UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

ý                                 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2003

 

o                                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from                  to                 

 

Commission File Number 000 - 32983

 

CBRE HOLDING, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware

 

94-3391143

(State or other jurisdiction of incorporation or
organization)

 

(I.R.S. Employer Identification Number)

 

 

 

355 South Grand Avenue, Suite 3100 Los Angeles, California

 

90071-1552

(Address of principal executive offices)

 

(Zip Code)

 

 

 

(213) 613-3226

 

Not Applicable

(Registrant’s telephone number, including area code)

 

(Former name, former address and
former fiscal year if changed since last report)

 

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   ý    No   o

 

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes   o    No   ý

 

The number of shares of Class A and Class B common stock outstanding at April 30, 2003 was 1,835,123 and 12,624,813, respectively.

 

 



 

CBRE HOLDING, INC.

 

FORM 10-Q

 

March 31, 2003

 

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets at March 31, 2003 (Unaudited) and December 31, 2002

3

 

 

 

 

Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002 (Unaudited)

4

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 (Unaudited)

5

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

 

 

 

Item 4.

Disclosure Controls and Procedures

25

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

26

 

 

 

Item 6.

Exhibits and Reports on Form 8-K

26

 

 

 

Signature

27

 

 

 

Certifications

28

 

2



 

CBRE HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)

 

 

 

March 31,
2003

 

December 31,
2002

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

19,370

 

$

79,701

 

Receivables, less allowance for doubtful accounts of $10,164 and $10,892 at March 31, 2003 and December 31, 2002, respectively

 

144,365

 

166,213

 

Warehouse receivable

 

11,625

 

63,140

 

Prepaid expenses

 

18,912

 

9,748

 

Deferred tax assets, net

 

19,674

 

18,723

 

Other current assets

 

9,470

 

8,415

 

Total current assets

 

223,416

 

345,940

 

Property and equipment, net

 

66,706

 

66,634

 

Goodwill

 

577,137

 

577,137

 

Other intangible assets, net of accumulated amortization of $8,680 and $7,739 at March 31, 2003 and December 31, 2002, respectively

 

90,245

 

91,082

 

Deferred compensation assets

 

63,396

 

63,642

 

Investments in and advances to unconsolidated subsidiaries

 

53,980

 

50,208

 

Deferred tax assets, net

 

36,297

 

36,376

 

Other assets

 

85,119

 

93,857

 

Total assets

 

$

1,196,296

 

$

1,324,876

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

102,891

 

$

102,415

 

Compensation and employee benefits payable

 

57,737

 

63,734

 

Accrued bonus and profit sharing

 

33,223

 

103,858

 

Income taxes payable

 

 

15,451

 

Short-term borrowings:

 

 

 

 

 

Warehouse line of credit

 

11,625

 

63,140

 

Revolver and swingline credit facility

 

13,500

 

 

Other

 

48,768

 

47,925

 

Total short-term borrowings

 

73,893

 

111,065

 

Current maturities of long-term debt

 

10,933

 

10,711

 

Total current liabilities

 

278,677

 

407,234

 

Long-Term Debt:

 

 

 

 

 

11¼% senior subordinated notes, net of unamortized discount of $3,002 and $3,057 at March 31, 2003 and December 31, 2002, respectively

 

225,998

 

225,943

 

Senior secured term loans

 

208,350

 

211,000

 

16% senior notes, net of unamortized discount of $5,040 and $5,107 at March 31, 2003 and December 31, 2002, respectively

 

62,599

 

61,863

 

Other long-term debt

 

12,319

 

12,327

 

Total long-term debt

 

509,266

 

511,133

 

Deferred compensation liability

 

106,549

 

106,252

 

Other liabilities

 

45,048

 

43,301

 

Total liabilities

 

939,540

 

1,067,920

 

Minority interest

 

5,727

 

5,615

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Class A common stock; $0.01 par value; 75,000,000 shares authorized; 1,835,123 and 1,793,254 shares issued and outstanding (including treasury shares) at March 31, 2003 and December 31, 2002, respectively

 

18

 

17

 

Class B common stock; $0.01 par value; 25,000,000 shares authorized; 12,624,813 shares issued and outstanding at March 31, 2003 and December 31, 2002

 

127

 

127

 

Additional paid-in capital

 

241,510

 

240,574

 

Notes receivable from sale of stock

 

(4,823

)

(4,800

)

Accumulated earnings

 

34,806

 

36,153

 

Accumulated other comprehensive loss

 

(18,877

)

(18,998

)

Treasury stock at cost, 110,174 shares at March 31, 2003 and December 31, 2002

 

(1,732

)

(1,732

)

Total stockholders’ equity

 

251,029

 

251,341

 

Total liabilities and stockholders’ equity

 

$

1,196,296

 

$

1,324,876

 

 

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

 

3



 

CBRE HOLDING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except share data)

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

 

 

 

 

 

 

Revenue

 

$

263,724

 

$

223,990

 

Costs and expenses:

 

 

 

 

 

Cost of services

 

123,599

 

99,054

 

Operating, administrative and other

 

126,175

 

115,853

 

Depreciation and amortization

 

6,171

 

7,592

 

Equity income from unconsolidated subsidiaries

 

(3,063

)

(2,005

)

Merger-related and other nonrecurring charges

 

 

582

 

 

 

 

 

 

 

Operating income

 

10,842

 

2,914

 

Interest income

 

1,075

 

864

 

Interest expense

 

14,324

 

16,017

 

Loss before benefit for income tax

 

(2,407

)

(12,239

)

Benefit for income tax

 

(1,060

)

(6,144

)

Net loss

 

$

(1,347

)

$

(6,095

)

 

 

 

 

 

 

Basic loss per share

 

$

(0.09

)

$

(0.40

)

 

 

 

 

 

 

Weighted average shares outstanding for basic loss per share

 

15,029,219

 

15,050,633

 

Diluted loss per share

 

$

(0.09

)

$

(0.40

)

 

 

 

 

 

 

Weighted average shares outstanding for diluted loss per share

 

15,029,219

 

15,050,633

 

 

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

 

4



 

CBRE HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net loss

 

$

(1,347

)

$

(6,095

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

6,171

 

7,592

 

Deferred compensation plan deferrals

 

2,111

 

2,817

 

Equity income from unconsolidated subsidiaries

 

(3,063

)

(2,005

)

Decrease in receivables

 

21,169

 

25,998

 

Increase in prepaid expenses and other assets

 

(2,365

)

(2,799

)

Decrease in compensation and employee benefits and accrued bonus and profit sharing

 

(77,994

)

(77,720

)

Increase in accounts payable and accrued expenses

 

1,112

 

9,798

 

Decrease in income taxes payable

 

(15,728

)

(14,734

)

Other operating activities, net

 

(827

)

602

 

Net cash used in operating activities

 

(70,761

)

(56,546

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures, net of concessions received

 

(4,000

)

(2,145

)

Acquisition of businesses including net assets acquired, intangibles and goodwill

 

(22

)

(8,364

)

Other investing activities, net

 

1,528

 

(821

)

Net cash used in investing activities

 

(2,494

)

(11,330

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from revolver and swingline credit facility

 

33,750

 

50,500

 

Repayment of revolver and swingline credit facility

 

(20,250

)

(13,000

)

Proceeds from (repayment of) senior notes and other loans, net

 

68

 

(3,195

)

Repayment of senior secured term loans

 

(2,338

)

(2,338

)

Other financing activities, net

 

526

 

(880

)

Net cash provided by financing activities

 

11,756

 

31,087

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(61,499

)

(36,789

)

CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD

 

79,701

 

57,450

 

Effect of currency exchange rate changes on cash

 

1,168

 

(664

)

CASH AND CASH EQUIVALENTS, AT END OF PERIOD

 

$

19,370

 

$

19,997

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest (net of amount capitalized)

 

$

5,823

 

$

8,454

 

 

 

 

 

 

 

Income taxes, net of refunds

 

$

14,532

 

$

6,867

 

 

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

 

5



 

CBRE HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 

1.                   Nature of Operations

 

CBRE Holding, Inc., a Delaware corporation, was incorporated on February 20, 2001 as Blum CB Holding Corporation.  On March 26, 2001, Blum CB Holding Corporation changed its name to CBRE Holding, Inc. (the Company).  The Company and its former wholly owned subsidiary, Blum CB Corporation (Blum CB), a Delaware corporation, were created to acquire all of the outstanding shares of CB Richard Ellis Services, Inc. (CBRE), an international real estate services firm. Prior to July 20, 2001, the Company was a wholly owned subsidiary of Blum Strategic Partners, L.P. (Blum Strategic), formerly known as RCBA Strategic Partners, LP, which is an affiliate of Richard C. Blum, a director of the Company and CBRE.

 

On July 20, 2001, the Company acquired CBRE (the 2001 Merger) pursuant to an Amended and Restated Agreement and Plan of Merger, dated May 31, 2001, among the Company, CBRE and Blum CB.  Blum CB was merged with and into CBRE, with CBRE being the surviving corporation.  The operations of the Company after the 2001 Merger are substantially the same as the operations of CBRE prior to the 2001 Merger.  In addition, the Company has no substantive operations other than its investment in CBRE.

 

On February 17, 2003, the Company, CBRE, Apple Acquisition Corp. (the Merger Sub) and Insignia Financial Group, Inc. (Insignia) entered into an Agreement and Plan of Merger (the Insignia Acquisition Agreement).  Pursuant to the terms and subject to the conditions of the Insignia Acquisition Agreement, the Merger Sub will merge with and into Insignia, the separate existence of the Merger Sub will cease and Insignia will continue its existence as a wholly owned subsidiary of CBRE (the Insignia Acquisition).

 

When the Insignia Acquisition becomes effective, each outstanding share of common stock of Insignia (other than the cancelled shares, dissenting shares and shares held by wholly owned subsidiaries of Insignia) will be converted into the right to receive $11.00 in cash, without interest, from the Merger Sub, subject to adjustments as provided in the Insignia Acquisition Agreement.  At the same time, each outstanding share of common stock of the Merger Sub will be converted into one share of common stock of the surviving entity in the Insignia Acquisition.

 

Currently, the transaction is valued at approximately $430.0 million, including the repayment of net debt and the redemption of preferred stock.  In addition to Insignia shareholder approval, the transaction, which is expected to close in June 2003, is subject to the receipt of financing and regulatory approvals.  The sale by Insignia on March 14, 2003 of its residential real estate services subsidiaries, Insignia Douglas Elliman LLC and Insignia Residential Group, Inc., to Montauk Battery Realty, LLC and Insignia’s receipt of the cash proceeds from such sale will not affect the consideration to be paid in the Insignia Acquisition.

 

2.                   New Accounting Pronouncements

 

In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities,” which is an interpretation of Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements.”  This interpretation addresses consolidation of entities that are not controllable through voting interests or in which the equity investors do not bear the residual economic risks.  The objective of this interpretation is to provide guidance on how to identify a variable interest entity (VIE) and determine when the assets, liabilities, noncontrolling interests and results of operations of a VIE need to be consolidated with its primary beneficiary.  A company that holds variable interests in an entity will need to consolidate the entity if the company’s interest in the VIE is such that the company will absorb a majority of the VIE’s expected losses and/or receive a majority of the VIE’s expected residual returns or if the VIE does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties.  For VIEs in which a significant (but not majority) variable interest is held, certain disclosures are required.  The consolidation requirements of FIN 46 apply immediately to VIEs created after January 31, 2003.  The consolidation requirements apply to existing VIEs in the first fiscal year or interim period beginning after June 15, 2003.  Certain disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the VIE was established.  The adoption of this interpretation is not expected to have a material impact on the Company’s financial position or results of operations.

 

3.                   Basis of Preparation

 

The accompanying consolidated financial statements have been prepared in accordance with the rules applicable to

 

6



 

Form 10-Q and include all information and footnotes required for interim financial statement presentation.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ materially from those estimates.  All significant inter-company transactions and balances have been eliminated, and certain reclassifications have been made to prior periods’ consolidated financial statements to conform to the current period presentation.  The results of operations for the three months ended March 31, 2003 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2003.  The consolidated financial statements and notes to the consolidated financial statements should be read in conjunction with the Company’s filing on form 10-K, which contains the latest available audited consolidated financial statements and notes thereto, as of and for the period ended December 31, 2002.

 

4.                   Goodwill and Other Intangible Assets

 

The Company engages a third-party valuation firm to perform an annual assessment of its goodwill and other intangible assets deemed to have indefinite lives for impairment as of the beginning of the fourth quarter of each year.  The Company also assesses its goodwill and other intangible assets deemed to have indefinite useful lives for impairment when events or circumstances indicate that their carrying value may not be recoverable from future cash flows.

 

There were no changes in the carrying value of goodwill for the three months ended March 31, 2003.

 

Other intangible assets totaled $90.2 million and $91.1 million, net of accumulated amortization of $8.7 million and $7.7 million, as of March 31, 2003 and December 31, 2002, respectively and are comprised of the following (dollars in thousands):

 

 

 

As of March 31, 2003

 

As of December 31, 2002

 

 

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

 

 

 

 

 

 

 

 

 

 

Amortizable intangible assets

 

 

 

 

 

 

 

 

 

Management contracts

 

$

18,913

 

$

6,118

 

$

18,887

 

$

5,605

 

Loan servicing rights

 

16,312

 

2,562

 

16,234

 

2,134

 

Total

 

$

35,225

 

$

8,680

 

$

35,121

 

$

7,739

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortizable intangible assets Trademark

 

$

63,700

 

 

 

$

63,700

 

 

 

 

In accordance with Statement of Financial Accounting Standards (SFAS) No. 141, the trademark was separately identified as a result of the 2001 Merger and has an indefinite life.  The management contracts and loan servicing rights are amortized over useful lives ranging up to ten years.  Amortization expense related to these intangible assets was $1.0 million for the three months ended March 31, 2003.  The estimated amortization expense for the five years ending December 31, 2007 approximates $3.8 million, $3.7 million, $3.7 million, $3.4 million and $3.4 million, respectively.

 

5.                   Investments in and Advances to Unconsolidated Subsidiaries

 

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

 

7



 

Condensed Balance Sheets Information:

 

 

 

March 31,
2003

 

December 31,
2002

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

$

116,024

 

$

127,635

 

Noncurrent assets

 

$

1,615,216

 

$

1,562,546

 

Current liabilities

 

$

199,930

 

$

108,463

 

Noncurrent liabilities

 

$

591,199

 

$

664,241

 

Minority interest

 

$

4,165

 

$

3,938

 

 

Condensed Statements of Operations Information:

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

 

 

 

 

 

 

Net revenue

 

$

99,031

 

$

80,331

 

Income from operations

 

$

23,604

 

$

17,205

 

Net income

 

$

21,077

 

$

13,226

 

 

Included in other current assets in the accompanying consolidated balance sheets is a note receivable from the Company’s  equity investment in Investor 1031, LLC in the amount of $0.6 million as of March 31, 2003.  This note was issued on June 20, 2002, bears interest at 20.0% per annum and is due for repayment on July 15, 2003

 

The Company’s investment management business involves investing the Company’s own capital in certain real estate investments together with clients, including its equity investments in CB Richard Ellis Strategic Partners, LP, Global Innovation Partners, L.L.C. and other co-investments included in the table above. The Company has provided investment management, property management, brokerage, appraisal and other professional services to these equity investees.

 

6.                   Debt

 

The Company issued $229.0 million in aggregate principal amount of 11 ¼% Senior Subordinated Notes due June 15, 2011 (the Notes), which were issued and sold by Blum CB Corp. for approximately $225.6 million, net of discount, on June 7, 2001 and assumed by CBRE in connection with the 2001 Merger.  The Notes are jointly and severally guaranteed on a senior subordinated basis by the Company and its domestic subsidiaries.  The Notes require semi-annual payments of interest in arrears on June 15 and December 15, having commenced on December 15, 2001, and are redeemable in whole or in part on or after June 15, 2006 at 105.625% of par on that date and at declining prices thereafter.  In addition, before June 15, 2004, the Company may redeem up to 35.0% of the originally issued amount of the Notes at 111 ¼% of par, plus accrued and unpaid interest, solely with the net cash proceeds from public equity offerings.  In the event of a change of control, the Company is obligated to make an offer to purchase the Notes at a redemption price of 101.0% of the principal amount, plus accrued and unpaid interest.  The amount of the Notes included in the accompanying consolidated balance sheets, net of unamortized discount, was $226.0 million and $225.9 million as of March 31, 2003 and December 31, 2002, respectively.

 

The Company also entered into a $325.0 million Senior Credit Facility (the Credit Facility) with Credit Suisse First Boston (CSFB) and other lenders. The Credit Facility is jointly and severally guaranteed by the Company and its domestic subsidiaries and is secured by substantially all their assets.  The Credit Facility includes the Tranche A term facility of $50.0 million, maturing on July 20, 2007; the Tranche B term facility of $185.0 million, maturing on July 18, 2008; and the revolving line of credit of $90.0 million, including revolving credit loans, letters of credit and a swingline loan facility, maturing on July 20, 2007.  Borrowings under the Tranche A and revolving facility bear interest at varying rates based on the Company’s option, at either the applicable LIBOR plus 2.50% to 3.25% or the alternate base rate plus 1.50% to 2.25% as determined by reference to the Company’s ratio of total debt less available cash to EBITDA, which is defined in the debt agreement.  Borrowings under the Tranche B facility bear interest at varying rates based on the Company’s option at either the applicable LIBOR plus 3.75% or the alternate base rate plus 2.75%.  The alternate base

 

8



 

rate is the higher of (1) CSFB’s prime rate or (2) the Federal Funds Effective Rate plus one-half of one percent.

 

The Tranche A facility will be repaid by July 20, 2007 through quarterly principal payments over six years, which total $7.5 million each year through June 30, 2003 and $8.75 million each year thereafter through July 20, 2007. The Tranche B facility requires quarterly principal payments of approximately $0.5 million, with the remaining outstanding principal due on July 18, 2008. The revolving line of credit requires the repayment of any outstanding balance for a period of 45 consecutive days commencing on any day in the month of December of each year as determined by the Company. The Company repaid its revolving credit facility as of November 5, 2002 and at March 31, 2003 had an outstanding balance on the line of credit of $13.5 million. The total amount outstanding under the credit facility included in senior secured term loans, current maturities of long-term debt and short-term borrowings in the accompanying consolidated balance sheets was $232.1 million and $221.0 million as of March 31, 2003 and December 31, 2002, respectively.

 

The Company issued an aggregate principal amount of $65.0 million of 16.0% Senior Notes due on July 20, 2011 (the Senior Notes).  The Senior Notes are unsecured obligations, senior to all current and future unsecured indebtedness, but subordinated to all current and future secured indebtedness of the Company.  Interest accrues at a rate of 16.0% per year and is payable quarterly in cash in arrears.  Interest may be paid in kind to the extent CBRE’s ability to pay cash dividends is restricted by the terms of the Credit Facility.  Additionally, interest in excess of 12.0% may, at the Company’s option, be paid in kind through July 2006.  The Company elected to pay in kind interest in excess of 12.0%, or 4.0%, that was payable on April 20, 2002, July 20, 2002, October 20, 2002 and January 20, 2003.  The Senior Notes are redeemable at the Company’s option, in whole or in part, at 116.0% of par commencing on July 20, 2001 and at declining prices thereafter. As of March 31, 2003, the redemption price was 112.8% of par.  In the event of a change in control, the Company is obligated to make an offer to purchase all of the outstanding Senior Notes at 101.0% of par. The total amount of the Senior Notes included in the accompanying consolidated balance sheets, net of unamortized discount, was $62.6 million and $61.9 million as of March 31, 2003 and December 31, 2002, respectively.

 

The Senior Notes are solely the Company’s obligation to repay.  CBRE has neither guaranteed nor pledged any of its assets as collateral for the Senior Notes, and is not obligated to provide cash flow to the Company for repayment of these Senior Notes.  However, the Company has no substantive assets or operations other than its investment in CBRE to meet any required principal and interest payments on the Senior Notes.  The Company will depend on CBRE’s cash flows to fund principal and interest payments as they come due.

 

The Notes, the Credit Facility and the Senior Notes all contain numerous restrictive covenants that, among other things, limit the Company’s ability to incur additional indebtedness, pay dividends or distributions to stockholders, repurchase capital stock or debt, make investments, sell assets or subsidiary stock, engage in transactions with affiliates, issue subsidiary equity and enter into consolidations or mergers.  The Credit Facility requires the Company to maintain a minimum coverage ratio of interest and certain fixed charges and a maximum leverage and senior leverage ratio of earnings before interest, taxes, depreciation and amortization to funded debt.  The Credit Facility requires the Company to pay a facility fee based on the total amount of the unused commitment.

 

The Company has short-term borrowings of $73.9 million and $111.1 million with related weighted average interest rates of 5.0% and 3.9% as of March 31, 2003 and December 31, 2002, respectively.

 

A subsidiary of the Company has a credit agreement with Residential Funding Corporation (RFC) for the purpose of funding mortgage loans that will be resold.  The credit agreement in 2001 initially provided for a revolving line of credit of $150.0 million, bore interest at the greater of one-month LIBOR or 3.0% (RFC Base Rate), plus 1.0% and expired on August 31, 2001.  Through various executed amendments and extension letters in 2001, the revolving line of credit was increased to $350.0 million and the maturity date was extended to January 22, 2002.

 

Effective January 23, 2002, the Company entered into a Second Amended and Restated Warehousing Credit and Security Agreement.  This agreement provided for a revolving line of credit in the amount of $350.0 million until February 28, 2002 and $150.0 million for the period from March 1, 2002 through August 31, 2002.  Additionally, on February 1, 2002, the Company executed a Letter Agreement with RFC that redefined the RFC Base Rate to the greater of one-month LIBOR or 2.25% per annum.  On April 20, 2002, the Company obtained a temporary revolving line of credit increase of $210.0 million that resulted in a total line of credit equaling $360.0 million, which expired on July 31,

 

9



 

2002.  Upon expiration of the temporary increase and through various executed amendments and extension letter agreements, the Company established a revolving line of credit of $200.0 million, redefined the RFC Base Rate to the greater of one-month LIBOR or 2.0% and extended the maturity date of the agreement to December 20, 2002.  On December 16, 2002, the Company entered into the Third Amended and Restated Warehousing Credit and Security Agreement effective December 20, 2002.  The agreement provides for a revolving line of credit of $200.0 million, bears interest at the RFC Base Rate plus 1.0% and expires on August 31, 2003.  On March 28, 2003, the Company was notified that effective May 1, 2003, the RFC base rate would be lowered to the greater of one-month LIBOR or 1.5%.

 

During the quarter ended March 31, 2003, the Company had a maximum of $93.9 million revolving line of credit principal outstanding with RFC.  At March 31, 2003 and December 31, 2002, respectively, the Company had a $11.6 million and a $63.1 million warehouse line of credit outstanding, which are included in short-term borrowings in the accompanying consolidated balance sheets.  Additionally, the Company had a $11.6 million and a $63.1 million warehouse receivable, which are also included in the accompanying consolidated balance sheets as of March 31, 2003 and December 31, 2002, respectively.

 

A subsidiary of the Company has a credit agreement with JP Morgan Chase.  The credit agreement provides for a non-recourse revolving line of credit of up to $20.0 million, bears interest at 1.0% in excess of the bank’s cost of funds and expires on May 28, 2003.  At March 31, 2003 and December 31, 2002 the Company had no revolving line of credit principal outstanding with JP Morgan Chase.

 

During 2001, the Company incurred $37.2 million of non-recourse debt through a joint venture.  In September 2002, the maturity date on this non-recourse debt was extended to June 18, 2003.  At March 31, 2003 and December 31, 2002, respectively, the Company had $39.4 million and $40.0 million of non-recourse debt outstanding, which is included in short-term borrowings in the accompanying consolidated balance sheets.

 

7.                   Commitments and Contingencies

 

The Company is a party to a number of pending or threatened lawsuits arising out of, or incident to, its ordinary course of business. Management believes that any liability that may result from disposition of these lawsuits will not have a material effect on the Company’s consolidated financial position or results of operations.

 

A subsidiary of the Company has an agreement with Fannie Mae to fund the purchase of a $104.6 million loan portfolio using proceeds from its RFC line of credit. A 100% participation in the loan portfolio was sold to Fannie Mae with the Company retaining the credit risk on the first 2% of losses incurred on the underlying portfolio of commercial mortgage loans. The Company has collateralized a portion of its obligation to cover the first 1% of losses through a letter of credit in favor of Fannie Mae for a total of approximately $1.0 million.

 

The Company had outstanding letters of credit totaling $17.4 and  $7.8 million as of March 31, 2003 and December 31, 2002, respectively, including the Fannie Mae letter of credit discussed in the preceding paragraph.  The letters of credit expire at varying dates through March 2004.

 

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. These co-investments typically range from 2% to 5% of the equity in a particular fund.  As of March 31, 2003, the Company had committed an additional $20.8 million to fund future co-investments.

 

8.                   Comprehensive Loss

 

Comprehensive loss consists of net loss and other comprehensive income (loss).  Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments and unfunded pension liability. Foreign currency translation adjustments exclude income tax expense (benefit) given that the earnings of non-US subsidiaries are deemed to be reinvested for an indefinite period of time.

 

10



 

 

The following table provides a summary of the comprehensive loss (dollars in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

 

 

 

 

 

 

Net loss

 

$

(1,347

)

$

(6,095

)

Foreign currency translation gain (loss)

 

121

 

(252

)

 

 

 

 

 

 

Comprehensive loss

 

$

(1,226

)

$

(6,347

)

 

9.                   Stock-Based Compensation

 

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.”  This statement amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures about the effect on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation.  Finally, SFAS No. 148 amends APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure about those effects in interim financial information.  For entities that voluntarily change to the fair value based method of accounting for stock-based employee compensation, the transition and the disclosure provisions are effective for fiscal years ending after December 15, 2002.  The amendments to APB No. 28 are effective for interim periods beginning after December 15, 2002.

 

However, the Company continues to account for stock-based compensation under the recognition and measurement principles of APB Opinion No. 25 and does not plan to voluntarily change to the fair value based method of accounting for stock-based compensation.  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 loss and per share information would have been as follows on a pro forma basis (dollars in thousands, except per share data):

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

 

 

 

 

 

 

Net Loss:

 

 

 

 

 

As Reported

 

$

(1,347

)

$

(6,095

)

Pro Forma

 

(1,495

)

(6,233

)

Basic EPS:

 

 

 

 

 

As Reported

 

(0.09

)

(0.40

)

Pro Forma

 

(0.10

)

(0.41

)

Diluted EPS:

 

 

 

 

 

As Reported

 

(0.09

)

(0.40

)

Pro Forma

 

(0.10

)

(0.41

)

 

These pro forma amounts may not be representative of future pro forma results.

 

The weighted average fair value of options and warrants granted was $1.63 and $2.39 for the three months ended March 31, 2003 and 2002, respectively.  Dividend yield is excluded from the calculation since it is the present intention of the Company to retain all earnings.  The fair value of each option grant and warrant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

Risk-free interest rate

 

3.04

%

4.14

%

Expected volatility

 

0.00

%

0.00

%

Expected life

 

5 years

 

5 years

 

 

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options,

 

11



 

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 that the Black-Scholes model does not necessarily provide a reliable single measure of the fair value of its employee stock options.

 

10.  Per Share Information

 

Basic and diluted loss per share for the Company was computed by dividing the net loss by the weighted average number of common shares outstanding of 15,029,219 and 15,050,633 for the three months ended March 31, 2003 and 2002, respectively.  As a result of operating losses incurred for the three months ended March 31, 2003 and 2002, diluted weighted average shares outstanding did not give effect to common stock equivalents, as to do so would have been anti-dilutive.

 

11.  Fiduciary Funds

 

The consolidated balance sheets do not include the net assets of escrow, agency and fiduciary funds, which amounted to $390.8 million and $414.6 million at March 31, 2003 and December 31, 2002, respectively.

 

12.  Guarantor and Nonguarantor Financial Statements

 

In connection with the 2001 Merger with Blum CB, and as part of the financing of the 2001 Merger, CBRE assumed an aggregate of $229.0 million in Senior Subordinated Notes (the Notes) due June 15, 2011.  These Notes are unsecured and rank equally in right of payment with any of the Company’s senior subordinated unsecured indebtedness.  The Notes are effectively subordinated to indebtedness and other liabilities of the Company’s subsidiaries that are not guarantors of the Notes.  The Notes are guaranteed on a full, unconditional, joint and several basis by the Company, CBRE and CBRE’s domestic subsidiaries.

 

The following condensed consolidating financial information includes:

 

(1) Condensed consolidating balance sheets as of March 31, 2003 and December 31, 2002; condensed consolidating statements of operations for the three months ended March 31, 2003 and 2002, and condensed consolidating statements of cash flows for the three months ended March 31, 2003 and 2002, of (a) Holding, the parent, (b) CBRE, which is the subsidiary issuer, (c) the guarantor subsidiaries, (d) the nonguarantor subsidiaries and (e) the Company on a consolidated basis; and (2) Elimination entries necessary to consolidate CBRE Holding, Inc., the parent, with CBRE and its guarantor and nonguarantor subsidiaries.

 

Investments in consolidated subsidiaries are presented using the equity method of accounting.  The principal elimination entries eliminate investments in consolidated subsidiaries and inter-company balances and transactions.

 

12



 

CBRE HOLDING, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 2003
(Unaudited)
(Dollars in thousands)

 

 

 

Parent

 

CBRE

 

Guarantor
Subsidiaries

 

Nonguarantor
Subsidiaries

 

Elimination

 

Consolidated
Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

82

 

$

276

 

$

12,455

 

$

6,557

 

$

 

$

19,370

 

Receivables, less allowance for doubtful accounts

 

30

 

37

 

52,835

 

91,463

 

 

144,365

 

Warehouse receivable

 

 

 

11,625

 

 

 

11,625

 

Prepaid and other current assets

 

21,048

 

17,695

 

14,884

 

10,170

 

(15,741

)

48,056

 

Total current assets

 

21,160

 

18,008

 

91,799

 

108,190

 

(15,741

)

223,416

 

Property and equipment, net

 

 

 

52,184

 

14,522

 

 

66,706

 

Goodwill

 

 

 

442,965

 

134,172

 

 

577,137

 

Other intangible assets, net

 

 

 

88,332

 

1,913

 

 

90,245

 

Deferred compensation assets

 

 

63,396

 

 

 

 

63,396

 

Investment in and advances to unconsolidated subsidiaries

 

 

4,798

 

42,419

 

6,763

 

 

53,980

 

Investment in consolidated subsidiaries

 

280,987

 

314,867

 

65,723

 

 

(661,577

)

 

Inter-company loan receivable

 

 

438,818

 

 

 

(438,818

)

 

Deferred tax assets, net

 

36,297

 

 

 

 

 

36,297

 

Other assets

 

4,753

 

16,549

 

13,305

 

50,512

 

 

85,119

 

Total assets

 

$

343,197

 

$

856,436

 

$

796,727

 

$

316,072

 

$

(1,116,136

)

$

1,196,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

2,104

 

$

10,764

 

$

34,455

 

$

55,568

 

$

 

$

102,891

 

Inter-company payable

 

15,741

 

 

 

 

(15,741

)

 

Compensation and employee benefits payable

 

 

 

30,555

 

27,182

 

 

57,737

 

Accrued bonus and profit sharing

 

 

 

10,182

 

23,041

 

 

33,223

 

Short-term borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse line of credit

 

 

 

11,625

 

 

 

11,625

 

Revolving credit and swingline facility

 

 

13,500

 

 

 

 

13,500

 

Other

 

 

 

876

 

47,892

 

 

48,768

 

Total short-term borrowings

 

 

13,500

 

12,501

 

47,892

 

 

73,893

 

Current maturities of long-term debt

 

 

10,288

 

 

645

 

 

10,933

 

Total current liabilities

 

17,845

 

34,552

 

87,693

 

154,328

 

(15,741

)

278,677

 

Long-Term Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

11¼% senior subordinated notes, net of unamortized discount

 

 

225,998

 

 

 

 

225,998

 

Senior secured term loans

 

 

208,350

 

 

 

 

208,350

 

16% senior notes, net of unamortized discount

 

62,599

 

 

 

 

 

62,599

 

Other long-term debt

 

 

 

12,129

 

190

 

 

12,319

 

Inter-company loan payable

 

 

 

362,614

 

76,204

 

(438,818

)

 

Total long-term debt

 

62,599

 

434,348

 

374,743

 

76,394

 

(438,818

)

509,266

 

Deferred compensation liability

 

 

106,549

 

 

 

 

106,549

 

Other liabilities

 

11,724

 

 

19,424

 

13,900

 

 

45,048

 

Total liabilities

 

92,168

 

575,449

 

481,860

 

244,622

 

(454,559

)

939,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 

 

 

 

5,727

 

 

5,727

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

251,029

 

280,987

 

314,867

 

65,723

 

(661,577

)

251,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

343,197

 

$

856,436

 

$

796,727

 

$

316,072

 

$

(1,116,136

)

$

1,196,296

 

 

13



 

CBRE HOLDING, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2002

(Dollars in thousands)

 

 

 

Parent

 

CBRE

 

Guarantor
Subsidiaries

 

Nonguarantor
Subsidiaries

 

Elimination

 

Consolidated
Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

127

 

$

54

 

$

74,173

 

$

5,347

 

$

 

$

79,701

 

Receivables, less allowance for doubtful accounts

 

 

40

 

61,624

 

104,549

 

 

166,213

 

Warehouse receivable

 

 

 

63,140

 

 

 

63,140

 

Prepaid and other current assets

 

18,723

 

22,201

 

8,432

 

7,729

 

(20,199

)

36,886

 

Total current assets

 

18,850

 

22,295

 

207,369

 

117,625

 

(20,199

)

345,940

 

Property and equipment, net

 

 

 

51,419

 

15,215

 

 

66,634

 

Goodwill

 

 

 

442,965

 

134,172

 

 

577,137

 

Other intangible assets, net

 

 

 

89,075

 

2,007

 

 

91,082

 

Deferred compensation assets

 

 

63,642

 

 

 

 

63,642

 

Investment in and advances to unconsolidated subsidiaries

 

 

4,782

 

39,205

 

6,221

 

 

50,208

 

Investment in consolidated subsidiaries

 

302,593

 

322,794

 

66,162

 

 

(691,549

)

 

Inter-company loan receivable

 

 

429,396

 

 

 

(429,396

)

 

Deferred tax assets, net

 

36,376

 

 

 

 

 

36,376

 

Other assets

 

4,896

 

17,464

 

20,453

 

51,044

 

 

93,857

 

Total assets

 

$

362,715

 

$

860,373

 

$

916,648

 

$

326,284

 

$

(1,141,144

)

$

1,324,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

2,137

 

$

4,610

 

$

36,895

 

$

58,773

 

$

 

$

102,415

 

Inter-company payable

 

20,199

 

 

 

 

(20,199

)

 

Compensation and employee benefits payable

 

 

 

40,938

 

22,796

 

 

63,734

 

Accrued bonus and profit sharing

 

 

 

59,942

 

43,916

 

 

103,858

 

Income taxes payable

 

15,451

 

 

 

 

 

15,451

 

Short-term borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse line of credit

 

 

 

63,140

 

 

 

63,140

 

Other

 

 

 

16

 

47,909

 

 

47,925

 

Total short-term borrowings

 

 

 

63,156

 

47,909

 

 

111,065

 

Current maturities of long-term debt

 

 

9,975

 

 

736

 

 

10,711

 

Total current liabilities

 

37,787

 

14,585

 

200,931

 

174,130

 

(20,199

)

407,234

 

Long-Term Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

11¼% senior subordinated notes, net of unamortized discount

 

 

225,943

 

 

 

 

225,943

 

Senior secured term loans

 

 

211,000

 

 

 

 

211,000

 

16% senior notes, net of unamortized discount

 

61,863

 

 

 

 

 

61,863

 

Other long-term debt

 

 

 

12,129

 

198

 

 

12,327

 

Inter-company loan payable

 

 

 

362,344

 

67,052

 

(429,396

)

 

Total long-term debt

 

61,863

 

436,943

 

374,473

 

67,250

 

(429,396

)

511,133

 

Deferred compensation liability

 

 

106,252

 

 

 

 

106,252

 

Other liabilities

 

11,724

 

 

18,450

 

13,127

 

 

43,301

 

Total liabilities

 

111,374

 

557,780

 

593,854

 

254,507

 

(449,595

)

1,067,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 

 

 

 

5,615

 

 

5,615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

251,341

 

302,593

 

322,794

 

66,162

 

(691,549

)

251,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

362,715

 

$

860,373

 

$

916,648

 

$

326,284

 

$

(1,141,144

)

$

1,324,876

 

 

14



 

CBRE HOLDING, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2003

(Unaudited)

(Dollars in thousands)

 

 

 

Parent

 

CBRE

 

Guarantor Subsidiaries

 

Nonguarantor Subsidiaries

 

Elimination

 

Consolidated Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

 

$

 

$

190,490

 

$

73,234

 

$

 

$

263,724

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

 

89,697

 

33,902

 

 

123,599

 

Operating, administrative and other

 

100

 

1,968

 

83,035

 

41,072

 

 

126,175

 

Depreciation and amortization

 

 

 

4,234

 

1,937

 

 

6,171

 

Equity (income) loss from unconsolidated subsidiaries

 

 

(24

)

(3,249

)

210

 

 

(3,063

)

Operating (loss) income

 

(100

)

(1,944

)

16,773

 

(3,887

)

 

10,842

 

Interest income

 

36

 

9,313

 

455

 

566

 

(9,295

)

1,075

 

Interest expense

 

2,909

 

10,066

 

8,855

 

1,789

 

(9,295

)

14,324

 

Equity income (loss) of consolidated subsidiaries

 

331

 

3,378

 

(4,649

)

 

940

 

 

(Loss) income before (benefit) provision for income tax

 

(2,642

)

681

 

3,724

 

(5,110

)

940

 

(2,407

)

(Benefit) provision for income tax

 

(1,295

)

350

 

346

 

(461

)

 

(1,060

)

Net (loss) income

 

$

(1,347

)

$

331

 

$

3,378

 

$

(4,649

)

$

940

 

$

(1,347

)

 

 

 

CBRE HOLDING, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2002

(Unaudited)

(Dollars in thousands)

 

 

 

Parent

 

CBRE

 

Guarantor
Subsidiaries

 

Nonguarantor
Subsidiaries

 

Elimination

 

Consolidated
Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

 

$

 

$

168,560

 

$

55,430

 

$

 

$

223,990

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

 

71,655

 

27,399

 

 

99,054

 

Operating, administrative and other

 

100

 

2,378

 

81,162

 

32,213

 

 

115,853

 

Depreciation and amortization

 

 

 

 

5,201

 

2,391

 

 

7,592

 

Equity income from unconsolidated subsidiaries

 

 

(167

)

(1,278

)

(560

)

 

 

(2,005

)

Merger-related and other nonrecurring charges

 

 

582

 

 

 

 

582

 

Operating (loss) income

 

(100

)

(2,793

)

11,820

 

(6,013

)

 

2,914

 

Interest income

 

45

 

9,815

 

703

 

86

 

(9,785

)

864

 

Interest expense

 

2,794

 

10,467

 

9,355

 

3,186

 

(9,785

)

16,017

 

Equity losses of consolidated subsidiaries

 

(5,211

)

(1,831

)

(7,256

)

 

14,298

 

 

Loss before benefit for income tax

 

(8,060

)

(5,276

)

(4,088

)

(9,113

)

14,298

 

(12,239

)

Benefit for income tax

 

(1,965

)

(65

)

(2,257

)

(1,857

)

 

(6,144

)

Net loss

 

$

(6,095

)

$

(5,211

)

$

(1,831

)

$

(7,256

)

$

14,298

 

$

(6,095

)

 

15



 

CBRE HOLDING, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2003

(Unaudited)

(Dollars in thousands)

 

 

 

Parent

 

CBRE

 

Guarantor
Subsidiaries

 

Nonguarantor
Subsidiaries

 

Consolidated
Total

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES:

 

$

(678

)

$

4,924

 

$

(45,078

)

$

(29,929

)

$

(70,761

)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures, net of concessions received

 

 

 

(3,228

)

(772

)

(4,000

)

Acquisition of businesses including net assets acquired, intangibles and goodwill

 

 

 

(22

)

 

(22

)

Other investing activities, net

 

 

 

1,866

 

(338

)

1,528

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

(1,384

)

(1,110

)

(2,494

)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Proceeds from revolver and swingline credit facility

 

 

33,750

 

 

 

33,750

 

Repayment of revolver and swingline credit facility

 

 

(20,250

)

 

 

(20,250

)

Repayment of senior secured term loans

 

 

(2,338

)

 

 

(2,338

)

(Increase) decrease in intercompany receivables, net

 

 

(15,864

)

(15,256

)

31,120

 

 

Other financing activities, net

 

633

 

 

 

(39

)

594

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

633

 

(4,702

)

(15,256

)

31,081

 

11,756

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(45

)

222

 

(61,718

)

42

 

(61,499

)

CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD

 

127

 

54

 

74,173

 

5,347

 

79,701

 

Effect of currency exchange rate changes on cash

 

 

 

 

1,168

 

1,168

 

CASH AND CASH EQUIVALENTS, AT END OF PERIOD

 

$

82

 

$

276

 

$

12,455

 

$

6,557

 

$

19,370

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

Interest (net of amount capitalized)

 

$

2,009

 

$

3,160

 

$

406

 

$

248

 

$

5,823

 

Income taxes, net of refunds

 

$

14,532

 

$

 

$

 

$

 

$

14,532

 

 

16



 

CBRE HOLDING, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2002

(Unaudited)

(Dollars in thousands)

 

 

 

Parent

 

CBRE

 

Guarantor
Subsidiaries

 

Nonguarantor
Subsidiaries

 

Consolidated
Total

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:

 

$

650

 

$

(2,780

)

$

(40,203

)

$

(14,213

)

$

(56,546

)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures, net of concessions received

 

 

 

(1,622

)

(523

)

(2,145

)

Acquisition of businesses including net assets acquired, intangibles and goodwill

 

 

(8,339

)

(25

)

 

(8,364

)

Other investing activities, net

 

 

 

(1,006

)

185

 

(821

)

Net cash used in investing activities

 

 

(8,339

)

(2,653

)

(338

)

(11,330

)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Proceeds from revolver and swingline credit facility

 

 

50,500

 

 

 

50,500

 

Repayment of revolver and swingline credit facility

 

 

(13,000

)

 

 

(13,000

)

Repayment of senior notes and other loans, net

 

 

 

(2,534

)

(661

)

(3,195

)

Repayment of senior secured term loans

 

 

(2,338

)

 

 

(2,338

)

(Increase) decrease in intercompany receivables, net

 

 

(24,639

)

18,979

 

5,660

 

 

Other financing activities, net

 

(641

)

(151

)

(40

)

(48

)

(880

)

Net cash (used in) provided by financing activities

 

(641

)

10,372

 

16,405

 

4,951

 

31,087

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

9

 

(747

)

(26,451

)

(9,600

)

(36,789

)

CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD

 

3

 

931

 

42,204

 

14,312

 

57,450

 

Effect of currency exchange rate changes on cash

 

 

 

 

(664

)

(664

)

CASH AND CASH EQUIVALENTS, AT END OF PERIOD

 

$

12

 

$

184

 

$

15,753

 

$

4,048

 

$

19,997

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

Interest (net of amount capitalized)

 

$

2,600

 

$

3,301

 

$

477

 

$

2,076

 

$

8,454

 

Income taxes, net of refunds

 

$

6,867

 

$

 

$

 

$

 

$

6,867

 

 

17



 

13.            Industry Segments

 

The Company reports its operations through three geographically organized segments:  (1) Americas, (2) Europe, Middle East and Africa (EMEA) and (3) Asia Pacific.  The Americas consist of operations in the U.S., Canada, Mexico and South America.  EMEA mainly consists of Europe, while Asia Pacific includes operations in Asia, Australia and New Zealand.  The following table summarizes the revenue and operating income (loss) by operating segment (dollars in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2003

 

2002

 

Revenue

 

 

 

 

 

Americas

 

$

199,950

 

$

178,613

 

EMEA

 

45,478

 

30,073

 

Asia Pacific

 

18,296

 

15,304

 

 

 

 

 

 

 

 

 

$

263,724

 

$

223,990

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

Americas

 

$

14,464

 

$

8,132

 

EMEA

 

(784

)

(3,003

)

Asia Pacific

 

(2,838

)

(2,215

)

 

 

 

 

 

 

 

 

10,842

 

2,914

 

 

 

 

 

 

 

Interest income