SEC Comment Letter for CBRE GROUP, INC. (CBRE) (CIK 0001138118) (CBRE) — Apr 17, 2009
CBRE GROUP, INC. (CBRE) (CIK 0001138118)
Date: April 17, 2009 · CIK: 0001138118 · Accession: 0000000000-09-020280
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-32205
Letter
April 16, 2009 Mail Stop 3010 By U.S. Mail and facsimile to (949) 809-4357 Mr. Brett White, Chief Executive Officer CB Richard Ellis Group, Inc. 1150 Santa Monica Boulevard, Suite 1600 Los Angeles, CA 90025 RE: CB Richard Ellis Group, Inc. File No. 001-32205 Form 10-K for the year ended December 31, 2008
Dear Mr. White: We have reviewed the above referenced filing and have the following comments. We have limited our review to only your fina ncial statements and related disclosures and will make no further review of your documents. As such, all persons who are responsible for the adequacy and accuracy of the disclosu res are urged to be certain that they have included all information required pursuant to the Securities Exchange Act of 1934.
In our comments, we ask you to provide us with additional information so we may better understand your disclosure. Please be as detailed as necessary in your explanation. After reviewing this inform ation, we may or may not raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comment or on any other aspect of our review. Feel free to call us at the tele phone numbers listed at th e end of th is letter. Selected Financial Data, page 32; Management’s Discussion and Analysis of Financial Condition and Results of Operations, pages 45 and 51 1. We noted that you adjusted EBITDA fo r goodwill and other non-amortizable intangible asset impairment, and you us e this non-GAAP financial measure to evaluate operating performance. Given the impairment appears to be the result of a decline in estimated future discoun ted cash flows and operations in your reporting segments, it is not clear why th e exclusion of impairment charges is useful in evaluating operating performa nce. Please explain to us how you
CB Richard Ellis Group, Inc. Page 2 of 3 considered the guidance in Questions 8 a nd 14 of the Frequently Asked Questions Regarding the Use of Non-GAAP Financial Measures in determining whether it is appropriate to exclude this charge and characterize this measure as “EBITDA.” 2. We noted your disclosure that management uses EBITDA as a measure to evaluate the operating perfor mance of your various “business lines.” We also noted that you presented EBITDA by segment on pages 51-53. Please clarify to us whether EBITDA is reported to the chief operating decision maker for purpose of assessing segment performance. If so, explain why you have not reported this information in your Industry Segments di sclosure in note 25. In addition, please clarify your basis for adjusting for royalty and management service expense. Critical Accounting Policies
Goodwill and Other Intangible Asset, page 40
3. Given the materiality of goodwill and the im pact the identification of reporting units can have on the determination of a goodwill impairment charge, please tell us how you considered providing the fo llowing disclosure in the critical accounting estimates: • How the reporting units were identified. • How goodwill is allocate d to reporting units • Whether there have been any changes in the number of reporting units, or the manner in which goodwill was allocated. If such changes have taken place, they should be explained. Financial Statements
Note 14 – Long-Term Debt and Short-Term Borrowings, page 113
4. Reference is made to your discussion of CBRE’s funding arrangement with Red Capital for the purpose of funding origin ations of Freddie Mac and Fannie Mae multi-family property mortgage loans. Please clarify if these commitments are being accounted for as derivatives under SFAS 133. If so, tell us how you evaluate fair value and your consideration of interest rate and credit risk in this valuation.
Note 15 – Commitments and Contingencies, page 116
5. Please clarify the accounting treatment for your agreement with Fannie Mae under the Delegated Underwriting and Serv icing Lender Program and include the accounting literature you reli ed upon in determining how transactions under this program are recorded in your financial statements.
As appropriate, please respond to these co mments within 10 business days or tell us when you will provide us with a response. Please submit your response letter on
CB Richard Ellis Group, Inc. Page 3 of 3 EDGAR. Please understand that we may have additional comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filings reviewed by the staff to be certain that they have provided all information investors require for an info rmed decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filings;
• staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and
• the company may not assert staff comme nts as a defense in any proceeding initiated by the Commission or any person under the federal secu rities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filings or in response to our comments on your filings. You may contact Jorge L. Bonilla at ( 202) 551-3414 or me at (202) 551-3413 if you have any questions, Sincerely, Cicely LaMothe Branch Chief
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April 16, 2009 Mail Stop 3010
By U.S. Mail and facsimile to (949) 809-4357
Mr. Brett White, Chief Executive Officer CB Richard Ellis Group, Inc. 1150 Santa Monica Boulevard, Suite 1600 Los Angeles, CA 90025
RE: CB Richard Ellis Group, Inc.
File No. 001-32205
Form 10-K for the year ended December 31, 2008
Dear Mr. White:
We have reviewed the above referenced filing and have the following comments.
We have limited our review to only your fina ncial statements and related disclosures and
will make no further review of your documents. As such, all persons who are responsible for the adequacy and accuracy of the disclosu res are urged to be certain that they have
included all information required pursuant to the Securities Exchange Act of 1934.
In our comments, we ask you to provide us with additional information so we
may better understand your disclosure. Please be as detailed as necessary in your
explanation. After reviewing this inform ation, we may or may not raise additional
comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects.
We welcome any questions you may have about our comment or on any other aspect of
our review. Feel free to call us at the tele phone numbers listed at th e end of th is letter.
Selected Financial Data, page 32; Management’s Discussion and Analysis of Financial
Condition and Results of Operations, pages 45 and 51
1. We noted that you adjusted EBITDA fo r goodwill and other non-amortizable
intangible asset impairment, and you us e this non-GAAP financial measure to
evaluate operating performance. Given the impairment appears to be the result of
a decline in estimated future discoun ted cash flows and operations in your
reporting segments, it is not clear why th e exclusion of impairment charges is
useful in evaluating operating performa nce. Please explain to us how you
CB Richard Ellis Group, Inc.
Page 2 of 3
considered the guidance in Questions 8 a nd 14 of the Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures in determining whether it is
appropriate to exclude this charge and characterize this measure as “EBITDA.”
2. We noted your disclosure that management uses EBITDA as a measure to
evaluate the operating perfor mance of your various “business lines.” We also
noted that you presented EBITDA by segment on pages 51-53. Please clarify to us whether EBITDA is reported to the chief operating decision maker for purpose of assessing segment performance. If so, explain why you have not reported this information in your Industry Segments di sclosure in note 25. In addition, please
clarify your basis for adjusting for royalty and management service expense.
Critical Accounting Policies
Goodwill and Other Intangible Asset, page 40
3. Given the materiality of goodwill and the im pact the identification of reporting
units can have on the determination of a goodwill impairment charge, please tell
us how you considered providing the fo llowing disclosure in the critical
accounting estimates:
• How the reporting units were identified.
• How goodwill is allocate d to reporting units
• Whether there have been any changes in the number of reporting units, or
the manner in which goodwill was allocated. If such changes have taken place, they should be explained.
Financial Statements
Note 14 – Long-Term Debt and Short-Term Borrowings, page 113
4. Reference is made to your discussion of CBRE’s funding arrangement with Red
Capital for the purpose of funding origin ations of Freddie Mac and Fannie Mae
multi-family property mortgage loans. Please clarify if these commitments are
being accounted for as derivatives under SFAS 133. If so, tell us how you evaluate fair value and your consideration of interest rate and credit risk in this
valuation.
Note 15 – Commitments and Contingencies, page 116
5. Please clarify the accounting treatment for your agreement with Fannie Mae
under the Delegated Underwriting and Serv icing Lender Program and include the
accounting literature you reli ed upon in determining how transactions under this
program are recorded in your financial statements.
As appropriate, please respond to these co mments within 10 business days or tell
us when you will provide us with a response. Please submit your response letter on
CB Richard Ellis Group, Inc.
Page 3 of 3
EDGAR. Please understand that we may have additional comments after reviewing your
responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filings reviewed by the staff to be certain that they have provided all information investors require for an info rmed decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the
filings;
• staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filings or in response to our comments on your filings.
You may contact Jorge L. Bonilla at ( 202) 551-3414 or me at (202) 551-3413 if
you have any questions,
Sincerely,
Cicely LaMothe Branch Chief