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CBRE GROUP, INC. 8-K Report (Feb 24, 2004)

Reports
Other Events
Filing Date
Filed February 24, 2004
Period End
February 18, 2004
Security
CBRE
In the record · 2016–202610-K1110-Q328-K149

CBRE filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 149 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Mar ’17Mar ’17
  2. Leadership change8-K · Apr ’19Apr ’19
  3. Material agreement8-K · Jul ’21Jul ’21
  4. Leadership change8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 8-K filed February 24, 2004. Cited figures are marked; the original filing is the authoritative source.

CB Richard Ellis Group, Inc. filed this Form 8-K on February 24, 2004 to furnish the transcript of its February 18, 2004 conference call on fourth-quarter 2003 results.

Q4 2003 was the first quarter in which CB and Insignia Financial Group were reported on a combined basis. Revenue rose about 65% year over year to $621.3 milliona, with foreign currency contributing $25.9 million of the increase. EBITDA was $63.4 million after $17 million of merger-related expenses and about $10.2 million of Insignia integration costs.

Excluding those charges, EBITDA would have been higher, and underlying EBITDA growth was roughly 8% on a reported basis, which was held down by the charges. The quarter was also burdened by higher costs and financing expense. Cost of services rose about 70% to $311.5 millionb and operating expense rose about 71% to $234.5 million, driven mainly by consolidating Insignia, higher commissions and bonus accruals, and a legal settlement.

Interest expense increased $13.5 millionc year over year, reflecting the 2003 senior notes and term loan issued for the Insignia acquisition and a premium on the redemption of $30 million of 16% mezzanine notes. The effective tax rate fell to 15% from 62%, largely because of non-taxable gains on the deferred compensation plan. Management said it was in compliance with new financial covenants at December 2003 with sufficient cushion, and that cash was $160.9 million at year-end.

Total debt at CB Richard Ellis Services was $798.3 milliond, up $268.5 million from a year earlier. Management described the Insignia integration as nearly complete, with synergies within expected ranges. It expects roughly $11 million of remaining merger and integration costs in 2004, mostly in the first half, of which only about $3 million to $4 million is cash.

Regional results were strong: the Americas saw Q4 revenue rise about 61%, with standalone CBRE leasing revenue up about 26%. Europe's Q4 revenue rose about 111%, and Asia-Pacific revenue rose about 48% with EBITDA up about 78%.

The call also referenced a pending IPO, but management declined to provide detail beyond the S-1 filing. The filing contains only the call transcript and no audited financial statements.

02—Key points

Key Highlights

  1. Q4 2003 revenue of $621.3 million, up about 65% year over year (about $244.8 million), including a $25.9 million favorable foreign currency effect
  2. Q4 2003 EBITDA of $63.4 million, up about 8% year over year despite $17 million of merger-related expenses and about $10.2 million of integration costs
  3. Cost of services rose about 70% to $311.5 million and operating expense rose about 71% to $234.5 million, largely from consolidating Insignia
  4. Interest expense rose $13.5 million year over year, and the effective tax rate fell from 62% to 15%
  5. Cash was $160.9 million at December 31, 2003; total debt at CB Richard Ellis Services was $798.3 million; the company said it was in compliance with new covenants
  6. About $11 million of remaining merger and integration costs expected in 2004, mostly in the first half, with only $3 million to $4 million in cash
  7. Regional growth: Americas Q4 revenue up about 61%, Europe up about 111%, and Asia-Pacific up about 48% with EBITDA up about 78%

03—Questions

Frequently Asked Questions

  1. How did the Insignia acquisition affect CB Richard Ellis's Q4 2003 results?

    Q4 2003 was the first full quarter with Insignia consolidated, so the reported revenue and expense increases largely reflect the acquisition. Management said Insignia accounted for about 42 percentage points of the 61% Americas revenue increase. Insignia also drove higher costs, integration expenses, and the new debt that raised interest expense. Management said integration was going well and synergies were within the expected range.

  2. What are the remaining integration and merger costs, and how much is cash?

    Management estimated about $11 million of merger-related and integration costs in 2004, with about $1 million for the merger and about $10 million for integration. Most is expected in the first two quarters. The cash portion is only about $3 million to $4 million, with the rest being amortization of broker retention compensation over three to five years.

  3. What is the expected 2004 interest expense?

    Management said the Q4 2003 interest run rate was about $22 million per quarter, excluding a premium of just under $3 million on the mezzanine note redemption. Repaying the $30 million of 16% mezzanine debt should save about $5 million of interest annually in 2004. Management also said its 2004 plan assumed a slight rise in interest rates in the second half of the year.

  4. Is the company in compliance with its debt covenants, and how much cash does it have?

    Management said it had completed its December 2003 covenant calculations and was in compliance with the new financial covenant ratios with sufficient cushion. Its models showed it would remain in compliance through 2004. Cash at December 31, 2003 was $160.9 million, mostly from the year-end build-up and Insignia's consolidation. No revolver borrowings were outstanding, and management did not expect to draw on the revolver until mid-March 2004, when bonuses are typically paid.

04—Continue

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