to our
Company's reduction in workforce.

Revenues on a consolidated basis increased by $110.6 million or 9.1% during
the year ended December 31, 2000, compared to the year ended December 31, 1999.
The real estate market in the US remained healthy in 2000, with relatively low
interest and vacancy rates. As a result, lease revenues increased by
$91.3 million or 20.4% during the current year. Investment management fees
increased by $13.5 million or 46.8% and loan origination and servicing fees were
higher by $12.3 million or 26.7%. In addition, other revenues decreased by
$11.3 million primarily due to the contribution of an engineering services group
into a separately owned joint venture, as well as the loss of revenue due to the
sale of assets previously included in the management services segment.

Commissions, fees and other incentives on a consolidated basis totaled
$634.6 million, an increase of $75.4 million or 13.5% for the year ended
December 31, 2000, compared to the year ended December 31, 1999. Lease
commissions increased significantly due to higher lease revenues. In addition,
the overall revenue growth resulted in higher variable commission expense as
compared to the prior year. Variable commissions increase as a percentage of
revenue as certain earnings levels are met. During 2000, a greater number of
high level producers earned a larger proportion of total revenues. This
contributed to an increase in commissions as a percentage of revenue from 46.1%
to 47.9% for the current year.

Operating, administrative and other on a consolidated basis was
$538.5 million, an increase of $2.1 million or .4% for the year ended
December 31, 2000, compared to prior year. This increase is due to higher bonus
incentives and profit share driven by the improved current year results, offset
by lower salary requirements in North America. As a percentage of revenue,
operating, administrative and other was 40.7% for the year ended December 31,
2000, compared to 44.2% for the year ended December 31, 1999. The decreased
percentage is due to our focus on higher margin lines of business, as well as
improving operational efficiency through cost containment measures.

Consolidated interest expense was $41.7 million, an increase of
$2.3 million or 5.9% for the year ended December 31, 2000, as compared to the
year ended December 31, 1999. The increase resulted from higher interest rates
for the revolving credit facility, offset in part by lower average borrowing
levels during 2000. Overall, we reduced our outstanding long-term debt by
$50.5 million or 13.8% as compared to December 31, 1999, helping to minimize the
impact of the increased interest rates during the current year.

Provision for income tax on a consolidated basis was $34.8 million for the
year ended December 31, 2000, as compared to the provision for income tax of
$16.2 million for the year ended December 31, 1999. The increase is mainly due
to higher pre-tax income and a lower release of valuation allowance during the
current year. The effective tax rate was 51% for the current year as compared to
41% for the prior year. The increase in the effective tax rate is primarily due
to a decrease in the release of valuation allowances from $6.3 million to
$3.0 million in the current year. Valuation allowances over the past two years
have been released as it has become more likely than not that our Company would
realize additional deferred tax assets.

EBITDA was $150.5 million for the year ended December 31, 2000, as compared
to $117.4 million for the year ended December 31, 1999, with EBITDA as a
percentage of revenue increasing from 9.7% to 11.4% for the current year. EBITDA
represents earnings before interest expense, income taxes, depreciation and
amortization of intangible assets relating to acquisitions, merger related and
other nonrecurring charges. Management believes that the presentation of EBITDA
will enhance a reader's understanding of our operating performance and ability
to service debt as it provides a measure of cash generated (subject to the
payment of interest and income taxes) that can be used by us to service our debt
and for other required or discretionary purposes. Net cash that will be
available to us for discretionary purposes represents remaining cash after debt
service and other cash requirements, such as capital expenditures, are deducted
from EBITDA. EBITDA should not be considered as an alternative to (i) operating
income determined in accordance with GAAP or (ii) operating cash flow determined
in accordance with GAAP. Our calculation of EBITDA may not be comparable to
similarly titled measures reported by other companies.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Our Company reported consolidated net income of $23.3 million, or $1.10
diluted earnings per share for the year ended December 31, 1999, on revenues of
$1,213.0 million compared to a consolidated net income of $24.6 million on
revenues of $1,034.5 million for the year ended December 31, 1998. However,
including the $32.3 million deemed dividend resulting from the accounting
treatment of the preferred stock repurchase, the 1998 net loss applicable to
common stockholders was $7.7 million, or $0.38 diluted loss per share. The 1999
result includes nonrecurring gains of $8.7 million from the sale of five
non-strategic offices and a risk management operation, and one-time charges of
approximately $10.2 million, the majority of which were severance costs related
to our reduction in workforce.

Revenues on a consolidated basis were $1,213.0 million, an increase of
$178.5 million or 17.3% for the year ended December 31, 1999, compared to the
year ended December 31, 1998. The overall increase related to the continued
improvement in the commercial real estate markets across the US as reflected in
increased lease transactions, as well as the full contribution from REI, Hillier
Parker and various other 1998 acquisitions. Additionally, we continued to
benefit from our global market presence by leveraging the ability to deliver
comprehensive real estate services into new businesses.

Commissions, fees and other incentives on a consolidated basis were
$559.3 million, an increase of $100.8 million or 22.0% for the year ended
December 31, 1999, compared to the year ended December 31, 1998. The increase in
these costs is attributable to an increase in revenue and includes the impact of
a new commission-based program, which enables sales professionals to earn
additional commission over a certain revenue threshold. The increase is also due
to the full year contribution from REI and Hillier Parker and various other 1998
acquisitions.

Operating, administrative and other on a consolidated basis was
$536.4 million, an increase of $87.6 million or 19.5% for the year ended
December 31, 1999, compared to the year ended December 31, 1998. As a percentage
of revenue, operating, administrative and other increased slightly to 44.2% for
the year ended December 31, 1999, compared to 43.4% for the year ended
December 31, 1998. The increase is due primarily to the acquisitions of REI and
Hillier Parker.

Consolidated interest expense was $39.4 million, an increase of
$8.3 million or 26.8% for the year ended December 31, 1999, as compared to the
year ended December 31, 1998. The increase resulted from the renewal of certain
senior term loans at a higher borrowing rate, as well as higher borrowing levels
during 1999.

Provision for income tax on a consolidated basis was $16.2 million for the
year ended December 31, 1999, as compared to the provision for income tax of
$25.9 million for the year ended December 31, 1998. The decrease is primarily
due to the decrease in income before provision for income tax. In addition, our
Company released $6.3 million valuation allowances as it became evident that it
is more likely than not that we would realize additional deferred tax assets,
resulting in a decrease in the effective tax rate. In early 1998, we repurchased
our outstanding preferred stock which triggered a limitation on the annual
amount of net operating losses (NOLs) we can use to offset future US taxable
income. This limitation does not affect the way taxes are reported for financial
reporting purposes, but it will affect the timing of the actual amount of taxes
paid on an annual basis.

EBITDA was $117.4 million for the year ended December 31, 1999, as compared
to $127.2 million for the year ended December 31, 1998.

SEGMENT OPERATIONS

Our Company provides integrated real estate services through three global
business segments: Transaction Management, Financial Services and Management
Services. The factors for determining the reportable segments were based on the
type of service and client and the way the chief operating decision-makers
organize segments internally for making operating decisions and assessing
performance. Transaction Management consists of sales, leasing and consulting
services in connection with commercial real estate, transaction management and
advisory services with large corporate clients and investment property services
(brokerage services for commercial real estate property marketed for sale to
institutional and private investors). Financial Services consists of commercial
loan origination and servicing through our wholly-owned subsidiary, L.J.
Melody & Company (L.J. Melody), investment management services through our
wholly-owned subsidiary, CB Richard Ellis Investors, L.L.C. (CBRE Investors) and
valuation and appraisal services. Current year results for the Financial
Services segment include a $5.3 million pre-tax gain from the sale of loan
servicing rights. Management Services provides facility, property and
construction management services. In 2000, the Management Services segment
results include a $4.7 million pre-tax gain from the sale of certain assets.
Prior year results include a non-recurring pre-tax gain from the sale of five
non-strategic offices and a risk management operation totaling $8.7 million. In
July 1999, our Company announced that we changed our segment reporting from four
segments to three segments. Prior periods have been restated to conform to the
new segmentation. The following tables summarize our revenue, cost and expenses,
and operating income by operating segment for the years ended December 31, 2000,
1999 and 1998:

YEAR ENDED DECEMBER 31
---------------------------------------------------------------
2000 1999 1998
------------------- ------------------- -------------------
(DOLLARS IN THOUSANDS)

TRANSACTION MANAGEMENT
Revenue:
Leases............................... $510,287 53.7% $426,108 48.4% $352,811 46.2%
Sales................................ 378,486 39.8 383,726 43.5 330,206 43.3
Other consulting and referral
fees(1)............................ 61,479 6.5 71,095 8.1 79,934 10.5
-------- ----- -------- ----- -------- -----
Total revenue........................ 950,252 100.0% 880,929 100.0% 762,951 100.0%
Costs and expenses:
Commissions, fees and other
incentives......................... 542,248 57.1 477,057 54.2 405,393 53.1
Operating, administrative and
other.............................. 303,357 31.9 314,814 35.7 262,604 34.4
Depreciation and amortization........ 21,342 2.2 20,676 2.3 13,722 1.8
-------- ----- -------- ----- -------- -----
Operating income(2).................... $ 83,305 8.8% $ 68,382 7.8% $ 81,232 10.7%
======== ===== ======== ===== ======== =====
EBITDA................................. $104,647 11.0% $ 89,058 10.1% $ 94,954 12.5%
======== ===== ======== ===== ======== =====

YEAR ENDED DECEMBER 31
---------------------------------------------------------------
2000 1999 1998
------------------- ------------------- -------------------
(DOLLARS IN THOUSANDS)

FINANCIAL SERVICES
Revenue:
Appraisal fees....................... $ 72,861 34.0% $ 69,007 38.9% $ 48,090 33.1%
Loan origination and servicing
fees............................... 58,188 27.2 45,938 25.9 39,402 27.1
Investment management fees........... 40,433 18.9 27,323 15.4 32,591 22.4
Other(1)............................. 42,622 19.9 35,059 19.8 25,167 17.4
-------- ----- -------- ----- -------- -----
Total revenue........................ 214,104 100.0% 177,327 100.0% 145,250 100.0%
Costs and expenses:
Commissions, fees and other
incentives......................... 65,058 30.4 59,294 33.5 41,491 28.6
Operating, administrative and
other.............................. 119,333 55.7 100,201 56.5 85,885 59.1
Depreciation and amortization........ 12,001 5.6 10,719 6.0 11,025 7.6
-------- ----- -------- ----- -------- -----
Operating income(2).................... $ 17,712 8.3% $ 7,113 4.0% $ 6,849 4.7%
======== ===== ======== ===== ======== =====
EBITDA................................. $ 29,713 13.9% $ 17,832 10.1% $ 17,874 12.3%
======== ===== ======== ===== ======== =====
MANAGEMENT SERVICES
Revenue:
Property management fees............. $ 83,251 52.3% $ 79,994 51.7% $ 67,300 53.3%
Facilities management fees........... 23,069 14.5 25,597 16.5 17,219 13.6
Other(1)............................. 52,928 33.2 49,192 31.8 41,783 33.1
-------- ----- -------- ----- -------- -----
Total revenue........................ 159,248 100.0% 154,783 100.0% 126,302 100.0%
Costs and expenses:
Commissions, fees and other
incentives......................... 27,333 17.2 22,938 14.8 11,579 9.2
Operating, administrative and
other.............................. 115,791 72.7 121,366 78.4 100,305 79.4
Depreciation and amortization........ 9,856 6.2 9,075 5.9 7,438 5.9
-------- ----- -------- ----- -------- -----
Operating income(2).................... $ 6,268 3.9% $ 1,404 0.9% $ 6,980 5.5%
======== ===== ======== ===== ======== =====
EBITDA................................. $ 16,124 10.1% $ 10,479 6.8% $ 14,418 11.4%
======== ===== ======== ===== ======== =====
MERGER-RELATED AND OTHER NONRECURRING
CHARGES................................ $ -- $ -- $ 16,585
======== ======== ========
TOTAL OPERATING INCOME................... $107,285 $ 76,899 $ 78,476
======== ======== ========
TOTAL EBITDA EXCLUDING MERGER-RELATED AND
OTHER NONRECURRING CHARGES............. $150,484 $117,369 $127,246
======== ======== ========

- ------------------------

(1) 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.

(2) Segment operating income excludes merger-related and other nonrecurring
charges.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

TRANSACTION MANAGEMENT

REVENUE increased by $69.3 million or 7.9% for the year ended December 31,
2000, compared to the year ended December 31, 1999. This increase was primarily
due to higher lease revenues in North America as a result of a greater number of
total transactions executed during the current year, as well

as a larger dollar average per transaction. Europe reported increased lease
revenues primarily due to strong performances in France and the UK, as well as
expanded operations in the Netherlands and Spain. Increased lease revenues in
Asia Pacific are primarily due to a better overall economy in China, as well as
improvements in Australia. Sales revenues decreased slightly from the prior
year, primarily due to higher interest rates and a weak currency in Australia.
COMMISSIONS, FEES AND OTHER INCENTIVES increased by $65.2 million or 13.7% for
the year ended December 31, 2000, compared to the year ended December 31, 1999,
primarily due to an increase in lease revenues. In addition, the overall revenue
growth resulted in higher variable commission expense compared to the prior
year. Our commissions are directly correlated to revenue in the Transaction
Management segment. During 1999, the commission program was amended, providing
an increasing percentage of commissions to producers as the amount of revenue
earned increases. As a producer achieves each revenue target, the percentage of
commission increases on a retroactive basis. This motivates producers to reach
higher revenue targets. During 2000, a greater number of producers generated a
larger proportion of revenue at the higher revenue targets. This contributed to
an increase in commissions as a percentage of revenue from 54.2% to 57.1% for
the current year. OPERATING, ADMINISTRATIVE, AND OTHER decreased by
$11.5 million or 3.6% for the year ended December 31, 2000, compared to the year
ended December 31, 1999. This decrease is mainly related to lower personnel
requirements in North America due to cost containment measures, as well as
higher equity income from unconsolidated subsidiaries during the current year.
This is slightly offset by increased bonus incentives and profit share due to
the more favorable results.

FINANCIAL SERVICES

REVENUE increased by $36.8 million or 20.7% for the year ended December 31,
2000, compared to the year ended December 31, 1999. Investment management fees
grew by 48.0% due to a higher volume of managed assets, as well as increased
incentive fees from several properties in North America and Asia. Loan
origination and servicing fees increased by $12.3 million, of which
$3.7 million is attributable to the acquisitions of Boston Mortgage Capital
Corporation in late 2000 and Eberhardt Company late in 1999. In addition,
excluding any acquisitions, loan production fees increased by $5.9 million or
18% over the prior year, while loan servicing fees increased by $2.7 million or
22.0%. Other revenue increased due to the acquisition of several small
consulting companies late in 1999 and early 2000. COMMISSIONS, FEES AND OTHER
INCENTIVES increased by $5.8 million or 9.7% for the year ended December 31,
2000, compared to the year ended December 31, 1999 due primarily to higher loan
commissions. OPERATING, ADMINISTRATIVE, AND OTHER increased by $19.1 million or
19.1% for the year ended December 31, 2000, compared to the year ended
December 31, 1999, mainly due to increased personnel requirements as a result of
expanded investment management operations in North America and Asia and higher
bonus incentives and profit share attributable to the more favorable current
year results. In addition, earnings from unconsolidated subsidiaries decreased
for the current year as compared to the same period last year.

MANAGEMENT SERVICES

REVENUE increased by $4.5 million or 2.9% for the year ended December 31,
2000, compared to the year ended December 31, 1999, due to higher lease and
sales revenues. In addition, property management fees increased, primarily due
to higher square footage managed in India and Australia. This was slightly
offset by lower facilities management fees due to the loss of a major client at
the beginning of 2000. COMMISSIONS, FEES AND OTHER INCENTIVES increased by
$4.4 million or 19.2% for the year ended December 31, 2000, compared to the year
ended December 31, 1999 attributable mainly to the higher sales and lease
commissions. OPERATING, ADMINISTRATIVE, AND OTHER decreased $5.6 million or 4.6%
for the year ended December 31, 2000, compared to the year ended December 31,
1999. The decline is mainly due to lower personnel requirements due to cost
containment measures and higher equity income in unconsolidated subsidiaries in
North America. As a percentage of revenue, operating expenses decreased from
78.4% to 72.7% for the current year.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

TRANSACTION MANAGEMENT

REVENUE increased by $118.0 million or 15.5% for the year ended
December 31, 1999, compared to the year ended December 31, 1998, mainly due to
the continued improvement of the real estate market, mainly in brokerage leasing
services and the full year contribution of REI and Hillier Parker and the
various other 1998 acquisitions. COMMISSIONS, FEES AND OTHER INCENTIVES
increased by $71.7 million or 17.7% for the year ended December 31, 1999,
compared to the year ended December 31, 1998, primarily due to the increase in
revenue. This also includes the impact of a new commission-based program which
enables sales professionals to earn additional commission over a certain revenue
threshold, as well as the full year contribution from REI and Hillier Parker and
the various other 1998 acquisitions. OPERATING, ADMINISTRATIVE, AND OTHER
increased by $52.2 million or 19.9% for the year ended December 31, 1999,
compared to the year ended December 31, 1998, primarily due to the full year
inclusion of REI and Hillier Parker, as well as the various other 1998
acquisitions. DEPRECIATION AND AMORTIZATION increased by $7.0 million or 50.7%
for the year ended December 31, 1999, as compared to the year ended
December 31, 1998, primarily as a result of additional investments in computer
hardware and software to support the increase in new business.

FINANCIAL SERVICES

REVENUE increased by $32.1 million or 22.1% for the year ended December 31,
1999, compared to the year ended December 31, 1998. The increase in revenue is
primarily due the full year contribution of REI and Hillier Parker and the
various other 1998 acquisitions, resulting in increased appraisal and valuation
fees. COMMISSIONS, FEES AND OTHER INCENTIVES increased by $17.8 million or 42.9%
for the year ended December 31, 1999, compared to the year ended December 31,
1998. The increase is primarily a result of the revenue increase. OPERATING,
ADMINISTRATIVE, AND OTHER increased by $14.3 million or 16.7% for the year ended
December 31, 1999, compared to the year ended December 31, 1998, mainly as a
result of the integration of REI and Hillier Parker and the various other 1998
acquisitions.

MANAGEMENT SERVICES

REVENUE increased by $28.5 million or 22.5% for the year ended December 31,
1999, compared to the year ended December 31, 1998, primarily due to growth in
the facilities management businesses, as well as the full year contribution of
REI and Hillier Parker and the various other 1998 acquisitions. COMMISSIONS,
FEES AND OTHER INCENTIVES increased by $11.4 million or 98.1% for the year ended
December 31, 1999, compared to the year ended December 31, 1998 due to the
higher revenues as a result of the REI and Hillier Parker acquisitions and the
various other 1998 acquisitions. OPERATING, ADMINISTRATIVE, AND OTHER increased
$21.1 million or 21.0% for the year ended December 31, 1999, compared to the
year ended December 31, 1998, primarily related to the acquisitions of REI and
Hillier Parker and the investment in infrastructure to expand the business.
DEPRECIATION AND AMORTIZATION increased by $1.6 million or 22.0% for the year
ended December 31, 1999, as compared to the year ended December 31, 1998,
primarily related to the acquisitions of REI and Hillier Parker and the various
other 1998 acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

We finance our operations and non-acquisition related capital expenditures
primarily with internally generated funds and borrowings under a revolving
credit facility. The revolving credit facility contains numerous restrictive
covenants that, among other things, limit our ability to incur or repay other
indebtedness, make advances or loans to subsidiaries and other entities, make
capital expenditures, incur liens, enter into mergers or effect other
fundamental corporate transactions, sell our assets, or declare dividends. In
addition, we are required to meet certain financial ratios relating to our

adjusted net worth, level of indebtedness, fixed charges and interest coverage.
In October 1999, we executed an amendment to our revolving credit facility,
eliminating the mandatory reduction on December 31, 1999, and revising some of
the restrictive covenants. The new amendment is also subject to mandatory
reductions of the facility by $80.0 million and $70.0 million on December 31,
2000 and 2001, respectively. This reduced the facility from $350.0 million to
$270.0 million at December 31, 2000. The amount outstanding under this facility
was $110.0 million at December 31, 2000 and is included in the accompanying
consolidated balance sheets. Our Company paid down the revolving credit facility
by $50.0 million in 2000 and we plan to pay down additional debt in 2001. This
revolving credit facility matures in 2003.

Our Company believes that we can satisfy our non-acquisition obligations as
well as working capital requirements from internally generated cash flow,
borrowings under the amended revolving credit facility or any replacement credit
facilities. Material future acquisitions, if any, that require cash will require
new sources of capital such as an expansion of the amended revolving credit
facility and raising money by issuing additional debt or equity. We anticipate
that our existing sources of liquidity, including cash flow from operations,
will be sufficient to meet our anticipated non-acquisition cash requirements for
the foreseeable future and in any event for at least the next twelve months.

In November 2000, Blum CB Corporation (Blum CB) made a proposal to take our
Company private in a transaction in which the public stockholders would have
received $15.50 per share in cash. Our Company's Board of Directors appointed a
special committee consisting of directors Stanton D. Anderson and Paul C. Leach,
to consider Blum CB's proposal as well as other alternatives. After considering
our alternatives and negotiating the improved $16.00 per share proposal, the
special committee recommended the transaction. Based upon that recommendation,
our Board of Directors also approved the transaction.

In order to finance the transaction, Blum CB has received commitment letters
from Credit Suisse First Boston (CSFB) and DLJ Investment Funding, Inc. for
$400.0 million of senior debt and $75.0 million of mezzanine debt. CSFB has also
committed to provide a $100.0 million working capital facility. In addition,
affiliates of Blum Capital Partners have committed up to $40.0 million of common
stock that will be rolled over in the transaction. An additional $85.0 million
of equity for the transaction will be provided by the rollover of Company
equity, most of which is owned by the stockholders of Blum CB Corp. other than
Blum Capital Partners.

The acquisition, which is expected to close late in the second quarter,
remains subject to certain conditions, including the receipt of Blum CB's debt
financing, the approval of the merger by the holders of two-thirds of the
outstanding shares of our Company not owned by the buying group, the expiration
or termination of waiting periods under applicable antitrust laws and a
successful tender offer for at least 51% of our outstanding 8 7/8% Senior
Subordinated Notes. Our Company will pay a termination fee of $7.5 million and
reimburse up to $3.0 million of the buying group's expenses if we wish to accept
a superior acquisition proposal. No workforce reductions are contemplated in
connection with the acquisition.

Operating cashflow increased by $10.1 million over the year ended 1999
primarily due to higher net income adjusted for non-cash items. Historically,
our net income and operating cashflow are substantially lower in the first three
quarters of the year as compared to the fourth quarter. This seasonality is due
to a focus at year-end on completing sales and lease transactions and is
consistent within the real estate industry. Fourth quarter operating cashflow
totaled $86.6 million, an increase of $15.4 million over prior year quarter. In
addition, receivables increased at a lower rate, due to a greater emphasis on
receivable collections.

We utilized $35.7 million in investing activities, an increase of
$9.0 million over the prior year. This increase is primarily due to our
Company's $21.0 million investment in several technology companies as part of
our overall e-business strategy. Our e-investment strategy is to improve
internal business

operations with resulting cost savings through paperwork reduction, to improve
service delivery to clients and to create value in growth business that will
flow to us. In addition, as of December 31, 2000, we had committed an additional
$37.7 million to fund future co-investments. Our participation in real estate
transactions through co-investment activity could increase fluctuations in our
earnings and cash flow.

During the current year, we received $17.5 million in proceeds primarily
from the sale of certain assets within the Management Services segment, the sale
of loan servicing rights and the receipt of proceeds in 2000 from the 1999 sale
of a risk management operation. This was slightly lower than the 1999 proceeds
received of $19.4 million. This included $7.4 million received from the sale of
inventoried property, plus $12.1 million primarily received from the sale of the
headquarters building in downtown Los Angeles, California and a small office
building in Phoenix, Arizona.

In addition, capital expenditures decreased from $35.1 million for the year
ended December 31, 1999 to $26.9 million in the current year. Capital
expenditures for 1998 totaled $29.7 million. Expenditures in 2000 mainly related
to the purchase of computer hardware and software. Higher purchases in 1999 as
compared to 2000 and 1998 related to our efforts to prepare for year 2000
computer hardware and software systems issues. We expect to have capital
expenditures ranging from $20-25 million in 2001.

Net cash used in financing activities was $53.5 million for the year ended
December 31, 2000, compared to $37.7 million for the year ended December 31,
1999, and is mainly attributable to our repayment of debt. From time to time, we
purchase stock on the open market to fulfill our obligations under stock option,
deferred compensation and other similar stock-based compensation plans. For the
year ended December 31, 2000, we repurchased 185,800 shares of common stock for
$2.0 million in order to minimize the dilutive effect of our obligation to issue
stock under the Deferred Compensation Plan. During 1999, we repurchased a total
of 397,450 shares of common stock for $5.0 million to minimize the dilution from
the grant of options and stock purchase rights. The 1999 stock repurchase
program was completed on January 5, 2000.

RECENT ACQUISITIONS

During 2000, our Company acquired five companies with an aggregate purchase
price of $3.4 million in cash, $0.7 million in notes, plus additional payments
over the next five years based on acquisition earnout agreements. These payments
will supplement the purchase price and be recorded as additional goodwill. The
most significant acquisition in 2000 was the purchase of Boston Mortgage Capital
Corporation, Boston Mortgage, through L.J. Melody, for $2.1 million, plus
supplemental payments based on an acquisition earnout agreement. Boston Mortgage
provides further mortgage banking penetration into the northeast. It services
approximately $1.8 billion in loans covering roughly 175 commercial properties
throughout New England, New York and New Jersey.

During 1999, we acquired four companies with an aggregate purchase price of
approximately $13.8 million. The two significant acquisitions were Eberhardt
Company which was acquired in September 1999 through L.J. Melody for
approximately $7.0 million and Profi Nordic which was acquired in February 1999
through CBRE Profi Acquisition Corp., formerly Koll Tender III, for
approximately $5.5 million.

In 1998, we made several large acquisitions. In April 1998, our Company
purchased all of the outstanding shares of REI, an international commercial real
estate services firm operating under the name Richard Ellis in major commercial
real estate markets worldwide, excluding the UK. The acquisition was accounted
for as a purchase. The purchase price has largely been allocated to goodwill,
which is amortized on a straight line basis over an estimated useful life of
30 years. The purchase price for REI was approximately $104.8 million of which
approximately $53.3 million was paid in cash and notes and approximately
$51.5 million was paid in shares of our common stock. In addition, we

assumed approximately $14.4 million of long-term debt and minority interest. We
incurred a one-time charge of $3.8 million associated with the integration of
REI's operations and systems into those of our Company.

We also acquired the business of Hillier Parker May and Rowden, or Hillier
Parker, in July 1998. This was a commercial property services partnership
operating in the UK. The acquisition was accounted for as a purchase. The
purchase price for Hillier Parker included approximately $63.6 million in cash
and $7.1 million in shares of our common stock. In addition, we assumed a
contingent payout plan for key Hillier Parker employees with a potential payout
over three years of approximately $13.9 million and assumed various annuity
obligations of approximately $15.0 million. The purchase price has largely been
allocated to goodwill which is amortized on a straight line basis over its
estimated useful life of 30 years.

In September of 1998, our Company purchased the approximately 73.0% interest
that we did not already own in CB Commercial Real Estate Group of Canada, Inc.
We acquired the remaining interest for approximately $14.3 million in cash. The
acquisition was accounted for as a purchase. The purchase price has been largely
allocated to intangibles and goodwill which are amortized on a straight line
basis over their estimated useful lives ranging up to 30 years.

In October 1998, we purchased the remaining ownership interests that we did
not already own in the Richard Ellis Australia and New Zealand businesses. The
costs for the remaining interest was $20.0 million in cash. Virtually all of the
revenue from these locations is derived from brokerage and appraisal services.
The acquisition was accounted for as a purchase. The purchase price has largely
been allocated to intangibles and goodwill which are amortized on a straight
line basis over their estimated useful lives ranging up to 30 years.

Our Company also made various smaller acquisitions throughout 1998.

LITIGATION

In December 1996, GMH Associates, Inc. (GMH) filed a lawsuit against
Prudential Realty Group (Prudential) and our Company in Superior Court of
Pennsylvania, Franklin County, alleging various contractual and tort claims
against Prudential, the seller of a large office complex, and our Company, its
agent in the sale, contending that Prudential breached its agreement to sell the
property to GMH, breached its duty to negotiate in good faith, conspired with
our Company to conceal from GMH that Prudential was negotiating to sell the
property to another purchaser and that Prudential and our Company misrepresented
that there were no other negotiations for the sale of the property. Following a
non-jury trial, the court rendered a decision in favor of GMH and against
Prudential and us, awarding GMH $20.3 million in compensatory damages, against
Prudential and us jointly and severally, and $10.0 million in punitive damages,
allocating the punitive damage award $7.0 million as against Prudential and
$3.0 million as against us. Following the denial of motions by Prudential and us
for a new trial, a judgment was entered on December 3, 1998. Prudential and our
Company filed an appeal of the judgment. On March 3, 2000, the appellate court
in Pennsylvania reversed all of the trial courts' decisions finding that
liability was not supported on any theory claimed by GMH and directed that a
judgement be entered in favor of the defendants including our Company. The
plaintiff filed an appeal with the Pennsylvania Supreme Court which was denied.
The plaintiff has exhausted all appeal possibilities and judgment is expected to
be entered shortly in favor of all defendants.

filed an appeal of the verdict and requested a reduction of damages. On
March 9, 1999 the appellate court ruled in our Company's favor, reversed the
trial court decision and ordered a new trial. On February 16, 2000 the Supreme
Court of New Jersey reversed the decision of the appellate court, concluded that
the general damage award in the trial court should be sustained and returned the
case to the appellate court for a determination as to whether a new trial should
be ordered on the issue of punitive damages. In April 2000, we settled the
compensatory damages claim, including interest, and all claims to date with
respect to attorneys fees by paying to the plaintiff the sum of $2.75 million
leaving only the punitive damage claim for resolution. The plaintiff also
agreed, with very limited exceptions, that no matter what the outcome of the
punitive damage claim our Company would not be responsible for more than 50% of
the plaintiff's future attorney fees. In February 2001, our Company settled all
remaining claims for the sum of $2.0 million and received a comprehensive
release.

EURO CONVERSION DISCLOSURE

A majority of the European Union member countries converted to a common
currency, the "Euro," on January 1, 1999. The existing legacy currencies of the
participating countries will continue to be accepted until January 1, 2002. We
do not expect the introduction of the Euro to have a significant impact on our
market or the manner in which we conduct business, and believe the related
impact on our financial results will not be material. Approximately 5% of our
2000 business was transacted in the participating member countries. We are
currently using both the Euro and legacy currencies to conduct business in these
member countries.

NET OPERATING LOSSES

Our Company had US federal income tax NOLs of approximately $16.3 million at
December 31, 2000, corresponding to $5.7 million of our $60.3 million in net
deferred tax assets before valuation allowances.

Our ability to utilize NOLs was limited in 1999 and 2000 and will be in
subsequent years as a result of our 1996 public offering, the 1997 Koll
acquisition and the 1998 repurchase of preferred stock which cumulatively caused
a more than 50.0% change of ownership within a three year period. As a result of
the limitation, our ability to utilize the existing NOL is limited to
$26.0 million on an annual basis. We anticipate that the remaining
$16.3 million of NOLs will be utilized in 2001.

NEW ACCOUNTING PRONOUNCEMENTS

In September 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 140, ACCOUNTING FOR TRANSFERS
AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. SFAS 140
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral established by SFAS 125. In addition, this
statement is effective for recognition and reclassification of collateral and
for disclosures relating to securitization transactions and collateral for
fiscal years ending after December 15, 2000. Our Company does not perform these
types of transactions. This statement is effective for all transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. We are evaluating the impact of SFAS 140 on our results of
operation and financial position for these types of transactions.

In June 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 138, ACCOUNTING FOR
CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN

HEDGING ACTIVITIES--AN AMENDMENT OF FASB STATEMENT NO. 133. SFAS No. 138 amends
the accounting and reporting for certain derivative instruments and hedging
activities and is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. SFAS 138 is not expected to have a material
impact on our earnings or other components of comprehensive income.

In June 1999, the FASB issued SFAS No. 137, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES--DEFERRAL OF THE EFFECTIVE DATE OF FASB
STATEMENT NO. 133, which deferred the effective date of SFAS No. 133 for one
year. SFAS No. 137 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. SFAS No. 137 is not anticipated to have a
material impact on earnings or other components of comprehensive income as we
had no derivatives outstanding at December 31, 2000.

In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting. SFAS No. 133 is not expected to
have a material impact on earnings or other components of comprehensive income
as our Company had no derivatives outstanding at December 31, 2000.

SAFE HARBOR STATEMENT REGARDING OUTLOOK AND OTHER FORWARD-LOOKING DATA

Portions of this Form 10-K, including Management's Discussion and Analysis,
contain forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results and performance in future
periods to be materially different from any future results or performance
suggested in forward-looking statements in this Form 10-K. Any forward-looking
statements speak only as of the date of this report and we expressly disclaim
any obligation to update or revise any forward-looking statements found herein
to reflect any changes in our expectations or results or any change in events.
Factors that could cause results to differ materially include, but are not
limited to: commercial real estate vacancy levels; employment conditions and
their effect on vacancy rates; property values; rental rates; any general
economic recession domestically or internationally; and general conditions of
financial liquidity for real estate transactions.

REPORT OF MANAGEMENT

Our management is responsible for the integrity of the financial data
reported by us and our subsidiaries. Fulfilling this responsibility requires the
preparation and presentation of consolidated financial statements in accordance
with generally accepted accounting principles in the US. Management uses
internal accounting controls, corporate-wide policies and procedures and
judgment so that these statements reflect fairly the consolidated financial
position, results of operations and cash flows of our Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk consists of foreign currency exchange rate
fluctuations related to international operations and changes in interest rates
on debt obligations.

Approximately 22% of our business is transacted in local currencies of
foreign countries. We attempt to manage our exposure primarily by balancing
monetary assets and liabilities, and maintaining

cash positions only at levels necessary for operating purposes. While our
international results of operations as measured in dollars are subject to
foreign exchange rate fluctuations, the related risk is not considered material.
We routinely monitor our transaction exposure to currency rate changes, and
enter into currency forward and option contracts to limit our exposure, as
appropriate. Gains and losses on contracts are deferred until the transaction
being hedged is finalized. In 2000, we had no outstanding contracts. We do not
engage in any speculative activities.

We manage our interest expense by using a combination of fixed and variable
rate debt. We utilize sensitivity analyses to assess the potential effect of our
variable rate debt. If interest rates were to increase by 90 basis points,
approximately 10% of our weighted-average variable rate at year-end, the net
impact would be a decrease of $1.1 million on annual pre-tax income and cash
flow. Our fixed and variable long-term debt at December 31, 2000 consisted of
the following:

STERLING EURO OVERNIGHT
LIBOR LIBOR INDEX AVERAGE
YEAR OF MATURITY FIXED RATE PLUS 2.0% MINUS 1.5% PLUS 1.75% TOTAL
- ---------------- ---------- --------- ---------- -------------- --------

2001.................................. $ 3,647 $ -- $ -- $6,946 $ 10,593
2002.................................. 1,794 -- 2,742 -- 4,536
2003.................................. 512 110,000 -- -- 110,512
2004.................................. 128 -- -- -- 128
2005.................................. 20 -- -- -- 20
Thereafter(1)......................... 188,375 -- -- -- 188,375
-------- -------- ------ ------ --------
Total............................... $194,476 $110,000 $2,742 $6,946 $314,164
======== ======== ====== ====== ========
Weighted Average Interest Rate........ 8.9% 8.8% 4.8% 6.9% 8.8%
======== ======== ====== ====== ========

- ------------------------

(1) Includes Senior Subordinated Note.

Based on dealer's quotes, the estimated fair value of our $173.3 million
Senior Subordinated Note is $155.8 million. Estimated fair values for other
liabilities are not presented because we believe that they are not materially
different from book value, primarily because the majority of our remaining debt
is based on variable rates that approximate terms that we could obtain at
December 31, 2000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

PAGE
--------

Report of Independent Public Accountants.................... 34

Consolidated Balance Sheets at December 31, 2000 and 1999... 35

Consolidated Statements of Operations for the Years Ended
December 31, 2000, 1999 and 1998.......................... 36

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998.......................... 37

Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 2000, 1999 and 1998.............. 38

Consolidated Statements of Comprehensive Income for the
Years Ended December 31, 2000, 1999, and 1998............. 39

Notes to Consolidated Financial Statements.................. 40

Quarterly Results of Operations and Other Financial Data
(Unaudited)............................................... 66

FINANCIAL STATEMENT SCHEDULE:

Schedule II--Valuation and Qualifying Accounts.............. 67

All other schedules are omitted because either they are not applicable, not
required or the information required is included in the Consolidated Financial
Statements, including the notes thereto.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of CB Richard Ellis Services, Inc.:

We have audited the accompanying consolidated balance sheets of CB Richard
Ellis Services, Inc. (a Delaware corporation) as of December 31, 2000, and 1999,
and the related consolidated statements of operations, stockholders' equity,
comprehensive income and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits 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 audits provide 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 CB Richard Ellis
Services, Inc. as of December 31, 2000, and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not a required part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Los Angeles, California
February 24, 2001

CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

DECEMBER 31
-------------------
2000 1999
-------- --------

ASSETS
Current Assets:
Cash and cash equivalents................................. $ 20,854 $ 27,844
Receivables, less allowance for doubtful accounts of
$12,631 and $15,560 at December 31, 2000 and 1999....... 176,908 168,276
Prepaid expenses.......................................... 8,017 8,370
Deferred taxes, net....................................... 11,139 11,758
Other current assets...................................... 6,127 10,596
-------- --------
Total current assets.................................... 223,045 226,844
Property and equipment, net................................. 75,992 70,149
Goodwill, net of accumulated amortization of $56,417 and
$41,008 at December 31, 2000 and 1999..................... 423,975 445,010
Other intangible assets, net of accumulated amortization of
$289,038 and $279,156 at December 31, 2000 and 1999....... 46,432 57,524
Cash surrender value of insurance policies, deferred
compensation plan......................................... 53,203 20,442
Investment in and advances to unconsolidated subsidiaries... 41,325 38,514
Deferred taxes, net......................................... 32,327 28,190
Prepaid pension costs....................................... 25,235 26,323
Other assets................................................ 41,571 16,487
-------- --------
Total assets............................................ $963,105 $929,483
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses..................... $ 83,673 $ 81,068
Compensation and employee benefits........................ 128,149 119,126
Reserve for bonus and profit sharing...................... 59,530 46,625
Income taxes payable...................................... 28,260 18,429
Current maturities of long-term debt...................... 10,593 6,765
-------- --------
Total current liabilities............................... 310,205 272,013
Long-term debt:
Senior subordinated notes, less unamortized discount of
$1,664 and $1,892 at December 31, 2000 and 1999......... 173,336 173,108
Revolving credit facility................................. 110,000 160,000
Other long-term debt...................................... 20,235 24,764
-------- --------
Total long-term debt.................................... 303,571 357,872
Deferred compensation liability............................. 80,503 47,202
Other liabilities........................................... 29,739 38,787
-------- --------
Total liabilities....................................... 724,018 715,874
Minority interest........................................... 3,748 3,872
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 8,000,000 shares
authorized; no shares issued or outstanding............. -- --
Common stock, $0.01 par value; 100,000,000 shares
authorized; 20,605,023 and 20,435,692 shares issued and
outstanding at December 31, 2000 and 1999............... 217 213
Additional paid-in capital................................ 364,168 355,893
Notes receivable from sale of stock....................... (11,847) (8,087)
Accumulated deficit....................................... (89,097) (122,485)
Accumulated other comprehensive loss...................... (12,258) (1,928)
Treasury stock at cost, 1,072,155 and 885,100 shares at
December 31, 2000 and 1999.............................. (15,844) (13,869)
-------- --------
Total stockholders' equity.............................. 235,339 209,737
-------- --------
Total liabilities and stockholders' equity.............. $963,105 $929,483
======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

CB RICHARD ELLIS SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

YEAR ENDED DECEMBER 31
------------------------------------
2000 1999 1998
---------- ---------- ----------

Revenue:
Leases................................................. $ 539,419 $ 448,091 $ 371,300
Sales.................................................. 389,745 394,718 357,718
Property and facilities management fees................ 110,654 110,111 86,379
Consulting and referral fees........................... 78,714 73,569 72,586
Appraisal fees......................................... 75,055 71,050 48,082
Loan origination and servicing fees.................... 58,190 45,940 39,402
Investment management fees............................. 42,475 28,929 33,145
Other.................................................. 29,352 40,631 25,891
---------- ---------- ----------
Total revenue........................................ 1,323,604 1,213,039 1,034,503
Costs and Expenses:
Commissions, fees and other incentives................. 634,639 559,289 458,463
Operating, administrative and other.................... 538,481 536,381 448,794
Merger-related and other nonrecurring charges.......... -- -- 16,585
Depreciation and amortization.......................... 43,199 40,470 32,185
---------- ---------- ----------
Operating income......................................... 107,285 76,899 78,476
Interest income.......................................... 2,554 1,930 3,054
Interest expense......................................... 41,700 39,368 31,047
---------- ---------- ----------
Income before provision for income tax................... 68,139 39,461 50,483
Provision for income tax................................. 34,751 16,179 25,926
---------- ---------- ----------
Net income............................................... $ 33,388 $ 23,282 $ 24,557
========== ========== ==========
Deemed dividend on preferred stock....................... $ -- $ -- $ 32,273
========== ========== ==========
Net income (loss) applicable to common stockholders...... $ 33,388 $ 23,282 $ (7,716)
========== ========== ==========
Basic earnings (loss) per share.......................... $ 1.60 $ 1.11 $ (0.38)
========== ========== ==========
Weighted average shares outstanding for basic earnings
(loss) per share....................................... 20,931,111 20,998,097 20,136,117
========== ========== ==========
Diluted earnings (loss) per share........................ $ 1.58 $ 1.10 $ (0.38)
========== ========== ==========
Weighted average shares outstanding for diluted earnings
(loss) per share....................................... 21,097,240 21,072,436 20,136,117
========== ========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.

CB RICHARD ELLIS SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

YEAR ENDED DECEMBER 31
---------------------------------
2000 1999 1998
--------- --------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 33,388 $ 23,282 $ 24,557
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization excluding deferred
financing costs....................................... 43,199 40,470 32,185
Amortization of deferred financing costs................ 2,069 1,696 1,184
Deferred compensation deferrals......................... 43,557 25,932 14,738
(Gain) loss on sale of properties, businesses and
servicing rights...................................... (10,184) (9,865) 2,058
Equity interest in earnings of unconsolidated
subsidiaries.......................................... (7,112) (7,528) (3,443)
Minority interest....................................... 607 2,016 730
Provision for litigation, doubtful accounts and other... 5,125 4,724 5,185
Deferred income tax (benefit) provision................. (4,083) (12,688) 14,394
Increase in receivables................................... (12,545) (37,640) (24,846)
Increase in cash surrender value of insurance policies,
deferred compensation plan.............................. (32,761) (20,442) --
Increase in compensation and employee benefits payable and
reserve for bonus and profit share...................... 24,418 37,339 7,782
(Decrease) increase in accounts payable and accrued
expenses................................................ (3,201) 1,346 2,615
Increase in income taxes payable.......................... 11,074 16,696 8,913
(Decrease) increase in other liabilities.................. (9,553) 7,583 (9,536)
Net change in other operating assets and liabilities...... 114 1,090 98
--------- --------- ---------
Net cash provided by operating activities............... 84,112 74,011 76,614
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (26,921) (35,130) (29,715)
Proceeds from sale of inventoried property................ -- 7,355 --
Proceeds from sale of properties, businesses and servicing
rights.................................................. 17,495 12,072 --
Purchase of investments................................... (23,413) (1,019) --
Increase in intangible assets and goodwill................ (3,119) (5,331) (14,595)
Acquisition of businesses including net assets acquired,
intangibles and goodwill................................ (3,442) (8,931) (189,895)
Other investing activities, net........................... 3,678 4,217 10,685
--------- --------- ---------
Net cash used in investing activities................... (35,722) (26,767) (223,520)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility................... 179,000 165,000 315,000
Repayment of revolving credit facility.................... (229,000) (172,000) (268,000)
Proceeds from senior subordinated term loan............... -- -- 172,788
Repayment of inventoried property loan.................... -- (7,093) (377)
Proceeds from (repayment of) senior notes and other loans,
net..................................................... 588 (12,402) (14,324)
Payment of dividends payable.............................. -- -- (5,000)
Repurchase of preferred stock............................. -- -- (72,331)
Repurchase of common stock................................ (2,018) (4,986) (8,883)
Repayment of capital leases............................... (1,373) (1,340) (1,655)
Minority interest payments................................ (2,180) (3,801) (2,902)
Other financing activities, net........................... 1,460 (1,099) 5,122
--------- --------- ---------
Net cash (used in) provided by financing activities..... (53,523) (37,721) 119,438
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents........ (5,133) 9,523 (27,468)
Cash and cash equivalents, at beginning of period........... 27,844 19,551 47,181
Effect of exchange rate changes on cash..................... (1,857) (1,230) (162)
--------- --------- ---------
Cash and cash equivalents, at end of period................. $ 20,854 $ 27,844 $ 19,551
========= ========= =========
SUPPLEMENTAL DATA:
Cash paid during the period for:
Interest (none capitalized)............................... $ 38,352 $ 36,997 $ 27,528
Income taxes, net......................................... $ 27,607 $ 12,689 $ 3,395

The accompanying notes are an integral part of these consolidated financial
statements.

CB RICHARD ELLIS SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)

NOTES ACCUMULATED
ADDITIONAL RECEIVABLE OTHER
PREFERRED COMMON PAID-IN FROM SALE ACCUMULATED COMPREHENSIVE TREASURY
STOCK STOCK CAPITAL OF STOCK DEFICIT INCOME (LOSS) STOCK TOTAL
--------- -------- ---------- ---------- ----------- ------------- -------- --------

Balance, December 31, 1997... $ 40 $188 $333,981 $ (5,956) $(170,324) $ (158) $ -- $157,771
Net income................... -- -- -- -- 24,557 -- -- 24,557
Common stock issued for
incentive plans............ -- 1 962 (962) -- -- -- 1
Contributions, deferred
compensation plan.......... -- -- 5,361 -- -- -- -- 5,361
Collection on, net of
cancellation of notes
receivable from employee
stock incentive plan....... -- -- (646) 1,264 -- -- -- 618
Common stock issued for REI
and HP acquisitions........ -- 15 58,486 -- -- -- -- 58,501
Shares issued for Capital
Accumulation Plan.......... -- -- 2,889 -- -- -- -- 2,889
Common stock options
exercised.................. -- 7 8,835 -- -- -- -- 8,842
Amortization of cheap
stock...................... -- -- 312 -- -- -- -- 312
Tax deduction from issuance
of stock................... -- -- 11,907 -- -- -- -- 11,907
Foreign currency translation
gain....................... -- -- -- -- -- 1,297 -- 1,297
Purchase of preferred
stock...................... (40) -- (72,291) -- -- -- -- (72,331)
Purchase of common stock..... -- -- -- -- -- -- (8,883) (8,883)
---- ---- -------- -------- --------- -------- -------- --------
Balance, December 31, 1998... -- 211 349,796 (5,654) (145,767) 1,139 (8,883) 190,842
Net income................... -- -- -- -- 23,282 -- -- 23,282
Common stock issued for
incentive plans............ -- 2 2,534 (2,534) -- -- -- 2
Contributions, deferred
compensation plan.......... -- -- 2,094 -- -- -- -- 2,094
Collection on, net of
cancellation of notes
receivable from employee
stock incentive plan....... -- -- -- 101 -- -- -- 101
Common stock options
exercised.................. -- -- 449 -- -- -- -- 449
Amortization of cheap
stock...................... -- -- 312 -- -- -- -- 312
Tax deduction from issuance
of stock................... -- -- 708 -- -- -- -- 708
Foreign currency translation
loss....................... -- -- -- -- -- (3,067) -- (3,067)
Purchase of common stock..... -- -- -- -- -- -- (4,986) (4,986)
---- ---- -------- -------- --------- -------- -------- --------
Balance, December 31, 1999... -- 213 355,893 (8,087) (122,485) (1,928) (13,869) 209,737
Net income................... -- -- -- -- 33,388 -- -- 33,388
Common stock issued for
incentive plans............ -- 4 4,310 (4,310) -- -- -- 4
Contributions, deferred
compensation plan.......... -- -- 2,729 -- -- -- -- 2,729
Deferred compensation plan
co-match................... -- -- 907 -- -- -- -- 907
Collection on, net of
cancellation of notes
receivable from employee
stock incentive plan....... -- -- (550) 550 -- -- -- --
Amortization of cheap and
restricted stock........... -- -- 342 -- -- -- -- 342
Tax deduction from issuance
of stock................... -- -- 580 -- -- -- -- 580
Foreign currency translation
loss....................... -- -- -- -- -- (10,330) -- (10,330)
Purchase of common stock..... -- -- (43) -- -- -- (1,975) (2,018)
---- ---- -------- -------- --------- -------- -------- --------
Balance, December 31, 2000... $ -- $217 $364,168 $(11,847) $ (89,097) $(12,258) $(15,844) $235,339
==== ==== ======== ======== ========= ======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

CB RICHARD ELLIS SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)

YEAR ENDED DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------

Net income.................................................. $ 33,388 $23,282 $24,557
Other comprehensive (loss) income, net of tax............... (10,330) (3,067) 1,297
-------- ------- -------
Comprehensive income........................................ $ 23,058 $20,215 $25,854
======== ======= =======

The accompanying notes are an integral part of these consolidated financial
statements

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
CB Richard Ellis Services, Inc. (the Company) and majority owned and controlled
subsidiaries. The equity attributable to minority shareholders' interests in
subsidiaries is shown separately in the balance sheets. All significant
intercompany accounts and transactions have been eliminated in consolidation.

The Company's investments in unconsolidated subsidiaries in which it has the
ability to exercise significant influence over operating and financial policies,
but does not control, are accounted for by using the equity method. Accordingly,
the Company's share of the earnings of these equity basis companies is included
in consolidated net income. All other investments held on a long-term basis are
valued at cost less any permanent impairment in value.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and highly liquid investments with
an original maturity of less than three months. The Company controls certain
cash and cash equivalents as agent for its investment and property management
clients. These amounts are not included in the consolidated balance sheets.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price of an acquisition over
the Company's interest in the fair value of the net identifiable assets
acquired. Goodwill is carried at cost less accumulated amortization and
amortized on a straight-line basis. Net goodwill at December 31, 2000 consisted
of $405.7 million related to the 1995 through 2000 acquisitions which is being
amortized over an estimated useful life of 30 years and $18.3 million related to
the Company's original acquisition in 1989 which is being amortized over an
estimated useful life of 40 years.

Net other intangible assets at December 31, 2000 included $6.0 million of
deferred financing costs and $40.4 million of intangibles stemming from the 1995
through 2000 acquisitions. These are amortized on a straight-line basis over the
estimated useful lives of the assets up to 12 years.

The Company periodically evaluates the recoverability of the carrying amount
of goodwill and other intangible assets. In this assessment, the Company
considers macro market conditions and trends in the Company's relative market
position, its capital structure, lender relationships and the estimated
undiscounted future cash flows associated with these assets. If any of the
significant assumptions inherent in this assessment materially change due to
market, economic and/or other factors, the recoverability is assessed based on
the revised assumptions and resultant undiscounted cash flows. If the analysis
indicates impairment, it would be recorded in the period the changes occur based
on the fair value of the goodwill and other intangible assets.

PROPERTY, PLANT AND EQUIPMENT

The Company capitalizes expenditures that materially increase the life of
the related assets and charges the cost of maintenance and repairs to expense.
Upon sale or retirement, the capitalized costs and related accumulated
depreciation or amortization are eliminated from the respective accounts, and
the resulting gain or loss is included in operating income.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Depreciation is computed primarily using the straight line method over
estimated useful lives ranging from 3 to 10 years. Leasehold improvements are
amortized over the term of the respective leases, excluding options to renew.
Equipment under capital leases is depreciated over the related term of the
leases.

INCOME RECOGNITION

Real estate commissions on sales are recorded as income upon close of escrow
or upon transfer of title. Real estate commissions on leases are generally
recorded as income upon the earlier of the date of occupancy or cash receipt
unless significant future contingencies exist. Investment management fees and
management fees are recognized when earned under the provisions of the related
agreements. Appraisal fees are recorded after services have been rendered. Loan
origination fees are recognized at the time the loan closes and the Company has
no significant remaining obligations for performance in connection with the
transaction, while loan servicing fees are recorded as principal and interest
payments are collected from mortgagors. Other commissions and fees are recorded
as income at the time the related services have been performed unless
significant future contingencies exist.

FOREIGN CURRENCIES

The financial statements of subsidiaries located outside the United States
(US) are generally measured using the local currency as the functional currency.
The assets and liabilities of these subsidiaries are translated at the rates of
exchange at the balance sheet date and income and expenses are translated at the
average monthly rate. The currency effects of translating the financial
statements of these non-US operations of the Company are included in the
"Accumulated other comprehensive income (loss)" component of stockholders'
equity. Gains and losses resulting from foreign currency transactions are
included in the results of operations. The aggregate transaction gains and
losses included in the consolidated statements of operations are a $3.1 million
loss, $1.1 million gain and $0.2 million loss for 2000, 1999 and 1998,
respectively.

COMPREHENSIVE INCOME

Comprehensive income consists of net income and other comprehensive income
(loss). Accumulated other comprehensive income (loss) consists of foreign
currency translation adjustments.

ACCOUNTING FOR TRANSFERS AND SERVICING

The Company follows Statement of Financial Accounting Standards (SFAS)
No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS in accounting for loan sales and acquisition of servicing
rights. Under SFAS No. 125, the Company is required to recognize, at fair value,
financial and servicing assets it has acquired control over and related
liabilities it has incurred and amortize them over the period of estimated net
servicing income or loss. Write-off of the asset is required when control is
surrendered. The fair value of these servicing rights resulted in a gain, which
is reflected in the Consolidated Statements of Operations, with a corresponding
servicing asset of approximately $0.7 million and $0.8 million, at December 31,
2000 and 1999, respectively, which is reflected in the Consolidated Balance
Sheets.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles in the US requires management to make estimates
and assumptions that affect the reported amounts of certain assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of certain revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. Management believes that these estimates provide a reasonable basis
for the fair presentation of its financial condition and results of operations.

STOCK BASED COMPENSATION

The Company has elected to apply the provisions of Accounting Principles
Board (APB) Opinion No. 25 and provide the pro forma disclosure requirements of
SFAS No. 123, ACCOUNTING FOR STOCK BASED COMPENSATION in the footnotes to its
consolidated financial statements. SFAS No. 123 requires pro forma disclosure of
net income and, if presented, earnings per share, as if the fair-value based
method of accounting defined in this statement had been applied. APB Opinion
No. 25 and related interpretations require accounting for stock compensation
awards based on their intrinsic value as of the grant date.

INCOME TAXES

Income taxes are accounted for under the asset and liability method in
accordance with SFAS 109, ACCOUNTING FOR INCOME TAXES. Deferred tax assets and
liabilities are determined based on temporary differences between financial
reporting and tax basis of assets and liabilities and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured by
applying enacted tax rates and laws to taxable income in the years in which the
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

NEW ACCOUNTING PRONOUNCEMENTS

In September 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 140, ACCOUNTING FOR TRANSFERS
AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. SFAS 140
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral established by SFAS 125. In addition, this
statement is effective for recognition and reclassification of collateral and
for disclosures relating to securitization transactions and collateral for
fiscal years ending after December 15, 2000. The Company does not perform these
types of transactions. This statement is effective for all transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. The Company is evaluating the impact of SFAS 140 on its results
of operation and financial position for these types of transactions.

In June 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 138, ACCOUNTING FOR
CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES--AN AMENDMENT OF
FASB STATEMENT NO. 133. SFAS No. 138 amends the accounting and reporting for
certain derivative instruments and hedging activities and is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS 138 is
not expected to have a material impact on earnings or other components of
comprehensive income of the Company.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In June 1999, the FASB issued SFAS No. 137, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES--DEFERRAL OF THE EFFECTIVE DATE OF FASB
STATEMENT NO. 133, which deferred the effective date of SFAS No. 133 for one
year. SFAS No. 137 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. SFAS No. 137 is not anticipated to have a
material impact on earnings or other components of comprehensive income as the
Company had no derivatives outstanding at December 31, 2000.

In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting. SFAS No. 133 is not expected to
have a material impact on earnings or other components of comprehensive income
as the Company had no derivatives outstanding at December 31, 2000.

RECLASSIFICATIONS

Some reclassifications, which do not have an effect on net income, have been
made to the 1999 and 1998 financial statements to conform to the 2000
presentation.

2. ACQUISITIONS AND DISPOSITIONS

During 2000, the Company acquired five companies with an aggregate purchase
price of approximately $3.4 million in cash, $0.7 million in notes, plus
additional payments over the next five years based on acquisition earnout
agreements. These payments will supplement the purchase price and be recorded as
additional goodwill. The most significant acquisition in 2000 was the purchase
of Boston Mortgage Capital Corporation (Boston Mortgage), through L.J. Melody,
for approximately $2.1 million, plus supplemental payments based on an
acquisition earnout agreement. Boston Mortgage provides further mortgage banking
penetration into the northeast. It services approximately $1.8 billion in loans
covering roughly 175 commercial properties throughout New England, New York and
New Jersey.

In February 2000, the Company sold certain non-strategic assets for cash
proceeds of $8.4 million, resulting in a pre-tax gain of $4.7 million.

During 1999, the Company acquired four companies with an aggregate purchase
price of approximately $13.8 million. The two significant acquisitions were
Eberhardt Company which was acquired in September 1999 through L.J. Melody for
approximately $7.0 million and Profi Nordic which was acquired in February 1999
through CBRE Profi Acquisition Corp. (formerly Koll Tender III) for
approximately $5.5 million.

During 1999, the Company sold five of its smaller non-strategic offices
(Bakersfield and Fresno, California; Albuquerque, New Mexico; Reno, Nevada; and
Salt Lake City, Utah) for a total of approximately $7.0 million received in cash
and notes. It also sold an insurance operation which was

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS AND DISPOSITIONS (CONTINUED)
used to help property management and other clients with complex insurance
problems for $3.0 million in receivables. These sales resulted in a pre-tax gain
of $8.7 million.

On October 20, 1998 the Company, through L.J. Melody, purchased Carey,
Brumbaugh, Starman, Phillips, and Associates, Inc., a regional mortgage banking
firm for approximately $5.6 million in cash and approximately $2.4 million in
notes bearing interest at 9.0% with three annual payments which began in
October 1999. Approximately $0.2 million of the $2.4 million notes was accounted
for as deferred cash compensation to select key executives. The acquisition was
accounted for as a purchase. The purchase price has largely been allocated to
intangibles and goodwill which are amortized on a straight line basis over their
estimated useful lives of 7 and 30 years, respectively.

On October 1, 1998 the Company purchased the remaining ownership interests
that it did not already own in the Richard Ellis Australia and New Zealand
businesses. The costs for the remaining interest was $20.0 million in cash.
Virtually all of the revenue of these locations is derived from brokerage and
appraisal services. The acquisition was accounted for as a purchase. The
purchase price has largely been allocated to intangibles and goodwill which are
amortized on a straight line basis over their estimated useful lives ranging up
to 30 years.

On September 22, 1998 the Company purchased the approximately 73.0% interest
that it did not already own in CB Commercial Real Estate Group of Canada, Inc.
The Company acquired the remaining interest for approximately $14.3 million in
cash. The acquisition was accounted for as a purchase. The purchase price has
been largely allocated to intangibles and goodwill which are amortized on a
straight line basis over their estimated useful lives ranging up to 30 years.

On July 7, 1998 the Company acquired the business of Hillier Parker May and
Rowden, now known as CB Hillier Parker Limited (HP), a commercial property
services partnership operating in the United Kingdom (UK). The acquisition was
accounted for as a purchase. The purchase price for HP included approximately
$63.6 million in cash and $7.1 million in shares of the Company's common stock.
In addition, the Company assumed a contingent payout plan for key HP employees
with a potential payout over three years of approximately $13.9 million and
assumed various annuity obligations of approximately $15.0 million. The purchase
price has largely been allocated to goodwill which is amortized on a straight
line basis over its estimated useful life of 30 years.

On July 1, 1998 the Company increased its ownership percentage in CB
Commercial/Arnheim & Neely, an existing partnership formed in September 1996,
which then combined with the Galbreath Company Mid-Atlantic to form CB Richard
Ellis/Pittsburgh, LP. The total purchase price of the Company's 50% interest in
the combined enterprise is $5.7 million.

On May 31, 1998 the Company acquired Mathews Click and Associates, a
property sales, leasing, and management firm, for approximately $10.0 million in
cash and potential supplemental payments of $1.9 million which were contingent
upon operating results, payable to the sellers over a period of two years. The
acquisition was accounted for as a purchase. The total purchase price including
potential supplemental payments was allocated to intangibles and goodwill which
are amortized on a straight line basis over their estimated useful lives of 7
and 30 years, respectively.

Effective May 1, 1998 the Company, through L.J. Melody, acquired
Shoptaw-James, Inc. (Shoptaw-James), a regional mortgage banking firm, for
approximately $6.3 million in cash and approximately $2.7 million in notes
bearing interest at 9.0% with three annual payments which began in May 1999. The
acquisition was accounted for as a purchase. Approximately $0.3 million of the
$2.7 million notes

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS AND DISPOSITIONS (CONTINUED)
are being accounted for as compensation over the term of the notes as the
payment of these notes are contingent upon select key executives' and producers'
continued employment with the Company. Approximately $2.4 million of the
$2.7 million is being accounted for as supplemental payments to the sellers over
a period of three years. The purchase price and supplemental payments have
largely been allocated to intangibles and goodwill which are amortized on a
straight line basis over their estimated useful lives of 7 and 30 years,
respectively.

On April 17, 1998 the Company purchased all of the outstanding shares of CB
Commercial Limited, formerly known as REI Limited (REI), an international
commercial real estate services firm operating under the name Richard Ellis in
major commercial real estate markets worldwide (excluding the UK). The
acquisition was accounted for as a purchase. The purchase price has largely been
allocated to goodwill, which is amortized on a straight line basis over an
estimated useful life of 30 years. The purchase price for REI was approximately
$104.8 million of which approximately $53.3 million was paid in cash and notes
and approximately $51.5 million was paid in shares of the Company's common
stock. In addition, the Company assumed approximately $14.4 million of long-term
debt and minority interest. The Company incurred a one-time charge of
$3.8 million associated with the integration of REI's operations and systems
into the Company's.

On February 1, 1998 the Company, through L.J. Melody, acquired all of the
issued and outstanding stock of Cauble and Company of Carolina, a regional
mortgage banking firm for approximately $2.2 million, including cash payments of
approximately $1.8 million and a note payable of approximately $0.4 million
bearing interest at 9.0% with principal payments starting in April 1998. The
acquisition was accounted for as a purchase. The purchase price has been largely
allocated to intangibles and goodwill, which are amortized on a straight line
basis over their estimated useful lives of 7 and 30 years, respectively.

On January 31, 1998 the Company, through L.J. Melody, acquired certain
assets of North Coast Mortgage Company, a regional mortgage banking firm for
cash payments of approximately $3.0 million and approximately $0.9 million in
notes. Approximately $0.3 million of the $0.9 million notes have been accounted
for as supplemental payments to the sellers and approximately $0.6 million as
deferred compensation to certain key executives and producers payable in three
annual installments which began in February 1999. The acquisition was accounted
for as a purchase. The purchase price and supplemental payments have largely
been allocated to intangibles and goodwill, which are amortized on a straight
line basis over their estimated useful lives of 7 and 30 years, respectively.
The $0.6 million of deferred cash compensation is being accounted for as
compensation over the term of the agreements as the payment of the compensation
is contingent upon select key executives' and producers' continued employment
with the Company.

The assets and liabilities of certain acquired companies, along with the
related goodwill, intangibles and indebtedness, are reflected in the
accompanying consolidated financial statements at December 31, 2000. The results
of operations of the acquired companies are included in the consolidated results
from the dates they were acquired. The unaudited pro forma results of operations
of the Company for the

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS AND DISPOSITIONS (CONTINUED)
year ended December 31, 1998, assuming the REI acquisition had occurred on
January 1, 1998, would have been as follows (amounts in thousands, except per
share data):

YEAR ENDED
DECEMBER 31, 1998
------------------

Revenue..................................................... $1,051,114
Net income.................................................. 15,586
Net loss applicable to common stockholders.................. (16,687)
Loss per share
Basic..................................................... (0.81)
Diluted................................................... (0.81)

For the year ended December 31, 1998, net loss applicable to common
stockholders includes a deemed dividend of $32.3 million on the repurchase of
the Company's preferred stock. The pro forma results do not necessarily
represent results which would have occurred if the acquisitions had taken place
on the date assumed above, nor are they indicative of the results of future
combined operations. The amounts are based upon certain assumptions and
estimates, and do not reflect any benefit from economies which might be achieved
from combined operations. Further, REI historical results for the first three
months of 1998 include certain nonrecurring adjustments.

3. PROPERTY AND EQUIPMENT

Property and equipment is stated at cost and consists of the following (in
thousands):

DECEMBER 31
-------------------
2000 1999
-------- --------

Buildings and improvements.................................. $ 17,354 $ 19,273
Furniture and equipment..................................... 128,678 111,840
Equipment under capital leases.............................. 28,765 29,800
-------- --------
174,797 160,913
Accumulated depreciation and amortization................... (98,805) (90,764)
-------- --------
Property and equipment, net $ 75,992 $ 70,149
======== ========

The Company sold its headquarters building in downtown Los Angeles,
California, in September 1999 and a small office building in Phoenix, Arizona in
October 1999, both at a minimal loss. Depreciation expense was $19.2 million,
$17.1 million and $14.8 million during 2000, 1999 and 1998, respectively.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES

Investments in and advances to unconsolidated subsidiaries as of
December 31, 2000 and 1999 are as follows (in thousands):

DECEMBER 31
-------------------
INTEREST 2000 1999
-------- -------- --------

CB Commercial/Whittier Partners, LP......................... 50.0% $10,173 $ 9,646
CBRE Pittsburgh............................................. 50.0% 6,261 5,853
Ikoma CB Richard Ellis K.K.................................. 20.0% 3,695 2,523
Strategic Partners (CBRE Investors)......................... 3.4% 3,659 --
Building Technology Engineers............................... 49.9% 2,595 --
CBRE Corp Partners, LLC..................................... 9.1% 2,510 1,453
Other....................................................... * 12,432 19,039
------- -------
$41,325 $38,514
======= =======

- ------------------------

* Various interests with varying ownership rates.

Unaudited combined condensed financial information for the entities
accounted for using the equity method is as follows (in thousands):

Condensed Statement of Operations Information:

YEAR ENDED DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------
(UNAUDITED)

Net revenue................................................. $241,902 $172,365 $72,911
Income from operations...................................... 59,936 43,088 27,921
Net income.................................................. 50,183 32,795 23,678

Condensed Balance Sheet Information:

DECEMBER 31
-------------------
2000 1999
-------- --------
(UNAUDITED)

Current assets.............................................. $153,942 $ 62,579
Noncurrent assets........................................... 777,718 689,286
Current liabilities......................................... 94,507 34,076
Noncurrent liabilities...................................... 302,530 249,546
Minority interest........................................... 519 1,115

5. EMPLOYEE BENEFIT PLANS

OPTION PLANS. In conjunction with the North Coast Mortgage Company
acquisition, options for 25,000 shares were granted with an exercise price
representing the fair market value at date of grant of $32.50 per share. On
December 15, 1998, the option holders elected to change the exercise price to
$20.00 per share, which was above market value on the date of election, and
simultaneously reduce the

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
number of shares by 20%. The options vest over five years at a rate of 20% per
year, expiring in February 2008. Options for 20,000 shares under the North Coast
Mortgage Company acquisition were outstanding at December 31, 2000.

In conjunction with the Shoptaw-James acquisition, options for 25,000 shares
were granted with an exercise price representing a fair market value of $37.32
per share on the date of grant. On December 15, 1998 the option holders elected
to change the exercise price to $20.00 per share, which was above market value
on the date of election, and simultaneously reduce the number of shares by 20%.
The options vest over five years at a rate of 20% per year, expiring in
May 2008. Options for 20,000 shares under the Shoptaw-James acquisition were
outstanding at December 31, 2000.

In October 1998, in conjunction with the Carey, Brumbaugh acquisition,
options for 25,000 shares were granted with an exercise price representing a
fair market of $19.44 per share on the grant date. The options vest over five
years at a rate of 20% per year, expiring in September 2008. Options for 25,000
shares under the Carey, Brumbaugh acquistion were outstanding at December 31,
2000.

In April 1998, in conjunction with the REI acquisition, the Company approved
the assumption of the options outstanding under the REI Limited Stock Option
Plan. These options for 46,115 shares of common stock were issued and exercised
immediately at $14.95 per share in exchange for existing REI options. Also in
conjunction with the REI acquisition, the Company granted options for 475,677
shares at an exercise price equal to fair market value at date of grant of
$33.76 per share. On December 15, 1998 select holders of stock options elected
to change the exercise price of their options to $20.00 per share, which was
above market value on the date of election, and simultaneously reduce the number
of shares by 20%. During 2000, the Company granted options for 58,000 shares of
common stock at an exercise price of $12.88 per share. All options were granted
at an exercise price equal to fair market value at date of grant. The vesting
periods of these options range from three to five years and they expire at
various dates through August 2010. Options for 492,984 shares were outstanding
under the REI Limited Stock Option Plan at December 31, 2000.

A total of 700,000 shares of common stock have been reserved for issuance
under the Company's 1997 Employee Stock Option Plan. On December 15, 1998,
select holders of stock options with an exercise price in excess of $20.00 per
share elected to change the exercise price of their options to $20.00 per share,
which was above market value on the date of election and simultaneously reduce
the number of shares by 20%. During 2000, the Company granted options for
105,000 shares of common stock at exercise prices ranging from $10.38 to $12.85
per share. All options were granted at an exercise price equal to fair market
value at date of grant. The vesting periods for these options range from
approximately four to five years and they expire at various dates through
August 2010. Options for 692,060 shares were outstanding under the 1997 Employee
Stock Option Plan at December 31, 2000.

In August 1997, in conjunction with the Koll acquisition, the Company
approved the assumption of the options outstanding under the KMS Holding Company
Amended 1994 Stock Option Plan (now known as the CBC Substitute Option Plan
(CBCSP)) and the Koll Acquisition Stock Option Plan (KASOP). Under the CBCSP,
407,087 stock options were issued with exercise prices ranging from $12.89 to
$18.04 per share in exchange for existing Koll options. These options were
immediately exercisable and expire at various dates through April 2006. All
options were granted at an exercise price equal to fair market value at date of
grant. At December 31, 2000, 231,941 options were outstanding. Under the KASOP,
options for 550,000 shares were approved for issuance to former senior

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
executives of Koll who became employees or directors of the Company. These
options have exercise prices ranging from $14.25 to $36.75 per share and vesting
periods ranging from immediate to three years. During 2000, the Company granted
options for 20,000 shares of common stock under the KASOP at an exercise price
of $12.88 per share. These options expire at various dates through August 2010.
Options for 550,000 shares were outstanding for the KASOP at December 31, 2000.

In August 1997, in conjunction with the Koll acquisition, the Company
approved the issuance of warrants to purchase 599,967 shares. Of the outstanding
warrants, 42,646 are attached to common stock obtainable under the CBC
Substitute Option Plan and 555,741 are attached to shares of outstanding common
stock. Each warrant is exercisable into one share of common stock at an exercise
price of $30.00 commencing in August 2000 and expiring in August 2004. At
December 31, 2000, 598,387 warrants issued were outstanding.

A total of 90,750 shares of common stock have been reserved for issuance
under the L.J. Melody Acquisition Stock Option Plan, which was adopted by the
Board of Directors in September 1996 as part of the July 1996 acquisition of
L.J. Melody. Options for all these shares have been issued at an exercise price
of $10.00 per share and vest over a period of five years at the rate of 5% per
quarter and these options expire in June 2006. Options for 90,750 shares of
common stock under the L.J. Melody Acquisition Stock Option Plan were
outstanding at December 31, 2000.

A total of 600,000 shares of common stock have been reserved for issuance
under the Company's 1991 Service Providers Stock Option Plan. In various years,
options were granted below market price to select directors as partial payment
for director fees. On December 15, 1998 select holders of stock options with an
exercise price in excess of $20.00 per share elected to change the exercise
price of their options to $20.00 per share, which was above market value on the
date of election and simultaneously reduce the number of shares by 20%. During
2000, options for 39,000 shares were granted to select directors and executive
officers at an exercise price equal to fair market value at date of grant
ranging from $11.81 to $12.88 per share. These options vest from a zero to a
five year period and expire at various dates through August 2010. Options for
583,888 shares were outstanding under the 1991 Service Providers Stock Option
Plan at December 31, 2000.

A total of 1,000,000 shares of common stock have been reserved for issuance
under the Company's 1990 Stock Option Plan. All options vest over a four year
period, expiring at various dates through November 2006. Options for 35,000
shares under the 1990 Stock Option Plan were outstanding at December 31, 2000.

The Company completed the 1999 stock repurchase program on January 5, 2000.
A total of 397,450 shares of common stock were purchased for a total of
$5.0 million. In 1998, a total of 488,900 shares of common stock were purchased
for $8.8 million. The shares purchased in 1999 and 1998 will be used to minimize
the dilution caused by the exercise of stock options and the grant of stock
purchase rights.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
A summary of the status of the Company's option plans at December 31, 2000,
1999 and 1998 and changes during the years then ended is presented in the table
and narrative below:

2000 1999 1998
--------------------------- --------------------------- ----------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
STOCK OPTIONS AND WARRANTS SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
- -------------------------- --------- --------------- --------- --------------- ---------- ---------------

Outstanding beginning of the
year........................... 3,075,356 $20.71 2,937,085 $23.18 3,284,381 $22.43
Granted.......................... 487,710 24.81 628,611 15.17 1,885,944 25.94
Exercised........................ -- -- (58,000) 10.00 (824,385) 10.73
Forfeited/Expired................ (223,056) 19.84 (432,340) 31.64 (1,408,855) 32.42
--------- ------ --------- ------ ---------- ------
Outstanding end of year.......... 3,340,010 $21.25 3,075,356 $20.71 2,937,085 $23.18
--------- ------ --------- ------ ---------- ------
Exercisable at end of year....... 1,824,665 $23.90 770,756 $21.86 830,289 $21.94
Weighted average fair value of
options granted during
the year....................... $ 6.72 $ 8.84 $12.27

Significant option and warrant groups outstanding at December 31, 2000 and
related weighted average price and life information is presented below:

EXERCISABLE OPTIONS
OUTSTANDING OPTIONS AND WARRANTS AND WARRANTS
------------------------------------------------- -----------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------------ ----------- ----------------- --------------- ----------- ---------------

$00.38-$10.38............................ 167,594 5.32 yrs. $ 7.44 143,519 $ 6.97
$11.81-$19.44............................ 985,941 7.69 yrs. 14.48 327,141 14.48
$20.00-$23.75............................ 1,273,754 6.84 yrs. 20.52 488,218 20.79
$30.00-$36.75............................ 912,721 4.64 yrs. 32.11 865,787 32.02
--------- ------ --------- ------
3,340,010 $21.25 1,824,665 $23.90
========= ====== ========= ======

DEFERRED COMPENSATION PLAN (THE DCP). In 1994, the Company implemented the
DCP. Under the DCP, a select group of management and highly compensated
employees can defer the payment of all or a portion of their compensation
(including any bonus). The DCP permits participating employees to make an
irrevocable election at the beginning of each year to receive amounts deferred
at a future date either in cash, which is an unsecured long-term liability of
the Company, or in shares of common stock of the Company which elections are
recorded as additions to stockholders' equity. In May 2000, the Company began
repurchasing stock from the open market in order to minimize the dilutive effect
of issuing stock pursuant to the DCP. As of December 31, 2000, the Company has
repurchased 185,800 shares of common stock for $2.0 million, which is reported
as an increase in treasury stock. In 1999, the Company revised the DCP to add
insurance products which function like mutual funds as an investment alternative
and to fund the Company's obligation for deferrals invested in these insurance
products. Prior to July 1, 2000, cash payments to purchase additional insurance
products were made on the third business day of the month following the related
DCP participant deferral. Currently, payments are made twice a month. For the
year ended December 31, 2000, $43.6 million was deferred and

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
mainly allocated to the other investment products. The accumulated non-stock
liability at December 31, 2000 was $80.5 million and the assets (in the form of
insurance proceeds) set aside to cover the liability was $53.2 million. The
total liability of $92.0 million, including $11.5 million deferred in stock, was
charged to expense in the period of deferral and classified as deferred
compensation plan liability, except for stock which is included in stockholders'
equity. On July 17, 2000, the Company announced a match of the stock portion of
the DCP for the Plan Year 1999 in the amount of $4.5 million, equivalent to
437,880 shares of common stock at a market price of $10.38 per share. The
vesting period is over five years with 20% vesting each year at December 31,
2000 through 2004. The related compensation expense will be amortized over the
vesting period. The Company charged to compensation expense a total of
$0.9 million for the year ended December 31, 2000. The weighted average fair
value of the shares granted during the year is $5.90. In October 2000, the
Company added the "Retention Program" and the "Recruitment Program" to the DCP,
with the awards being effective January 2001. Under the Retention Program, the
125 best sales professionals were credited with 5,700, 4,500 or 3,000 stock
units under the DCP (each unit is the equivalent of one share of stock). The
stock units do not vest for four years and in the case of those sales
professionals who were credited with 5,700 or 4,500 stock units, there was a
requirement to execute a long-term covenant not to compete. Under the
Recruitment Program, the Company credited either stock units or cash to
experienced new hires for sales professional jobs. The share awards ranged from
750 to 4,500 and the cash awards ranged from $30 thousand to $100 thousand.

As allowed under the provisions of SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, the Company has elected to follow Accounting Principles Board
(APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
interpretations in accounting for its employee stock based compensation plans.
Under this method the Company does not recognize compensation expense for
options that were granted at or above the market price of the underlying stock
on the date of grant. Had compensation expense been determined consistent with
SFAS No. 123, the Company's net income and per share information would have been
reduced to the following pro forma amounts (in thousands except per share data):

2000 1999 1998
-------- -------- --------

Net Income:
As Reported.................................... $33,388 $23,282 $24,557
Pro Forma...................................... 30,393 19,039 20,396
Basic EPS:
As Reported.................................... 1.60 1.11 (0.38)
Pro Forma...................................... 1.45 0.91 (0.59)
Diluted EPS:
As Reported.................................... 1.58 1.10 (0.38)
Pro Forma...................................... 1.44 0.91 (0.59)

Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)

The fair value of each option grant and DCP company match is estimated on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions used for grants:

2000 1999 1998
---------- ---------- ----------

Risk-free interest rate.................... 6.52% 5.55% 4.95%
Expected volatility........................ 58.06% 61.83% 48.16%
Expected life.............................. 5.00 years 5.00 years 5.00 years

Dividend yield is excluded from the calculation since it is the present
intention of the Company to retain all earnings.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, the Company
believes the Black-Scholes model does not necessarily provide a reliable single
measure of the fair value of its employee stock options.

STOCK PURCHASE PLANS. The Company has restricted stock purchase plans
covering select key executives including senior management. A total of 500,000
and 550,000 shares of common stock have been reserved for issuance under the
Company's 1999 and 1996 Equity Incentive Plans, respectively. The shares may be
issued to senior executives for a purchase price equal to the greater of $18.00
and $10.00 per share or fair market value, respectively. Under the 1999 and 1996
Equity Incentive Plans, the Company issued 285,000 and 50,000 shares in 2000,
and 415,833 and 441,937 shares were outstanding at December 31, 2000,
respectively. The purchase price for these shares must be paid either in cash or
by delivery of a full recourse promissory note. The related promissory notes are
also included in the Consolidated Statements of Stockholders' Equity.

In October 1998, the Company offered all employees under the 1990 Stock
Option Plan who held options that expired in April 1999 a loan equal to 100% of
the total exercise price plus 40% of the difference between the current market
value of the shares and the exercise price. Loan proceeds were applied towards
the total exercise price and payroll withholding taxes. The loans are evidenced
by full recourse promissory notes having a maturity of five years at an interest
rate of 6.0%. Interest is due annually, while the principal is due the earlier
of five years or upon sale of the shares. The shares issued under this offering
may not be sold until after 18 months from the date of issuance. A total of
415,000 shares were issued under this offering. The related promissory notes of
$4.7 million and $4.9 million are included in other assets in the Consolidated
Balance Sheets at December 31, 2000 and 1999, respectively.

BONUSES. The Company has bonus programs covering select key employees,
including senior management. Awards are based on the position and performance of
the employee and the achievement of pre-established financial, operating and
strategic objectives. The amounts charged to expense for bonuses were
$49.8 million, $44.3 million and $33.7 million for the years ended December 31,
2000, 1999, and 1998, respectively.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
CAPITAL ACCUMULATION PLAN (THE CAP PLAN). The Cap Plan is a defined
contribution profit sharing plan under Section 401(k) of the Internal Revenue
Code and is the Company's only such plan. Under the Cap Plan, each participating
employee may elect to defer a portion of his or her earnings and the Company may
make additional contributions from the Company's current or accumulated net
profits to the Cap Plan in these amounts as determined by the Board of
Directors. The Company expensed, in connection with the Cap Plan, $2.2 million
and $1.6 million for the years ended December 31, 2000 and 1999. No expense, in
connection with the Cap Plan, was incurred for the year ended December 31, 1998.

EMPLOYEE STOCK PURCHASE PLAN. In May 2000, the Company amended and
restated, effective July 1, 2000, its 1998 employee stock purchase plan designed
exclusively for employees who earn less than $100,000 in total annual
compensation. Under the plan, the eligible employees may purchase common stock
by means of contributions to the Company at a price equal to 90% of the fair
market value of the share on the last trading day of the purchase period. The
plan provides for purchases by employees up to an aggregate of 150,000 shares
each year for 2000, 2001 and 2002. This program was discontinued effective
October 2000.

PENSION PLAN. The Company, through the acquisition of Hillier Parker,
maintains a contributory defined benefit pension plan to provide retirement
benefits to existing and former Hillier Parker employees participating in the
plan. It is the Company's policy to fund the minimum annual contributions
required by applicable regulations. Pension expense totaled $0.9 million,
$1.9 million and $0.9 million in 2000, 1999 and 1998, respectively.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following sets forth a reconciliation of benefit obligation, plan
assets, plan's funded status and amounts recognized in the accompanying
Consolidated Balance Sheets:

YEAR ENDED
DECEMBER 31
-------------------
2000 1999
-------- --------
(IN THOUSANDS)

CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year................. $ 72,146 $ 73,190
Service cost............................................ 5,728 5,350
Interest cost........................................... 4,026 4,175
Plan participants' contributions........................ 671 804
Actuarial gain.......................................... (4,680) (7,495)
Benefits paid........................................... (1,343) (1,760)
Currency gain........................................... (5,472) (2,118)
-------- --------
Benefit obligation at end of year....................... $ 71,076 $ 72,146
======== ========
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year.......... $115,039 $ 95,731
Actual return on plan assets............................ (3,340) 22,666
Company contributions................................... 1,257 786
Plan participants' contributions........................ 671 419
Benefits paid........................................... (1,343) (1,760)
Currency loss........................................... (8,596) (2,803)
-------- --------
Fair value of plan assets at end of year................ $103,688 $115,039
======== ========
Funded status........................................... $ 32,612 $ 42,893
Unrecognized net actuarial gain......................... (7,941) (16,570)
Company contributions in the post-measurement period.... 564 --
-------- --------
Prepaid benefit cost.................................... $ 25,235 $ 26,323
======== ========

Weighted-average assumptions used in developing the projected benefit
obligation were as follows:

DECEMBER 31
-------------------
2000 1999
-------- --------

Discount rate............................................... 6.00% 5.75%
Expected return on plan assets.............................. 7.75% 7.75%
Rate of compensation increase............................... 5.00% 5.00%

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. EMPLOYEE BENEFIT PLANS (CONTINUED)
Net periodic pension cost consisted of the following:

YEAR ENDED
DECEMBER 31
-------------------
2000 1999
-------- --------
(IN THOUSANDS)

Employer service cost..................................... $ 5,728 $ 5,350
Interest cost on projected benefit obligation............. 4,026 4,175
Expected return on plan assets............................ (8,395) (7,636)
Unrecognized net gain..................................... (425) --
------- -------
Net periodic benefit cost................................. $ 934 $ 1,889
======= =======

6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

DECEMBER 31
-------------------
2000 1999
-------- --------

Senior Subordinated Notes, less unamortized discount of
$1.7 million and $1.9 million at December 31, 2000 and
1999, respectively, with fixed interest at 8.9% due in
2006...................................................... $173,336 $173,108
Revolving Credit Facility, with interest ranging from 8.5%
to 9.0%, due in 2003...................................... 110,000 160,000
Westmark Senior Notes, with interest ranging from 9.0% to
10.0% through December 31, 2004 and at variable rates
depending on the Company's credit facility rate
thereafter, due from 2001 through 2010.................... 15,502 16,502
Euro cash pool loan, with interest at 6.91% and no stated
maturity date............................................. 6,946 --
REI Senior Notes, with variable interest rates based on
Sterling LIBOR minus 1.5%, due in 2002.................... 2,742 2,965
Shoptaw-James Senior Notes, with fixed interest at 9.0%, due
in 2001................................................... 810 1,620
Carey, Brumbaugh Senior Notes, with fixed interest at 9.0%,
due in 2001............................................... 720 1,440
Eberhardt Acquisition Obligations, with fixed interest at
8.0%, due from 2001 through 2002.......................... 600 900
Capital lease obligations, mainly for autos and telephone
equipment, with interest ranging from 6.8% to 8.9%, due
through 2004.............................................. 2,302 3,554
Other....................................................... 1,206 4,548
-------- --------
Total..................................................... 314,164 364,637
Less current maturities................................... 10,593 6,765
-------- --------
Total long-term debt...................................... $303,571 $357,872
======== ========

Annual aggregate maturities of long-term debt at December 31, 2000 are as
follows (in thousands): 2001--$10,593; 2002--$4,536; 2003--$110,512; 2004--$128;
2005--$20; and $188,375 thereafter.

In October 1999, the Company executed an amendment to the revolving credit
facility, eliminating the mandatory reduction on December 31, 1999, and revising
some of the restrictive covenants. The new amendment is also subject to
mandatory reductions of the facility by $80.0 million and

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. LONG-TERM DEBT (CONTINUED)
$70.0 million on December 31, 2000 and 2001, respectively. This reduced the
facility from $350.0 million to $270.0 million at December 31, 2000. The amount
outstanding under this facility was $110.0 million at December 31, 2000.
Interest rate alternatives include Bank of America's reference rate plus 1.00%
and LIBOR plus 2.00%. The weighted average rate on amounts outstanding at
December 31, 2000 was 8.79%.

The revolving credit facility contains numerous restrictive covenants that,
among other things, limit the Company's ability to incur or repay other
indebtedness, make advances or loans to subsidiaries and other entities, make
capital expenditures, incur liens, enter into mergers or effect other
fundamental corporate transactions, sell its assets, or declare dividends. In
addition, the Company is required to meet certain ratios relating to its
adjusted net worth, level of indebtedness, fixed charges and interest coverage.

The Company has outstanding Senior Subordinated Notes (Subordinated Notes)
due on June 1, 2006. The Subordinated Notes are redeemable in whole or in part
after June 1, 2002 at 104.438% of par on that date and at declining prices
thereafter. On or before June 1, 2001, up to 35.0% of the issued amount may be
redeemed at 108.875% of par plus accrued interest solely with the proceeds from
an equity offering.

The Company has a credit agreement with Residential Funding Corporation
(RFC). The credit agreement provides for a revolving line of credit, which bears
interest at 1.25% per annum over LIBOR. On July 19, 2000, the Company executed
an amendment to the revolving line of credit, increasing the line of credit from
$50.0 million to $100.0 million, decreasing the interest rate from 1.25% to
1.00% per annum over LIBOR and extending the expiration date from August 31,
2000 to August 31, 2001. In addition, on November 8, 2000, the Company obtained
a temporary line of credit increase of $52.0 million, resulting in a total line
of credit equaling $152.0 million. This temporary line of credit increase
expired on November 30, 2000. During the year, the Company had a maximum of
$151.3 million revolving line of credit principal outstanding. At December 31,
2000, the Company had $0.4 million revolving line of credit principal
outstanding.

7. COMMITMENTS AND CONTINGENCIES

In December 1996, GMH Associates, Inc. (GMH) filed a lawsuit against
Prudential Realty Group (Prudential) and the Company in the Superior Court of
Pennsylvania, Franklin County, alleging various contractual and tort claims
against Prudential, the seller of a large office complex, and the Company, its
agent in the sale, contending that Prudential breached its agreement to sell the
property to GMH, breached its duty to negotiate in good faith, conspired with
the Company to conceal from GMH that Prudential was negotiating to sell the
property to another purchaser and that Prudential and the Company misrepresented
that there were no other negotiations for the sale of the property. Following a
non-jury trial, the court rendered a decision in favor of GMH and against
Prudential and the Company, awarding GMH $20.3 million in compensatory damages,
against Prudential and the Company jointly and severally, and $10.0 million in
punitive damages, allocating the punitive damage award $7.0 million as against
Prudential and $3.0 million as against the Company. Following the denial of
motions by Prudential and the Company for a new trial, a judgment was entered on
December 3, 1998. Prudential and the Company filed an appeal of the judgment. On
March 3, 2000, the appellate court in Pennsylvania reversed all of the trial
courts' decisions finding that liability was not supported on any theory claimed
by GMH and directed that a judgment be entered in favor of the defendants
including

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
the Company. The plaintiff filed an appeal with the Pennsylvania Supreme Court
which was denied. The plaintiff has exhausted all appeal possibilities and
judgment is expected to be entered shortly in favor of all defendants.

In August 1993, a former commissioned sales person of the Company filed a
lawsuit against the Company in the Superior Court of New Jersey, Bergen County,
alleging gender discrimination and wrongful termination by the Company. On
November 20, 1996, a jury returned a verdict against the Company, awarding
$1.5 million in general damages and $5.0 million in punitive damages to the
plaintiff. Subsequently, the trial court awarded the plaintiff $0.6 million in
attorneys' fees and costs. Following denial by the trial court of the Company's
motions for new trial, reversal of the verdict and reduction of damages, the
Company filed an appeal of the verdict and requested a reduction of damages. On
March 9, 1999, the appellate court ruled in the Company's favor, reversed the
trial court decision and ordered a new trial. On February 16, 2000, the Supreme
Court of New Jersey reversed the decision of the appellate court, concluded that
the general damage award in the trial court should be sustained and returned the
case to the appellate court for a determination as to whether a new trial should
be ordered on the issue of punitive damages. In April 2000, the Company settled
the compensatory damages claim (including interest) and all claims to date with
respect to attorneys fees by paying to the plaintiff the sum of $2.75 million
leaving only the punitive damage claim for resolution (the plaintiff also
agreed, with very limited exceptions, that no matter what the outcome of the
punitive damage claim the Company would not be responsible for more than 50% of
the plaintiff's future attorney fees). In February 2001, the Company settled all
remaining claims for the sum of $2.0 million and received a comprehensive
release.

The Company is a party to a number of pending or threatened lawsuits arising
out of, or incident to, its ordinary course of business. Based on available cash
and anticipated cash flows, the Company believes that the ultimate outcome will
not have an impact on the Company's ability to carry on its operations.
Management believes that any liability to the Company that may result from
disposition of these lawsuits will not have a material effect on the
consolidated financial position or results of operations of the Company.

The following is a schedule by years of future minimum lease payments for
noncancelable leases as of December 31, 2000 (in thousands):

CAPITAL OPERATING
LEASES LEASES
-------- ---------

2001...................................................... $1,167 $ 48,299
2002...................................................... 895 40,686
2003...................................................... 518 33,316
2004...................................................... 10 25,967
2005...................................................... -- 22,195
Thereafter................................................ -- 97,674
------ --------
Total minimum payments required........................... $2,590 $268,137
====== ========

The interest portion of capital lease payments represents the amount
necessary to reduce net minimum lease payments to present value calculated at
the Company's incremental borrowing rate at

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
the inception of the leases. This totaled $0.3 million at December 31, 2000,
resulting in a present value of net minimum lease payments of $2.3 million. At
December 31, 2000, $0.9 million and $1.4 million are included in the current
portion of long-term debt and long-term debt, respectively. In addition, the
total minimum payments for noncancelable operating leases have not been reduced
by the minimum sublease rental income of $42.9 million due in the future under
noncancelable subleases.

Substantially all leases require the Company to pay maintenance costs,
insurance and property taxes, and generally may be renewed for five year
periods. The composition of total rental expense under noncancelable operating
leases consisted of the following (in thousands):

DECEMBER 31,
------------------------------
2000 1999 1998
-------- -------- --------

Minimum rentals.................................. $56,243 $51,467 $33,126
Less sublease rentals............................ (1,387) (928) (706)
------- ------- -------
$54,856 $50,539 $32,420
======= ======= =======

In 1999, the Company entered into an agreement with Fannie Mae in which the
Company agreed to fund the purchase of a $103.6 million loan portfolio from
proceeds from its RFC line of credit, which was temporarily increased to
$140.0 million in 2000. In December 2000, the Company entered into an agreement
with Fannie Mae in which the Company agreed to fund the purchase of an
additional $7.5 million loan from proceeds from its RFC line of credit. A 100%
participation in both the original and additional loan portfolio was
subsequently sold to Fannie Mae with the Company retaining the credit risk on
the first 2% of loss incurred on the underlying commercial mortgage loans. The
Company has collateralized a portion of its obligation to cover the first 2% of
losses for both the $103.6 million loan portfolio and the additional
$7.5 million loan portfolio by increasing a letter of credit in favor of Fannie
Mae to total $1.1 million.

The Company has a participation agreement with RFC whereby RFC agrees to
purchase a 99% participation interest in any eligible multifamily mortgage loans
owned by the Company and outstanding at quarter-end. This participation
agreement, which originally expired on August 31, 2000, has been extended to
August 31, 2001.

An important part of the strategy for the Company's investment management
business involves investing the Company's own capital in certain real estate
investments with its clients. As of December 31, 2000, the Company had committed
an additional $37.7 million to fund future co-investments.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES

The tax provision (benefit) for the years ended December 31, 2000, 1999 and
1998 consisted of the following (in thousands):

YEAR ENDED DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------

Federal:
Current........................................ $24,924 $14,403 $ 4,265
Deferred tax................................... 921 (1,417) 14,469
Reduction of valuation allowances.............. (3,000) (6,347) --
------- ------- -------
22,845 6,639 18,734
State:
Current........................................ 6,895 5,627 3,470
Deferred tax................................... (1,243) (1,411) (75)
------- ------- -------
5,652 4,216 3,395
Foreign:
Current........................................ 7,015 8,837 3,797
Deferred tax................................... (761) (3,513) --
------- ------- -------
6,254 5,324 3,797
------- ------- -------
$34,751 $16,179 $25,926
======= ======= =======

The following is a reconciliation, stated as a percentage of pre-tax income,
of the US statutory federal income tax rate to the Company's effective tax rate
on income from operations:

YEAR ENDED
DECEMBER 31
------------------------------
2000 1999 1998
-------- -------- --------

Federal statutory tax rate................................. 35% 35% 35%
Permanent differences, including goodwill, meals,
entertainment and other.................................. 11 15 8
State taxes, net of federal benefit........................ 6 9 4
Foreign income taxes....................................... 4 4 4
Reduction of valuation allowances.......................... (5) (22) --
-- --- --
Effective tax rate......................................... 51% 41% 51%
== === ==

The domestic component of income before provision for income tax included in
the consolidated statement of operations was $63.2 million, $32.0 million and
$45.6 million, for 2000, 1999 and 1998, respectively. The international
component of income before provision for income tax was $4.9 million,
$7.4 million and $4.9 million, for 2000, 1999 and 1998, respectively.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
Cumulative tax effects of temporary differences are shown below at
December 31, 2000 and 1999 (in thousands):

DECEMBER 31
-------------------
2000 1999
-------- --------

ASSET (LIABILITY)
Property and equipment.................................. $ 11,910 $ 5,820
Bad debts and other reserves............................ 12,832 15,940
Intangible amortization................................. (15,736) (16,533)
Bonus, unexercised restricted stock, deferred
compensation.......................................... 35,343 23,990
Partnership income...................................... 6,950 7,092
Net operating loss (NOL) and alternative minimum tax
credit carryforwards.................................. 6,134 23,086
Unconsolidated affiliates............................... 1,010 (1,167)
All other, net.......................................... 1,853 2,040
-------- --------
Net deferred tax asset before valuation allowances...... 60,296 60,268
Valuation allowances.................................... (16,830) (20,320)
-------- --------
Net deferred tax asset.................................. $ 43,466 $ 39,948
======== ========

The Company had federal income tax NOLs of approximately $16.3 million at
December 31, 2000, corresponding to $5.7 million of the Company's $60.3 million
in net deferred tax assets before valuation allowances.

The ability of the Company to utilize NOLs was limited in 1998 and will be
in subsequent years as a result of the Company's 1996 public offering, the 1997
Koll acquisition and the 1998 repurchase of preferred stock which cumulatively
caused a more than 50.0% change of ownership within a three year period. As a
result of the limitation, the Company's ability to utilize its existing NOLs is
limited to $26.0 million on an annual basis. It is anticipated that the Company
will utilize the remaining NOLs in 2001.

A deferred US tax liability has not been provided on the unremitted earnings
of foreign subsidiaries because it is the intent of the Company to permanently
reinvest these earnings. Undistributed earnings of foreign subsidiaries, which
have been or are intended to be permanently invested in accordance with APB
No. 23, ACCOUNTING FOR INCOME TAXES--SPECIAL AREAS, aggregated $27.7 million at
December 31, 2000.

9. EARNINGS PER SHARE INFORMATION

Basic earnings (loss) per share was computed by dividing net income (loss),
less preferred dividend requirements as applicable, by the weighted average
number of common shares outstanding during each period. The computation of
diluted earnings (loss) per share further assumes the dilutive effect of stock
options, stock warrants and other stock-based compensation programs, as well as
the conversion of the preferred stock during periods when preferred stock was
outstanding and was dilutive.

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. EARNINGS PER SHARE INFORMATION (CONTINUED)
In January 1998, the Company repurchased all 4.0 million shares of its
outstanding convertible preferred stock. The portion of the purchase price in
excess of the carrying value represents the deemed dividend charge to net income
applicable to common shareholders when computing basic and diluted earnings
(loss) per share for the year ended December 31, 1998.

The following is a calculation of earnings (loss) per share for the years
ended December 31 (in thousands, except share and per share data):

2000 1999 1998
-------------------------------- -------------------------------- --------------------------------
PER- PER- PER-
SHARE SHARE SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT INCOME SHARES AMOUNT
-------- ---------- -------- -------- ---------- -------- -------- ---------- --------

Basic earnings (loss)
per share
Net income......... $33,388 $23,282 $24,557
Deemed dividend on
preferred stock
repurchase....... -- -- (32,273)
------- ------- -------
Net income (loss)
applicable to
common
stockholders..... $33,388 20,931,111 $1.60 $23,282 20,998,097 $1.11 $(7,716) 20,136,117 $(0.38)
======= ========== ===== ======= ========== ===== ======= ========== ======
Diluted earnings
(loss) per share
Net income (loss)
applicable to
common
stockholders..... $33,388 20,931,111 $23,282 20,998,097 $(7,716) 20,136,117
Diluted effect of
exercise of
options
outstanding...... 35,594 74,339 --
Diluted effect of
stock-based
compensation
programs......... 130,535 -- --
------- ---------- ------- ---------- ------- ----------
Net income (loss)
applicable to
common
stockholders..... $33,388 21,097,240 $1.58 $23,282 21,072,436 $1.10 $(7,716) 20,136,117 $(0.38)
======= ========== ===== ======= ========== ===== ======= ========== ======

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. EARNINGS PER SHARE INFORMATION (CONTINUED)
The following items were not included in the computation of diluted earnings
per share because their effect in the aggregate was anti-dilutive for the years
ended December 31:

2000 1999 1998
-------------- -------------- -----------------------

Stock options
Outstanding................... 2,574,029 2,008,659 2,337,118
Price ranges.................. $ 11.81-$36.75 $ 16.38-$36.75 $ 0.30-$37.31
Expiration ranges............. 6/8/04-8/31/10 6/8/04-5/31/09 4/18/99-7/22/08
Stock warrants
Outstanding................... 598,387 599,967 599,967
Price......................... $ 30.00 $ 30.00 $ 30.00
Expiration date............... 8/28/04 8/28/04 8/28/04

10. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

LONG-TERM DEBT. Based on dealer's quote, the estimated fair value of the
Company's $173.3 million Senior Subordinated Note, discussed in Note 6, is
$155.8 million.

Estimated fair values for the Revolving Credit Facilities and the remaining
long-term debts are not presented because the Company believes that it is not
materially different from book value, primarily because the majority of the
Company's debt is based on variable rates.

11. INDUSTRY SEGMENTS

In July 1999, the Company undertook a reorganization to streamline its US
operations which resulted in a change in its segment reporting from four to
three segments. The Company has a number of lines of business which are
aggregated, reported and managed through these three segments: Transaction
Management, Financial Services and Management Services. The Transaction
Management segment is our largest generator of revenue and operating income and
includes Brokerage Services, Corporate Services and Investment Property
activities. Brokerage Services includes activities that provide sales, leasing
and consulting services in connection with commercial real estate and is the
Company's primary revenue source. Corporate Services focuses on building
relationships with large corporate clients which generate recurring revenue.
Investment Property activities provide brokerage services for commercial real
property marketed for sale to institutional and private investors. The Financial
Services segment provides commercial mortgage, valuation, investment management
and consulting and research services. The Management Services segment provides
facility management services to corporate real estate users and property
management and related services to owners. The

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. INDUSTRY SEGMENTS (CONTINUED)
following table summarizes the revenue, cost and expenses, and operating income
(loss) by operating segment for the year ended December 31, 2000, 1999 and 1998
(in thousands):

YEAR ENDED DECEMBER 31
------------------------------------
2000 1999 1998
---------- ---------- ----------

REVENUE:
Transaction Management
Leases $ 510,287 $ 426,108 $ 352,811
Sales.................................................. 378,486 383,726 330,206
Other consulting and referral fees (1)................. 61,479 71,095 79,934
---------- ---------- ----------
Total revenue.......................................... 950,252 880,929 762,951
Financial Services
Appraisal fees......................................... 72,861 69,007 48,090
Loan origination and servicing fees.................... 58,188 45,938 39,402
Investment management fees............................. 40,433 27,323 32,591
Other (1).............................................. 42,622 35,059 25,167
---------- ---------- ----------
Total revenue.......................................... 214,104 177,327 145,250
Management Services
Property management fees............................... 83,251 79,994 67,300
Facilities management fees............................. 23,069 25,597 17,219
Other (1).............................................. 52,928 49,192 41,783
---------- ---------- ----------
Total revenue.......................................... 159,248 154,783 126,302
Consolidated revenues.................................... $1,323,604 $1,213,039 $1,034,503
========== ========== ==========
OPERATING INCOME (LOSS)
Transaction Management................................. $ 83,305 $ 68,382 $ 81,232
Financial Services..................................... 17,712 7,113 6,849
Management Services.................................... 6,268 1,404 6,980
Merger-related and other nonrecurring charges.......... -- -- (16,585)
---------- ---------- ----------
107,285 76,899 78,476
INTEREST INCOME.......................................... 2,554 1,930 3,054
INTEREST EXPENSE......................................... 41,700 39,368 31,047
---------- ---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES................. $ 68,139 $ 39,461 $ 50,483
========== ========== ==========
DEPRECIATION AND AMORTIZATION
Transaction Management................................. $ 21,342 $ 20,676 $ 13,722
Financial Services..................................... 12,001 10,719 11,025
Management Services.................................... 9,856 9,075 7,438
---------- ---------- ----------
$ 43,199 $ 40,470 $ 32,185
========== ========== ==========

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. INDUSTRY SEGMENTS (CONTINUED)

YEAR ENDED DECEMBER 31
------------------------------------
2000 1999 1998
---------- ---------- ----------

CAPITAL EXPENDITURES
Transaction Management................................. $ 15,435 $ 15,830 $ 12,669
Financial Services..................................... 6,674 11,030 10,179
Management Services.................................... 4,812 8,270 6,867
---------- ---------- ----------
$ 26,921 $ 35,130 $ 29,715
========== ========== ==========
EQUITY INTEREST IN EARNINGS OF UNCONSOLIDATED
SUBSIDIARIES
Transaction Management................................. $ 3,930 $ 2,542 $ 315
Financial Services..................................... 1,162 4,030 706
Management Services.................................... 2,020 956 2,422
---------- ---------- ----------
$ 7,112 $ 7,528 $ 3,443
========== ========== ==========

- ------------------------

DECEMBER 31
-------------------
2000 1999
-------- --------

Identifiable assets
Transaction Management................................ $477,268 $444,422
Financial Service1s................................... 261,682 246,151
Management Services................................... 159,835 171,118
Corporate............................................. 64,320 67,792
-------- --------
$963,105 $929,483
======== ========

Identifiable assets by industry segment are those assets used in the Company
operations in each segment. Corporate identified assets are principally made up
of cash and cash equivalents and deferred taxes.

DECEMBER 31
-------------------
2000 1999
-------- --------

Investment in and advances to unconsolidated
subsidiaries
Transaction Management................................ $ 14,208 $ 11,352
Financial Services.................................... 15,199 18,587
Management Services................................... 11,918 8,575
-------- --------
$ 41,325 $ 38,514
======== ========

CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. INDUSTRY SEGMENTS (CONTINUED)
GEOGRAPHIC INFORMATION:

YEAR ENDED DECEMBER 31
------------------------------------
2000 1999 1998
---------- ---------- ----------

Revenue
Americas
United States........................ $1,027,359 $ 940,341 $ 884,304
Canada, South and Central America.... 46,721 42,112 16,473
---------- ---------- ----------
1,074,080 982,453 900,777

Asia Pacific........................... 84,985 79,420 46,528
Europe, Middle East and Africa......... 164,539 151,166 87,198
---------- ---------- ----------
$1,323,604 $1,213,039 $1,034,503
========== ========== ==========

DECEMBER 31
-------------------
2000 1999
-------- --------

Long-lived assets
United States........................................... $55,100 $51,064
All other countries..................................... 20,892 19,085
------- -------
$75,992 $70,149
======= =======

Long-lived assets include property, plant and equipment.

12. SUBSEQUENT EVENT

On February 24, 2001, the Company announced that it had entered into a
merger agreement providing for the acquisition of the Company by Blum CB
Corporation (Blum CB) for $16.00 per share in cash. Blum CB is an affiliate of
Blum Capital Partners, Freeman Spogli & Co. and certain directors and executive
officers of the Company. The transaction is valued at approximately
$750.0 million, including the assumption and refinancing of debt.

The agreement provides that the Company employees will have the option to
roll over their existing shares in the Company's deferred compensation plan and
a portion of the Company shares held in their 401(k) accounts. Employees will
also be provided the opportunity to make a direct equity investment in the
surviving company.

The acquisition, which is expected to close late in the second quarter,
remains subject to certain conditions, including the receipt of Blum CB's debt
financing, the approval of the merger by the holders of two-thirds of the
outstanding shares of the Company not owned by the buying group, the expiration
or termination of waiting periods under applicable antitrust laws and a
successful tender offer for at least 51% of the Company's outstanding 8 7/8%
Senior Subordinated Notes. The Company will pay a termination fee of
$7.5 million and reimburse up to $3.0 million of the buying group's expenses if
the Company wishes to accept a superior acquisition proposal. No workforce
reductions are contemplated in connection with the acquisition.

CB RICHARD ELLIS SERVICES, INC.

QUARTERLY RESULTS OF OPERATIONS AND OTHER FINANCIAL DATA

(UNAUDITED)

The following table sets forth the Company's unaudited quarterly results of
operations. The unaudited quarterly information should be read in conjunction
with the audited consolidated financial statements of the Company and the notes
thereto. The operating results for any quarter are not necessarily indicative of
the results for any future period.

2000 1999
------------------------------------------------- -------------------------------------------------
DEC. 31 SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30 JUNE 30 MARCH 31
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)

RESULTS OF OPERATION:

Revenue.................. $ 418,280 $ 326,521 $ 317,884 $ 260,919 $ 395,653 $ 307,018 $ 277,167 $ 233,201
Operating income......... $ 50,617 $ 24,884 $ 22,545 $ 9,239 $ 35,197 $ 20,046 $ 16,580 $ 5,076
Interest expense, net.... $ 9,018 $ 10,039 $ 10,893 $ 9,196 $ 9,629 $ 9,503 $ 9,667 $ 8,639
Net income (loss)........ $ 20,914 $ 6,977 $ 5,477 $ 20 $ 17,031 $ 4,648 $ 3,356 $ (1,753)
Basic EPS(1)............. $ 0.99 $ 0.34 $ 0.26 $ -- $ 0.81 $ 0.22 $ 0.16 $ (0.08)
Weighted average shares
outstanding for basic
EPS(1)................. 21,217,685 20,086,651 20,879,218 20,819,268 20,928,615 21,098,757 21,032,324 20,640,438
Diluted EPS(1)........... $ 0.97 $ 0.33 $ 0.26 $ -- $ 0.81 $ 0.22 $ 0.16 $ (0.08)
Weighted average shares
outstanding for diluted
EPS(1)................. 21,554,942 20,881,092 20,906,117 20,851,184 20,964,066 21,162,334 21,125,074 20,640,438

OTHER FINANCIAL DATA:

EBITDA................... $ 61,682 $ 35,718 $ 33,276 $ 19,808 $ 45,704 $ 30,047 $ 26,548 $ 15,070
Net cash provided by
(used in) operating
activities............. $ 86,601 $ 48,528 $ 16,505 $ (67,522) $ 71,174 $ 47,062 $ 10,122 $ (54,347)
Net cash (used in)
provided by investing
activities............. $ (7,350) $ (16,255) $ (18,431) $ 6,314 $ (5,417) $ (6,863) $ (16,327) $ 1,840
Net cash (used in)
provided by financing
activities............. $ (80,037) $ (28,824) $ (3,456) $ 58,794 $ (62,330) $ (27,820) $ 2,389 $ 50,040

BALANCE SHEET DATA:

Cash and cash
equivalents............ $ 20,854 $ 20,724 $ 19,195 $ 24,791 $ 27,844 $ 25,122 $ 12,553 $ 17,425
Total assets............. $ 963,105 $ 930,029 $ 904,925 $ 897,756 $ 929,483 $ 871,159 $ 841,311 $ 824,757
Total long-term debt..... $ 303,571 $ 390,624 $ 418,231 $ 416,531 $ 357,872 $ 413,227 $ 435,419 $ 431,135
Total liabilities........ $ 724,018 $ 717,618 $ 693,416 $ 687,765 $ 715,874 $ 670,685 $ 648,801 $ 634,707
Total stockholders
equity................. $ 235,339 $ 209,569 $ 208,276 $ 206,711 $ 209,737 $ 196,324 $ 187,819 $ 185,259
Number of shares
outstanding............ 20,605,023 20,246,122 20,270,560 20,408,692 20,435,692 20,686,995 20,794,165 20,640,865

RATIOS:

Debt/equity.............. 1.33 1.88 2.03 2.04 1.74 2.13 2.35 2.37
EBITDA/net interest
expense................ 6.84 3.56 3.05 2.15 4.75 3.16 2.75 1.74
EBITDA as a percentage of
revenue................ 14.7% 10.9% 10.5% 7.6% 11.6% 9.8% 9.6% 6.5%
Net income as a
percentage of
revenue................ 5.0% 2.1% 1.7% -- 4.3% 1.5% 1.2% (0.8)%
International revenue as
a percentage of
consolidated revenue... 21.6% 21.8% 22.7% 23.9% 22.5% 22.5% 22.3% 22.6%

- ----------------------------------

(1) EPS is defined as earnings (loss) per share

CB RICHARD ELLIS SERVICES, INC.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

(DOLLARS IN THOUSANDS)

ABOVE
MARKET ALLOWANCE
LEASE FOR BAD LEGAL OTHER
RESERVE DEBTS RESERVE RESERVES
-------- --------- -------- --------

Balance, December 31, 1997............................. $ -- $ 8,980 $ 9,807 $ 9,108
CB Canada balances at the date of acquisition........ -- 606 -- --
REI balances at the date of acquisition.............. -- 2,211 -- 256
Hillier Parker balances at the date of acquisition... 13,360 895 72 421
Charges to expense................................... -- 2,978 1,843 364
Write-offs, payments and other....................... (54) (2,322) (1,623) (6,004)
------- ------- ------- -------
Balance, December 31, 1998............................. 13,306 13,348 10,099 4,145
Charges to expense................................... -- 2,560 2,164 26
Write-offs, payments and other....................... (384) (348) (4,000) (2,526)
------- ------- ------- -------
Balance, December 31, 1999............................. 12,922 15,560 8,263 1,645
Charges to expense................................... -- 3,061 2,015 49
Write-offs, payments and other....................... (1,568) (5,990) (5,139) (291)
------- ------- ------- -------
Balance, December 31, 2000............................. $11,354 $12,631 $ 5,139 $ 1,403
======= ======= ======= =======

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

THE FOLLOWING IS A DESCRIPTION OF THE POSITIONS WITH THE COMPANY PRESENTLY
HELD BY AND THE BUSINESS EXPERIENCE FOR THE PAST FIVE YEARS FOR EACH DIRECTOR
AND EXECUTIVE OFFICER OF THE COMPANY.

STANTON D. ANDERSON, AGE 60. Mr. Anderson has been a Director of the
Company since 1989. From 1995 to 1997, he served as counsel to the law firm of
McDermott, Will & Emery and became partner of the firm and head of the
Legislative Practice department in 1998. Prior to 1995, Mr. Anderson was
founding partner in the law firm of Anderson, Hibey & Blair. He is also a
founder of Global USA, Inc., an international consulting company, where he
serves as Chairman. He served as Deputy Director of the Republican Convention in
1980, 1984 and 1988, as counsel to the Regan-Bush Campaign in 1980 and as a
Director of the 1980 Presidential Transition. Mr. Anderson serves on the Board
of Directors of International Management & Development Group, Ltd., and Center
for International Private Enterprise. He is a member of the Board of Advisors of
Westmont College. Mr. Anderson holds a B.A. degree from Westmont College and a
J.D. degree from Willamette University School of Law.

GARY J. BEBAN, AGE 54. Mr. Beban has been President, Corporate Services
since 1997 and a Director since 1989. Mr. Beban has been Senior Executive
Managing Director, Global Corporate Advisory Group since 1998. He joined the
Company's Los Angeles office in 1970 as an industrial and investment properties
specialist and thereafter served in several management positions in Chicago.
Mr. Beban was President, Brokerage Services from 1989 to 1997. He is a member of
the Industrial Development Research Council and the National Realty Committee.
Mr. Beban serves on the Board of Directors of The First American Financial
Corporation and its wholly owned subsidiary, First American Title
Insurance, Inc. Mr. Beban holds a B.A. degree from the University of California,
Los Angeles.

RICHARD C. BLUM, AGE 65. Mr. Blum has been a Director of the Company since
1993. He is the Chairman and President of Blum Capital Partners, a merchant
banking firm he founded in 1975. Mr. Blum is a member of the Board of Directors
of Northwest Airlines Corporation; Glenborough Realty; URS Corporation and
Playtex Products, Inc. Mr. Blum also serves as Vice Chairman of URS Corporation.
Mr. Blum holds a B.A. degree from the University of California, Berkeley, a
graduate degree from the University of Vienna and an M.B.A. degree from the
University of California, Berkeley.

JAMES J. DIDION, AGE 61. Mr. Didion has been Chairman of the Company since
January 1989 and a Director since the Company's incorporation. From 1989 to May
of 1999, he served as Chief Executive Officer. Prior to 1989 he served as
President of the Company following a career of almost 24 years in sales and
management positions in the commercial brokerage operations of CB Richard
Ellis, Inc. (CBRE). Mr. Didion is a member and current trustee of the Urban Land
Institute. He is also a member of the National Realty Committee and was Chairman
of the National Realty Committee from 1993 through June 1996. Mr. Didion holds
an B.A. degree from the University of California, Berkeley and serves on the
University's Advisory Board for the Haas School of Business.

BRADFORD M. FREEMAN, AGE 59. Mr. Freeman has been a Director of the Company
since August 1997. Mr. Freeman was a Director of Koll Real Estate Services and
Koll Management Services, Inc. from November 1994 to August 1997. Mr. Freeman is
a founding partner of Freeman Spogli & Co. Incorporated, a private investment
company, and its affiliated investment partnerships or companies, founded in
1983. Mr. Freeman is also a member of the Board of Directors of RDO

Equipment Company, an agricultural and industrial equipment distributor.
Mr. Freeman holds a B.A. degree from Stanford University and an M.B.A. degree
from Harvard University.

DONALD M. KOLL, AGE 67. Mr. Koll has been a Director of the Company since
August 1997. Mr. Koll was a Director of Koll Real Estate Services from
November 1994 to August 1997 and Chairman from August 1996 to August 1997. He
also served as Chairman and as a Director of Koll Management Services, Inc. from
June 1988 to August 1997, and served as the Chief Executive Officer of Koll
Management Services, Inc. from June 1988 to May 1991. Mr. Koll founded The Koll
Company in 1962 and has served as Chairman and Chief Executive Officer of The
Koll Company since that time. Since June 1992, Mr. Koll has been a Director and
has served as an executive officer of Koll Real Estate Group, Inc., a real
estate services company, which filed for Chapter 11 bankruptcy protection on
July 14, 1997 with a reorganization plan pre-approved by its bondholders.
Mr. Koll is also a Director of The Irvine Company and Fidelity National
Financial, Inc., a title company. He holds a B.A. degree from Stanford
University.

PAUL C. LEACH, AGE 55. Mr. Leach has been a Director of the Company since
August 1996. Since its founding in 1991, Mr. Leach has served as President of
Paul Leach & Company, a private investment-banking firm in San Francisco that
specializes in international and domestic acquisitions and investments. He was
Managing Director of The Lone Cypress Company, the then owner of Pebble Beach
Company, from 1992 to 1999. Since 1999, he has been a director of the Lone
Cypress Company, LLC, the current owner of Pebble Beach Company. From 1988
through 1991, Mr. Leach was a senior manager and partner in the international
merger and acquisition group at Deloitte & Touche. Prior to 1988, he held
several positions in San Francisco, including serving as a partner with both
Osterweis Capital Management and Centennial Petroleum Company and manager of
corporate development for Natomas Company. From 1975 through 1977, Mr. Leach
served as associate director of the Domestic Council Staff at the White House
during the Ford Administration. Mr. Leach holds an A.B. degree from Dartmouth
College and M.B.A. and J.D. degrees from Stanford Graduate School of Business
and Stanford Law School, respectively.

DAVID R. LIND, AGE 51. Mr. Lind is a Senior Vice President of the Company
and has been a real estate salesperson with the Company since November 1977.
Mr. Lind participated in the PGA Tour from 1975 to 1977. Mr. Lind holds a B.A.
degree from Duke University.

FREDERIC V. MALEK, AGE 64. Mr. Malek has been a Director of the Company
since 1989 and served as Co-Chairman from April 1989 to November 1996. He has
served as Chairman of Thayer Capital Partners, a merchant banking firm he
founded, since 1993. He was President of Marriott Hotels and Resorts from 1981
through 1988 and was Executive Vice President of Marriott Corp. from 1978
through 1988. He was Senior Advisor to the Carlyle Group, L.P., a merchant
banking firm, from November 1988 through December 1991. From September 1989
through June 1990, he was President of Northwest Airlines and from June 1990
through December 1991, he served as Vice Chairman of Northwest Airlines. From
December 1991 through November 1992, Mr. Malek served as Campaign Manager for
the 1992 Bush/Quayle presidential campaign. He also serves on the Board of
directors of American Management Systems, Inc.; Automatic Data Processing Corp.;
FPL Group, Inc.; Manor Care, Inc.; Northwest Airlines Corporation; Paine Webber
Funds; Sega Systems, Inc., Global Vacation Group, and Aegis
Communications Co., Inc. Mr. Malek holds a B.S. degree from the United States
Military Academy at West Point and an M.B.A. degree from the Harvard University
Graduate School of Business.

RAY ELIZABETH UTTENHOVE, AGE 52. Ms. Uttenhove has been a Director of the
Company since August 1997 and Senior Vice President of the Company since
September 1997. Ms. Uttenhove also served as First Vice President of Retail
Tenant Services for the Company from August 1995 to September 1997.
Ms. Uttenhove joined the Company in March 1981. She has been named to the
Company's Colbert Coldwell Circle (representing the top three percent of the
Company's sales force)

for 1995 and 1996. In 1995 she was awarded the William H. McCarthy Award, the
highest honor awarded producing professionals within the Company. Ms. Uttenhove
holds a B.A. degree from Mary Baldwin College and M.A. and M. Ed. Degrees from
Georgia State University.

W. BRETT WHITE, AGE 41. Mr. White has been Chairman, The Americas since May
of 1999 and was President, Brokerage Services from August 1997 to May 2000.
Previously, he was Executive Vice President of CBRE from March 1994 to
July 1997, and Managing Officer of the CBRE Newport Beach, California office
from 1992 to March 1994. Mr. White attended the University of California, Santa
Barbara from 1979-1984.

GARY L. WILSON, AGE 61. Mr. Wilson has been a Director of the Company since
1989. Since April 1997, Mr. Wilson has been Chairman of Northwest Airlines
Corporation, for which he served as Co-Chairman from January 1991 to
April 1997. From 1985 until January 1990, Mr. Wilson was an Executive Vice
President, Chief Financial Officer and Director for The Walt Disney Company and
remains a Director of The Walt Disney Company. Mr. Wilson also serves on the
Board of directors of On Command Corporation and Veritas Holdings GmbH. From
1974 until 1985, he was Executive Vice President and Chief Financial Officer of
Marriott Corporation. Mr. Wilson holds a B.A. degree from Duke University and an
M.B.A. degree from the Wharton Graduate School of Business and Commerce at the
University of Pennsylvania.

RAYMOND E. WIRTA, AGE 57. Mr. Wirta has been Chief Executive Officer of the
Company since May 1999 and a Director since August 1997. He served as Chief
Operating Officer from May 1998 to May 1999. Mr. Wirta was Chief Executive
Officer and a Director of Koll Real Estate Services from November 1994 to
August 1997. Prior to that, Mr. Wirta held various management positions with
Koll Management Services, Inc. since 1981. Mr. Wirta was a member of the Board
of Directors and served as Chief Executive Officer from June 1992 to
November 1996 to Koll Real Estate Group, Inc., which filed for Chapter 11
Bankruptcy protection on July 14, 1997 with a reorganization plan pre-approved
by its bondholders. Mr. Wirta holds a B.A. degree from California State
University, Long Beach and an M.B.A. degree in International Management from
Golden Gate University.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:

WALTER V. STAFFORD, AGE 60. Mr. Stafford has been Senior Executive Vice
President and General Counsel of the Company since July 1995 and Secretary since
May 1998. From November of 1988 to June of 1995 and from January of 1973 to
March of 1982, he was a Partner in the law firm of Pillsbury Madison & Sutro.
From March of 1982 to November 1988, he was Executive Vice President, General
Counsel and a Director of Diasonics, Inc. Mr. Stafford holds a B.A. degree from
the University of California at Berkeley and a J.D. degree from Boalt Hall,
University of California at Berkeley.

JAMES LEONETTI, AGE 41. Mr. Leonetti joined CB Richard Ellis as Chief
Financial Officer in September 2000. He is a senior financial executive and CPA
with over 19 years of diverse experience in the areas of finance, real estate
development, banking, mortgage banking and credit administration. Mr. Leonetti
spent five years as an Assistant Controller with FarWest Financial and eight
years as a Senior Vice President and Controller at California Federal Bank. In
1987, when CalFed was sold to First Nationwide, Mr. Leonetti became Chief
Financial Officer of Long Beach Mortgage Company, where he remained until
mid-2000 after the sale of the company to Washington Mutual. Mr. Leonetti holds
a B.S. degree in business administration from the University of Southern
California.

DIRECTOR FILINGS PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934:

No directors or executive officers of the Company failed to file any report
required by Section 16(a) of the Securities Exchange Act of 1934, except that
the Form 5 for Paul Leach for 2000

was filed one day late due to his absence from the country and a Form 4 for Gary
Beban which should have been filed in 1998 with respect to the sale of 12,500
shares which was not filed until 2000.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth information
concerning the compensation of the Company's Chief Executive Officer and the
Company's four other executive officers for the three years ended December 31,
2000.

ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------- -----------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2)(3) AWARDS(3) OPTIONS COMPENSATION(4)
- ----------------------------- -------- -------- -------- ------------------ ---------- ---------- ---------------

Raymond E. Wirta............. 2000 $500,000 $972,000 $20,251 30,000 35,000 --
Chief Executive Officer 1999 412,523 300,000 12,000 -- -- --
1998 384,387 395,920 12,000 -- 80,000(5) --

James J. Didion.............. 2000 506,308 -- 12,000 -- -- --
Chairman of the Board 1999 496,795 -- 131,718 -- -- 860
1998 500,000 657,218 131,718 -- -- --

W. Brett White............... 2000 375,000 714,601 49,692 20,000 20,000 --
Chief Operating Officer 1999 331,846 225,000 45,342 -- 52,000 860
1998 281,250 318,908 45,342 25,000 48,000 --

James H. Leonetti............ 2000 72,115 82,500 -- -- 25,000 --
Senior Executive Vice
President 1999 -- -- -- -- -- --
and Chief Financial Officer 1998 -- -- -- -- -- --

Walter V. Stafford........... 2000 300,000 244,375 58,406 -- 10,000 --
Senior Executive Vice
President 1999 298,077 120,000 58,406 -- 20,000 860
Secretary and General Counsel 1998 300,000 257,550 58,001 -- -- --

- ------------------------------

(1) Bonus for each year is paid pursuant to the Annual Management Bonus Plan in
the first quarter of the following year, i.e.; the bonus shown for 2000 was
paid in March of 2001.

(2) With respect to Other Annual Compensation paid in 1998, 1999 and 2000, the
amounts listed for everyone except Mr. Leonetti include a $12,000 automobile
allowance. For Messrs. Wirta, Didion, Stafford and White, such amounts also
include interest accrued and forgiven under the promissory notes delivered
by them pursuant to the Company's 1996 Equity Incentive Plan (the "EIP").

(3) Pursuant to the Company's 1996 EIP, Messrs. Didion and Stafford purchased
respectively in 1996 175,027 and 48,640 shares of Common Stock for a
purchase price of $10 per share (the appraised value of the Common Stock at
the time of such purchase), which were paid by delivery of full recourse
promissory notes. Pursuant to the 1996 EIP, Mr. White purchased 25,000
shares of Common Stock in 1998 for a purchase price of $38.50 and 20,000
shares of Common Stock in 2000 for a purchase price of $12.875. Pursuant to
the 1996 EIP, Mr. Wirta purchased 30,000 shares of Common Stock in 2000 at a
purchase price of $12.875. All of these purchases were paid for by the
delivery of full recourse promissory notes. The Didion and Stafford notes
bear interest at a rate of 6.84% per annum, the White notes bear interest at
5.94% and 7.4%, respectively, and Mr. Wirta's note bears interest at 7.4%.
All such interest for any year is forgiven if the executive's performance
produces a high enough level of bonus (approximately $7,500 in interest is
forgiven for each $10,000 bonus). A First Amendment to Mr. White's 1998
Promissory Note provides that the portion of the then outstanding principal
in excess of the fair market value of the shares shall be forgiven in the
event that Mr. White is an employee of the Company or its subsidiaries on
November 16, 2002 and the fair market value of a share of the Company's
Common Stock is less than $38.50 on November 16, 2002. In the event of any
such principal forgiveness, the Company shall pay to Mr. White an amount
equal to any federal, state or local income tax liability resulting from
such principal forgiveness. The aggregate number and value of such shares
held by the individuals named above as of December 31, 2000, net of the
purchase price of such shares was as follows: Mr. Didion--175,027
($809,500); Mr. Stafford--48,640 ($224,965), Mr. White--45,000 (negative
$561,875) and Mr. Wirta--30,000 ($52,500). The shares vest at the rate of
5 percent per quarter, commencing December 31, 1995 in the case of
Messrs. Didion and Stafford, March 31, 1998 and September 30, 2000 in the
case of Mr. White and at September 30, 2000 in the case of Mr. Wirta. As a
result of bonuses paid in 1999, 2000, and in 2001, all interest on
Mr. Stafford's and Mr. White's promissory notes for 1998, 1999 and 2000 was
forgiven. As a result of a bonus paid in 1999, all interest on Mr. Didion's
promissory note for 1998 was forgiven. As a result of the decision of the
Compensation Committee in February

of 2000, Mr. Didion's interest for 1999 was also forgiven. Interest on
Mr. Didion's promissory note was not forgiven in 2000. As a result of a
bonus paid in 2001, all interest on Mr. Wirta's note for 2000 was forgiven.

(4) Consists of each individual's allocable share of profit sharing
contributions made by the Company to the Company's Cap Plan (a qualified
profit sharing 401(k) plan).

(5) In each of 1997 and 1998, Mr. Wirta received an option to purchase 100,000
shares of Common Stock (total of 200,000 shares), which were amended on
December 15, 1998. Pursuant to the amendment, the options were repriced to
$20 and the number of shares underlying each option was reduced by 20% from
100,000 to 80,000 shares (total of 160,000 shares).

As part of the senior management succession planning which began in early
1998, upon election by the Board of Directors at the 1999 Annual Meeting, Ray
Wirta succeeded James Didion as the Company's CEO. Mr. Didion will continue as
Chairman at the pleasure of the Board. As part of this change, the Company and
Mr. Didion have entered into an amended and restated ten-year employment
agreement which provides for an annual salary of $500,000 with no incentive
compensation or bonus anticipated. Mr. Didion will act as a Senior Adviser to
the Company during the term of his employment. For so long as he is employed,
the Company will provide Mr. Didion with medical and other benefits generally
made available to senior officers and an office, a secretary and clerical help.
The amended agreement is terminable by the Company for cause. Cause includes
conviction of a felony, fraud and willful and substantial failure to render
services. If the agreement is terminated without cause or in the event of his
death or total disability, Mr. Didion (or his estate) will continue to be
entitled to the salary and will be fully vested in any unvested stock options or
stock purchase rights.

OPTION GRANTS TABLE. The following table sets forth information concerning
grants of stock options during the year ended December 31, 2000 to the persons
named in the preceding table.

POTENTIAL REALIZABLE
PERCENTAGE VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM
UNDERLYING OPTION EMPLOYEES PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) IN 2000 SHARE DATE 5% 10%
- ---- ----------------- ---------- --------- ---------- ---------- ----------

Raymond E. Wirta.......... 35,000 7.2% $12.875 8/31/10 $283,395 $718,200
James H. Leonetti......... 25,000 5.1% 12.875 8/31/10 202,425 513,000
W. Brett White............ 20,000 4.1% 12.875 8/31/10 161,940 410,400
Walter V. Stafford........ 10,000 2.1% 12.875 8/31/10 80,970 205,200

- ------------------------

(1) The options vest 20% per year beginning August 7, 2001.

AGGREGATED OPTIONS TABLE. The following table sets forth information
concerning unexercised options held as of December 31, 2000 by the persons named
in the table under "Summary Compensation Table". As of February 28, 2001, no
options had been exercised by any of such persons.

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
2000 DECEMBER 31, 2000
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------

James J. Didion....... -- -- 200,000 -- -- --
Raymond E. Wirta...... -- -- 32,000 163,000 -- $61,250
W. Brett White........ -- -- 29,600 90,400 $3,900 50,600
James H. Leonetti..... -- -- -- 25,000 -- 43,750
Walter V. Stafford.... -- -- 4,000 26,000 1,500 23,500

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of
the shares of CB Richard Ellis Services common stock as of February 28, 2001 by
each of CB Richard Ellis Services' directors and executive officers, CB Richard
Ellis Services' directors and executive officers as a group, and all other
stockholders known by CB Richard Ellis Services to beneficially own more than
five percent of CB Richard Ellis Services common stock. Except as otherwise
indicated, each person listed in the table possesses sole voting power and
dispositive power over the shares indicated as beneficially owned by such
person.

NUMBER OF
BENEFICIAL OWNER SHARES PERCENT
- ---------------- --------- --------

Capital Group International, Inc. (1)....................... 2,195,400 10.43%
Capital Guardian Trust Company
11100 Santa Monica Blvd.
Los Angeles, California 90025
Dimensional Fund Advisors Inc. (2).......................... 1,230,600 5.84%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
FS Equity Partners III, L.P. (3)(4)......................... 3,630,033 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
FS Capital Partners L.P. (3)(4)............................. 3,630,033 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
FS Holdings, Inc. (3)(4).................................... 3,630,033 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
FS Equity Partners International, L.P. (3)(5)............... 137,314 *
c/o Paget Brown & Company, Ltd.
West Winds Building, Third Floor
P.O. Box 1111
Grand Cayman, Cayman Islands, B.W.I.
FS & Co. International, L.P. (3)(5)......................... 137,314 *
c/o Paget Brown & Company, Ltd.
West Winds Building, Third Floor
P.O. Box 1111
Grand Cayman, Cayman Islands, B.W.I.
FS International Holdings Limited (3)(5).................... 137,314 *
c/o Paget Brown & Company, Ltd.
West Winds Building, Third Floor
P.O. Box 1111
Grand Cayman, Cayman Islands, B.W.I.
Ronald P. Spogli (3)(6)..................................... 3,767,347 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
William M. Wardlaw (3)(6)................................... 3,767,347 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025

NUMBER OF
BENEFICIAL OWNER SHARES PERCENT
- ---------------- --------- --------

J. Frederick Simmons (3)(6)................................. 3,767,347 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
John M. Roth (3)(6)......................................... 3,767,347 17.90%
599 Lexington Avenue, 18th Floor
New York, New York 10022
Charles R. Rullman, Jr. (3)(6).............................. 3,767,347 17.90%
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
RCBA GP, L.L.C. (3)(7)...................................... 6,974,126 33.13%
909 Montgomery Street, Suite 400
San Francisco, California 94133
RCBA Strategic Partners, L.P. (3)(7)........................ 6,974,126 33.13%
909 Montgomery Street, Suite 400
San Francisco, California 94133
CBRE Holding, Inc. (3)(7)................................... 6,974,126 33.13%
909 Montgomery Street, Suite 400
San Francisco, California 94133
Stanton D. Anderson (8)..................................... 10,997 *
Gary J. Beban (8)........................................... 169,246 *
Richard C. Blum (3)(7)(8)(9)................................ 8,067,317 38.32%
James J. Didion (8)(10)(11)................................. 504,864 2.40%
Bradford M. Freeman (3)(6).................................. 3,767,347 17.90%
Donald M. Koll (3)(8)(12)................................... 1,133,019 5.38%
Paul C. Leach (8)........................................... 9,943 *
James H. Leonetti........................................... *
David R. Lind (8)........................................... 14,594 *
Frederic V. Malek (3)(8)(13)................................ 409,983 1.95%
Walter V. Stafford (8)...................................... 68,398 *
Ray E. Uttenhove (8)(11)(14)................................ 8,328 *
Brett White (3)(8).......................................... 88,175 *
Gary L. Wilson (8).......................................... 15,407 *
Raymond E. Wirta (3)(8)(15)................................. 644,526 3.06%
All directors and executive officers as a group (15 persons) 9,690,984 46.04%
(16)......................................................

- ------------------------

* Less than 1%.

(1) Based upon an Amendment No. 3 to Schedule 13G dated December 29, 2000.
Capital Group International, Inc. is the parent holding company of a group
of investment management companies that hold investment and/or voting power
over the shares indicated, and Capital Group International, Inc. may be
deemed to beneficially own such shares, with sole voting power over
1,662,800 such shares and sole dispositive power over 2,195,400 of such
shares. Capital Guardian Trust Company is a wholly owned subsidiary of
Capital Group International, Inc. and a bank within the meaning of
Section 3(a)(6) of the Securities Exchange Act of 1934 and is deemed to be
the beneficial owner of the shares indicated, with sole voting power over
1,662,800 of such shares and sole dispositive power over 2,195,400 of such
shares, as a result of serving as an investment manager for various
institutional accounts.

(2) Based upon a Schedule 13G dated December 31, 2000. Dimensional Fund
Advisors Inc. is an investment advisor registered under the Investment
Advisers Act of 1940, serving as investment

manager for certain investment companies, trusts and accounts which own the
indicated shares, and Dimensional Fund Advisors Inc. has sole voting and
sole dispositive power over all of such shares. Dimensional Fund
Advisors Inc. disclaims beneficial ownership of all of such shares.

(3) A party to, or an affiliate of a party to, the Contribution and Voting
Agreement dated February 23, 2001, described below. Under Section 13(d) of
the Securities Exchange Act of 1934, such parties and affiliates may be
deemed to constitute a "group" which beneficially owns up to 8,944,641
shares of Common Stock of the Company, representing approximately 39.63% of
the shares of Common Stock outstanding.

(4) Based upon an Amendment No. 2 to Schedule 13D dated December 4, 2000. Each
of FS Equity Partners III, L.P., FS Capital Partners, L.P. and FS
Holdings, Inc. is deemed to beneficially own the indicated shares, 351,585
of which shares are shares underlying warrants. Such entities have shared
voting power and shared dispositive power over all of the shares
beneficially owned by them. FS Holdings, Inc. is the general partner of FS
Capital Partners L.P., which is the general partner of FS Equity Partners
III, L.P.

(5) Based upon an Amendment No. 2 to Schedule 13D dated December 4, 2000. Each
of FS Equity Partners International, L.P., FS & Co. International, L.P. and
FS International Holdings Limited is deemed to beneficially own the
indicated shares, 13,299 of which shares are shares underlying warrants.
Such entities have shared voting power and shared dispositive power over all
of the shares beneficially owned by them.

(6) Based upon an Amendment No. 2 to Schedule 13D dated December 4, 2000.
Consists of shares beneficially owned by FS Holdings, Inc. and FS
International Holdings Limited and includes 364,884 shares underlying
warrants. Messrs. Freeman, Spogli, Wardlaw, Simmons, Roth and Rullman are
directors, executive officers and shareholders of and therefore may be
deemed to beneficially own the securities beneficially owned by such
entities. Such individuals have shared voting power and shared dispositive
power over all of the shares beneficially owned by such entities. Such
individuals disclaim beneficial ownership of all of such shares beneficially
owned by such entities, except to the extent of such individuals' pecuniary
interest therein. Mr. Freeman is a director of the Company.

(7) Includes the following shares for which CBRE Holding, Inc. has been granted
voting proxy from the following entities and individuals pursuant to a
Contribution and Voting Agreement dated February 23, 2001, described below:
(i) 2,345,900 from RCBA Strategic Partners, L.P.; (ii) 3,402,463 from FS
Equity Partners III, L.P. and FS Equity Partners International, L.P.;
(iii) 734,290 from The Koll Holding Company; (iv) 397,873 from Frederic V.
Malek; (v) 58,600 from Brett White and (vi) 35,000 from Raymond E. Wirta.
RCBA GP, L.L.C. is the general partner of RCBA Strategic Partners, L.P.,
which wholly owns CBRE Holding, Inc. Company director Richard C. Blum is a
managing member of RCBA GP, L.L.C. RCBA GP, L.L.C., RCBA Strategic
Partners, L.P. and CBRE Holding, Inc. each have shared voting power and
shared dispositive power over the all of the shares indicated as being
beneficially owned by them.

(8) Represents number of shares of Common Stock which the named individual
beneficially owns as well as those which the individual has options to
acquire that are exercisable on or before May 31, 2001. The respective
numbers shown in the table include the following number of option shares for
the following individuals: Anderson--10,997; Beban--19,200; Blum--15,205;
Didion--200,000; Koll--5,538; Leach--9,943; Lind--2,143; Malek--12,110;
Stafford--4,000; Uttenhove--4,773; White--29,600; Wilson--12,692 and
Wirta--32,000.

(9) Based on an Amendment No. 4 to Schedule 13D dated February 27, 2001 and an
Amendment No. 2 to Schedule 13D dated November 13, 2000. Includes:
(i) 15,205 shares underlying options owned by Mr. Blum; (ii) 1,077,986
shares beneficially owned by Richard C. Blum &

Associates, Inc. as general partner of BLUM Capital Partners, L.P., which
either directly owns such shares or has voting and investment power over
them as general partner to certain limited partnerships that own them or
investment advisor to certain client accounts that own them;
(iii) 2,345,900 shares beneficially owned by RCBA GP, L.L.C.;
(iv) 3,402,463 shares beneficially owned by Freeman Spogli affiliates;
(v) 58,600 shares beneficially owned by Brett White; (vi) 35,000 shares
beneficially owned by Ray Wirta; (vii) 734,290 shares beneficially owned by
Koll Company affiliates and (viii) 397,873 shares beneficially owned by
Frederic Malek. Mr. Blum is a principal shareholder of Richard C. Blum &
Associates, Inc. and a managing member of RCBA GP, L.L.C. BLUM Capital
Partners, L.P. is a registered investment advisor under the Investment
Advisers Act of 1940. Mr. Blum has sole voting power and sole dispositive
power over 15,205 of the indicated shares and shared voting power and shared
dispositive power over 8,052,112 of the indicated shares. Mr. Blum disclaims
beneficial ownership of all of the indicated shares, except to the extent of
any pecuniary interest.

(10) Includes 7,000 shares held in trust for the benefit of three members of
Mr. Didion's immediate family.

(11) Excludes shares to which the named individual would not be entitled
pursuant to the CB Richard Ellis Services Deferred Compensation Plan.

(12) Based upon an Amendment No. 1 to Schedule 13D dated December 4, 2000.
Includes: (i) 319,983 shares underlying options and warrants owned directly
by Mr. Koll; (ii) 734,290 shares owned by The Koll Holding Company; and
(iii) 78,746 shares underlying warrants owned by The Koll Holding Company.
Mr. Koll is the sole trustee of the Donald M. Koll Separate Property Trust,
which wholly owns The Koll Company, which wholly owns The Koll Holding
Company. Raymond E. Wirta, the Company's Chief Executive Officer and a
Company director, holds an option granted by The Koll Holding Company to
acquire 521,590 of the shares and 55,936 of the warrants owned by The Koll
Holding Company, which shares are included in the number indicated for The
Koll Holding Company. Mr. Koll has sole voting power and sole dispositive
power over 319,983 of the indicated shares and shared voting power and
shared dispositive power over 813,033 of the indicated shares.

(13) Includes 12,110 shares underlying options and 98,000 shares owned by a
trust for which Mr. Malek is the trustee. Mr. Malek has sole voting power
and sole dispositive power over 12,110 of the indicated shares and shared
voting power and sole dispositive power over 392,873 of the indicated
shares.

(14) Includes 103 shares for which Ms. Uttenhove shares investment and voting
power with her husband.

(15) Includes: (i) 32,000 shares underlying options to purchase shares from the
Company; (ii) 521,590 shares owned by the Koll Holding Company that
Mr. Wirta has the right to acquire under an option granted by The Koll
Holding Company to Mr. Wirta and (iii) 55,936 shares owned by the Koll
Holding Company which Mr. Wirta has the right to acquire under a warrant
granted by the Koll Holding Company to Mr. Wirta. Mr. Wirta has shared
voting power and sole dispositive power over 35,000 of the indicated shares
and sole voting power and sole dispositive power over 612,526 of the
indicated shares.

(16) Includes 1,563,358 shares underlying options or warrants, including
Mr. Wirta's options and warrant to acquire an aggregate of 577,526 shares
held by The Koll Holding Company (counting such shares only once in such
total).

Agreement"), pursuant to which, subject to the approval and adoption of the
Merger Agreement by the stockholders of the Company in accordance with Delaware
law, and to other conditions set forth in the Merger Agreement, BLUM CB Corp.
will be merged into the Company with the Company as the surviving corporation
and a wholly-owned subsidiary of Holding (the "Merger"). Immediately following
the Merger, the majority of the common stock of Holding would be owned by
certain current stockholders, officers and directors of the Company or their
affiliates, causing a change of control of the Company. Such current
stockholders, officers and directors and/or their affiliates are parties to a
Contribution and Voting Agreement, dated February 23, 2001, among Holding, BLUM
CB Corp., RCBA Strategic Partners, L.P., FS Equity Partners III, L.P., FS Equity
Partners International, L.P., The Koll Holding Company, Frederic V. Malek,
Raymond E. Wirta and Brett White (the "Contribution and Voting Agreement").
Pursuant to the Contribution and Voting Agreement, such parties have agreed,
among other things, to vote all of the shares of Common Stock of the Company
owned by them, and any shares as to which they control the voting, in favor of
the Merger Agreement, the Merger and certain related transactions, at any
meeting of stockholders of the Company called to consider such matters.

As a result of the Contribution and Voting Agreement and other agreements
entered into prior thereto, the parties to the Contribution and Voting Agreement
and certain of their affiliates may be deemed to constitute a "group" within the
meaning of Section 13(d) of the Securities Exchange Act of 1934. Such group may
be deemed to beneficially own all of the shares of Common Stock of the Company
beneficially owned by any of the members of such group. As of February 28, 2001,
based on Schedules 13D and amendments thereto filed with the Securities and
Exchange Commission, the members of such group, collectively, beneficially owned
up to 8,944,641 shares of Common Stock of the Company (including options and
warrants), representing approximately 39.63% of the shares of Common Stock
outstanding. The members of such group that individually beneficially own 5% or
more of the Common Stock of the Company or are officers or directors of the
Company are listed in the table above and are indicated by footnote (3). Members
of such group that are not listed in the table are as follows: (a) BLUM CB
Corp., Richard C. Blum & Associates, Inc. and BLUM Capital Partners, L.P., all
of which are affiliates of Company director Richard C. Blum; and (b) The Donald
M. Koll Separate Property Trust, The Koll Company, The Koll Holding Company, all
of which are affiliates of Company director Donald M. Koll.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In February 1995 (to provide legal services in connection with the Company's
activities with certain Federal agencies) and in November 2000 (to represent the
Special Committee of the Board reviewing the going private transaction), the
Company retained the law firm of McDermott, Will & Emery, of which Mr. Anderson
is now a partner.

Pursuant to the Company's EIP, a restricted stock purchase plan, shares of
Common Stock were purchased in 1996, 1998 and 2000 by certain executive officers
and Directors named below for a purchase price equal to fair market value, which
was paid by delivery of full recourse promissory notes. The notes bear interest
at the minimum federal rate, which may be forgiven if the executive's
performance produces a high enough level of bonus (approximately $7,500 in
interest is forgiven for

each $10,000 bonus). The aggregate number, purchase price, interest rate, value
and net value of such shares held by the individuals named above as of
December 31, 2000 was as follows:

AGGREGATE AGGREGATE
NO. OF PURCHASE INTEREST VALUE OF
SHARES PRICE RATE SHARES NET VALUE
-------- ---------- -------- ---------- ---------

James J. Didion........................... 175,027 $1,750,270 6.84% $2,559,770 $ 809,500
Walter V. Stafford........................ 48,640 $ 486,400 6.84% $ 711,360 $ 224,960
W. Brett White............................ 25,000 $ 962,500 5.94% $ 365,625 $(596,875)
W. Brett White............................ 20,000 $ 257,500 7.40% $ 292,500 $ 35,000
Ray Wirta................................. 30,000 $ 386,250 7.40% $ 438,750 $ 52,500

The shares vest at the rate of 5 percent per quarter commencing on the
purchase date. As a result of bonuses paid in 2001, all interest on
Mr. Stafford's, Mr. White's and Mr. Wirta's promissory notes for 2000 were
forgiven. Interest on Mr. Didion's promissory note was not forgiven in 2000. In
1998, Mr. White purchased 25,000 shares of Common Stock for a purchase price of
$38.50 per share and in 2000, 20,000 shares of Common Stock for a purchase price
of $12.875 per share (in each case represents the market value of the Common
Stock on the date of purchase), which was paid for by the delivery of promissory
notes. The notes bear interest at a rate of 5.94% and 7.4% per annum,
respectively, which may be forgiven as previously described. As of December 31,
2000, Mr. White held 45,000 shares which, net of the purchase price, had a
negative value. The shares are subject to a right of repurchase by the Company,
which terminates with respect to 5% of the total number of shares each quarter
commencing March 31, 1998 as to the 25,000 shares and September 30, 2000 as to
the 20,000 shares. A First Amendment to the 1998 Promissory Note provides that
the portion of the then outstanding principal in excess of the fair market value
of the shares shall be forgiven in the event that Mr. White is an employee of
the Company or its subsidiaries on November 16, 2002 and the fair market value
of a share of the Company's Common Stock is less than $38.50 on November 16,
2002. In the event of any such principal forgiveness the Company shall pay to
Mr. White an amount equal to any federal, state or local income tax liability
resulting from such principal forgiveness. In August of 2000, the Company loaned
Mr. White $75,000 which he repaid in March of 2001 with interest at 9% per
annum.

On February 23, 2001, the Company entered into an Agreement and Plan of
Merger among the Company, CBRE Holding, Inc. (f/k/a BLUM CB Holding Corp.), a
Delaware corporation ("Holding"), BLUM CB Corp., a Delaware corporation and a
wholly-owned subsidiary of Holding (the "Merger Agreement"), pursuant to which,
subject to the approval and adoption of the Merger Agreement by the stockholders
of the Company in accordance with Delaware law, and to other conditions set
forth in the Merger Agreement, BLUM CB Corp. will be merged into the Company
with the Company as the surviving corporation and a wholly-owned subsidiary of
Holding (the "Merger"). Immediately following the Merger, the majority of the
common stock of Holding would be owned by certain current stockholders, officers
and directors of the Company or their affiliates, causing a change of control of
the Company. Such current stockholders, officers and directors and/or their
affiliates are parties to a Contribution and Voting Agreement, dated
February 23, 2001, among Holding, BLUM CB Corp., RCBA Strategic Partners, L.P.,
FS Equity Partners III, L.P., FS Equity Partners International, L.P., The Koll
Holding Company, Frederic V. Malek, Raymond E. Wirta and Brett White (the
"Contribution and Voting Agreement"). Pursuant to the Contribution and Voting
Agreement, such partners have agreed, among other things, to vote all of the
shares of Common Stock of the Company owned by them, and any shares as to which
they control the voting, in favor of the Merger Agreement, the Merger and
certain related transactions, at any meeting of shareholders of the Company
called to consider such matters.

The Company has entered into Indemnity Agreements with each of its present
Directors, some of whom are also officers of the Company.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)

1. FINANCIAL STATEMENTS

See Index to Consolidated Financial Statements set forth on page 24.

2. FINANCIAL STATEMENT SCHEDULE

See Index to Consolidated Financial Statements set forth on page 24.

3. Exhibits

See Exhibit Index beginning on page 54 hereof.

(b)

The registrant filed a Current Report on Form 8-K dated February 27, 2001
with regard to the announcement that it had entered into an Agreement and Plan
of Merger with an investment group led by Blum Capital Partners, L.P. and the
registrant's Chief Executive Officer.

The registrant filed a Current Report on Form 8-K dated February 21, 2001
with regard to a memorandum dated February 21, 2001 issued to the employees of
the Company by members of the Special Committee of the Board of Directors. This
memorandum discussed the status of their evaluation of the proposal by the
investment group led by Blum Capital Partners, L.P.

The registrant filed a Current Report on Form 8-K dated February 8, 2001
concerning the fourth quarter earnings conference call conducted by the Company.

The registrant filed a Current Report on Form 8-K dated January 24, 2001
with regard to a memorandum dated January 24, 2001 issued to the employees of
the Company and prepared by members of the Special Committee of the Board of
Directors. This memorandum contained further discussions of the status of their
evaluation of the proposal by the investment group led by Blum Capital
Partners, L.P.

The registrant filed a Current Report on Form 8-K dated December 12, 2000
with regard to a memorandum dated December 12, 2000 issued to the employees of
the Company by the members of the Special Committee of the Board of Directors.
This memorandum discussed the status of the Special Committee's evaluation of
the proposal by the investment group led by Blum Capital Partners, L.P.

The registrant filed a Current Report on Form 8-K dated November 10, 2000
concerning the Company's press release dated November 13, 2000 announcing that
it received a proposal from an investment group led by Blum Capital
Partners, L.P. to purchase all of the Company's outstanding common stock for a
cash purchase price of $15.50 per share.

The registrant filed a Current Report on Form 8-K dated November 2, 2000
concerning the third quarter earnings conference call conducted by the Company.

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.
(Registrant)

By: /s/ RAYMOND E. WIRTA
-----------------------------------------
Raymond E. Wirta
CHIEF EXECUTIVE OFFICER

Date: March 30, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ STANTON D. ANDERSON
------------------------------------------- Director March 30, 2001
Stanton D. Anderson

/s/ GARY J. BEBAN
------------------------------------------- Director March 30, 2001
Gary J. Beban

/s/ RICHARD C. BLUM
------------------------------------------- Director March 30, 2001
Richard C. Blum

/s/ JAMES J. DIDION
------------------------------------------- Chairman of the Board March 30, 2001
James J. Didion

/s/ BRADFORD M. FREEMAN
------------------------------------------- Director March 30, 2001
Bradford M. Freeman

/s/ DONALD M. KOLL
------------------------------------------- Director March 30, 2001
Donald M. Koll

/s/ PAUL C. LEACH
------------------------------------------- Director March 30, 2001
Paul C. Leach

SIGNATURE TITLE DATE
--------- ----- ----

/s/ JAMES H. LEONETTI
------------------------------------------- Chief Financial Officer March 30, 2001
James H. Leonetti

/s/ DAVID R. LIND
------------------------------------------- Director March 30, 2001
David R. Lind

/s/ FREDERIC V. MALEK
------------------------------------------- Director March 30, 2001
Frederic V. Malek

/s/ RAY ELIZABETH UTTENHOVE
------------------------------------------- Director March 30, 2001
Ray Elizabeth Uttenhove

/s/ W. BRETT WHITE
------------------------------------------- Director March 30, 2001
W. Brett White

/s/ GARY L. WILSON
------------------------------------------- Director March 30, 2001
Gary L. Wilson

/s/ RAYMOND E. WIRTA
------------------------------------------- Director and Chief March 30, 2001
Raymond E. Wirta Executive Officer

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------

2.1* Agreement and Plan of Reorganization dated as of May 13,
1997 by and among CB Commercial Real Estate Services
Group, Inc. (the "Company"), CBC Acquisition Corporation,
Koll Real Estate Services, FS Equity Partners III, L.P., FS
Equity Partners International, L.P., AP KMS Partners, L.P.,
AP KMS II, LLC, The Koll Holding Company and other
individual signatories thereto, filed as Annex 1 to the
Company's definitive proxy statement/prospectus dated
July 31, 1997 as part of the Company's Registration
Statement on Form S-4 Amendment No. 4 (File No. 333-28731)
2.2* Offer Document dated February 7, 1998 from the Company to
the Shareholders of REI Limited, filed as Exhibit 2 to the
Company's Form S-3 Registration Statement (File
No. 333-48875)
2.3* Form of Offer by the Partners of Hillier Parker May & Rowden
for the Entire Business of the Partnership to CB Hillier
Parker Ltd., filed as Exhibit 2 to the Company's Current
Report on Form 8-K dated July 7, 1998
2.4* Agreement and Plan of Merger by and among CB Richard Ellis
Services, Inc., Blum CB Holding Corp. and Blum CB Corp dated
February 23, 2001, filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K dated February 27, 2001
3.1* Fifth Restated Certificate of Incorporation of the Company,
filed as Exhibit 3.1(i) to the Company's Form 8-K dated
May 20, 1998
3.2 Fifth Amended and Restated Bylaws of the Company, filed as
Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998
4.1* Specimen Form of Common Stock Certificate, filed as
Exhibit 4.1 to the Company's Form S-1 Registration Statement
(File No. 333-12757)
4.2* Form of the Company's Restricted Stock Agreement between the
Company and the Company's Officer or Employee, filed as
Exhibit 4.8 to the Company's Form S-1 Registration
Statement (File No. 33-29410)
4.3* First Amendment to the Company's Restricted Stock Agreement,
filed as Exhibit 4.9 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1989
4.4* Form of Warrant Agreement between the Company, FS Equity
Partners III, L.P., FS Equity Partners
International, L.P., AP KMS Partners, L.P., AP KMS II, LLC,
The Koll Holding Company and certain individuals, with
attached Form of Warrant Certificate, filed as Annex 2 to
the Company's definitive proxy statement/prospectus dated
July 31, 1997 as part of the Company's Registration
Statement on Form S-4 Amendment No. 4 (File No. 333-28731)
4.5* First Supplemental Indenture between CB Richard Ellis
Services, Inc. and State Street Bank and Trust Company of
California, N.A., as Trustee, dated as of May 26, 1998 for
8 7/8 percent Senior Subordinated Notes due 2008
("Subordinated Notes"), filed as Exhibit 4.1 to the
Company's Form 8-K dated May 20, 1998; and Form of Indenture
relating to the Subordinated Notes was filed as Exhibit 4.1
to the Company's Registration Statement on Form S-3
(File No. 333-48875)
10.1(i)*^ CB Commercial Real Estate Services Group, Inc. Omnibus Stock
and Incentive Plan, filed as Exhibit 10.13 to Post-Effective
Amendment No. 1 to the Company's Form S-1 Registration
Statement (File No. 33-29410)
10.1(ii)*^ First Amendment to the CB Commercial Real Estate Services
Group, Inc. Omnibus Stock and Incentive Plan, filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------

10.1(iii)*^ Second Amendment to the CB Commercial Real Estate Services
Group, Inc. Omnibus Stock and Incentive Plan, filed as
Exhibit 10.16(iii) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993
10.1(iv)*^ Third Amendment to the CB Commercial Real Estate Services
Group, Inc. Omnibus Stock and Incentive Plan, filed as
Exhibit 10.4(iv) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994
10.2(i)*^ 1990 Stock Option Plan, filed as Exhibit 4(a) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1990
10.2(ii)*^ First Amendment to the 1990 Stock Option Plan, filed as
Exhibit 10.15(ii) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992
10.2(iii)*^ Second Amendment to the 1990 Stock Option Plan, filed as
Exhibit 10.8(iii) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993
10.2(iv)*^ Third Amendment to the 1990 Stock Option Plan, filed as
Exhibit 10.5(iv) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994
10.3^ CB Richard Ellis Services, Inc. Amended and Restated Annual
Management Bonus Plan, filed as Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998
10.4(i)*^ CB Commercial Real Estate Services Group, Inc. 1991 Service
Providers Stock Option Plan, filed as Exhibit 10.27 to the
Company's Current Report on Form 8-K dated April 1, 1992
10.4(ii)*^ 1997 Amendment to the 1991 Service Providers Stock Option
Plan, filed as Annex 7 to the Company's definitive proxy
statement/prospectus dated July 31, 1997 as part of the
Company's Registration Statement on Form S-4 Amendment
No. 4 (File No. 333-28731)
10.5(i)*^ CB Commercial Real Estate Services Group, Inc. Amended and
Restated Deferred Compensation Plan, filed as Exhibit 10.6
to the Company's Form 10-K for the year ended December 31,
1997
10.5(ii)*^ Amendment to the Amended and Restated Deferred Compensation
Plan (effective December 1, 1997) filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998
10.6*^ Amended and Restated 1996 Equity Incentive Plan of CB
Commercial Real Estate Services Group, Inc., filed as Annex
8 to the Company's definitive proxy statement/ prospectus
dated July 31, 1997 as part of the Company's Registration
Statement on Form S-4 Amendment No. 4 (File No. 333-28731)
10.7*^ CB Commercial Real Estate Services Group, Inc. L.J. Melody
Acquisition Stock Option Plan, filed as Exhibit 10.10 to the
Company's Form 10-K for the year ended December 31, 1996
10.8*^ Form of Indemnification Agreement between the Company, CB
Commercial Real Estate Group, Inc. and directors and
officers, filed as Exhibit 10.29 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992
10.9*^ Employment Agreement between the Company and Lawrence J.
Melody dated July 1, 1996, filed as Exhibit 10.12 to the
Company's Form S-1 Registration Statement
(File No. 333-12757)
10.10*^ CB Commercial Real Estate Services Group, Inc. 1997 Employee
Stock Option Plan, filed as Annex 5 to the Company's
definitive proxy statement/prospectus dated July 31, 1997 as
part of the Company's Registration Statement on Form S-4
Amendment No. 4 (File No. 333-28731)
10.11*^ CB Commercial Real Estate Services Group, Inc. Koll
Acquisition Stock Option Plan, filed as Exhibit 10.13 to the
Company's Form 10-K for the year ended December 31, 1997

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------

10.12(i)*^ CB Commercial Real Estate Services Group, Inc. / KMS Holding
Corporation Amended 1994 Nonqualified Performance Stock
Option Plan, filed as Exhibit 10.14(i) to the Company's
Form 10-K for the year ended December 31, 1997
10.12(ii)*^ Form of Nonstatutory Stock Option Agreement evidencing
substitute options granted by the Company upon assumption of
options issued under the KMS Holding Corporation Amended
1994 Stock Option Plan, filed as Exhibit 10.14(ii) to the
Company's Form 10-K for the year ended December 31, 1997
10.13*^ Consulting Agreement dated July 16, 1997 between CB
Commercial Real Estate Group, Inc. and Donald M. Koll, filed
as Exhibit 10.15 to the Company's Form 10-K for the year
ended December 31, 1997
10.14*^ Employment Agreement dated May 23, 1997 between the Company
and James J. Didion, filed as Exhibit 10(iii)(17) to the
Company's Registration Statement on Form S-4 Amendment
No. 1 (File No. 333-28731)
10.15* Registration Rights Agreement by and among the Company, FS
Equity Partners III, L.P., FS Equity Partners
International, L.P., AP KMS Partners, L.P., AP KMS II, LLC,
The Koll Holding Company, Raymond E. Wirta and William S.
Rothe, Jr. dated as of May 14, 1997, filed as
Exhibit 10(i)(3) to the Company's Registration Statement on
Form S-4 (File No. 333-28731)
10.16*^ Noncompetition and Confidentiality Agreement by and among
the Company, CBC Acquisition Corporation, Koll Real Estate
Services, Donald M. Koll and The Koll Holding Company dated
May 14, 1997, filed as Exhibit 10(i)(4) to the Company's
Registration Statement on Form S-4 (File No. 333-28731)
10.17*^ Noncompetition and Confidentiality Agreement by and among
the Company, Koll Real Estate Services, and William S. Rothe
dated as of May 14, 1997, filed as Exhibit 10(i)(5) to the
Company's Registration Statement on Form S-4 (File
No. 333-28731)
10.18*^ Noncompetition and Confidentiality Agreement by and among
the Company, Koll Real Estate Services, and Raymond E. Wirta
dated as of May 14, 1997, filed as Exhibit 10(i)(6) to the
Company's Registration Statement on Form S-4 (File
No. 333-28731)
10.19*^ Employment Agreement by and between the Company and William
Rothe dated as of May 14, 1997, filed as Exhibit 10(iii)(1)
to the Company's Registration Statement on Form S-4 (File
No. 333-28731)
10.20(i)* Credit Agreement dated as of August 28, 1997 by and among
the Company; Bank of America NT & SA; The Sumitomo Bank,
Limited; Wells Fargo Bank, N.A.; BHF-Bank
Aktiengeselleshaft; Credit Lyonnais Los Angeles Branch;
Dresdner Bank AG, New York Branch and Grand Cayman Branch;
Key Bank National Association; and other financial
institutions, filed as Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended September 30, 1997
10.20(ii)* Amendment No. 1 dated as of January 21, 1998, to the Credit
Agreement dated as of August 28, 1997 by and among the
Company; Bank of America NT & SA; The Sumitomo Bank,
Limited; Wells Fargo Bank, N.A.; BHF-Bank
Aktiengeselleshaft; Credit Lyonnais Los Angeles Branch;
Dresdner Bank AG, New York Branch and Grand Cayman Branch;
Key Bank National Association; and other financial
institutions, filed as Exhibit 10.22(ii) to the Company's
Form 10-K for the year ended December 31, 1997
10.20(iii)* Amended and Restated Credit Agreement dated May 20, 1998
among CB Richard Ellis Services, Inc.; Wells Fargo Bank,
N.A., The Bank of Nova Scotia; Credit Lyonnais Los Angeles
Branch; Dresdner Bank AG, New York Branch; Keybank National
Association; The Long-Term Credit Bank of Japan, Ltd., Los
Angeles Agency; and other financial institutions party to
the agreement is filed as Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended June 30, 1998

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------

10.20(iv)* Amendment No. 1 to the Amended and Restated Credit Agreement
dated May 20, 1998 among CB Richard Ellis Services, Inc.;
Wells Fargo Bank, N.A., The Bank of Nova Scotia; Credit
Lyonnais Los Angeles Branch; Dresdner Bank AG, New York
Branch; Keybank National Association; The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency; and other financial
institutions party to the agreement is filed as
Exhibit 10.1 to the Company's Form 10-Q for the quarter
ended September 30, 1998
10.21* Form of amendment to the Company's 1990 Stock Option Plan,
the 1991 Service Providers Stock Option Plan, the L.J.
Melody Acquisition Stock Option Plan, and the Koll
Acquisition Stock Option Plan, filed as Exhibit 10.23 to the
Company's Form 10-K for the year ended December 31, 1997
10.22(i)* Purchase Agreement dated as of May 15, 1995 among CB
Commercial Real Estate Group, Inc., Westmark Real Estate
Acquisition Partnership, L.P., and certain individuals
signatory thereto, filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K dated June 30, 1995
10.22(ii)* Form of SPP Purchase Agreement by and among Westmark Real
Estate Acquisition Partnership, L.P., CB Commercial Real
Estate Group, Inc. and certain individuals, dated as of
August 15, 1997, filed as Exhibit 10.24(ii) to the Company's
Form 10-K for the year ended December 31, 1997
10.23^ Amended and Restated Employment Agreement by and between the
Company and James J. Didion entered into as of March 3,
1999, filed as Exhibit 10.23 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1998
10.24 Amendment No. 3 dated October 29, 1999 to the Amended and
Restated Credit Agreement dated May 20, 1998 among the
Company; Wells Fargo Bank, N.A.; The Bank of Nova Scotia;
Credit Lyonnais Los Angeles Branch; Bank of America National
Trust and Savings Association; Dresdner Bank AG, New York
Branch; KeyBank National Association; the Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency; and other financial
institutions party thereto
11 Statement concerning Computation of Per Share Earnings
(filed as Note 9 of the Consolidated Financial Statements)
12 Computation of Ratio of Earnings to Fixed Charges and
Preferred Dividends
21 Subsidiaries of the Company
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule (filed only with the SEC)
99.1 Press Release dated November 13, 2000 issued by the Company
announcing the proposal from the investment group led by
Blum Capital Partners, L.P. to purchase all of the Company's
outstanding common stock filed as Exhibit 99.1 to the
Company's Current Report on Form 8-K dated November 10, 2000
99.2 Memorandum dated November 13, 2000 from Ray Wirta, Chief
Executive Officer of the Company all US employees discussing
the proposal to acquire the Company by Blum Capital
Partners, L.P., Ray Wirta, Brett White and other additional
investors, filed as Exhibit 99.2 to the Company's Current
Report on Form 8-K dated November 10, 2000
99.3 Memorandum dated November 13, 2000 from Brett White,
Chairman, The Americas, to all US sales professionals
discussing the proposal to acquire the Company by Blum
Capital Partners, L.P., Ray Wirta, Brett White and other
additional investors, filed as Exhibit 99.3 to the Company's
Current Report on Form 8-K dated November 10, 2000
99.4 Questions and Answers on the proposal from Blum Capital
Partners, L.P. to all US employees and sales professionals
filed as Exhibit 99.4 to the Company's Current Report on
Form 8-K dated November 10, 2000

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------

99.5 Offer Letter dated November 10, 2000 from Blum Capital
Partners, L.P. to the Company to purchase all of the common
stock of the Company not owned by the offering group at a
price of $15.50 per share, filed as Exhibit 99.5 to the
Company's Current Report on Form 8-K dated November 10, 2000
99.6 Memorandum dated December 12, 2000 from Members of the
Special Committee of the Board of Directors to all employees
discussing the status of their evaluation of the proposal by
the investment group led by Blum Capital Partners, L.P.
filed as Exhibit 99.1 to the Company's Current Report on
Form 8-K dated December 12, 2000
99.7 Memorandum dated January 24, 2001 from Members of the
Special Committee of the Board of Directors to all employees
discussing their progress and the status of the Blum Group
proposal, filed as Exhibit 99.1 to the Company's Current
Report on Form 8-K dated January 24, 2001
99.8 Memorandum dated January 24, 2001 from Members of the
Special Committee of the Board of Directors to all employees
regarding the status of their evaluation of the proposal by
the investment group led by Blum Capital Partners, L.P.
filed as Exhibit 99.1 to the Company's Current Report on
Form 8-K dated February 21, 2001
99.9 Contribution and Voting Agreement dated February 23, 2001
among Blum CB Holding Corp., Blum CB Corp., RCBA Strategic
Partners, L.P., FS Equity Partners III, L.P., FS Equity
Partners International, L.P. and together with FSEP, Raymond
E. Wirta, W. Brett White and those other investors who are
signatories to the Agreement, filed as Exhibit 99.1 to the
Company's Current Report on Form 8-K dated February 27, 2001
99.10 Guarantee Agreement dated February 23, 2001 between the
Company and RCBA Strategic Partners, L.P. This Guarantee
Agreement irrevocably guarantees the payment to the Company
of any and all amounts which are finally judicially
determined to be due to the Company from Blum CB Corp.
(Acquire) or Blum CB Holding Corp. (Holding) by reason of
the willful breach of the terms of the Agreement, filed as
Exhibit 99.2 to the Company's Current Report on Form 8-K
dated February 27, 2001
99.11 Press Release dated February 24, 2001 announcing that the
Company has entered into a merger agreement providing for
the acquisition of the Company by Blum CB Corp. for $16 per
share in cash, filed as Exhibit 99.3 to the Company's
Current Report on Form 8-K dated February 27, 2001

- ------------------------

* Incorporated by reference

^ Management contract or compensatory plan required by Item 601 of
Regulation S-K