SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

For the Transition Period from          to         

Commission File Number 001 - 12231

CB RICHARD ELLIS SERVICES, INC.
(Exact name of registrant as specified in its charter)

    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 / /

    The number of shares of common stock outstanding at October 31, 2001 was 11,540,747.

CB RICHARD ELLIS SERVICES, INC.

FORM 10-Q

September 30, 2001

TABLE OF CONTENTS

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CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, except share and per share data)

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

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CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)

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

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CB RICHARD ELLIS SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES

    Holding purchased all of the outstanding common stock of the Company in exchange for cash and common stock of Holding. The non-cash component of the merger consideration included approximately $157.1 million in common stock and payables. The payables will be paid subsequent to September 30, 2001.

    The Company issued $149.9 million in common stock to Holding in exchange for non-cash consideration.

    In connection with the merger, Holding assumes $252.7 million in net liabilities of the Company.

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

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CB RICHARD ELLIS SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Merger

    CB Richard Ellis Services, Inc. (the Company) was founded in 1906 and conducts its worldwide operations through approximately 75 direct and indirect subsidiaries. Approximately 76% of the Company's revenues are from the United States (US) and 24% from the rest of the world.

    On July 20, 2001, the Company was acquired (the merger) by CBRE Holding, Inc. (Holding) pursuant to an Amended and Restated Agreement and Plan of Merger dated May 31, 2001 (the merger agreement) among Holding, the Company and Blum CB Corporation (Blum CB), a wholly owned subsidiary of Holding. Blum CB was merged with and into the Company, with the Company being the surviving corporation. At the effective time of the merger, the Company became a wholly owned subsidiary of Holding. Pursuant to the terms of the merger agreement, each issued and outstanding share of common stock of the Company was converted into the right to receive $16.00 in cash, except for (i) shares of common stock of the Company owned by Holding and Blum CB immediately prior to the merger, which totaled 7,967,774 shares, which were cancelled, (ii) treasury shares and shares of common stock of the Company owned by any of the Company's subsidiaries, which were cancelled, and (iii) shares of the Company held by stockholders who perfect appraisal rights for such shares in accordance with Delaware law. Immediately prior to the merger, the following, collectively referred to as the buying group, contributed to Holding all the shares of the Company's common stock that he or it directly owned in exchange for an equal number of shares of Class B common stock of Holding: RCBA Strategic Partners, L.P., a Delaware limited partnership (RCBA), FS Equity Partners III, L.P. (FSEP), a Delaware limited partnership, Strategic Partners II, L.P., a Delaware limited partnership, FS Equity Partners International, L.P. (FSEP International), a Delaware limited partnership, The Koll Holding Company, a California corporation, Frederic V. Malek, a director of the Company and Holding, Raymond E. Wirta, the Chief Executive Officer and a director of the Company and Holding, and W. Brett White, the President and a director of the Company and Holding. Such shares of common stock of the Company, which totaled 7,967,774 shares of common stock, were then cancelled. In addition, Holding offered to purchase for cash options outstanding to acquire common stock of the Company at a purchase price per option equal to the greater of the amount by which $16.00, exceeded the exercise price of the option, if at all, or $1.00 per option. In connection with the merger, the Company purchased the outstanding options to acquire common stock of the Company on behalf of Holding, which were recorded as merger-related and other nonrecurring charges in the period ending July 20, 2001.

    The funding to complete the merger, as well as the refinancing of substantially all of the outstanding indebtedness of the Company, was obtained through (i) the cash contribution of $74.8 million from the sale of Class B shares of common stock of Holding for $16.00 per share, (ii) the sale of shares of its Class A common stock of the Company for $16.00 per share to employees and independent contractors of the Company, (iii) the sale of 625,000 shares of Class A common stock of Holding to CalPERS for $16.00 per share, (iv) the issuance and sale by Holding of 65,000 units for $65.0 million to DLJ Investment Funding, Inc. and other purchasers, which units consist of $65.0 million in aggregate principal amount of 16% Senior Notes due 2011 and 339,820 shares of Class A common stock of Holding, (v) the issuance and sale by Blum CB of $229.0 million in aggregate principal amount of 11¹/4% Senior Subordinated Notes due 2011 for $225.6 million (which were assumed by the Company in connection with the merger) and (vi) borrowings by the Company under a new $325.0 million senior credit agreement with Credit Suisse First Boston and other lenders. Holding contributed the net cash proceeds of $155.1 million from the sale of its Class A and Class B common

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stock and the sale of its Senior Notes to the Company in exchange for the issuance of 11,540,747 shares of common stock of the Company and 6,250,000 shares of preferred stock of the Company.

    Following the merger, the common stock of the Company was delisted from the New York Stock Exchange. The Company has also successfully completed a tender offer and consent solicitation for all of the outstanding principal amount of its 8⁷/8% Senior Subordinated Notes due 2006 (the Notes). The Notes were purchased at $1,079.14 for each $1,000 principal amount of Notes, which included the consent payment of $30.00 per $1,000 principal amount of Notes. The Company also repaid the outstanding balance of its existing revolving credit facility.

    The Company entered into the merger in order to enhance the flexibility to operate its existing businesses and to develop new ones.

2. Purchase Accounting

    The aggregate purchase price paid for the Company by Holding was approximately $375 million, which includes: (1) shares of CBRE Holding Class B common stock, valued at $16.00 per share, and warrants to acquire shares of CBRE Holding Class B common stock, issued to members of the buying group in exchange for shares of common stock contributed to Holding immediately prior to the merger and the cancellation of warrants to acquire common stock of the Company; (2) $16.00 per share in cash paid to owners of common stock of the Company, excluding shares owned by members of the buying group discussed above; (3) allocations in CBRE's deferred compensation plan (the DCP) from vested stock fund units, each of which was valued at $16.00 and which had one underlying share of the Company's common stock prior to the merger, to other investment alternatives available under the DCP, in each case at the election of the applicable participant; (4) vested stock fund units each of which was valued at $16.00 and which had one underlying share of Holding Class A common stock, valued at $16.00 per unit, issued in exchange for stock fund units underlying shares of the Holding's Class A common stock after the merger, that participants elected to continue to hold after the merger; (5) unvested stock fund units, each which was valued at $16.00 and which were automatically converted to have one underlying share of Holding's Class A common stock after the merger, and (6) direct costs incurred in connection with the merger.

    The merger was accounted for as a purchase by Holding. Prior to the merger, no single member of the Buying Group, nor any combination thereof, controlled the Company. After completion of the merger, RCBA controlled Holding. The shares of common stock of the Company directly owned by RCBA prior to the merger, which were included in the shares owned by the Buying Group contributed to Holding, have been valued at RCBA's book value in the determination of the purchase price. All other shares of common stock of the Company acquired by Holding have been accounted for at fair value of $16.00 per share in the determination of the purchase price. As such, the merger has been accounted for as a step purchase acquisition in accordance with Statement of Financial Accounting Standard (SFAS) 141, "Business Combinations," and the net assets of the Company have been adjusted to 86.5% of their estimated fair value.

    The preliminary purchase accounting adjustments of Holding have been recorded in the accompanying unaudited consolidated financial statements of the Company through the application of push down accounting as of and for any periods subsequent to July 20, 2001. The excess of the purchase price paid by Holding over its preliminary estimates of the fair value of the assets and liabilities of the Company at the date of merger, was approximately $629.1 million and is reflected as goodwill in the accompanying unaudited consolidated balance sheet as of September 30, 2001. The financial statements of the Company for the periods prior to July 20, 2001 were prepared using the Company's historical basis of accounting and are designated as "Pre-Merger." Because the operating results for the post-merger period include push down accounting and are affected by the purchase accounting adjustments, they are not directly comparable to the pre-merger results. The process of

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determining the fair value of assets and liabilities at the merger date is continuing, and the final result awaits the finalization of certain preliminary estimates. The estimated fair value of net liabilities assumed was $252.6 million at July 20, 2001.

    In accordance with SFAS 142, "Goodwill and Other Intangible Assets" the new goodwill balance established as a result of the merger is not being amortized. Prior to the adoption of SFAS 142, the Company recognized $8.8 million and $11.7 million in amortization expense during the period from January 1, 2001 to July 20, 2001 and the nine months ended September 30, 2000, respectively, related to the Company's historical goodwill.

3. Basis of Preparation

    The accompanying unaudited consolidated statement of financial position as of September 30, 2001 and the consolidated statements of operations and cash flows for the period from July 20, 2001 to September 30, 2001 reflect the consolidated financial position, statements of operations, and cash flows of the Company subsequent to the date of the merger and include all material adjustments required under the purchase method of accounting. Also included are financial statements reflecting the consolidated financial position of the Company as of December 31, 2000; the consolidated statement of operations of the Company for the period from July 1, 2001 to July 20, 2001; the consolidated statements of operations and cash flows for the period from January 1, 2001 to July 20, 2001 and the nine months ended September 30, 2000; and the consolidated statements of operations for the three months ended September 30, 2000 (collectively "Pre-Merger financial statements"). The Pre-Merger financial statements have been prepared using the historical cost of the Company's assets and have not been adjusted to reflect the merger with Blum CB.

    Unaudited pro forma results of the Company assuming the merger had occurred as of January 1, 2000 are presented below. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been, and may not be indicative of future operating results. (in thousands):

    The accompanying unaudited consolidated financial statements 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. 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 generally accepted accounting principles 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 estimated. All significant inter-company transactions and balances have been eliminated and certain reclassifications have been made to prior periods' consolidated statements to conform to current period presentation. The results of operations for the period from January 1, 2001 to July 20, 2001 and July 20, 2001 to September 30, 2001 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2001.

    The consolidated financial statements and notes to the consolidated financial statements, along with management's discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with the Company's recent filing on Form 10-K, which

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contains the latest available audited consolidated financial statements and notes thereto, as of and for the period ended December 31, 2000, as well as the Company's recent Form S-4 Registration Statements filed in October 2001.

4. Investments in and Advances to Unconsolidated Subsidiaries

    Condensed Statement of Operations (unaudited) for the unconsolidated subsidiaries accounted for using the equity method is as follows (in thousands):

5. Debt

    As a part of the merger agreement, the Company successfully completed a tender offer and consent solicitation for all of the outstanding principal amount of its 8⁷/8% Senior Subordinated Notes due 2006 (the Subordinated Notes). The Subordinated Notes were purchased at $1,079.14 for each $1,000 principal amount of the Subordinated Notes, and included a consent payment of $30.00 per $1,000 principal amount of Subordinated Notes. The Company also repaid the outstanding balance of its revolving credit facility.

    In addition, the Company assumed $229.0 million in aggregate principal amount of 11¹/4% Senior Subordinated Notes due June 15, 2011 (the Notes) issued for $225.6 million net of discount, by Blum CB. The Notes require semi-annual payments of interest in arrears on June 15 and December 15, commencing 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 111¹/4% of par, plus accrued and unpaid interest solely with the net cash proceeds from public equity offerings. In the event of a change in 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 Notes are fully and unconditionally guaranteed on a senior subordinated basis by Holding and the Company's domestic subsidiaries. The effective yield on the Notes is 11.5%. The amount included in the accompanying Consolidated Balance Sheets less unamortized discount was $225.7 million at September 30, 2001.

    The Notes contain numerous restrictive covenants that, among other things, limit the Company's ability to incur additional indebtedness, pay dividends or distributions to stockholders or repurchase capital stock or debt that is junior to the Notes, make investments, sell assets or subsidiary stock, engage in transactions with affiliates, issue subsidiary equity and enter into consolidations or mergers.

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    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 Holding, 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 in 2007; the Tranche B term facility of $185.0 million, maturing in 2008; and the revolving line of credit of $90.0 million, including revolving credit loans, letters of credit and a swingline loan facility, maturing in 2007. Borrowings under the senior secured credit facilities will bear interest at varying rates based on the Company's option, at either LIBOR plus 3.25% or the alternate base rate plus 2.25%, in the case of the Tranche A and the revolving facility, and LIBOR plus 3.75% or the alternate base rate plus 2.75%, in the case of the Tranche B facility. The alternate base rate is the higher of (1) CSFB's prime rate or (2) the Federal Funds Effective Rate plus one-half of one percent. After delivery of the Company's consolidated financial statements for the year ending December 31, 2001, the amount added to the LIBOR rate or the alternate base rate under the Tranche A and revolving facility will vary, from 2.50% to 3.25% for LIBOR and from 1.50% to 2.25% for the alternate base rate, as determined by reference to the Company's ratios of total debt less available cash to EBITDA, as defined in the debt agreement.

    The Tranche A facility will fully amortize by July 20, 2007 through quarterly principal payments over 6 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 $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, as determined by the Company, in the month of December of each year. 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 $255.2 million at September 30, 2001. The weighted average interest rate was 7.4% at September 30, 2001.

    In order to fund a portion of the merger, Holding issued an aggregate principal amount of $65 million of 16.0% Senior Notes due July 20, 2011 (the Senior Notes), which is solely Holding's obligation to repay. The Company has neither guaranteed nor pledged any of its assets as collateral for the Senior Notes, and is not obligated to provide cashflow to Holding for repayment of these Senior Notes. However, Holding has no substantive assets or operations other than its investment in the Company to meet any required principal and interest payments on the Senior Notes. Holding will depend on the Company's available cash flows to fund principal and interest payments as they come due.

    The Company has short-term borrowings of $104.8 million and $9.2 million with related weighted average interest rates of 5.0% and 7.3% as of September 30, 2001 and December 31, 2000, respectively.

    A subsidiary of the Company has a credit agreement with Residential Funding Corporation (RFC). The credit agreement provides for a revolving line of credit of up to $175.0 million, and bears interest at 1.00% per annum over LIBOR. The agreement expires on August 31, 2002. During the quarter ended September 30, 2001, the Company had a maximum of $157.2 million revolving line of credit principal outstanding. The Company had a participation agreement with RFC whereby RFC agreed to purchase a 99% participation interest in any eligible multifamily mortgage loans owned by the Company and outstanding at quarter-end the (Participation Agreement). The Participation Agreement expired August 31, 2001. At September 30, 2001, the Company had $72.2 million under the warehouse line of credit outstanding, which is included in short-term borrowings in the accompanying Consolidated Balance Sheets. The Company also had a $72.2 million warehouse receivable. Subsequent to September 30, 2001, the warehouse line of credit was repaid with the proceeds from the warehouse receivable.

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6. Employee Benefit Plans

    Option Plans and Warrants.  At the effective time of the merger, each holder of an option to acquire the Company's common stock, whether or not vested, had the right to receive, in consideration for the cancellation of his or her options, an amount per share of common stock equal to the greater of (A) the amount by which $16.00 exceeded the exercise price of the option, if any, and (B) $1.00, reduced in each case by applicable withholding taxes. Employees holding warrants to acquire shares of the Company received $1.00 per share of common stock underlying the warrant. Warrants held by non-employees other than FSEP and FSEP International, who received warrants to acquire shares of the Company's Class B Common Stock, were cancelled, at no payment to such holders.

    Deferred Compensation Plan (the DCP).  In 1994, the Company implemented the DCP. Under the DCP, a select group of management and highly compensated employees can defer the payment of all or a portion of their compensation (including any bonuses) and have it invested in stock fund units, a series of mutual funds within an insurance policy or any interest bearing account. As part of the merger, the DCP was amended so that each stock fund unit represented the right to receive one share of Class A common stock of Holding. Each participant in the DCP who was a US employee or an independent contractor in the specified states and had pre-merger vested stock fund units as of the merger was permitted, to make one of the following elections: (1) convert the value of his or her pre-merger vested stock fund units, based upon a value of $16.00 per stock unit, into any of the insurance mutual fund or interest index fund alternatives provided under the DCP, or (2) continue to hold the vested stock fund units in his or her account under the DCP. In accordance with a change in control provision included in the terms of the DCP, shares of stock fund units associated with the 1999 Company matching contribution, which were unvested prior to the merger, became vested upon completion of the merger, but remained as stock fund units. Vested stock fund units, including those that vested due to the change in control, are included in goodwill in the accompanying consolidated balance sheet as of September 30, 2001. The above accounting treatment is in accordance with Financial Interpretation Number (FIN) 44 "Accounting for certain Transactions Involving Stock Compensation." All stock fund units that were unvested prior to the merger were automatically converted into the right to receive one share of Class A common stock of Holding. After completion of the merger, no new deferrals are allowed in stock fund units.

    Capital Accumulation Plan (The Cap Plan).  The Cap Plan is a defined contribution profit sharing plan under section 401(k) of the Internal Revenue Code and is the Company's only such plan. In connection with the merger, each share of the Company's common stock held by the plan was exchanged for $16.00 in cash. In addition, the Cap Plan was amended to eliminate the Company's common stock as an investment option after July 20, 2001. The cash received for the shares of the Company's common stock was available for reinvestment in one or more of the investment alternatives contained within the Cap Plan, including a new Holding Stock Fund, in which employees on one time basis can invest in Class A shares of common stock of Holding.

7. Commitments and Contingencies

    Between November 12 and December 6, 2000, five putative class actions were filed in the Court of Chancery of the State of Delaware in and for New Castle County by various of the Company's stockholders against the Company, its directors and the buying group which has taken the Company private. A similar action was also filed on November 17, 2000 in the Superior Court of the State of California in and for the County of Los Angeles. These actions all alleged that the offering price for the going private transaction was unfair and inadequate and sought injunctive relief or rescission of the transaction and, in the alternative, money damages.

    The five Delaware actions have been consolidated and a lead counsel appointed. As of October 2, 2001, the parties to the Delaware litigation entered into a settlement agreement that was filed with the

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appropriate court in Delaware. However, the Delaware court has not yet approved the settlement. Furthermore, the parties involved in the California lawsuit have not agreed to a settlement.

    The Company is a party to a number of pending or threatened lawsuits arising out of, or incident to, its ordinary course of business. Based on available cash and anticipated cash flows, the Company believes that the ultimate outcome will not have an impact on the Company's ability to carry on its operations. 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.

    An important part of the strategy for the Company's investment management business involves investing its own capital in certain real estate investments with its clients. As of September 30, 2001, the Company had invested $51.0 million and committed $32.6 million to fund future co-investments.

8. Shareholder's Equity

    As a part of the merger transaction, the Company retired all its shares of common stock outstanding prior to the merger. The Company authorized to issue 108,000,000 new shares of capital stock after the merger, of which (1) 8,000,000 were Preferred Stock, with 6,250,000 designated Series A Convertible Participating Preferred Stock (Series A Preferred Stock), and (2) 100,000,000 were common stock. Both have a par value of $.01 per share. 11,540,747 shares of common stock and 6,250,000 shares of Series A Preferred Stock were issued to Holding at $16.00 per share, respectively, in exchange for the net cash proceeds from the sale of Class A and Class B shares of common stock of Holding, and the sale of Senior Notes by Holding.

    The holders of the Series A Preferred Stock are entitled to receive a dividend at the rate of 16% per annum of the original purchase price deemed to be $16.00 per share. All such dividends are cumulative and must be paid before any other dividend. The holders of the Series A Preferred Stock are entitled to participate on an as-converted to common stock basis in any dividends paid to the holders of common stock. The holders of the Series A Preferred Stock are entitled to receive an amount per share equal to the original purchase price plus any accrued but unpaid dividends prior and in preference to any distribution of any of its assets or surplus funds of the Company to the holders of the common stock. If upon such liquidation of the Company, the assets and funds distributed are insufficient to permit the payment of the Series A Liquidation Preference, the entire assets and funds legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock. The holders of common stock shall be entitled to receive the remaining assets of the Company pro rata based on the number of shares of Common Stock held by each such holder (assuming full conversion of all the Series A Preferred Stock). As of September 30, 2001, no dividends have been declared on the Series A Preferred Stock. As of September 30, 2001, the Series A Preferred shareholders are entitled to $3.2 million in cumulative preferred dividends, when and if declared.

    Each share of Series A Preferred Stock is convertible, at the option of the holder, at anytime after the date of issuance into shares of common stock as is determined by dividing the original purchase price by the conversion price in effect at the time of the conversion. The conversion price for Series A Preferred Stock shall initially be $16.00 per share, subject to future adjustment.

9. Comprehensive Income (Loss)

    Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.

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The following unaudited table summarizes the comprehensive income (loss) of the Company (dollars in thousands):

10. Nonrecurring Charges

    During the period from July 20 to September 30, 2001, the Company recorded merger-related and other nonrecurring pre-tax charges totaling $3.3 million which primarily included the write-off of the Company's e-business investments. During the period from January 1, 2001 to July 20, 2001, the Company incurred $22.1 million of merger-related and other nonrecurring pre-tax charges. This included merger-related costs of $16.4 million, severance costs of $2.8 million related to the Company's cost reduction program instituted in May 2001, as well as the write-off of an e-investment of $2.9 million.

11. Guarantor and Nonguarantor Financial Statements

    In connection with the merger with Blum CB, and as part of the financing of the merger, the Company assumed an aggregate of $229.0 million in Senior Subordinated Notes (the Notes) due 2011. These Notes are unsecured and rank equally in right of payment with any of the Company's future 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's wholly-owned domestic subsidiaries and by Holding.

    The following condensed consolidating financial information includes:

    (1) Condensed consolidating balance sheets as of September 30, 2001 and December 31, 2000; condensed consolidating statements of operations for the periods from July 20, 2001 to September 30, 2001, July 1, 2001 to July 20, 2001, January 1, 2001 to July 20, 2001 and the three and nine months ended September 30, 2000; and condensed consolidating statements of cash flows for the period from July 20, 2001 to September 30, 2001, the period from January 1, 2001 to July 20, 2001, and the nine months ended September 30, 2000 of (a) CB Richard Ellis Services, Inc., the parent, (b) the guarantor subsidiaries, (c) the nonguarantor subsidiaries, and (d) the Company on a consolidated basis; and

    (2) Elimination entries necessary to consolidate CB Richard Ellis Services, Inc., the parent, with 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. In accordance with SFAS 142, "Goodwill and Other Intangibles", all goodwill acquired in an acquisition shall be assigned to reporting units as of the date of acquisition. The Company is currently evaluating the fair value of these reporting units and the applicable goodwill to be assigned. As a result, the Condensed Consolidated Balance Sheet as of September 30, 2001 does not reflect this allocation of goodwill based upon the fair value of the Company's reporting units.

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CB RICHARD ELLIS SERVICES, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 2001
(Dollars in Thousands)
(Post-Merger)

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CB RICHARD ELLIS SERVICES, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000
(Dollars in Thousands)
(Pre-Merger)

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CB RICHARD ELLIS SERVICES, INC.
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE PERIOD FROM JULY 20 TO SEPTEMBER 30, 2001
(Dollars in Thousands)
(Post-Merger)