Exhibit 99.1
|
PRESS RELEASE |
|
Corporate Headquarters |
FOR IMMEDIATE RELEASE ¾ November 12, 2003
|
For further information: |
|
|
CBRE Holding, Inc. Reports Third Quarter 2003 Results
Los Angeles, CA - (November 12, 2003) — CBRE Holding, Inc., parent corporation of CB Richard Ellis Services, Inc., the world’s leading real estate services firm, today reported its results for the three and nine months ended September 30, 2003.
Third quarter 2003 results include the activities of Insignia Financial Group, Inc. (Insignia Acquisition) from July 23, 2003 (the effective date of the merger) through the end of the quarter. The combined company results have been significantly impacted by costs associated with the merger, as noted below.
Revenue totaled $423.4 million for the third quarter ended September 30, 2003, an increase of $138.4 million or 48.6% as compared to $284.9 million for the third quarter ended September 30, 2002. Net loss totaled $28.4 million for the third quarter ended September 30, 2003 versus net income of $1.9 million for the same period last year. The net loss in the current period was mainly driven by $31.3 million of amortization expense resulting from intangible assets acquired as part of the Insignia Acquisition as well as merger-related charges of $16.5 million associated with the Insignia Acquisition. The intangible asset amortization primarily pertains to the revenue backlog acquired in the Insignia transaction. Net income cannot be recognized from purchased backlog; hence this amortization expense offsets that portion of operating income that was generated from the Insignia backlog acquired. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) totaled $20.7 million for the third quarter ended September 30,
2003, a decrease of $6.9 million or 24.9% from last year’s same period results. This decrease was mainly driven by the above-mentioned $16.5 million of merger-related charges.
Revenue totaled $1.0 billion for the nine months ended September 30, 2003, which represents a $215.0 million or 27.1% increase over $793.8 million of revenue generated in the same period last year. Net loss totaled $24.6 million for the nine months ended September 30, 2003 versus net income of $3.6 million for the nine months ended September 30, 2002. The net loss in the current year was mainly due to the previously mentioned total of $47.8 million of amortization expense and merger-related charges incurred during the quarter ended September 30, 2003. EBITDA for the nine months ended September 30, 2003 was $69.4 million, a $2.6 million or 3.5% decrease from last year’s same period results. This decrease was primarily caused by the $19.8 million of merger-related costs associated with the Insignia Acquisition that were incurred during this period.
On November 12, 2003, at 7:00 a.m. Pacific time, the Company will hold a conference call with its bondholders to discuss its results for the quarter ended September 30, 2003. To access the call, dial 800-450-0785, access code 703359 (outside the United States, please call 612-332-0634). A transcript of the call will be available at www.cbre.com for review for twelve months after the call.
About CB Richard Ellis
Headquartered in Los Angeles, CB Richard Ellis is the world’s leading commercial real estate services firm. With approximately 14,000 employees, the company serves real estate owners, investors and occupiers through more than 250 offices worldwide. The company’s core services include property sales, leasing and management; corporate services; facilities and project management; mortgage banking; investment management; capital markets; appraisal and valuation; research; and consulting. For more information, visit the company’s Web site at www.cbre.com.
CBRE HOLDING, INC.
OPERATING RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Dollars in thousands)
(Unaudited)
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
||||||||
|
|
|
2003 |
|
2002 |
|
2003 |
|
2002 |
|
||||
|
Revenue |
|
$ |
423,376 |
|
$ |
284,928 |
|
$ |
1,008,817 |
|
$ |
793,811 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
||||
|
Cost of services |
|
208,198 |
|
135,670 |
|
484,863 |
|
363,506 |
|
||||
|
Operating, administrative and other |
|
180,298 |
|
124,470 |
|
443,894 |
|
364,676 |
|
||||
|
Depreciation and amortization |
|
41,071 |
|
6,404 |
|
53,571 |
|
18,107 |
|
||||
|
Equity income from unconsolidated subsidiaries |
|
(2,318 |
) |
(2,778 |
) |
(9,182 |
) |
(6,422 |
) |
||||
|
Merger-related charges |
|
16,485 |
|
— |
|
19,795 |
|
50 |
|
||||
|
Total costs and expenses |
|
443,734 |
|
263,766 |
|
992,941 |
|
739,917 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating (loss) income |
|
(20,358 |
) |
21,162 |
|
15,876 |
|
53,894 |
|
||||
|
Interest income |
|
1,788 |
|
1,275 |
|
3,564 |
|
2,673 |
|
||||
|
Interest expense |
|
28,255 |
|
15,420 |
|
59,519 |
|
46,341 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
(Loss) income before (benefit) provision for income tax |
|
(46,825 |
) |
7,017 |
|
(40,079 |
) |
10,226 |
|
||||
|
(Benefit) provision for income tax |
|
(18,380 |
) |
5,136 |
|
(15,459 |
) |
6,596 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income |
|
$ |
(28,445 |
) |
$ |
1,881 |
|
$ |
(24,620 |
) |
$ |
3,630 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
EBITDA |
|
$ |
20,713 |
|
$ |
27,566 |
|
$ |
69,447 |
|
$ |
72,001 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
EBITDA margin |
|
4.9 |
% |
9.7 |
% |
6.9 |
% |
9.1 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
EBITDA is calculated as follows: |
|
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
||||||||
|
|
|
2003 |
|
2002 |
|
2003 |
|
2002 |
|
||||
|
Operating (loss) income |
|
$ |
(20,358 |
) |
$ |
21,162 |
|
$ |
15,876 |
|
$ |
53,894 |
|
|
Add: |
|
|
|
|
|
|
|
|
|
||||
|
Depreciation and amortization |
|
41,071 |
|
6,404 |
|
53,571 |
|
18,107 |
|
||||
|
EBITDA |
|
$ |
20,713 |
|
$ |
27,566 |
|
$ |
69,447 |
|
$ |
72,001 |
|
EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization. Management believes that the presentation of EBITDA will enhance a reader’s understanding of the Company’s operating performance. EBITDA is also a measure used by senior management to evaluate the performance of the Company’s various lines of business and for other required or discretionary purposes, such as the use of EBITDA as a significant component when measuring performance under the Company’s employee incentive programs. Additionally, many of the Company’s debt covenants are based upon a measure similar to EBITDA. EBITDA should not be considered as an alternative to (i) operating income determined in accordance with accounting principles generally accepted in the United States of America, or (ii) operating cash flow determined in accordance with accounting principles generally accepted in the United States of America. The Company’s calculation of EBITDA may not be comparable to similarly titled measures reported by other companies.
CB RICHARD ELLIS SERVICES, INC (1)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
|
|
|
September 30, 2003 |
|
December 31, 2002 |
|
||
|
|
|
|
|
|
|
||
|
Assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
65,428 |
|
$ |
79,574 |
|
|
Restricted cash |
|
17,912 |
|
— |
|
||
|
Warehouse receivable (2) |
|
135,820 |
|
63,140 |
|
||
|
Other current assets |
|
389,456 |
|
223,351 |
|
||
|
Property and equipment, net |
|
110,705 |
|
66,634 |
|
||
|
Goodwill and other intangible assets, net |
|
947,041 |
|
668,219 |
|
||
|
Deferred taxes, non current |
|
26,227 |
|
36,376 |
|
||
|
Deferred compensation assets |
|
70,077 |
|
63,642 |
|
||
|
Other assets |
|
200,963 |
|
139,169 |
|
||
|
|
|
|
|
|
|
||
|
Total assets |
|
$ |
1,963,629 |
|
$ |
1,340,105 |
|
|
|
|
|
|
|
|
||
|
Liabilities: |
|
|
|
|
|
||
|
Current liabilities, excluding debt |
|
$ |
413,378 |
|
$ |
288,891 |
|
|
Warehouse line of credit (2) |
|
135,820 |
|
63,140 |
|
||
|
Senior secured term loan tranche A (3) |
|
32,813 |
|
38,750 |
|
||
|
Senior secured term loan tranche B (3) |
|
255,650 |
|
182,225 |
|
||
|
11¼% senior subordinated notes |
|
226,114 |
|
225,943 |
|
||
|
9 ¾% senior notes |
|
200,000 |
|
— |
|
||
|
Other debt (4) |
|
81,074 |
|
60,988 |
|
||
|
Deferred compensation liability |
|
125,465 |
|
106,252 |
|
||
|
Other long-term liabilities |
|
99,427 |
|
43,301 |
|
||
|
|
|
|
|
|
|
||
|
Total liabilities |
|
1,569,741 |
|
1,009,490 |
|
||
|
|
|
|
|
|
|
||
|
Minority interest |
|
6,706 |
|
5,615 |
|
||
|
|
|
|
|
|
|
||
|
Stockholders' equity |
|
323,766 |
|
263,137 |
|
||
|
Mezzanine notes |
|
63,416 |
|
61,863 |
|
||
|
|
|
|
|
|
|
||
|
Total stockholders' equity |
|
387,182 |
|
325,000 |
|
||
|
|
|
|
|
|
|
||
|
Total liabilities and stockholders' equity |
|
$ |
1,963,629 |
|
$ |
1,340,105 |
|
(1) CB Richard Ellis Services, Inc. is a wholly owned subsidiary of CBRE Holding, Inc.
(2) Includes Freddie MAC loan receivables and related non-recourse warehouse line of credit of $135.8 million and $63.1 million at September 30, 2003 and December 31, 2002, respectively.
(3) On October 14, 2003, the Company refinanced all of the outstanding loans under the amended and restated credit agreement it entered into in connection with the completion of the Insignia Acquisition. The Tranche A and Tranche B facilities were combined into a single term loan facility, of which $300.0 million was drawn on October 14, 2003.
(4) Includes non-recourse debt relating to a building investment in Japan of $42.3 million and $40.0 million at September 30, 2003 and December 31, 2002, respectively.