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Segments | 6 Months Ended
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Jun. 30, 2020
Segment Reporting [Abstract] |
Segments |
1 4. | Segments
We organize our operations around, and publicly report our financial results on, three global business segments: (1) Advisory Services; (2) Global Workplace Solutions and (3) Real Estate Investments. Advisory Services provides a comprehensive range of services globally, including property leasing, property sales, mortgage services, property management, project management and valuation. Global Workplace Solutions provides a broad suite of integrated, contractually-based outsourcing services to occupiers of real estate, including facilities management, project management and transaction services. Real Estate Investments includes: (i) investment management services provided globally; (ii) development services in the U.S. and U.K. and (iii) flexible office space solutions. Summarized financial information by segment is as follows (dollars in thousands):
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  |  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advisory Services |  | $ | 1,552,929 |  |  | $ | 2,178,958 |  |  | $ | 3,484,453 |  |  | $ | 4,013,360 |
Global Workplace Solutions |  |  | 3,666,844 |  |  |  | 3,385,452 |  |  |  | 7,413,018 |  |  |  | 6,551,367 |
Real Estate Investments |  |  | 161,611 |  |  |  | 149,663 |  |  |  | 373,081 |  |  |  | 284,856 |
Total revenue |  | $ | 5,381,384 |  |  | $ | 5,714,073 |  |  | $ | 11,270,552 |  |  | $ | 10,849,583 |
Adjusted EBITDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advisory Services |  | $ | 133,106 |  |  | $ | 333,528 |  |  | $ | 425,760 |  |  | $ | 597,378 |
Global Workplace Solutions |  |  | 115,947 |  |  |  | 104,060 |  |  |  | 215,245 |  |  |  | 203,739 |
Real Estate Investments |  |  | 18,251 |  |  |  | 30,904 |  |  |  | 56,650 |  |  |  | 117,407 |
Total Adjusted EBITDA |  | $ | 267,304 |  |  | $ | 468,492 |  |  | $ | 697,655 |  |  | $ | 918,524 |
Adjusted EBITDA is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources to each segment and assessing performance of each segment. EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments. Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of costs primarily associated with workforce optimization efforts in response to the COVID-19 pandemic, certain cash and non-cash items related to acquisitions, certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, costs associated with our reorganization, including cost-savings initiatives, and other non-recurring costs. Adjusted EBITDA is calculated as follows (dollars in thousands):
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  |  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
Net income attributable to CBRE Group, Inc. |  | $ | 81,897 |  |  | $ | 223,731 |  |  | $ | 254,092 |  |  | $ | 388,140 |
Add: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 116,384 |  |  |  | 106,479 |  |  |  | 230,178 |  |  |  | 212,302 |
Asset impairments |  |  | — |  |  |  | — |  |  |  | 75,171 |  |  |  | 89,037 |
Interest expense, net of interest income |  |  | 17,950 |  |  |  | 24,600 |  |  |  | 33,966 |  |  |  | 45,792 |
Write-off of financing costs on extinguished debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,608 |
Provision for income taxes |  |  | 18,803 |  |  |  | 62,521 |  |  |  | 69,985 |  |  |  | 106,399 |
EBITDA |  |  | 235,034 |  |  |  | 417,331 |  |  |  | 663,392 |  |  |  | 844,278 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Costs associated with workforce optimization efforts (1) |  |  | 37,594 |  |  |  | — |  |  |  | 37,594 |  |  |  | — |
Impact of fair value adjustments to real estate assets acquired in the Telford Acquisition (purchase accounting) that were sold in period |  |  | 1,247 |  |  |  | — |  |  |  | 7,000 |  |  |  | — |
Costs incurred related to legal entity restructuring |  |  | 693 |  |  |  | — |  |  |  | 3,934 |  |  |  | — |
Integration and other costs related to acquisitions |  |  | 236 |  |  |  | 9,037 |  |  |  | 1,019 |  |  |  | 9,037 |
Carried interest incentive compensation (reversal) expense to align with the timing of associated revenue |  |  | (7,500 | ) |  |  | 8,308 |  |  |  | (15,284 | ) |  |  | 15,644 |
Costs associated with our reorganization, including cost-savings initiatives (2) |  |  | — |  |  |  | 33,816 |  |  |  | — |  |  |  | 49,565 |
Adjusted EBITDA |  | $ | 267,304 |  |  | $ | 468,492 |  |  | $ | 697,655 |  |  | $ | 918,524 |
(1) | Primarily represents costs incurred related to workforce optimization initiated and executed in the second quarter of 2020 as part of management’s cost containment efforts in response to the COVID-19 pandemic. The charges are cash expenditures primarily for severance costs incurred related to this effort. Of the total costs, $7.4 million was included within the “Cost of revenue” line item and $30.2 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statements of operations for both the three and six months ended June 30, 2020.
(2) | Primarily represents severance costs related to headcount reductions in connection with our reorganization announced in the third quarter of 2018 that became effective January 1, 2019.
Our CODM is not provided with total asset information by segment and accordingly, does not measure or allocate total assets on a segment basis. As a result, we have not disclosed any asset information by segment. Geographic Information Revenue in the table below is allocated based upon the country in which services are performed (dollars in thousands):
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  |  | 2020 |  |  |  | 2019 |  |  |  | 2020 |  |  |  | 2019 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 3,089,794 |  |  | $ | 3,372,201 |  |  | $ | 6,470,357 |  |  | $ | 6,408,907 |
United Kingdom |  |  | 677,880 |  |  |  | 657,005 |  |  |  | 1,451,895 |  |  |  | 1,245,587 |
All other countries |  |  | 1,613,710 |  |  |  | 1,684,867 |  |  |  | 3,348,300 |  |  |  | 3,195,089 |
Total revenue |  | $ | 5,381,384 |  |  | $ | 5,714,073 |  |  | $ | 11,270,552 |  |  | $ | 10,849,583 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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