Edgar Filing: CB RICHARD ELLIS GROUP INC

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2011

¨	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 001 – 32205

CB RICHARD ELLIS GROUP, 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)

11150 Santa Monica Boulevard, Suite 1600 Los Angeles, California		90025
(Address of principal executive offices)		(Zip Code)

(310) 405-8900
(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 x No ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x.

The number of shares of Class A common stock outstanding at July 29, 2011 was 325,097,062.

FORM 10-Q

June 30, 2011

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets at June 30, 2011 (Unaudited) and December 31, 2010		3
	Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010 (Unaudited)		4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (Unaudited)		5
	Consolidated Statement of Equity for the six months ended June 30, 2011 (Unaudited)		6
	Notes to Consolidated Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		57
Item 4.	Controls and Procedures		59

PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		60
Item 1A.	Risk Factors		60
Item 6.	Exhibits		61
Signatures			63

CB RICHARD ELLIS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)


	June 30, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	752,109		$	506,574
Restricted cash		49,221			52,257
Receivables, less allowance for doubtful accounts of $39,078 and $33,272 at June 30, 2011 and December 31, 2010, respectively		968,585			940,167
Warehouse receivables		308,249			485,433
Income taxes receivable		36,356			—
Prepaid expenses		100,251			96,951
Deferred tax assets, net		112,969			112,304
Real estate and other assets held for sale		558			16,295
Other current assets		50,756			50,889

Total Current Assets		2,379,054			2,260,870
Property and equipment, net		216,584			188,397
Goodwill		1,407,543			1,323,801
Other intangible assets, net of accumulated amortization of $182,361 and $166,295 at June 30, 2011 and December 31, 2010, respectively		333,940			332,855
Investments in unconsolidated subsidiaries		145,158			138,973
Deferred tax assets, net		6,300			10,320
Real estate under development		90,469			112,819
Real estate held for investment		539,920			626,395
Available for sale securities		33,930			31,936
Other assets, net		129,834			95,202

Total Assets	$	5,282,732		$	5,121,568

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	441,799		$	445,337
Compensation and employee benefits payable		337,062			346,539
Accrued bonus and profit sharing		224,969			455,523
Income taxes payable		—			18,398
Short-term borrowings:
Warehouse lines of credit		302,490			453,835
Revolving credit facility		111,220			17,516
Other		16			16

Total short-term borrowings		413,726			471,367
Current maturities of long-term debt		42,038			38,086
Notes payable on real estate		153,598			154,213
Liabilities related to real estate and other assets held for sale		46			12,152
Other current liabilities		17,598			15,153

Total Current Liabilities		1,630,836			1,956,768
Long-Term Debt:
Senior secured term loans		979,500			602,500
11.625% senior subordinated notes, net of unamortized discount of $11,671 and $12,318 at June 30, 2011 and December 31, 2010, respectively		438,329			437,682
6.625% senior notes		350,000			350,000
Other long-term debt		85			54

Total Long-Term Debt		1,767,914			1,390,236
Pension liability		40,061			40,007
Non-current tax liabilities		81,217			78,306
Notes payable on real estate		366,353			461,665
Other liabilities		156,693			128,791

Total Liabilities		4,043,074			4,055,773
Commitments and contingencies		—			—
Equity:
CB Richard Ellis Group, Inc. Stockholders’ Equity:
Class A common stock; $0.01 par value; 525,000,000 shares authorized; 324,992,942 and 323,594,919 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		3,250			3,236
Additional paid-in capital		854,983			814,244
Accumulated earnings		280,929			185,337
Accumulated other comprehensive loss		(56,158	)		(94,602	)

Total CB Richard Ellis Group, Inc. Stockholders’ Equity		1,083,004			908,215
Non-controlling interests		156,654			157,580

Total Equity		1,239,658			1,065,795

Total Liabilities and Equity	$	5,282,732		$	5,121,568

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

CB RICHARD ELLIS GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share data)


	Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011		2010
Revenue	$	1,422,218	$	1,171,919		$	2,607,323	$	2,197,802
Costs and expenses:
Cost of services		839,822		678,714			1,553,577		1,293,908
Operating, administrative and other		432,856		372,033			809,881		710,739
Depreciation and amortization		25,385		27,616			48,563		53,911

Total costs and expenses		1,298,063		1,078,363			2,412,021		2,058,558
Gain on disposition of real estate		6,027		3,623			7,999		3,623

Operating income		130,182		97,179			203,301		142,867
Equity income from unconsolidated subsidiaries		17,068		14,235			32,247		7,651
Interest income		1,902		3,111			4,570		4,911
Interest expense		34,216		50,275			67,934		100,067

Income from continuing operations before provision for income taxes		114,936		64,250			172,184		55,362
Provision for income taxes		46,336		26,704			69,742		34,003

Net income from continuing operations		68,600		37,546			102,442		21,359
Income from discontinued operations, net of income taxes		6,267		7,140			16,911		7,140

Net income		74,867		44,686			119,353		28,499
Less: Net income (loss) attributable to non-controlling interests		13,644		(10,104	)		23,761		(19,664	)

Net income attributable to CB Richard Ellis Group, Inc.	$	61,223	$	54,790		$	95,592	$	48,163

Basic income per share attributable to CB Richard Ellis Group, Inc. shareholders
Income from continuing operations attributable to CB Richard Ellis Group, Inc.	$	0.19	$	0.15		$	0.30	$	0.13
Income from discontinued operations attributable to CB Richard Ellis Group, Inc.		—		0.02			—		0.02

Net income attributable to CB Richard Ellis Group, Inc.	$	0.19	$	0.17		$	0.30	$	0.15

Weighted average shares outstanding for basic income per share		317,698,275		312,910,934			317,133,967		312,895,372

Diluted income per share attributable to CB Richard Ellis Group, Inc. shareholders
Income from continuing operations attributable to CB Richard Ellis Group, Inc.	$	0.19	$	0.15		$	0.30	$	0.13
Income from discontinued operations attributable to CB Richard Ellis Group, Inc.		—		0.02			—		0.02

Net income attributable to CB Richard Ellis Group, Inc.	$	0.19	$	0.17		$	0.30	$	0.15

Weighted average shares outstanding for diluted income per share		324,093,042		318,425,227			323,510,069		317,736,844

Amounts attributable to CB Richard Ellis Group, Inc. shareholders
Income from continuing operations, net of tax	$	61,223	$	47,279		$	95,592	$	40,652
Income from discontinued operations, net of tax		—		7,511			—		7,511

Net income	$	61,223	$	54,790		$	95,592	$	48,163

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

CB RICHARD ELLIS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	119,353		$	28,499
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		49,088			54,079
Amortization of financing costs		3,241			5,325
Gain on sale of loans, servicing rights and other assets		(25,437	)		(20,343	)
Gain on disposition of real estate held for investment		(19,695	)		(11,879	)
Equity income from unconsolidated subsidiaries		(32,247	)		(7,651	)
Provision for doubtful accounts		6,830			12,421
Compensation expense related to stock options and non-vested stock awards		21,292			22,018
Incremental tax benefit from stock options exercised		(14,495	)		(236	)
Distribution of earnings from unconsolidated subsidiaries		11,855			11,793
Tenant concessions received		11,807			3,424
Decrease in receivables		4,131			4,961
(Increase) decrease in prepaid expenses and other assets		(4,523	)		4,352
Decrease (increase) in real estate held for sale and under development		32,525			(10,868	)
Decrease in accounts payable and accrued expenses		(34,955	)		(23,737	)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(256,597	)		(83,708	)
(Increase) decrease in income taxes receivable		(28,245	)		113,243
Increase (decrease) in other liabilities		400			(601	)
Other operating activities, net		(718	)		(85	)

Net cash (used in) provided by operating activities		(156,390	)		101,007

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(47,148	)		(7,161	)
Acquisition of businesses, including net assets acquired, intangibles and goodwill, net of cash acquired		(41,075	)		(62,720	)
Contributions to unconsolidated subsidiaries		(17,094	)		(10,852	)
Distributions from unconsolidated subsidiaries		34,988			16,130
Net proceeds from disposition of real estate held for investment		109,667			57,249
Additions to real estate held for investment		(6,315	)		(5,212	)
Proceeds from the sale of servicing rights and other assets		11,416			9,741
Decrease in restricted cash		3,974			7,804
Other investing activities, net		(704	)		(954	)

Net cash provided by investing activities		47,709			4,025

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior secured term loans		400,000			—
Repayment of senior secured term loans		(19,000	)		(60,770	)
Proceeds from revolving credit facility		744,733			16,349
Repayment of revolving credit facility		(652,000	)		(10,496	)
Proceeds from notes payable on real estate held for investment		3,551			8,741
Repayment of notes payable on real estate held for investment		(91,471	)		(48,493	)
Proceeds from notes payable on real estate held for sale and under development		1,665			3,214
Repayment of notes payable on real estate held for sale and under development		(26,594	)		(3,412	)
Repayment of short-term borrowings and other loans, net		—			(4,047	)
Proceeds from exercise of stock options		4,858			312
Incremental tax benefit from stock options exercised		14,495			236
Non-controlling interests contributions		8,630			22,103
Non-controlling interests distributions		(30,679	)		(6,954	)
Payment of financing costs		(18,454	)		(5,707	)
Other financing activities, net		(91	)		(217	)

Net cash provided by (used in) financing activities		339,643			(89,141	)
Effect of currency exchange rate changes on cash and cash equivalents		14,573			(13,885	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		245,535			2,006
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD		506,574			741,557

CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	752,109		$	743,563

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest	$	68,221		$	85,408

Income tax payments (refunds), net	$	95,744		$	(77,047	)

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

CB RICHARD ELLIS GROUP, INC.

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)

(Dollars in thousands)


	CB Richard Ellis Group, Inc. Shareholders
	Class A common stock		Additional paid-in capital		Accumulated earnings		Accumulated other comprehensive loss			Non-controlling interests			Total
Balance at December 31, 2010	$	3,236	$	814,244	$	185,337	$	(94,602	)	$	157,580		$	1,065,795
Net income		—		—		95,592		—			23,761			119,353
Stock options exercised (including tax benefit)		14		19,339		—		—			—			19,353
Compensation expense for stock options and non-vested stock awards		—		21,292		—		—			—			21,292
Foreign currency translation gain		—		—		—		44,715			830			45,545
Unrealized losses on interest rate swaps and interest rate caps, net		—		—		—		(6,777	)		—			(6,777	)
Contributions from non-controlling interests		—		—		—		—			8,630			8,630
Distributions to non-controlling interests		—		—		—		—			(30,679	)		(30,679	)
Other, net		—		108		—		506			(3,468	)		(2,854	)

Balance at June 30, 2011	$	3,250	$	854,983	$	280,929	$	(56,158	)	$	156,654		$	1,239,658

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

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying consolidated financial statements of CB Richard Ellis Group, Inc. (which may be referred to in these financial statements as the “company”, “we”, “us” and “our”) have been prepared in accordance with the rules applicable to Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (GAAP) for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as otherwise noted) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, and reported amounts of revenue and expenses. Such estimates include the value of real estate assets, accounts receivable, investments in unconsolidated subsidiaries and assumptions used in the calculation of income taxes, retirement and other post-employment benefits, among others. These estimates and assumptions are based on management’s best judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including consideration of the current economic environment, and adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2011. The consolidated financial statements and notes to consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010, which contains the latest available audited consolidated financial statements and notes thereto, which are as of and for the year ended December 31, 2010.

2. New Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-29, “Business Combinations (Topic 805), Disclosure of Supplementary Pro Forma Information for Business Combinations.” ASU 2010-29 specifies that when a public company completes a business combination, the company should disclose revenue and earnings of the combined entity as though the business combination occurred as of the beginning of the comparable prior annual reporting period. The update also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, non-recurring pro forma adjustments directly attributable to the business combination included in the pro forma revenue and earnings. The requirements of ASU 2010-29 are effective for business combinations that occur on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We do not believe the adoption of this update will have a material impact on the disclosure requirements for our consolidated financial statements.

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860), Reconsideration of Effective Control for Repurchase Agreements.” ASU 2011-03 specifies when an entity may or may not recognize a sale upon the transfer of financial assets subject to repurchase agreements. That determination is based, in part, on whether the entity has maintained effective control over the transferred financial assets. The requirements of ASU 2011-03 will be effective for the first interim or annual period beginning on or after December 15, 2011, with early adoption prohibited. We do not believe the adoption of this update will have a material effect on our consolidated financial position or results of operations.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820), Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” These amendments were issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards (IFRS). ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements, particularly for level 3 fair value measurements. This ASU is effective for interim and annual periods beginning after December 15, 2011, with early adoption prohibited. We are currently evaluating the impact of adoption of this update on our consolidated financial statements, but do not expect it to have a material impact.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220), Presentation of Comprehensive Income.” This ASU eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted, and will require retrospective application for all periods presented. We do not believe the adoption of this update will have a material impact on the disclosure requirements for our consolidated financial statements.

3. REIM Acquisitions

On February 15, 2011, we announced that we had entered into definitive agreements to acquire the majority of the real estate investment management business of Netherlands-based ING Group N.V. (ING) for approximately $940 million in cash. The acquisitions include substantially all of the ING Real Estate Investment Management (REIM) operations in Europe and Asia, as well as substantially all of Clarion Real Estate Securities (CRES), its U.S.-based global real estate listed securities business (collectively referred to as ING REIM). On February 15, 2011, we also announced that we expected to acquire approximately $55 million of CRES co-investments from ING and potentially additional interests in other funds managed by ING REIM Europe and ING REIM Asia. Upon completion of the acquisitions (which we refer to as the REIM Acquisitions), ING REIM is expected to become part of our Global Investment Management segment (which conducts business through our indirect wholly-owned subsidiary, CBRE Investors), which will continue to be an independently operated business segment upon completion of the acquisitions. In addition, we expect to incur transaction costs relating to the acquisitions of approximately $150 million (pre-tax), including financing, retention and integration costs. We secured borrowings of $800.0 million of new term loans to finance the REIM Acquisitions (see Note 9). Of this amount, $400.0 million was drawn on June 30, 2011 to finance the CRES portion of the REIM Acquisitions, which closed on July 1, 2011 (see Note 17). The acquisition of ING REIM’s operations in Europe and Asia is expected to close in the second half of 2011 and is subject to approval by certain stakeholders, including regulatory agencies in Europe and Asia. We anticipate financing the acquisition of ING REIM’s operations in Europe and Asia primarily with the remaining $400.0 million of new term loans we have secured and cash on hand.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

4. Fair Value Measurements

The “Fair Value Measurements and Disclosures” Topic of the FASB ASC (Topic 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The fair value measurements employed for our impairment evaluations were generally based on a discounted cash flow approach and/or review of comparable activities in the market place. Inputs used in these evaluations included risk-free rates of return, estimated risk premiums as well as other economic variables.

There were no significant non-recurring fair value measurements recorded during the three and six months ended June 30, 2011 or the three months ended June 30, 2010. The following non-recurring fair value measurements were recorded during the six months ended June 30, 2010 (dollars in thousands):


	Net Carrying Value as of June 30, 2010		Fair Value Measured and Recorded Using						Total Impairment Charges for the Six Months Ended June 30, 2010
	Net Carrying Value as of June 30, 2010		Level 1		Level 2		Level 3
Investments in unconsolidated subsidiaries	$	32,803	$	—	$	—	$	32,803	$	6,947

During the six months ended June 30, 2010, we recorded investment write-downs of $6.9 million, of which $2.5 million were attributable to non-controlling interests. Such write-downs were included in equity loss from unconsolidated subsidiaries within our Global Investment Management segment in the accompanying consolidated statements of operations. During the six months ended June 30, 2010, $5.9 million of the investment write-downs were driven by a decrease in the estimated holding period of certain assets and $1.0 million was driven by a decline in value of an investment attributable to continued capital market disruption. When we performed our impairment analysis, the assumptions utilized reflected our outlook for the commercial real estate industry and the impact on our business. This outlook incorporated our belief that market conditions deteriorated and that these challenging conditions could persist for some time.

We do not have any material assets or liabilities that are required to be recorded at fair value on a recurring basis.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Topic 820 also requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying consolidated balance sheets, as follows:

Cash and Cash Equivalents and Restricted Cash: These balances include cash and cash equivalents as well as restricted cash with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

Receivables, less Allowance for Doubtful Accounts: Due to their short-term nature, fair value approximates carrying value.

Warehouse Receivables: Due to their short-term nature, fair value approximates carrying value. Fair value is determined based on the terms and conditions of funded mortgage loans and generally reflects the values of the warehouse lines of credit outstanding for our wholly-owned subsidiary, CBRE Capital Markets.

Available for Sale Securities: These investments are carried at their fair value.

Short-Term Borrowings: The majority of this balance represents our warehouse lines of credit outstanding for CBRE Capital Markets and our revolving credit facility. Due to the short-term nature and variable interest rates of these instruments, fair value approximates carrying value.

Senior Secured Term Loans: Based upon information from third-party banks, the estimated fair value of our senior secured term loans was approximately $1.0 billion at June 30, 2011, which approximates their actual carrying value at June 30, 2011 (see Note 9).

11.625% Senior Subordinated Notes: Based on dealers’ quotes, the estimated fair value of our 11.625% senior subordinated notes was $509.0 million at June 30, 2011. Their actual carrying value totaled $438.3 million at June 30, 2011.

6.625% Senior Notes: Based on dealers’ quotes, the estimated fair value of our 6.625% senior notes was $359.6 million at June 30, 2011. Their actual carrying value totaled $350.0 million at June 30, 2011.

Notes Payable on Real Estate: As of June 30, 2011, the carrying value of our notes payable on real estate was $520.0 million (see Note 8). These borrowings mostly have floating interest rates at spreads over a market rate index. It is likely that some portion of our notes payable on real estate have fair values lower than actual carrying values. Given our volume of notes payable and the cost involved in estimating their fair value, we determined it was not practicable to determine an estimated fair value for these notes payable. Additionally, only $13.6 million of these notes payable are recourse to us as of June 30, 2011.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

5. Investments in Unconsolidated Subsidiaries

Investments in unconsolidated subsidiaries are accounted for under the equity method of accounting. Combined condensed financial information for these entities is as follows (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Global Investment Management:
Revenue	$	158,903		$	109,590		$	299,155		$	275,824
Operating loss	$	(8,636	)	$	(92,723	)	$	(43,298	)	$	(355,722	)
Net loss	$	(20,102	)	$	(113,824	)	$	(70,267	)	$	(448,650	)

Development Services:
Revenue	$	28,167		$	31,625		$	47,581		$	52,561
Operating income	$	37,424		$	37,739		$	76,797		$	35,069
Net income	$	26,689		$	25,036		$	59,131		$	13,464

Other:
Revenue	$	32,417		$	31,748		$	66,802		$	60,894
Operating income	$	4,643		$	4,758		$	8,433		$	7,504
Net income	$	4,640		$	4,917		$	8,499		$	7,775

Total:
Revenue	$	219,487		$	172,963		$	413,538		$	389,279
Operating income (loss)	$	33,431		$	(50,226	)	$	41,932		$	(313,149	)
Net income (loss)	$	11,227		$	(83,871	)	$	(2,637	)	$	(427,411	)

During the six months ended June 30, 2010, we recorded non-cash write-downs of investments of $6.9 million within our Global Investment Management segment (see Note 4).

Our Global Investment Management segment involves investing our own capital in certain real estate investments with clients. We have provided investment management, property management, brokerage and other professional services in connection with these real estate investments on an arm’s length basis and earned revenues from these unconsolidated subsidiaries. We have also provided development, property management and brokerage services to certain of our unconsolidated subsidiaries in our Development Services segment on an arm’s length basis and earned revenues from these unconsolidated subsidiaries.

6. Real Estate and Other Assets Held for Sale and Related Liabilities

Real estate and other assets held for sale include completed real estate projects or land for sale in their present condition that have met all of the “held for sale” criteria of the “Property, Plant and Equipment” Topic of the FASB ASC (Topic 360) and other assets directly related to such projects. Liabilities related to real estate and other assets held for sale have been included as a single line item in the accompanying consolidated balance sheets.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Real estate and other assets held for sale and related liabilities were as follows (dollars in thousands):


	June 30, 2011		December 31, 2010
Assets:
Real estate held for sale (see Note 7)	$	558	$	15,399
Other current assets		—		20
Property and equipment, net		—		869
Other assets		—		7

Total real estate and other assets held for sale		558		16,295
Liabilities:
Notes payable on real estate held for sale (see Note 8)		—		11,650
Accounts payable and accrued expenses		46		370
Other current liabilities		—		28
Other liabilities		—		104

Total liabilities related to real estate and other assets held for sale		46		12,152

Net real estate and other assets held for sale	$	512	$	4,143

7. Real Estate

We provide build-to-suit services for our clients and also develop or purchase certain projects which we intend to sell to institutional investors upon project completion or redevelopment. Therefore, we have ownership of real estate until such projects are sold or otherwise disposed. Additionally, we consolidate certain variable interest entities that hold investments in real estate. Certain real estate assets secure the outstanding balances of underlying mortgage or construction loans. Our real estate is reported in our Development Services and Global Investment Management segments and consisted of the following (dollars in thousands):


	June 30, 2011		December 31, 2010
Real estate included in assets held for sale (see Note 6)	$	558	$	15,399
Real estate under development (non-current)		90,469		112,819
Real estate held for investment (1)		539,920		626,395

Total real estate (2)	$	630,947	$	754,613

(1)	Net of accumulated depreciation of $42.4 million and $37.8 million at June 30, 2011 and December 31, 2010, respectively.

(2)

Includes balances for lease intangibles and tenant origination costs of $8.9 million and $2.5 million, respectively, at June 30, 2011 and $10.1 million and $3.3 million, respectively, at December 31, 2010. We record lease intangibles and tenant origination costs upon acquiring real estate projects with in-place leases. The balances are shown net of amortization, which is recorded as an increase to, or a reduction of, rental income for lease intangibles and as amortization expense for tenant origination costs.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

8. Notes Payable on Real Estate

We had loans secured by real estate, which consisted of the following (dollars in thousands):


	June 30, 2011		December 31, 2010
Current portion of notes payable on real estate	$	153,598	$	154,213
Notes payable on real estate included in liabilities related to real estate and other assets held for sale (see Note 6)		—		11,650

Total notes payable on real estate, current portion		153,598		165,863
Notes payable on real estate, non-current portion		366,353		461,665

Total notes payable on real estate	$	519,951	$	627,528

At June 30, 2011 and December 31, 2010, $11.5 million and $1.4 million, respectively, of the non-current portion of notes payable on real estate and $2.1 million and $2.3 million, respectively, of the current portion of notes payable on real estate were recourse to us, beyond being recourse to the single-purpose entity that held the real estate asset and was the primary obligor on the note payable.

9. Debt

Since 2001, we have maintained credit facilities with Credit Suisse Group AG (CS) and other lenders to fund strategic acquisitions and to provide for our working capital needs. On November 10, 2010, we entered into a new credit agreement (as amended, the Credit Agreement) with a syndicate of banks led by CS, as administrative and collateral agent, to completely refinance our previous credit facilities. On March 4, 2011, we entered into an amendment to our Credit Agreement to, among other things, increase flexibility to various covenants to accommodate the REIM Acquisitions and to maintain the availability of the $800.0 million incremental facility under the Credit Agreement. On March 4, 2011, we also entered into an incremental assumption agreement to allow for the establishment of new tranche C and tranche D term loan facilities.

As of June 30, 2011, our Credit Agreement provides for the following: (1) a $700.0 million revolving credit facility, including revolving credit loans, letters of credit and a swingline loan facility, maturing on May 10, 2015; (2) a $350.0 million tranche A term loan facility requiring quarterly principal payments, which began on December 31, 2010 and continue through September 30, 2015, with the balance payable on November 10, 2015, (3) a $300.0 million tranche B term loan facility requiring quarterly principal payments, which began on December 31, 2010 and continue through September 30, 2016, with the balance payable on November 10, 2016; (4) a $400.0 million delayed draw seven year tranche C term loan facility with a maturity date of March 4, 2018; (5) a $400.0 million tranche D term loan facility requiring quarterly principal payments beginning September 30, 2011 and continuing through June 30, 2019, with the balance payable on September 4, 2019 and (6) an accordion provision which provides the ability to borrow an additional $800.0 million, which can be further expanded, subject to the satisfaction of what we believe are customary conditions. In regards to the tranche C and tranche D term loan facilities, we have up to 180 days from the date we entered into the incremental assumption agreement to draw on these facilities during which period we are required to pay a fee on the unused portions of each facility. After 180 days, any unused portions of these facilities would no longer be available for use. On June 30, 2011, we drew down $400.0 million of the tranche D term loan facility to finance the CRES portion of the REIM Acquisitions, which closed on July 1, 2011 (see Note 17). The acquisition of ING REIM’s operations in Europe and Asia is expected to close in the second half of 2011 and we anticipate financing it primarily with the entire $400.0 million of tranche C term loan facility and cash on hand.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The revolving credit facility allows for borrowings outside of the United States (U.S.), with sub-facilities of $5.0 million available to one of our Canadian subsidiaries, $35.0 million in aggregate available to one of our Australian and one of our New Zealand subsidiaries and $50.0 million available to one of our United Kingdom (U.K.) subsidiaries. Additionally, outstanding borrowings under these sub-facilities may be up to 5.0% higher as allowed under the currency fluctuation provision in the Credit Agreement. Borrowings under the revolving credit facility as of June 30, 2011 bear interest at varying rates, based at our option, on either the applicable fixed rate plus 1.65% to 3.15% or the daily rate plus 0.65% to 2.15% as determined by reference to our ratio of total debt less available cash to EBITDA (as defined in the Credit Agreement). As of June 30, 2011 and December 31, 2010, we had $111.2 million and $17.5 million, respectively, of revolving credit facility principal outstanding with related weighted average interest rates of 4.4% and 3.5%, respectively, which are included in short-term borrowings in the accompanying consolidated balance sheets. As of June 30, 2011, letters of credit totaling $13.6 million were outstanding under the revolving credit facility. These letters of credit were primarily issued in the normal course of business as well as in connection with certain insurance programs and reduce the amount we may borrow under the revolving credit facility.

Borrowings under the term loan facilities as of June 30, 2011 bear interest, based at our option, on the following: for the tranche A term loan facility, on either the applicable fixed rate plus 2.00% to 3.75% or the daily rate plus 1.00% to 2.75%, as determined by reference to our ratio of total debt less available cash to EBITDA (as defined in the Credit Agreement), for the tranche B term loan facility, on either the applicable fixed rate plus 3.25% or the daily rate plus 2.25%, for the tranche C term loan facility, on either the applicable fixed rate plus 3.25% or the daily rate plus 2.25% and for the tranche D term loan facility, on either the applicable fixed rate plus 3.50% or the daily rate plus 2.50%. As of June 30, 2011 and December 31, 2010, we had $323.8 million and $341.3 million, respectively, of tranche A term loan facility principal outstanding and $297.7 million and $299.2 million, respectively, of tranche B term loan facility principal outstanding, which are included in the accompanying consolidated balance sheets. As of June 30, 2011, we also had $400.0 million of tranche D term loan facility principal outstanding, which is included in the accompanying consolidated balance sheets. As of June 30, 2011, there were no amounts outstanding under our tranche C term loan facility.

In March 2011, we entered into five interest rate swap agreements, all with effective dates in October 2011, and immediately designated them as cash flow hedges in accordance with FASB ASC Topic 815, “Derivatives and Hedging.” The purpose of these interest rate swap agreements is to hedge potential changes to our cash flows due to the variable interest nature of our senior secured term loan facilities. The total notional amount of these interest rate swap agreements is $400.0 million, with $200.0 million expiring on October 2, 2017 and $200.0 million expiring on September 4, 2019. There was no hedge ineffectiveness for the three and six months ended June 30, 2011. During the three and six months ended June 30, 2011, we recorded net losses of $13.2 million and $11.5 million, respectively, to other comprehensive loss in relation to these interest rate swap agreements. As of June 30, 2011, the fair values of these interest rate swap agreements were reflected as an $11.5 million liability and were included in other long-term liabilities in the accompanying consolidated balance sheets. The fair value measurements employed for these interest rate swap agreements were based on observable market data, which falls within Level 2 of the fair value hierarchy.

The Credit Agreement is jointly and severally guaranteed by us and substantially all of our domestic subsidiaries. Borrowings under our Credit Agreement are secured by a pledge of substantially all of the capital stock of our U.S. subsidiaries and 65.0% of the capital stock of certain non-U.S. subsidiaries. Also, the Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment.

Our Credit Agreement and the indentures governing our 6.625% senior notes and 11.625% senior subordinated notes contain numerous restrictive covenants that, among other things, limit our ability to incur

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

additional indebtedness, pay dividends or make distributions to stockholders, repurchase capital stock or debt, make investments, sell assets or subsidiary stock, create or permit liens on assets, engage in transactions with affiliates, enter into sale/leaseback transactions, issue subsidiary equity and enter into consolidations or mergers. Our Credit Agreement also currently requires us to maintain a minimum coverage ratio of EBITDA (as defined in the Credit Agreement) to total interest expense of 2.25x and a maximum leverage ratio of total debt less available cash to EBITDA (as defined in the Credit Agreement) of 3.75x. Our coverage ratio of EBITDA to total interest expense was 13.58x for the trailing twelve months ended June 30, 2011 and our leverage ratio of total debt less available cash to EBITDA was 1.25x as of June 30, 2011.

On April 19, 2010, we entered into a Receivables Purchase Agreement, which allowed us to transfer an undivided interest in a designated pool of U.S. accounts receivable, on an ongoing basis, to provide collateral for borrowings up to a maximum of $55.0 million. Borrowings under this arrangement generally bore interest at the commercial paper rate plus 2.75%. This agreement expired on April 18, 2011 and we did not renew this arrangement. As of December 31, 2010, there were no amounts outstanding under this agreement.

10. Commitments and Contingencies

We are a party to a number of pending or threatened lawsuits arising out of, or incident to, the ordinary course of our business. Our management believes that any liability imposed on us that may result from disposition of these lawsuits will not have a material effect on our business, consolidated financial position, cash flows or results of operations.

We had outstanding letters of credit totaling $13.3 million as of June 30, 2011, excluding letters of credit for which we have outstanding liabilities already accrued on our consolidated balance sheet related to our subsidiaries’ outstanding reserves for claims under certain insurance programs as well as letters of credit related to operating leases. These letters of credit are primarily executed by us in the ordinary course of business as well as in connection with certain insurance programs. The letters of credit expire at varying dates through July 2012.

We had guarantees totaling $13.7 million as of June 30, 2011, excluding guarantees related to pension liabilities, consolidated indebtedness and other obligations for which we have outstanding liabilities already accrued on our consolidated balance sheet, and operating leases. The $13.7 million primarily consists of guarantees of obligations of unconsolidated subsidiaries, which expire at varying dates through November 2013.

In addition, as of June 30, 2011, we had numerous completion and budget guarantees relating to development projects. These guarantees are made by us in the ordinary course of our Development Services business. Each of these guarantees requires us to complete construction of the relevant project within a specified timeframe and/or within a specified budget, with us potentially being liable for costs to complete in excess of such timeframe or budget. However, we generally have “guaranteed maximum price” contracts with reputable general contractors with respect to projects for which we provide these guarantees. These contracts are intended to pass the risk to such contractors. While there can be no assurance, we do not expect to incur any material losses under these guarantees.

From time to time, we act as a general contractor with respect to construction projects. We do not consider these activities to be a material part of our business. In connection with these activities, we seek to subcontract construction work for certain projects to reputable subcontractors. Should construction defects arise relating to the underlying projects, we could potentially be liable to the client for the costs to repair such defects, although we would generally look to the subcontractor that performed the work to remedy the defect and also look to insurance policies that cover this work. While there can be no assurance, we do not expect to incur material losses with respect to construction defects.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

In January 2008, CBRE Multifamily Capital, Inc. (CBRE MCI), a wholly-owned subsidiary of CBRE Capital Markets, Inc., entered into an agreement with Fannie Mae, under Fannie Mae’s DUS Lender Program (DUS Program), to provide financing for multifamily housing with five or more units. Under the DUS Program, CBRE MCI originates, underwrites, closes and services loans without prior approval by Fannie Mae, and in selected cases, is subject to sharing up to one-third of any losses on loans originated under the DUS Program. CBRE MCI has funded loans subject to such loss sharing arrangements with unpaid principal balances of $2.5 billion at June 30, 2011. Additionally, CBRE MCI has funded loans under the DUS Program that are not subject to loss sharing arrangements with unpaid principal balances of approximately $522.7 million at June 30, 2011. CBRE MCI, under its agreement with Fannie Mae, must post cash reserves under formulas established by Fannie Mae to provide for sufficient capital in the event losses occur. As of June 30, 2011 and December 31, 2010, CBRE MCI had $3.3 million and $2.2 million, respectively, of cash deposited under this reserve arrangement, and had provided approximately $4.7 million and $4.0 million, respectively, of loan loss accruals. Fannie Mae’s recourse under the DUS Program is limited to the assets of CBRE MCI, which totaled approximately $104.3 million (including $46.6 million of warehouse receivables, a substantial majority of which are pledged against warehouse lines of credit and are therefore not available to Fannie Mae) at June 30, 2011.

An important part of the strategy for our Global Investment Management business involves investing our capital in certain real estate investments with our clients. These co-investments typically range from 2.0% to 5.0% of the equity in a particular fund. As of June 30, 2011, we had aggregate commitments of $18.0 million to fund future co-investments.

Additionally, an important part of our Development Services business strategy is to invest in unconsolidated real estate subsidiaries as a principal (in most cases co-investing with our clients). As of June 30, 2011, we had committed to fund $21.4 million of additional capital to these unconsolidated subsidiaries.

11. Income Per Share Information

The following is a calculation of income per share (dollars in thousands, except share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Computation of basic income per share attributable to CB Richard Ellis Group, Inc. shareholders:
Net income attributable to CB Richard Ellis Group, Inc. shareholders	$	61,223	$	54,790	$	95,592	$	48,163
Weighted average shares outstanding for basic income per share		317,698,275		312,910,934		317,133,967		312,895,372

Basic income per share attributable to CB Richard Ellis Group, Inc. shareholders	$	0.19	$	0.17	$	0.30	$	0.15

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Computation of diluted income per share attributable to CB Richard Ellis Group, Inc. shareholders:
Net income attributable to CB Richard Ellis Group, Inc. shareholders	$	61,223	$	54,790	$	95,592	$	48,163
Weighted average shares outstanding for basic income per share		317,698,275		312,910,934		317,133,967		312,895,372
Dilutive effect of contingently issuable shares		4,040,084		2,918,526		3,776,379		2,346,809
Dilutive effect of stock options		2,354,683		2,595,767		2,599,723		2,494,663

Weighted average shares outstanding for diluted income per share		324,093,042		318,425,227		323,510,069		317,736,844

Diluted income per share attributable to CB Richard Ellis Group, Inc. shareholders	$	0.19	$	0.17	$	0.30	$	0.15

For the three and six months ended June 30, 2011, options to purchase 55,587 shares of common stock were excluded from the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect.

For the three and six months ended June 30, 2010, options to purchase 838,830 shares of common stock were excluded from the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect. Additionally, 398,047 and 397,577 of contingently issuable shares were excluded from the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect for the three and six months ended June 30, 2010, respectively.

12. Comprehensive Income (Loss)

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income	$	74,867		$	44,686		$	119,353		$	28,499
Other comprehensive income (loss):
Foreign currency translation gain (loss)		15,550			(36,468	)		45,545			(60,594	)
Unrealized (losses) gains on interest rate swaps and interest rate caps, net		(7,833	)		174			(6,777	)		296
Other, net		998			(75	)		506			2,213

Total other comprehensive income (loss)		8,715			(36,369	)		39,274			(58,085	)

Comprehensive income (loss)		83,582			8,317			158,627			(29,586	)
Less: Comprehensive income (loss) attributable to non-controlling interests		14,116			(10,468	)		24,591			(20,388	)

Comprehensive income (loss) attributable to CB Richard Ellis Group, Inc.	$	69,466		$	18,785		$	134,036		$	(9,198	)

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

13. Pensions

We have two contributory defined benefit pension plans in the U.K., which we acquired in connection with previous acquisitions. Our subsidiaries based in the U.K. maintain the plans to provide retirement benefits to existing and former employees participating in these plans. During 2007, we reached agreements with the active members of these plans to freeze future pension plan benefits. In return, the active members became eligible to enroll in the CBRE Group Personal Pension Plan, a defined contribution plan in the U.K.

Net periodic pension cost consisted of the following (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Interest cost	$	4,209		$	3,884		$	8,322		$	7,947
Expected return on plan assets		(4,337	)		(3,605	)		(8,573	)		(7,376	)
Amortization of unrecognized net loss		345			530			682			1,085

Net periodic pension cost	$	217		$	809		$	431		$	1,656

We contributed $0.9 million and $1.8 million to fund our pension plans during the three and six months ended June 30, 2011, respectively. We expect to contribute a total of $3.7 million to fund our pension plans for the year ending December 31, 2011.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

14. Discontinued Operations

In the ordinary course of business, we dispose of real estate assets, or hold real estate assets for sale, that may be considered components of an entity in accordance with Topic 360. If we do not have, or expect to have, significant continuing involvement with the operation of these real estate assets after disposition, we are required to recognize operating profits or losses and gains or losses on disposition of these assets as discontinued operations in our consolidated statements of operations in the periods in which they occur. Real estate operations and dispositions accounted for as discontinued operations for the three and six months ended June 30, 2011 and 2010 were reported in our Global Investment Management and Development Services segments as follows (dollars in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011		2010
Revenue	$	1,355	$	978		$	2,385	$	978
Costs and expenses:
Operating, administrative and other		852		356			1,234		356
Depreciation and amortization		234		168			525		168

Total costs and expenses		1,086		524			1,759		524
Gain on disposition of real estate		6,601		11,879			17,638		11,879

Operating income		6,870		12,333			18,264		12,333
Interest income		—		1			—		1
Interest expense		603		715			1,353		715

Income from discontinued operations, before provision for income taxes		6,267		11,619			16,911		11,619
Provision for income taxes		—		4,479			—		4,479

Income from discontinued operations, net of income taxes		6,267		7,140			16,911		7,140
Less: Income (loss) from discontinued operations attributable to non-controlling interests		6,267		(371	)		16,911		(371	)

Income from discontinued operations attributable to CB Richard Ellis Group, Inc.	$	—	$	7,511		$	—	$	7,511

15. Industry Segments

We report our operations through the following segments: (1) Americas, (2) EMEA, (3) Asia Pacific, (4) Global Investment Management and (5) Development Services.

The Americas segment is our largest segment of operations and provides a comprehensive range of services throughout the U.S. and in the largest regions of Canada and selected parts of Latin America. The primary services offered consist of the following: real estate services, mortgage loan origination and servicing, valuation services, asset services and corporate services.

Our EMEA and Asia Pacific segments provide services similar to the Americas business segment. The EMEA segment has operations primarily in Europe, while the Asia Pacific segment has operations primarily in Asia, Australia and New Zealand.

Our Global Investment Management business provides investment management services to clients seeking to generate returns and diversification through direct and indirect investments in real estate in the U.S., Europe and Asia.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Our Development Services business consists of real estate development and investment activities primarily in the U.S.

Summarized financial information by segment is as follows (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Revenue
Americas	$	897,828	$	722,255	$	1,647,943	$	1,367,866
EMEA		261,087		225,378		466,055		413,538
Asia Pacific		188,546		158,678		349,046		293,110
Global Investment Management		57,554		46,896		107,876		86,303
Development Services		17,203		18,712		36,403		36,985

	$	1,422,218	$	1,171,919	$	2,607,323	$	2,197,802


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
EBITDA
Americas	$	115,375	$	89,847	$	193,503	$	151,835
EMEA		21,375		19,865		24,381		23,990
Asia Pacific		17,437		12,777		29,879		21,035
Global Investment Management		2,470		10,766		8,460		5,836
Development Services		9,438		28,380		22,916		33,898

	$	166,095	$	161,635	$	279,139	$	236,594

EBITDA represents earnings before net interest expense, income taxes, depreciation and amortization. Our management believes EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions. Such items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses EBITDA as a measure to evaluate the operating performance of our various business segments and for other discretionary purposes, including as a significant component when measuring our operating performance under our employee incentive programs. Additionally, we believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.

However, EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our 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 our 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 our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Net interest expense has been expensed in the segment incurred. Provision for (benefit of) income taxes has been allocated among our segments by using applicable U.S. and foreign effective tax rates. EBITDA for our segments is calculated as follows (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Americas
Net income attributable to CB Richard Ellis Group, Inc.	$	52,015		$	35,038		$	81,524		$	37,584
Add:
Depreciation and amortization		14,831			14,997			27,662			29,687
Interest expense		25,740			38,972			51,572			78,686
Royalty and management service income		(6,895	)		(5,347	)		(13,515	)		(9,492	)
Provision for income taxes		30,951			7,062			49,327			17,431
Less:
Interest income		1,267			875			3,067			2,061

EBITDA	$	115,375		$	89,847		$	193,503		$	151,835

EMEA
Net income attributable to CB Richard Ellis Group, Inc.	$	10,541		$	5,278		$	10,392		$	6,250
Add:
Depreciation and amortization		2,253			2,384			4,515			4,774
Interest expense		18			36			157			125
Royalty and management service expense		3,422			3,329			6,153			5,541
Provision for income taxes		5,248			9,189			3,788			7,984
Less:
Interest income		107			351			624			684

EBITDA	$	21,375		$	19,865		$	24,381		$	23,990

Asia Pacific
Net income attributable to CB Richard Ellis Group, Inc.	$	6,186		$	5,907		$	9,087		$	6,650
Add:
Depreciation and amortization		1,988			2,007			3,971			4,119
Interest expense		809			613			1,229			1,170
Royalty and management service expense		3,239			1,745			6,846			3,538
Provision for income taxes		5,745			4,288			9,535			7,488
Less:
Interest income		530			1,783			789			1,930

EBITDA	$	17,437		$	12,777		$	29,879		$	21,035

Global Investment Management
Net loss attributable to CB Richard Ellis Group, Inc.	$	(9,777	)	$	(1,119	)	$	(12,232	)	$	(9,587	)
Add:
Depreciation and amortization (1)		3,405			3,613			7,191			6,470
Interest expense (2)		5,688			6,063			10,453			10,478
Royalty and management service expense		234			273			516			413
Provision for (benefit of) income taxes		3,093			1,992			2,933			(1,770	)
Less:
Interest income		173			56			401			168

EBITDA (3)	$	2,470		$	10,766		$	8,460		$	5,836

Development Services
Net income attributable to CB Richard Ellis Group, Inc.	$	2,258		$	9,686		$	6,821		$	7,266
Add:
Depreciation and amortization (4)		3,142			4,783			5,749			9,029
Interest expense (5)		2,753			5,306			6,240			10,323
Provision for income taxes (6)		1,299			8,652			4,159			7,349
Less:
Interest income		14			47			53			69

EBITDA (7)	$	9,438		$	28,380		$	22,916		$	33,898

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(1)	Includes depreciation and amortization related to discontinued operations of $0.2 million and $0.5 million for the three and six months ended June 30, 2011, respectively.

(2)	Includes interest expense related to discontinued operations of $0.6 million and $1.4 million for the three and six months ended June 30, 2011, respectively.

(3)	Includes EBITDA related to discontinued operations of $0.8 million and $1.9 million for the three and six months ended June 30, 2011, respectively.

(4)	Includes depreciation and amortization related to discontinued operations of $0.2 million for the three and six months ended June 30, 2010.

(5)	Includes interest expense related to discontinued operations of $0.7 million for the three and six months ended June 30, 2010.

(6)	Includes provision for income taxes related to discontinued operations of $4.5 million for the three and six months ended June 30, 2010.

(7)	Includes EBITDA related to discontinued operations of $12.9 million for the three and six months ended June 30, 2010.

16. Guarantor and Nonguarantor Financial Statements

The following condensed consolidating financial information includes:

(1) Condensed consolidating balance sheets as of June 30, 2011 and December 31, 2010; condensed consolidating statements of operations for the three and six months ended June 30, 2011 and 2010; and condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010, of (a) CB Richard Ellis Group, Inc. as the parent, (b) CB Richard Ellis Services, Inc. (CBRE) as the subsidiary issuer, (c) the guarantor subsidiaries, (d) the nonguarantor subsidiaries and (e) CB Richard Ellis Group, Inc. on a consolidated basis; and

(2) Elimination entries necessary to consolidate CB Richard Ellis Group, Inc. as 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 intercompany balances and transactions.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2011

(Dollars in thousands)


	Parent		CBRE		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Elimination			Consolidated Total
Current Assets:
Cash and cash equivalents	$	66	$	118,592	$	434,546	$	198,905	$	—		$	752,109
Restricted cash		—		4,840		16,386		27,995		—			49,221
Receivables, net		—		—		411,097		557,488		—			968,585
Warehouse receivables (a)		—		—		308,249		—		—			308,249
Income taxes receivable		7,137		450		9,542		19,227		—			36,356
Prepaid expenses		—		1,749		40,696		57,806		—			100,251
Deferred tax assets, net		—		—		92,205		20,764		—			112,969
Real estate and other assets held for sale		—		—		558		—		—			558
Other current assets		—		—		31,884		18,872		—			50,756

Total Current Assets		7,203		125,631		1,345,163		901,057		—			2,379,054
Property and equipment, net		—		—		146,730		69,854		—			216,584
Goodwill		—		—		804,283		603,260		—			1,407,543
Other intangible assets, net		—		—		306,533		27,407		—			333,940
Investments in unconsolidated subsidiaries		—		—		96,387		48,771		—			145,158
Investments in consolidated subsidiaries		1,345,654		1,612,308		1,130,868		—		(4,088,830	)		—
Intercompany loan receivable		—		1,468,486		635,000		103,453		(2,206,939	)		—
Deferred tax assets, net		—		—		—		40,801		(34,501	)		6,300
Real estate under development		—		—		7,573		82,896		—			90,469
Real estate held for investment		—		—		4,223		535,697		—			539,920
Available for sale securities		—		—		33,930		—		—			33,930
Other assets, net		—		47,593		38,546		43,695		—			129,834

Total Assets	$	1,352,857	$	3,254,018	$	4,549,236	$	2,456,891	$	(6,330,270	)	$	5,282,732

Current Liabilities:
Accounts payable and accrued expenses	$	—	$	9,936	$	130,767	$	301,096	$	—		$	441,799
Compensation and employee benefits payable		—		626		200,924		135,512		—			337,062
Accrued bonus and profit sharing		—		—		139,405		85,564		—			224,969
Short-term borrowings:
Warehouse lines of credit (a)		—		—		302,490		—		—			302,490
Revolving credit facility		—		76,449		—		34,771		—			111,220
Other		—		—		16		—		—			16

Total short-term borrowings		—		76,449		302,506		34,771		—			413,726
Current maturities of long-term debt		—		42,000		—		38		—			42,038
Notes payable on real estate		—		—		—		153,598		—			153,598
Liabilities related to real estate and other assets held for sale		—		—		46		—		—			46
Other current liabilities		—		—		15,444		2,154		—			17,598

Total Current Liabilities		—		129,011		789,092		712,733		—			1,630,836
Long-Term Debt:
Senior secured term loans		—		979,500		—		—		—			979,500
11.625% senior subordinated notes, net		—		438,329		—		—		—			438,329
6.625% senior notes		—		350,000		—		—		—			350,000
Other long-term debt		—		—		—		85		—			85
Intercompany loan payable		269,853		—		1,937,086		—		(2,206,939	)		—

Total Long-Term Debt		269,853		1,767,829		1,937,086		85		(2,206,939	)		1,767,914
Deferred tax liabilities, net		—		—		34,501		—		(34,501	)		—
Pension liability		—		—		—		40,061		—			40,061
Non-current tax liabilities		—		—		81,217		—		—			81,217
Notes payable on real estate		—		—		—		366,353		—			366,353
Other liabilities		—		11,524		95,032		50,137		—			156,693

Total Liabilities		269,853		1,908,364		2,936,928		1,169,369		(2,241,440	)		4,043,074
Commitments and contingencies		—		—		—		—		—			—
Equity:
CB Richard Ellis Group, Inc. Stockholders’ Equity		1,083,004		1,345,654		1,612,308		1,130,868		(4,088,830	)		1,083,004
Non-controlling interests		—		—		—		156,654		—			156,654

Total Equity		1,083,004		1,345,654		1,612,308		1,287,522		(4,088,830	)		1,239,658

Total Liabilities and Equity	$	1,352,857	$	3,254,018	$	4,549,236	$	2,456,891	$	(6,330,270	)	$	5,282,732

(a)

Although CBRE Capital Markets is included among our domestic subsidiaries, which jointly and severally guarantee our 11.625% senior subordinated notes, our 6.625% senior notes and our Credit Agreement, a substantial majority of warehouse receivables funded under the JP Morgan Chase Bank, N.A. (JP Morgan), Kemps Landing Capital Company, LLC (Kemps Landing), Bank of America (BofA) and TD Bank, N.A. (TD Bank) lines of credit are pledged to JP Morgan, Kemps Landing, BofA and TD Bank, and accordingly, are not included as collateral for these notes or our other outstanding debt.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2010

(Dollars in thousands)


	Parent		CBRE		Guarantor Subsidiaries		Nonguarantor Subsidiaries		Elimination			Consolidated Total
Current Assets:
Cash and cash equivalents	$	4	$	223,845	$	96,862	$	185,863	$	—		$	506,574
Restricted cash		—		4,830		16,086		31,341		—			52,257
Receivables, net		—		—		364,634		575,533		—			940,167
Warehouse receivables (a)		—		—		485,433		—		—			485,433
Income taxes receivable		16,581		28,957		—		3,915		(49,453	)		—
Prepaid expenses		—		—		40,653		56,298		—			96,951
Deferred tax assets, net		—		—		92,205		20,099		—			112,304
Real estate and other assets held for sale		—		—		558		15,737		—			16,295
Other current assets		—		—		31,401		19,488		—			50,889

Total Current Assets		16,585		257,632		1,127,832		908,274		(49,453	)		2,260,870
Property and equipment, net		—		—		118,425		69,972		—			188,397
Goodwill		—		—		803,075		520,726		—			1,323,801
Other intangible assets, net		—		—		304,639		28,216		—			332,855
Investments in unconsolidated subsidiaries		—		—		82,593		56,380		—			138,973
Investments in consolidated subsidiaries		1,132,091		856,753		1,042,686		—		(3,031,530	)		—
Intercompany loan receivable		—		1,434,571		635,000		177,302		(2,246,873	)		—
Deferred tax assets, net		—		—		—		40,185		(29,865	)		10,320
Real estate under development		—		—		—		112,819		—			112,819
Real estate held for investment		—		—		4,214		622,181		—			626,395
Available for sale securities		—		—		31,936		—		—			31,936
Other assets, net		—		31,274		22,985		40,943		—			95,202

Total Assets	$	1,148,676	$	2,580,230	$	4,173,385	$	2,576,998	$	(5,357,721	)	$	5,121,568

Current Liabilities:
Accounts payable and accrued expenses	$	—	$	9,211	$	138,613	$	297,513	$	—		$	445,337
Compensation and employee benefits payable		—		626		204,034		141,879		—			346,539
Accrued bonus and profit sharing		—		—		235,694		219,829		—			455,523
Income taxes payable		—		—		67,851		—		(49,453	)		18,398
Short-term borrowings:
Warehouse lines of credit (a)		—		—		453,835		—		—			453,835
Revolving credit facility		—		10,120		—		7,396		—			17,516
Other		—		—		16		—		—			16

Total short-term borrowings		—		10,120		453,851		7,396		—			471,367
Current maturities of long-term debt		—		38,000		—		86		—			38,086
Notes payable on real estate		—		—		—		154,213		—			154,213
Liabilities related to real estate and other assets held for sale		—		—		86		12,066		—			12,152
Other current liabilities		—		—		12,621		2,532		—			15,153

Total Current Liabilities		—		57,957		1,112,750		835,514		(49,453	)		1,956,768
Long-Term Debt:
Senior secured term loans		—		602,500		—		—		—			602,500
11.625% senior subordinated notes, net		—		437,682		—		—		—			437,682
6.625% senior notes		—		350,000		—		—		—			350,000
Other long-term debt		—		—		—		54		—			54
Intercompany loan payable		240,461		—		2,006,412		—		(2,246,873	)		—

Total Long-Term Debt		240,461		1,390,182		2,006,412		54		(2,246,873	)		1,390,236
Deferred tax liabilities, net		—		—		29,865		—		(29,865	)		—
Pension liability		—		—		—		40,007		—			40,007
Non-current tax liabilities		—		—		78,306		—		—			78,306
Notes payable on real estate		—		—		—		461,665		—			461,665
Other liabilities		—		—		89,299		39,492		—			128,791

Total Liabilities		240,461		1,448,139		3,316,632		1,376,732		(2,326,191	)		4,055,773
Commitments and contingencies		—		—		—		—		—			—
Equity:
CB Richard Ellis Group, Inc. Stockholders’ Equity		908,215		1,132,091		856,753		1,042,686		(3,031,530	)		908,215
Non-controlling interests		—		—		—		157,580		—			157,580

Total Equity		908,215		1,132,091		856,753		1,200,266		(3,031,530	)		1,065,795

Total Liabilities and Equity	$	1,148,676	$	2,580,230	$	4,173,385	$	2,576,998	$	(5,357,721	)	$	5,121,568

(a)

Although CBRE Capital Markets is included among our domestic subsidiaries, which jointly and severally guarantee our 11.625% senior subordinated notes, our 6.625% senior notes and our Credit Agreement, a substantial majority of warehouse receivables funded under the Kemps Landing, JP Morgan, BofA and Fannie Mae ASAP lines of credit are pledged to Kemps Landing, JP Morgan, BofA and Fannie Mae, and accordingly, are not included as collateral for these notes or our other outstanding debt.

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2011

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Elimination			Consolidated Total
Revenue	$	—		$	—		$	834,952		$	587,266	$	—		$	1,422,218
Costs and expenses:
Cost of services		—			—			502,310			337,512		—			839,822
Operating, administrative and other		9,437			1,701			231,817			189,901		—			432,856
Depreciation and amortization		—			—			14,320			11,065		—			25,385

Total costs and expenses		9,437			1,701			748,447			538,478		—			1,298,063
Gain on disposition of real estate		—			—			—			6,027		—			6,027

Operating (loss) income		(9,437	)		(1,701	)		86,505			54,815		—			130,182
Equity income from unconsolidated subsidiaries		—			—			11,979			5,089		—			17,068
Interest income		—			26,492			400			2,039		(27,029	)		1,902
Interest expense		—			25,979			27,656			7,610		(27,029	)		34,216
Royalty and management service (income) expense		—			—			(7,988	)		7,988		—			—
Income from consolidated subsidiaries		67,158			67,906			15,327			—		(150,391	)		—

Income from continuing operations before (benefit of) provision for income taxes		57,721			66,718			94,543			46,345		(150,391	)		114,936
(Benefit of) provision for income taxes		(3,502	)		(440	)		26,637			23,641		—			46,336

Net income from continuing operations		61,223			67,158			67,906			22,704		(150,391	)		68,600
Income from discontinued operations, net of income taxes		—			—			—			6,267		—			6,267

Net income		61,223			67,158			67,906			28,971		(150,391	)		74,867
Less: Net income attributable to non-controlling interests		—			—			—			13,644		—			13,644

Net income attributable to CB Richard Ellis Group, Inc.	$	61,223		$	67,158		$	67,906		$	15,327	$	(150,391	)	$	61,223

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2010

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Elimination			Consolidated Total
Revenue	$	—		$	—		$	670,790		$	501,129		$	—		$	1,171,919
Costs and expenses:
Cost of services		—			—			397,544			281,170			—			678,714
Operating, administrative and other		10,734			2,151			189,287			169,861			—			372,033
Depreciation and amortization		—			—			14,517			13,099			—			27,616

Total costs and expenses		10,734			2,151			601,348			464,130			—			1,078,363
Gain on disposition of real estate		—			—			3,313			310			—			3,623

Operating (loss) income		(10,734	)		(2,151	)		72,755			37,309			—			97,179
Equity income from unconsolidated subsidiaries		—			—			12,398			1,837			—			14,235
Interest income		—			45			626			2,599			(159	)		3,111
Interest expense		—			39,453			117			10,864			(159	)		50,275
Royalty and management service (income) expense		—			—			(6,096	)		6,096			—			—
Income from consolidated subsidiaries		61,260			86,312			27,966			—			(175,538	)		—

Income from continuing operations before (benefit of) provision for income taxes		50,526			44,753			119,724			24,785			(175,538	)		64,250
(Benefit of) provision for income taxes		(4,264	)		(16,507	)		33,412			14,063			—			26,704

Net income from continuing operations		54,790			61,260			86,312			10,722			(175,538	)		37,546
Income from discontinued operations, net of income taxes		—			—			—			7,140			—			7,140

Net income		54,790			61,260			86,312			17,862			(175,538	)		44,686
Less: Net loss attributable to non-controlling interests		—			—			—			(10,104	)		—			(10,104	)

Net income attributable to CB Richard Ellis Group, Inc.	$	54,790		$	61,260		$	86,312		$	27,966		$	(175,538	)	$	54,790

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2011

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Elimination			Consolidated Total
Revenue	$	—		$	—		$	1,531,087		$	1,076,236	$	—		$	2,607,323
Costs and expenses:
Cost of services		—			—			923,270			630,307		—			1,553,577
Operating, administrative and other		19,242			1,888			440,240			348,511		—			809,881
Depreciation and amortization		—			—			26,605			21,958		—			48,563

Total costs and expenses		19,242			1,888			1,390,115			1,000,776		—			2,412,021
Gain on disposition of real estate		—			—			—			7,999		—			7,999

Operating (loss) income		(19,242	)		(1,888	)		140,972			83,459		—			203,301
Equity income from unconsolidated subsidiaries		—			—			28,427			3,820		—			32,247
Interest income		—			52,547			1,241			3,541		(52,759	)		4,570
Interest expense		—			51,873			52,150			16,670		(52,759	)		67,934
Royalty and management service (income) expense		—			—			(16,235	)		16,235		—			—
Income from consolidated subsidiaries		107,697			108,461			20,757			—		(236,915	)		—

Income from continuing operations before (benefit of) provision for income taxes		88,455			107,247			155,482			57,915		(236,915	)		172,184
(Benefit of) provision for income taxes		(7,137	)		(450	)		47,021			30,308		—			69,742

Net income from continuing operations		95,592			107,697			108,461			27,607		(236,915	)		102,442
Income from discontinued operations, net of income taxes		—			—			—			16,911		—			16,911

Net income		95,592			107,697			108,461			44,518		(236,915	)		119,353
Less: Net income attributable to non-controlling interests		—			—			—			23,761		—			23,761

Net income attributable to CB Richard Ellis Group, Inc.	$	95,592		$	107,697		$	108,461		$	20,757	$	(236,915	)	$	95,592

CB RICHARD ELLIS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2010

(Dollars in thousands)


	Parent			CBRE			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Elimination			Consolidated Total
Revenue	$	—		$	—		$	1,273,224		$	924,578		$	—		$	2,197,802
Costs and expenses:
Cost of services		—			—			764,690			529,218			—			1,293,908
Operating, administrative and other		21,110			2,514			364,479			322,636			—			710,739
Depreciation and amortization		—			—			28,734			25,177			—			53,911

Total costs and expenses		21,110			2,514			1,157,903			877,031			—			2,058,558
Gain on disposition of real estate		—			—			3,313			310			—			3,623

Operating (loss) income		(21,110	)		(2,514	)		118,634			47,857			—			142,867
Equity income (loss) from unconsolidated subsidiaries		—			—			8,807			(1,156	)		—			7,651
Interest income		—			103			1,486			3,671			(349	)		4,911
Interest expense		—			79,589			239			20,588			(349	)		100,067
Royalty and management service (income) expense		—			—			(11,097	)		11,097			—			—
Income from consolidated subsidiaries		60,888			110,318			21,854			—			(193,060	)		—

Income from continuing operations before (benefit of) provision for income taxes		39,778			28,318			161,639			18,687			(193,060	)		55,362
(Benefit of) provision for income taxes		(8,385	)		(32,570	)		51,321			23,637			—			34,003

Net income (loss) from continuing operations		48,163			60,888			110,318			(4,950	)		(193,060	)		21,359
Income from discontinued operations, net of income taxes		—			—			—			7,140			—			7,140
			&n

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