Exhibit 99.1
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PRESS RELEASE |
Corporate Headquarters |
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865 South Figueroa Street |
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Suite 3400 |
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Los Angeles, CA 90017 |
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www.cbre.com |
FOR IMMEDIATE RELEASE ¾ February 18, 2004
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For further information: |
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Kenneth Kay |
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Ronald Platisha |
CB Richard Ellis Group, Inc. Reports Fourth Quarter and Full Year 2003 Results
Los Angeles, CA - (February 18, 2004) — CB Richard Ellis Group, Inc. (formerly CBRE Holding, Inc.), parent corporation of CB Richard Ellis Services, Inc., the world’s largest commercial real estate services firm (based on 2002 revenue), today reported its results for the three and twelve months ended December 31, 2003.
Revenue totaled $621.3 million for the fourth quarter ended December 31, 2003, an increase of $244.8 million or 65.0% as compared to $376.5 million for the fourth quarter ended December 31, 2002. Net loss totaled $10.1 million for the fourth quarter ended December 31, 2003 versus net income of $15.1 million for the same period last year. The net loss in the current period was mainly driven by $28.9 million of amortization expense resulting from intangible assets acquired in connection with the acquisition of Insignia Financial Group, Inc. (Insignia Acquisition) as well as merger (separately identified) and integration (included in operating, administrative and other expenses) related charges of $27.2 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 $63.4 million for the fourth quarter ended December 31, 2003, an increase of $4.7 million or 8.0% from last year’s same period results. This increase was achieved despite the deduction of the above-mentioned $27.2 million of merger and integration related charges.
Revenue totaled $1.6 billion for the twelve months ended December 31, 2003, which represents a $459.8 million or 39.3% increase over the $1.2 billion of revenue generated
in the same period last year. Net loss totaled $34.7 million for the twelve months ended December 31, 2003 versus net income of $18.7 million for the twelve months ended December 31, 2002. The net loss in the current year was mainly due to the previously mentioned amortization expense of $60.4 million as well as merger and integration related charges which totaled $50.4 million for the year ended December 31, 2003. EBITDA for the twelve months ended December 31, 2003 was $132.8 million, a $2.1 million or 1.6% increase from last year’s same period results. This increase was achieved despite the deduction of the above-mentioned $50.4 million of merger and integration related charges.
On February 18, 2004, at 7:00 a.m. Pacific time, the Company will hold a conference call with its bondholders to discuss its results for the quarter ended December 31, 2003. To access the call, dial 888-273-9887, access code 720708 (outside the United States, please call 612-332-0923). A transcript of the call will be available at www.cbre.com for review for twelve months after the call.
About CB Richard Ellis
Headquartered in Los Angeles, CB Richard Ellis is the world’s largest commercial real estate services firm (in terms of 2002 revenue). With approximately 13,500 employees, the company serves real estate owners, investors and occupiers through more than 220 offices worldwide. The company’s core services include property sales, leasing and management; corporate services; facilities and project management; mortgage banking; investment management; capital markets; appraisal and valuation; research; and consulting. For more information, visit the company’s Web site at www.cbre.com.
CB Richard Ellis Group, Inc.
OPERATING RESULTS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002
(Dollars in thousands)
(Unaudited)
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Three Months Ended December 31, |
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Twelve Months Ended December 31, |
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2003 |
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2002 |
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2003 |
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2002 |
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Revenue |
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$ |
621,257 |
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$ |
376,466 |
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$ |
1,630,074 |
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$ |
1,170,277 |
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Costs and expenses: |
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Cost of services |
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311,545 |
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183,587 |
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796,408 |
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547,093 |
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Operating, administrative and other |
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234,503 |
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137,122 |
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678,397 |
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501,798 |
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Depreciation and amortization |
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39,051 |
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6,507 |
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92,622 |
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24,614 |
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Equity income from unconsolidated subsidiaries |
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(5,183 |
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(2,904 |
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(14,365 |
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(9,326 |
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Merger-related charges |
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17,022 |
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(14 |
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36,817 |
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36 |
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Total costs and expenses |
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596,938 |
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324,298 |
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1,589,879 |
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1,064,215 |
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Operating income |
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24,319 |
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52,168 |
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40,195 |
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106,062 |
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Interest income |
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2,477 |
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599 |
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6,041 |
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3,272 |
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Interest expense |
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27,697 |
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14,160 |
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87,216 |
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60,501 |
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(Loss) income before provision (benefit) for income taxes |
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(901 |
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38,607 |
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(40,980 |
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48,833 |
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Provision (benefit) for income taxes |
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9,183 |
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23,510 |
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(6,276 |
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30,106 |
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Net (loss) income |
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$ |
(10,084 |
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$ |
15,097 |
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$ |
(34,704 |
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$ |
18,727 |
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EBITDA |
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$ |
63,370 |
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$ |
58,675 |
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$ |
132,817 |
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$ |
130,676 |
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Operating income margin |
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3.9 |
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13.9 |
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2.5 |
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9.1 |
% |
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EBITDA margin |
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10.2 |
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15.6 |
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8.1 |
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11.2 |
% |
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EBITDA is calculated as follows:
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Three Months Ended December 31, |
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Twelve Months Ended December 31, |
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2003 |
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2002 |
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2003 |
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2002 |
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Operating income |
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$ |
24,319 |
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$ |
52,168 |
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$ |
40,195 |
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$ |
106,062 |
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Add: |
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Depreciation and amortization |
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39,051 |
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6,507 |
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92,622 |
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24,614 |
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EBITDA |
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$ |
63,370 |
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$ |
58,675 |
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$ |
132,817 |
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$ |
130,676 |
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EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization. EBITDA margin represents EBITDA divided by Revenue. Management believes that the presentation of EBITDA and EBITDA margin 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. 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 and EBITDA margin 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)
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December 31, 2003 |
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December 31, 2002 |
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Assets: |
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Cash and cash equivalents |
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$ |
160,872 |
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$ |
79,574 |
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Restricted cash |
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14,899 |
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— |
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Warehouse receivable (2) |
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230,790 |
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63,140 |
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Other current assets |
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459,139 |
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223,351 |
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Property and equipment, net |
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113,569 |
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66,634 |
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Goodwill and other intangible assets, net |
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948,539 |
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668,219 |
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Deferred compensation assets |
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76,389 |
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63,642 |
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Other assets |
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233,411 |
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175,545 |
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Total assets |
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$ |
2,237,608 |
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$ |
1,340,105 |
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Liabilities: |
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Current liabilities, excluding debt |
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$ |
557,372 |
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$ |
288,891 |
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Warehouse line of credit (2) |
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230,790 |
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63,140 |
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Senior secured term loan tranche A (3) |
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— |
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38,750 |
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Senior secured term loan tranche B (3) |
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297,500 |
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182,225 |
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11 1/4% senior subordinated notes |
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226,173 |
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225,943 |
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9 3/4% senior notes |
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200,000 |
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— |
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Other debt (4) |
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82,907 |
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60,988 |
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Deferred compensation liability |
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138,037 |
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106,252 |
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Other long-term liabilities |
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115,780 |
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43,301 |
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Total liabilities |
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1,848,559 |
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1,009,490 |
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Minority interest |
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6,656 |
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5,615 |
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Stockholders’ equity |
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346,921 |
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263,137 |
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16% senior notes of CB Richard Ellis Group |
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35,472 |
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61,863 |
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Total stockholders’ equity |
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382,393 |
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325,000 |
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Total liabilities and stockholders’ equity |
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$ |
2,237,608 |
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$ |
1,340,105 |
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(1) CB Richard Ellis Services, Inc. is a wholly owned subsidiary of CB Richard Ellis Group, Inc.
(2) Includes Freddie MAC loan receivables and related non-recourse warehouse line of credit of $230.8 million and $63.1 million at December 31, 2003 and 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 B facility.
(4) Includes non-recourse debt relating to a building investment in Japan of $43.7 million and $40.0 million at December 31, 2003 and 2002, respectively.