CB Richard Ellis Group, Inc. Reports Third Quarter 2005 Earnings Per Share up 88% from 2004 and Provides Full Year Guidance for 2005.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- CB Richard Ellis CB Richard Ellis Group, Inc. NYSE: CBG is a multinational real estate corporation currently based in Los Angeles, California, U.S.A.. On December 20, 2006, the corporation, also known as CBRE, completed acquisition of Trammell Crow Co. in a transaction valued at $2. Group, Inc. (NYSE NYSE See: New York Stock Exchange :CBG CBG corticosteroid-binding globulin. ) today reported third quarter 2005 revenue of $744.2 million, up 29.4% over the third quarter of 2004, and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.74 for the third quarter of 2005, compared with $0.16 in the third quarter of last year. Excluding one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges, third quarter 2005 diluted earnings per share was $0.75, an increase of 88% from $0.40 for the same quarter a year earlier. E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]Based on continuing favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. trends across all of the Company's business lines and geographies, CB Richard Ellis raised its full year 2005 guidance for diluted earnings per share to a range of $2.70 to $2.75, excluding one-time Insignia in·sig·ni·a also in·sig·ne n. pl. insignia or in·sig·ni·as 1. A badge of office, rank, membership, or nationality; an emblem. 2. A distinguishing sign. related and debt buy-back charges. E[acute accent]Third Quarter Highlights E[acute accent]For the third quarter of 2005, the Company generated revenue of $744.2 million, a 29.4% increase over the $575.0 million posted in the third quarter of 2004. The Company reported third quarter net income of $56.9 million, or $0.74 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with net income of $11.9 million, or $0.16 per diluted share in the third quarter of 2004. E[acute accent]Excluding one-time items, the Company would have earned net income(1)of $57.5 million, or $0.75 per diluted share in the third quarter of 2005, compared with net income of $29.7 million, or $0.40 per diluted share in the third quarter of 2004. E[acute accent]Revenue E[acute accent]The third quarter revenue increase of 29.4% reflects improved performance across virtually all of the Company's business lines and geographies. A steady leasing market recovery combined with increased appraisal activities and continued investment sales strength globally, fueled the double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth. E[acute accent]EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (2) E[acute accent]Earnings Before Interest, Taxes, Depreciation, and Amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA) totaled $111.2 million for the third quarter of 2005, an increase of $49.3 million, or 79.8%, from the same quarter last year. The increased EBITDA reflects strength across the majority of the Company's business lines and continued cost control. Also contributing to the year-over-year increase is the significant reduction of Insignia acquisition-related costs. E[acute accent]Interest Expense E[acute accent]Interest expense totaled $13.8 million for the third quarter of 2005, a decrease of $1.7 million, or 10.8%, compared with the same quarter last year. The decrease was primarily driven by the interest savings realized from the repayment of higher interest rate debt throughout 2004 and 2005, predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of outstanding bonds in the open market. E[acute accent]During the third quarter of 2005, the Company repurchased $4.5 million in aggregate principal amount of its outstanding 11 1/4% senior subordinated notes in the open market at a premium of $0.5 million. The year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. repurchases of $42.7 million will reduce annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. interest expense by approximately $4.8 million. E[acute accent]Management's Commentary E[acute accent]Compared with a year ago, the Company's third quarter investment sales revenues grew by 41% and leasing revenues advanced by 15%. "The third quarter saw a continuation of trends that have been in place all year: robust investment sales activity fueled by strong debt and equity capital flows into real estate, and leasing markets that are steadily improving in step with the economy," said Brett White Brett White (born April 8 1982 in Cooma, New South Wales) is an Australian professional rugby league footballer. He plays for the Melbourne Storm in the National Rugby League. , President and Chief Executive Officer of CB Richard Ellis. E[acute accent]"Overseas, increased cross-border investment activity has been a key factor in the continuing strength of most major investment markets. Leasing markets throughout Asia continue to exhibit strength, reflected in reduced vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. and higher rents. In Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , leasing demand has picked up modestly in some
major business centers including London London, city, CanadaLondon, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. and Madrid Madrid (mədrĭd`, Span. mäthhrēth`), city (1990 pop. 3,120,732), capital of Spain and of Madrid prov., central Spain, and the focus of its own autonomous region, on the Manzanares River. and a broader-based recovery is expected in 2006," Mr. White said. E[acute accent]"In this favorable market environment, the breadth and depth of our global platform has enabled us to capture increased market share and cross-sell more services to existing clients. We are well positioned for continued growth due to the strength of our people and platform, and quality of our brand." E[acute accent]Americas A·mer·i·cas , the See America. Region E[acute accent]Third quarter revenue for the Americas region, including the U.S., Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , increased 24.2% to $516.7 million, compared with $416.1 million for the third quarter of 2004. This increase was mainly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to improved leasing activity, continued high volume of investment sales, increased appraisal/valuation activities, and higher property and facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. fees. E[acute accent]Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the Americas region totaled $64.5 million for the third quarter of 2005, compared with $35.2 million for the third quarter of 2004. The $29.3 million increase was driven by double-digit revenue growth, as well as the lack of merger-related costs associated with the Insignia acquisition, which impacted the prior-year quarter. Excluding the impact of one-time items, operating income for the Americas region would have been $65.7 million for the third quarter of 2005, an increase of $21.8 million, or 49.8%, as compared to the third quarter of last year. The Americas region's EBITDA totaled $75.0 million for the third quarter of 2005, an increase of $28.2 million, or 60.2%, from last year's third quarter. E[acute accent]EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. Region E[acute accent]Revenue for the EMEA region, mainly consisting of operations in Europe, increased 42.8% to $149.6 million for the third quarter of 2005, compared with $104.8 million for the third quarter of 2004. Operating income for the EMEA segment totaled $26.7 million for the third quarter of 2005, compared with $4.0 million for the same period last year. Excluding one-time items related to the Insignia acquisition, operating income for this region would have been $26.9 million, an increase of $22.0 million, or 452.0%, as compared to the third quarter of 2004. EBITDA for the EMEA region totaled $28.9 million for the third quarter of 2005, an increase of $23.1 million, or 395.0%, from last year's third quarter. These improvements were primarily driven by a continued strong investment sales environment as well as improved leasing and appraisal activities. E[acute accent]Asia Pacific Region E[acute accent]In the Asia Pacific region, which includes operations in Asia, Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. , revenue totaled $44.1 million for the third quarter of 2005, an 18.1% increase from $37.3 million for the third quarter of 2004. Operating income for the Asia Pacific segment totaled $5.9 million for the third quarter of 2005, compared with $4.5 million for the same period last year, an increase of 29.5%. EBITDA for the Asia Pacific segment totaled $6.4 million for the current quarter, an increase of $1.1 million, or 19.9%, from the third quarter of 2004. The year-over-year third quarter improvement generally reflects increased business activity throughout the region. The Asia Pacific segment did not incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. any one-time costs associated with the Insignia acquisition or the initial public offering in the current or prior year quarter. E[acute accent]Global Investment Management Business E[acute accent]In the Global Investment Management segment, which consists of investment management operations in the U.S., Europe and Asia, revenue totaled $33.9 million for the third quarter of 2005, compared with $16.7 million in the third quarter of 2004. This increase was mainly due to higher incentive fees earned in France and the U.S. Operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for this segment totaled $1.2 million for the third quarter of 2005, compared with operating income of $1.0 million for the same period last year. EBITDA for the Global Investment Management segment totaled $0.8 million for the third quarter of 2005, a decrease of $3.0 million from last year's same period results. These decreases were attributable in part to higher incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. incentive compensation expense of approximately $10.3 million accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. in the current year quarter for Global Investment Management dedicated executives and team leaders in connection with funds concluding over the next few years. Only $0.5 million was accrued for this purpose in the third quarter of 2004. Revenues associated with these expenses cannot be recognized until certain financial hurdles are met. In the fourth quarter of 2005, the Company expects to recognize income from some of these funds, which should offset the cumulative accrued incentive compensation expense to date. The Global Investment Management segment did not incur any one-time costs associated with the Insignia acquisition in the current or prior year quarter. E[acute accent]Additional Business Line Highlights E[acute accent]The Company's mortgage brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. subsidiary, CBRE CBRE CB Richard Ellis (real-estate firm) CBRE Chemical, Biological, Radiological and Explosive CBRE Component-Based Reliability Estimation CBRE Coldwell Banker Richard Ellis (Boston, MA) Melody melody, succession of single tones of varying pitch. Melody is the linear aspect of music, in contrast to harmony, the chordal aspect, which results from the simultaneous sounding of tones. , continued to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. investors' healthy appetite ap·pe·tite n. An instinctive physical desire, as for food or sex. Appetite The natural instinctive desire for food. for debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay . For the first nine months of 2005, mortgage originations increased 39% from a year earlier to $12.4 billion. Reflecting a continuing outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. trend, the Company also expanded its relationships with several institutional accounts in its Asset Services portfolio during the third quarter, including AMB AMB Ambient AMB Ambassador AMB Amber AMB Ambulance AMB Associação Médica Brasileira (Brazil) AMB Ambulatory AMB Advanced Memory Buffer (FBDIMM control unit on DRAM) Property Corporation (with 32 million square feet now under management), Dividend Capital (7 million square feet now under management) and DBSI DBSI Deutsche Bank Securities, Incorporated - Discovery Real Estate Services (4 million square feet now under management). The Company also furthered its representation of Corporate Services Activities that combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) customers and business partners. accounts, such as Burlington Burlington, town, Canada Burlington, town (1991 pop. 129,575), SE Ont., Canada, on Lake Ontario. First settled (1798) by Mohawk Loyalist Joseph Brandt, Burlington's economy was built on the shipment of wheat, lumber, and quarried rock by waterway. Northern Santa Fe Santa Fe, city, Argentina Santa Fe, city (1991 pop. 341,000), capital of Santa Fe prov., NE Argentina, a river port near the Paraná, with which it is connected by canal. (more than 2 million square feet) and Regus The Regus Group plc (LSE: RGU) is a multinational corporation based in Chertsey, England and Dallas, Texas. Regus and its brands (HQ, Stratis, Business Meeting Places, and Laptop Lane) provide serviced offices, virtual offices, and meeting rooms to clients on a contract basis. Group (more than 6 million square feet). E[acute accent]Nine-month Results E[acute accent]Nine-month revenue increased by $387.7 million, or 24.7%, to $2.0 billion compared to the same period last year. The Company reported net income of $121.9 million, or $1.59 per diluted share, for the nine months ended September September: see month. 30, 2005 compared with a net loss of $1.7 million, or a loss of $0.03 per diluted share, for the nine months ended September 30, 2004. E[acute accent]Excluding one-time items, the Company would have earned net income of $130.0 million, or $1.70 per diluted share, for the nine months ended September 30, 2005 compared to net income of $49.5 million, or $0.71 per diluted share, for the same period in the prior year. E[acute accent]EBITDA for the nine months ended September 30, 2005 was $267.9 million, representing an increase of $157.0 million, or 141.6%, from $110.9 million for the same period of 2004. E[acute accent]Guidance E[acute accent]As previously mentioned, the Company is raising its full-year guidance for 2005. CB Richard Ellis expects to generate full year revenue of approximately $2.8 billion, net income in the range of $207.0 million to $210.0 million, and diluted earnings per share in the range of $2.70 to $2.75, excluding residual Residual See:Residual value one-time Insignia related and debt buy-back charges totaling approximately $14 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), as well as any additional one-time tax expense associated with the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of offshore income under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act of 2004, should the Company elect to do so. E[acute accent]Looking forward to 2006, consistent with its previously disclosed growth objectives, the Company estimates that it should generate revenue growth in the range of 7-9% with corresponding EBITDA growth of 12-14% and diluted earnings per share growth approximating 20%, excluding one-time items. The Company plans to issue more specific guidance on 2006 as it approaches year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . E[acute accent]The Company's third-quarter earnings conference call will be held on Wednesday Wednesday: see week. , November November: see month. 2, 2005 at 10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . A live webcast will be accessible through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's Web site at www.cbre.com. E[acute accent]The direct dial-in number for the conference call is 888-428-4480 (in the U.S.) and 612-288-0318 (outside the U.S.). A replay of the call will be available beginning at 2:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on November 2, 2005 and ending at 2:59 a.m. EST on November 12, 2005. To access the replay, the dial-in number is 800-475-6701 (in the U.S.) and 320-365-3844 (outside the U.S.) The access code for the replay is 800534. A transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the call will be available on the Company's Investor Relations Web site. E[acute accent]About CB Richard Ellis E[acute accent]CB Richard Ellis Group, Inc. (NYSE:CBG), a FORTUNE 1000 company headquartered in Los Angeles, is the world's largest commercial real estate services firm (in terms of 2004 revenue). With approximately 13,500 employees, the Company serves real estate owners, investors and occupiers through more than 200 offices worldwide (excluding affiliate and partner offices). The Company's core services The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. include property sales, leasing and management; corporate services; facilities and project management; mortgage banking; investment management; appraisal and valuation; research and consulting. Please visit our Web site at www.cbre.com. E[acute accent]This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the ''safe harbor'' provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements regarding our growth momentum in 2005 and 2006; future operations; and future financial performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this release. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, the Company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the Company does update one or more forward-looking statements, no inference (logic) inference - The logical process by which new facts are derived from known facts by the application of inference rules. See also symbolic inference, type inference. should be drawn that it will make additional updates with respect to those or other forward-looking statements. 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; interest rates; realization of values in investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company to offset incentive compensation expense related thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. ; any general economic recession domestically or internationally; general conditions of financial liquidity for real estate transactions; our ability to leverage our platform to sustain revenue growth; our ability to retain and incentivize in·cen·tiv·ize tr.v. in·cen·tiv·ized, in·cen·tiv·iz·ing, in·cen·tiv·iz·es To offer incentives or an incentive to; motivate: producers; and our ability to pay down debt. E[acute accent]Additional information concerning factors that may influence CB Richard Ellis Group, Inc.'s financial information can be found in its press releases as well as its periodic filings with the Securities and Exchange Commission. In this regard, risk factors are specifically discussed under the headings "Factors Affecting Our Future Performance" and "Forward-Looking Statements" in CB Richard Ellis Group, Inc.'s Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2004, filed March 15, 2005. Such filings are available publicly and may be obtained off the company's Web site at www.cbre.com or upon request from the CB Richard Ellis Investor Relations Department at investorrelations@cbre.com. E[acute accent](1) A reconciliation of net income (loss) to net income, as adjusted for one-time items, is provided in the exhibits to this release. E[acute accent](2) The Company's management believes that EBITDA is useful in evaluating its performance compared to that of other companies in its industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and acquisitions, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, the Company's management uses EBITDA as a measure to evaluate the performance of various business lines and for other discretionary purposes, including as a significant component when measuring its performance under its employee incentive programs. E[acute accent]However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), and when analyzing the Company's operating performance, readers should use EBITDA in addition to, and not as an alternative for, operating income (loss) and net income (loss), each as determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in the Company's debt instruments, which are further adjusted to reflect certain other cash and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. and are used to determine compliance with financial covenants and the Company's ability to engage in certain activities, such as incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. additional debt and making certain restricted payments. E[acute accent]For a reconciliation of EBITDA with the most comparable financial measures calculated and presented in accordance with GAAP, see the section of this press release titled "Non-GAAP Financial Measures."
CB RICHARD ELLIS GROUP, INC.
OPERATING RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(Dollars in thousands, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenue $744,198 $574,999 $1,954,627 $1,566,907
Costs and expenses:
Cost of services 380,943 300,711 987,680 797,544
Operating,
administrative and
other 255,706 213,226 720,657 643,016
Depreciation and
amortization 11,665 12,340 32,853 40,001
Merger-related
charges - 4,040 - 25,574
----------- ----------- ----------- -----------
Operating income 95,884 44,682 213,437 60,772
Equity income from
unconsolidated
subsidiaries 3,628 4,826 21,648 10,120
Interest income 413 1,262 5,916 4,099
Interest expense 13,840 15,509 40,812 53,934
Loss on extinguishment
of debt 624 17,066 7,386 21,075
----------- ----------- ----------- -----------
Income (loss) before
provision for income
taxes 85,461 18,195 192,803 (18)
Provision for income
taxes 28,525 6,300 70,874 1,690
----------- ----------- ----------- -----------
Net income (loss) $56,936 $11,895 $121,929 $(1,708)
=========== =========== =========== ===========
Basic income (loss)
per share $0.77 $0.17 $1.65 $(0.03)
=========== =========== =========== ===========
Weighted average
shares outstanding
for basic income
(loss) per share 74,177,337 71,446,359 73,834,169 66,006,231
=========== =========== =========== ===========
Diluted income (loss)
per share $0.74 $0.16 $1.59 $(0.03)
=========== =========== =========== ===========
Weighted average
shares outstanding
for diluted income
(loss) per share 76,777,271 75,184,418 76,444,808 66,006,231
=========== =========== =========== ===========
EBITDA $111,177 $61,848 $267,938 $110,893
=========== =========== =========== ===========
CB RICHARD ELLIS GROUP, INC.
SEGMENT RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
2005 2004 2005 2004
--------- --------- ----------- -----------
Americas
--------
Revenue $516,665 $416,149 $1,387,657 $1,119,218
Costs and expenses:
Cost of services 294,693 232,746 757,945 614,254
Operating, administrative
and other 149,375 135,456 440,144 408,288
Depreciation and
amortization 8,088 8,706 22,471 25,989
Merger-related charges - 4,040 - 22,038
--------- --------- ----------- -----------
Operating income $64,509 $35,201 $167,097 $48,649
========= ========= =========== ===========
EBITDA $75,049 $46,857 $198,344 $80,952
========= ========= =========== ===========
EMEA
----
Revenue $149,574 $104,762 $374,823 $292,897
Costs and expenses:
Cost of services 64,499 49,413 169,204 133,001
Operating, administrative
and other 55,861 49,464 160,852 147,849
Depreciation and
amortization 2,543 1,908 7,357 9,880
Merger-related charges - - - 3,205
--------- --------- ----------- -----------
Operating income (loss) $26,671 $3,977 $37,410 $(1,038)
========= ========= =========== ===========
EBITDA $28,891 $5,836 $44,139 $8,304
========= ========= =========== ===========
Asia Pacific
------------
Revenue $44,090 $37,342 $121,249 $100,612
Costs and expenses:
Cost of services 21,751 18,552 60,531 50,289
Operating,
administrative and
other 15,907 13,659 45,108 39,146
Depreciation and
amortization 572 605 1,720 1,855
--------- --------- ----------- -----------
Operating income $5,860 $4,526 $13,890 $9,322
========= ========= =========== ===========
EBITDA $6,418 $5,354 $16,126 $11,589
========= ========= =========== ===========
Global Investment
Management
-----------------
Revenue $33,869 $16,746 $70,898 $54,180
Costs and expenses:
Operating, administrative
and other 34,563 14,647 74,553 47,733
Depreciation and
amortization 462 1,121 1,305 2,277
Merger-related charges - - - 331
--------- --------- ----------- -----------
Operating (loss) income $(1,156) $978 $(4,960) $3,839
========= ========= =========== ===========
EBITDA $819 $3,801 $9,329 $10,048
========= ========= =========== ===========
Non-GAAP Financial Measures
The following measures are considered "non-GAAP financial
measures" under SEC guidelines:
(i) Net income, as adjusted for one-time items
(ii) Diluted earnings per share, as adjusted for one-time items
(iii) EBITDA
(iv) Operating income (loss), as adjusted for one-time items
The Company believes that these non-GAAP financial measures
provide a more complete understanding of ongoing operations and
enhance comparability of current results to prior periods as well as
presenting the effects of one-time items in all periods presented. The
Company believes that investors may find it useful to see these
non-GAAP financial measures to analyze financial performance without
the impact of one-time items that may obscure trends in the underlying
performance of its business.
Net income, as adjusted for one-time items and diluted earnings
per share, as adjusted for one-time items are calculated as follows
(dollars in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- --------------------------
2005 2004 2005 2004
----------- ----------- ----------- --------------
Net income (loss) $56,936 $11,895 $121,929 $(1,708)
Amortization expense
related to net
revenue backlog
acquired in
the Insignia
acquisition,
net of tax - 1,731 - 6,586
Merger-related
charges related to
the Insignia
acquisition,
net of tax - 2,891 - 16,438
Integration costs
related to the
Insignia acquisition,
net of tax 548 2,025 3,683 7,558
One-time
compensation
expense related to
the initial public
offering, net of
tax - 204 - 9,641
Loss on extinguishment
of debt, net of tax (6) 10,969 4,402 10,969
----------- ----------- ----------- --------------
Net income, as
adjusted $57,478 $29,715 $130,014 $49,484
=========== =========== =========== ==============
Diluted income per
share, as adjusted $0.75 $0.40 $1.70 $0.71
=========== =========== =========== ==============
Weighted average
shares outstanding
for diluted income
per share, as
adjusted 76,777,271 75,184,418 76,444,808 69,663,899 (1)
=========== =========== =========== ==============
(1) With adjustments to arrive at "Net income, as adjusted," a net
loss translates into a net income position on an adjusted basis.
Accordingly, the weighted average impact of the dilutive effect of
potential common shares of 3,657,688 has been considered in
determining the dilutive earnings per share on an adjusted basis.
EBITDA for the Company is calculated as follows
(dollars in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2005 2004 2005 2004
--------- -------- --------- ---------
Net income (loss) $56,936 $11,895 $121,929 $(1,708)
Add:
Depreciation and amortization 11,665 12,340 32,853 40,001
Interest expense 13,840 15,509 40,812 53,934
Loss on extinguishment of debt 624 17,066 7,386 21,075
Provision for income taxes 28,525 6,300 70,874 1,690
Less:
Interest income 413 1,262 5,916 4,099
--------- -------- --------- ---------
EBITDA $111,177 $61,848 $267,938 $110,893
========= ======== ========= =========
Operating income (loss), as adjusted for one-time items is
calculated as follows (dollars in thousands):
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- -------------------
2005 2004 2005 2004
-------- -------- --------- ---------
Americas
--------
Operating income $64,509 $35,201 $167,097 $48,649
Amortization expense relating to
net revenue backlog acquired in
the Insignia acquisition - 2,530 - 6,923
Merger-related charges related
to the Insignia acquisition - 4,040 - 22,038
Integration costs related to the
Insignia acquisition 1,180 2,073 4,751 9,575
One-time compensation expense
related to the initial
public offering - - - 15,000
-------- -------- --------- ---------
Operating income, as adjusted $65,689 $43,844 $171,848 $102,185
======== ======== ========= =========
EMEA
----
Operating income (loss) $26,671 $3,977 $37,410 $(1,038)
Amortization expense related to
net revenue backlog acquired
in the Insignia acquisition - - - 3,324
Merger-related charges related
to the Insignia acquisition - - - 3,205
Integration costs related to the
Insignia acquisition 195 890 1,432 2,183
-------- -------- --------- ---------
Operating income, as adjusted $26,866 $4,867 $38,842 $7,674
======== ======== ========= =========
Asia Pacific
The Asia Pacific segment did not incur any one-time costs associated
with the Insignia acquisition or the initial public offering.
Global Investment Management
----------------------------
Operating (loss) income $(1,156) $978 $(4,960) $3,839
Merger-related charges related to the
Insignia acquisition - - - 331
-------- ----- -------- -------
Operating (loss) income, as adjusted $(1,156) $978 $(4,960) $4,170
======== ===== ======== =======
The Company does not allocate net interest expense, loss on
extinguishment of debt or provision for income taxes among its
segments. Accordingly, EBITDA for segments is calculated as follows
(dollars in thousands):
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- ------------------
2005 2004 2005 2004
-------- -------- --------- --------
Americas
--------
Operating income $64,509 $35,201 $167,097 $48,649
Add:
Depreciation and amortization 8,088 8,706 22,471 25,989
Equity income from
unconsolidated subsidiaries 2,452 2,950 8,776 6,314
-------- -------- --------- --------
EBITDA $75,049 $46,857 $198,344 $80,952
======== ======== ========= ========
EMEA
----
Operating income (loss) $26,671 $3,977 $37,410 $(1,038)
Add:
Depreciation and amortization 2,543 1,908 7,357 9,880
Equity loss from unconsolidated
subsidiaries (323) (49) (628) (538)
-------- -------- --------- --------
EBITDA $28,891 $5,836 $44,139 $8,304
======== ======== ========= ========
Asia Pacific
------------
Operating income $5,860 $4,526 $13,890 $9,322
Add:
Depreciation and amortization 572 605 1,720 1,855
Equity (loss) income from
unconsolidated subsidiaries (14) 223 516 412
-------- -------- --------- --------
EBITDA $6,418 $5,354 $16,126 $11,589
======== ======== ========= ========
Global Investment Management
----------------------------
Operating (loss) income $(1,156) $978 $(4,960) $3,839
Add:
Depreciation and amortization 462 1,121 1,305 2,277
Equity income from unconsolidated
subsidiaries 1,513 1,702 12,984 3,932
-------- -------- --------- --------
EBITDA $819 $3,801 $9,329 $10,048
======== ======== ========= ========
CB RICHARD ELLIS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
September December
30, 31,
2005 2004
----------- -----------
Assets:
Cash and cash equivalents $284,571 $256,896
Restricted cash 5,962 9,213
Receivables, net 355,882 394,062
Warehouse receivable(1) 146,480 138,233
Property and equipment, net 133,439 137,703
Goodwill and other intangibles, net 951,368 935,161
Deferred compensation assets 142,690 102,578
Other assets, net 360,309 297,790
----------- -----------
Total assets $2,380,701 $2,271,636
=========== ===========
Liabilities:
Current liabilities, excluding debt $622,109 $637,165
Warehouse line of credit(1) 146,480 138,233
Senior secured term loan tranche B 268,200 277,050
11 1/4% senior subordinated notes 162,967 205,032
9 3/4% senior notes 130,000 130,000
Other debt(2) 48,983 22,492
Deferred compensation liability 166,463 160,281
Other long-term liabilities 126,025 135,510
----------- -----------
Total liabilities 1,671,227 1,705,763
Minority interest 6,568 5,925
Stockholders' equity 702,906 559,948
----------- -----------
Total liabilities and stockholders' equity $2,380,701 $2,271,636
=========== ===========
(1) Includes Freddie MAC loan receivables and related non-recourse
warehouse line of credit of $146.5 million and $138.2 million at
September 30, 2005 and December 31, 2004, respectively.
(2) Includes $29.2 million of non-recourse debt relating to an
investment in Europe at September 30, 2005.
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