01—Abstract
Summary
Summary of the 8-K filed October 23, 2001. Cited figures are marked; the original filing is the authoritative source.
CB Richard Ellis (CBRE) disclosed, via a Form 8-K furnishing a press release under Regulation FD, preliminary and unaudited results for the eight months ended August 31, 2001.
Revenues were approximately $743 milliona, down about 7% year over year. Commissions, fees and other incentives were approximately $352 million, down about 6%, and operating, administrative and other expenses were approximately $343 million, down about 1%. Because the revenue decline outpaced the expense reduction, the company reported lower operating income, cash flow and profitability over the period.
The filing also flags a deteriorating outlook. Management attributed the expected further weakening of the U.S. economy and commercial real estate market to the September 11, 2001 terrorist attacks on the World Trade Center and the Pentagon, along with the possibility of further hostilities and bio-terrorism. Management warned these conditions could adversely affect the transaction management segment and the company's other business segments.
Investors should note that the figures are preliminary and unaudited, and the filing provides no full-year guidance or detailed segment breakdown. The company's 2000 revenues were $1.3 billionb, so the eight-month 2001 figure is a partial-period comparison against a backdrop of softening demand in commercial real estate transactions.
02—Key points
Key Highlights
- Revenues for the eight months ended August 31, 2001 were approximately $743 million, down about 7% from the prior-year period.
- Commissions, fees and other incentives fell about 6% to approximately $352 million.
- Operating, administrative and other expenses were approximately $343 million, down only about 1%, which limited the benefit of cost control.
- Operating income, cash flow and profitability declined compared with the same period in 2000.
- Management expects a further deterioration in the U.S. economy and commercial real estate market following the September 11, 2001 attacks.
- The transaction management segment is identified as particularly vulnerable to the expected downturn.
- Results are preliminary and unaudited, and the disclosure was made under Regulation FD via a press release dated October 22, 2001.
03—Questions
Frequently Asked Questions
How did CBRE perform financially in the first eight months of 2001?
Revenues were approximately $743 million, down about 7%. Commissions, fees and other incentives were approximately $352 million, down about 6%, and operating, administrative and other expenses were approximately $343 million, down about 1%. Operating income, cash flow and profitability all declined relative to the same period in 2000.
Why did expenses decline so little compared with revenue?
Operating, administrative and other expenses fell only about 1% while revenues fell about 7%. The filing indicates that expense reductions only partially offset the revenue decline, leaving margins and profitability under pressure.
What is management's outlook following the September 11, 2001 attacks?
Management expects a further deterioration in the U.S. economy and commercial real estate market conditions. It warned that these conditions could adversely affect the transaction management segment and the company's other business segments, and it also cited the risk of further hostilities and bio-terrorist activity.
How reliable are the reported figures?
The results are described as preliminary and unaudited, so they may change once the financial statements are finalized and audited. Investors should treat them as an early indication rather than final results.
Which parts of the business are most at risk?
The filing specifically highlights the transaction management segment as likely to be adversely affected by the weaker market, since sales and leasing activity tends to fall when commercial real estate conditions deteriorate. The other business segments are also noted as potentially affected, though the filing does not quantify the impact.
04—Continue