2014 Annual Report
Jones Lang LaSalle Incorporated
JLL
knows
cities
Who we are
JLL is a professional services and investment management firm specializing in real
estate. We offer integrated services delivered by expert teams worldwide to clients
seeking increased value by owning, occupying, developing or investing in real estate.
• With 2014 fee revenue of more than $4.7 billion, our 58,100 colleagues serve clients in over 80 countries
from more than 230 corporate offices.
• We are an industry leader in property and corporate facility management services, with a portfolio
of 3.4 billion square feet worldwide.
• During 2014, we completed 33,500 transactions for landlord and tenant clients, representing 662 million
square feet of space.
• We provided capital markets services for
$118 billion of client transactions.
• LaSalle Investment Management, our investment
management business, is one of the world’s largest
and most diverse in real estate with $53.6 billion
of assets under management.
We know cities.
Cities are part of JLL’s DNA. We work in – and with
– cities around the world. Most of the real estate
services we provide to clients focus on the institutions
and facilities that support cities: from ports and airports
to office, industrial and retail assets, and educational
institutions. We also have a long and successful history
of working alongside cities to help them achieve their
goals for the future.
The more we understand cities, the better we serve our
clients. So we continuously renew and add to our urban
expertise through such resources as our award-winning
Cities Research Centre, our Cities Momentum Index
2015 and our Global 300, which identifies the 300 cities
we predict will account for the bulk of economic and
commercial real estate activity over the next decade.
On the cover:
Upper Left: The Cadillac Fairview Corporation Limited, one of North America’s largest owners,
operators and developers of commercial real estate, partnered with JLL to project manage a
retrofit of the company’s 777 Dunsmuir Street office tower in Vancouver, Canada with technology
to increase energy efficiency of the building’s heating system. Cadillac Fairview used Fēnix
Energy’s geo-exchange system for the retrofit. The system manages excess and unused energy
which is stored, instead of released, into the atmosphere. This is the first-ever vertical installation
of a geo-exchange system underneath an already-existing office tower.
Lower Right: JLL helped Class A Sacramento high-rise Bank of the West Tower in Sacramento,
California to earn Platinum LEED Green Building Certification. It is the first Class A high-rise multi-
tenant building in Sacramento’s premier business area of Capitol Mall to earn V3 2009 Platinum
Certification for Existing Buildings, the highest level of certification awarded by the U.S. Green
Building Council.
HSBC project: Acting on behalf of the National Pension Service of Korea, advised by J.P.
Morgan Asset Management, JLL sold the HSBC Tower (8 Canada Square) to Qatari
based QIA. The HSBC Tower is a 44 storey skyscraper, designed by Foster + Partners
and finished to a high specification in 2002. The building is the global headquarters of the
HSBC Group Plc, located in London’s Canary Wharf.
What we have accomplished
Ten-year track record
Fee Revenue1
~4x
Adjusted Operating Income2
~5x
Market Cap3
~6x
$4,702
$510
$7,317
• Long history of profitable
revenue growth
– 10-year compound annual revenue growth
= 17%; 80% organic and 20% from M&A
– 60+ mergers and acquisitions
• Success through Global Financial
Crisis by adapting to market cycles
and capturing market share
• Investment-grade financial strength
maintained for future growth
$1,167
2004
2014
$95
2004
$1,247
2014
2004
Feb 2015
• Experienced executive leadership
Note: All amounts in $ millions. 2004 market cap based on peak share price in the year. Current market cap
based on February 2015 share price.
Consolidated earnings scorecard
creates value for clients and
shareholders
– Six-member Global Executive
Board with combined 90-year tenure
– 300+ International Directors drive growth
and provide deep leadership
2014
2013
Fee Revenue1
Adjusted Net Income4
Adjusted EPS4
Adjusted Op. Income2
Adjusted EBITDA2
$4.7B
$393M
$8.69
$510M / 10.9%
$651M / 13.8%
Gross revenue : $5.4B
US GAAP: $386M
US GAAP: $8.52
Op. Income: $466M / 9.9%
EBITDA: $608M / 11.2%
$4.0B
Gross revenue: $4.5B
$285M
US GAAP: $269M
$6.32
US GAAP: $5.98
$389M / 9.7%
$369M / 9.2%
$498M / 12.4%
Stock prices
2013
2014
The following table sets forth the
high and low daily closing prices
of our common stock as reported
on the New York Stock Exchange
and dividends paid by quarter
(shown in the 2Q and 4Q bars).
$125.29
$126.96
$136.49
$100.69
$100.02
$97.10
22¢
$102.80
23¢
$123.45
22¢
$101.17
$112.57
$85.56
$86.50
$82.15
$82.68
$154.25
25¢
$118.79
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1 Fee Revenue is total revenue excluding vendor and subcontract costs that are included in
both revenue and expense. We believe that excluding gross contract costs from revenue
gives a more accurate picture of our revenue growth.
2 Adjusted Operating Income includes adjustments to Operating Income, calculated in
accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), to exclude
the impact of 1) restructuring and acquisition charges of $42.5 million, $18.3 million and
$2.6 million, and 2) King Sturge intangible amortization of $2.0 million, $2.2 million and zero,
for the years ended December 31, 2014, 2013 and 2004, respectively. Adjusted EBITDA
includes adjustments to U.S. GAAP EBITDA for the restructuring and acquisitions charges
noted above. We believe that excluding these items gives a more meaningful year-over-year
comparison. Please see the accompanying Form 10-K for additional information.
3 Market Cap for 2004 is based on the peak share price in the year.
4 Adjusted Net Income and Adjusted EPS (earnings per diluted average share) include
adjustments to Net Income and EPS, calculated in accordance with U.S. GAAP, to exclude
the impact of 1) restructuring and acquisition charges of $6.0 million, $13.7 million and $2.0
million, and 2) King Sturge intangible amortization of $1.5 million, $1.6 million, and zero, for
the years ended December 31, 2014, 2013 and 2004, respectively. We believe that excluding
these items gives a more meaningful year-over-year comparison. Please see
the accompanying Form 10-K for additional information.
4
Colin Dyer
Chief Executive Officer and President
To our stakeholders
JLL achieved another year of record revenue and profitability in 2014.
Leasing activity globally, which had been weak in prior years, started
to catch up with continued strength in real estate investment sales,
corporate outsourcing and institutional investment management to create
healthy conditions in most of the world’s major real estate markets.
Two groups ensured our success in this encouraging environment:
the clients who entrusted us with their business, and our own staff, who
earned that trust by delivering superior service, advice and results.
We strengthened our balance sheet in 2014, which Standard & Poor’s
acknowledged in December by upgrading our investment-grade credit
rating to “BBB”. Early in 2015, we amended our bank credit facility,
increasing our borrowing capacity to $2 billion from $1.2 billion.
The new facility further strengthens our operating flexibility and
aligns with our strategy for focused growth across service lines.
We accelerated last year through organic growth, ten strategic
acquisitions, and by market share gains. We became more
productive to become more profitable. We continued to make JLL
a diverse and inclusive place to work. Throughout the year, we were
guided by our shared values of client focus, teamwork and integrity.
And we extended JLL’s position as a sustainable company in the
broadest sense of the term: a firm that all our stakeholders can trust
and rely on over the long term.
Early in 2014, we announced the use of JLL as our principal trading
name, while maintaining Jones Lang LaSalle as our legal name.
The new JLL identity, a natural progression for our brand, recognizes
our position as a global company located in multiple markets around
the world. The new name supports different communication styles
in different countries, languages and channels. It has proven to be
especially useful in the digital and online channels we increasingly
rely on for sales, marketing and communications activities.
JLL 2014 Annual Report 5
Another year of record financial results
Our 2014 financial results speak to our
ability to create long-term value. Fee revenue
increased to $4.7 billion for the year,
18 percent above 2013 levels. Adjusted
net income reached $393 million, or $8.69
a share, up 38 percent from the previous
year. We maintained our record of 10 years
of 17 percent compound annual adjusted
EBITDA growth. We improved our
adjusted EBITDA margin to 13.8 percent
for the year, compared with 12.4 percent
in 2013. And, as we continued to invest in
growth throughout 2014, our total net debt
declined to $163 million at year-end, 63
percent lower than in the previous year.
10 years of investing in our G5 global
growth priorities
2014 marked the 10th year in which we have
invested in five priorities for global growth.
Together they have helped us achieve long-
term sustainable growth in a period that
included the great financial crisis. They
have made our culture a clear differentiator
within our industry, enhancing value for
our clients, shareholders, employees and
other stakeholders. And they have made
us a leader in the areas where we choose
to compete. We call these priorities the G5.
G1 sees us continually building our local
and regional service operations. G2 through
G4 target global growth opportunities in
outsourcing, real estate investment sales
and institutional funds management.
Our fifth G helps us sustain and leverage
growth across the first four by improving
connections between our employees, business
lines, technologies and market positions.
Taken together, all five Gs help us serve
clients more effectively, grow our business
more aggressively, increase productivity
more actively, manage enterprise risk
more efficiently and, overall, promote the
long-term sustainability of the organization.
G1Build our leading local
and regional market positions
Our position as a leading global provider
of real estate services depends on our
position and capabilities in key local
and regional real estate markets around
the world. As a result, we continually assess
strategic opportunities to strengthen our
presence, both in key geographical markets
and in key client and industry sectors
within those markets.
With that in mind, we completed 10 targeted
acquisitions in 2014:
• GCL Europe, a top logistics and supply-chain
firm in France.
• Tenzing AB, a Swedish leader in property
investment advice. More recently, we extended
our leadership position in Sweden with the
March 2015 acquisition of Nextport, a tenant
representation and relocation management firm
based in Stockholm.
• YY Property Solutions, which provides real
estate agency and investment services in Malaysia.
• CLEO Construction Management,
a California-based construction project
management services firm specializing
in medical facilities.
• Tasaciones Hipotecarias, the real estate
valuation subsidiary of BNP Paribas
Real Estate Spain.
• W.A. Ellis, a UK-based firm which strengthens
our residential capabilities in central London.
• CRESA Portland LLC, a leading tenant
representation and corporate services provider
that expands our presence in the U.S. Pacific
Northwest.
• Coverpoint Foodservice Consultants,
a UK-based specialist in food and beverage
advice, which strengthens our European
Retail & Leisure Consulting group.
• The international residential project sales
business of Henry Butcher, a leading real
estate advisory firm in Malaysia.
• Novo Interior, which expands our Tetris
project management business in Portugal.
JLL 2014 Annual Report 6
To all our new colleagues, welcome to JLL.
During the year, we also expanded our
global platform by opening new offices
in Lagos, Nigeria; Nanjing, China; and
Kuala Lumpur, Malaysia.
In 2014 we represented tenant and landlord
clients to complete 33,500 transactions
representing 662 million square feet of space.
The total represented a 16 percent increase
on 2013 levels. Our leasing revenue increased
17 percent during the year.
G2 Strengthen our leading position
in Corporate Solutions
Throughout 2014, we continued to expand
our leading position delivering integrated
real estate outsourcing services to corporate
clients in all parts of the world.
Global leasing markets showed corporate
occupier activity increasing around the
world by the end of the year, which closed
with surprising strength. Corporate clients
who had been focused on cost reduction
re-focused on portfolio restructuring and,
to attract and retain top talent in a very
competitive marketplace, a preference
for modern, accessible office space.
We won 58 new outsourcing assignments
in 2014, expanded our existing relationships
with another 53 clients and renewed
22 contracts. In our local market Corporate
Solutions business, which serves corporate
occupiers who purchase real estate services
locally, we won 61 assignments during the year.
All told, we provided corporate facility
management services for approximately
1.1 billion square feet of client real estate,
a 5 percent increase from 2013. Adding
the space we manage for property investors
to this figure, our total property and facility
management portfolio reached 3.4 billion
square feet at the end of the year. Property
and Facility Management fee revenue
increased 15 percent in 2014 compared
with the prior year.
G3 Capture the leading share
of global real estate capital
flow for investment sales
Our strategic priority of delivering capital
markets services globally is driven by two
related forces: the increasingly international,
cross-border flows of capital into real estate,
and the global marketing of prime real
estate assets. Few competitors can match
our expertise and global reach in this
market environment.
We provided capital markets services for
$118 billion of client transactions in 2014,
a 19 percent increase from the previous
year. Our Capital Markets and Hotels
revenues increased 15 percent year on year.
Our real estate investment banking
professionals continued to serve clients
looking for capital and other financial
resources to increase the value of their
real estate holdings.
G4 Strengthen LaSalle Investment
Management’s leadership position
LaSalle’s integrated global platform continued
to deliver superior performance to its clients,
and to our firm, in 2014. LaSalle’s operating
revenue increased 45 percent for the year,
resulting primarily from high levels of
incentive and advisory fees.
JLL 2014 Annual Report 7
LaSalle raised $8.9 billion of new capital
during the year to reach its highest level
since 2007. At year-end, assets under
management totaled $53.6 billion,
a 13 percent increase on 2013 levels.
These results indicate that investors are
maintaining, and in many cases increasing,
their allocations to real estate and specifically
to advisors they have come to trust over time.
G5 Differentiate and sustain the
organization by connecting across
the firm and with clients and other
stakeholders
To leverage and accelerate our investments
in the first four Gs, we have a need – and
a powerful opportunity – to continue to link
together different parts of our business ever
more efficiently. Not only does connecting
across the organization differentiate JLL
from competitors, but it also helps us sustain
the company over time.
Clients increasingly demand services
that are both specialized and integrated.
They seek faster, better and cheaper ways
to create and unlock value in their real
estate. And they want to be assured that
the service partners representing them
always act with the highest levels of integrity
and transparency. As we connect our people,
service lines, geographies, systems and
technologies more effectively, we improve
our client-service capabilities significantly.
Connecting operations effectively also
improves our productivity and, as a result,
our profitability. And it helps us manage
the enterprise risk that is inherent in our
business. Both contribute to the firm’s
long-term success.
We also recognize the responsibilities
we have to our own people and to the
communities we live and work in. Taking
an active role as a good corporate citizen
contributes to our ability to maintain
a sustainable, long-term presence as a
leader in our industry.
The JLL culture supports sustainable
connections. Superior client service,
teamwork and collaboration, and high
ethical standards frame our culture, drawing
us closer to each other and to our clients.
Our 2020 strategy for focused growth
Three years ago, to accelerate progress in our
G5 priorities, we identified and launched an
interrelated set of business and operational
strategies to promote focused growth to 2020.
Beyond confirming the continued relevance
of the G5 as ongoing priorities, the strategy
focuses on how best to support them. That
involves identifying and investing in resources
that will enable the strategy to succeed:
• Diverse talent and human capital equipped
to accomplish our strategic objectives
• Productivity measures to expand margins
• Investments in data and technology tools to help
clients maximize the value of their real estate
• Governance processes to identify and control
enterprise risk
• Strong brands to differentiate JLL and LaSalle
in the marketplace
Finally, the strength of our balance sheet will
allow us to drive revenue growth and fund
capital expenditures between now and 2020.
JLL 2014 Annual Report 8
A positive market environment in 2015
Changes on our Board of Directors
One-third of the way into 2015, we continue
to see positive momentum in global capital
markets and world leasing markets.
High demand continues to drive direct
investment in commercial real estate.
Our Research team’s projections show sales
increasing by 5 to 10 percent above 2014
levels. This will bring the year’s investment
sales market volumes to about $750 billion,
matching the record levels of 2007.
Corporate occupier activity is also
continuing to strengthen, with healthy
global economic growth, portfolio
restructuring and a preference for efficient,
modern space contributing to growth.
We project that gross absorption will
increase about 5 percent above 2014 levels,
with the greatest growth in Asia Pacific.
In institutional funds management,
we project current trends to continue.
Strong performers like LaSalle will attract
significant investment capital in this
environment. We also see increased appetite
for risk among investors, who continue
to move into value-add and opportunistic
investments in search of higher returns.
The main challenge this year will
be deploying capital successfully.
There are three pending changes on our
Board of Directors this year.
Kate S. Lavelle, has decided not to stand
for re-election at this year’s Annual Meeting
in order to devote additional time to a new
business venture. We appreciate her valued
service on our Board and wish her well in her
future endeavors. All of the other current
directors are standing for re-election.
We are very pleased that Ann Marie Petach
and Samuel A. Di Piazza, Jr. have been
nominated to stand for election at the
2015 Annual Meeting. Both have served
in senior positions at some of the largest
and most sophisticated global business
organizations, and we feel very fortunate
to have them as nominees.
Ann Marie most recently served in several
senior positions with BlackRock, Inc.,
the world’s largest investment management
firm, including as its Chief Financial Officer.
Before that, she had a 23-year career with
Ford Motor Company culminating in her
serving as its Treasurer.
Sam retired as Global Chief Executive Officer
of PricewaterhouseCoopers, concluding a
36-year career at the world’s largest professional
services firm. Most recently, he served as
Vice Chairman of the Institutional Clients
Group and Member of the Senior Strategic
Advisory Group at Citigroup, Inc.
Both will add significant financial, strategic
and operational expertise to an already
strong Board, and we look forward
to welcoming them to JLL.
JLL 2014 Annual Report A year of continued confidence at JLL
EOE Journal
9
• Best Performing Property Brand,
Managing Partners’ Forum Awards
for Management Excellence
• Best Property Consultancy Awards across
seven markets, International Property Awards
for Asia Pacific
• Best Place to Work in Money Management,
Pensions & Investments
• Real Estate Investment Management
Firm of the Year, Germany, International
Funds Awards
• Best Performing Fund in Pan-European
Property Fund Index, IPD European
Property Investment Awards
• Investment Agency Team of the Year,
UK Property Awards
• Best Real Estate Employer in Germany for the
third consecutive year, Immobilien Zeitung
Early this year, we were selected as one
of the World’s Most Ethical Companies
for the eighth straight year, and we were
also named to FORTUNE magazine’s
2015 Most Admired Companies list.
Thank you for your continued interest
in JLL.
Colin Dyer
Chief Executive Officer and President
April 2015
In this positive market environment,
confidence and optimism continue to
build among clients and our own staff.
We anticipate positive momentum across
business lines and geographies as a result.
The strength of our client relationships and
the JLL and LaSalle brands, the extent of our
professionals’ skills and experience, and
the depth and flexibility of our financial
resources position us for continued growth
and success in 2015 and beyond.
I want to close this letter with a final round
of thanks to our people for the contributions
they made in 2014 – and continue to make
this year – to our clients, to their colleagues
and to our firm. To illustrate their success,
here are a few of the awards they helped
JLL earn from industry associations and
independent groups in 2014:
• One of the World’s Most Ethical Companies for
the seventh consecutive year, Ethisphere Institute
• 2015 Corporate Equality Index, Human Rights
Campaign Foundation, achieving a perfect score
• One of America’s Best Managed Companies,
Forbes magazine
• #1 Global Investment Manager,
2014 Euromoney Real Estate Poll
• Global Outsourcing 100 for the sixth
consecutive year, International Association
of Outsourcing Professionals
• 2014 Energy Star Partner of the Year Sustained
Excellence Awards, U.S. Environmental
Protection Agency
• Winning ‘W’ Company, 2020 Honor Roll,
2020 Women on the Board
• Top Ten Most Innovative Law Departments,
InsideCounsel
• Best-in-Class - Real Estate Interactive
Media Award for Cities Research Centre
• Best of the Best, Top Diversity Employer
and Top Supplier Diversity Program, Black
JLL 2014 Annual Report Board of Directors and Global Corporate Officers
10
Board of Directors
Sheila A. Penrose
Chairman of the Board
Jones Lang LaSalle Incorporated
and Retired President
Corporate and Institutional Services
Northern Trust Corporation
Colin Dyer
Chief Executive Officer and President
Jones Lang LaSalle Incorporated
Hugo Bagué
Group Executive
Organisational Resources
Rio Tinto plc
Dame DeAnne Julius
Retired Chairman
Royal Institute of International Affairs
Kate S. Lavelle
Retired Chief Financial Officer
Dunkin’ Brands, Inc.
Ming Lu
Partner
KKR & Co., L.P.
Martin H. Nesbitt
Co-Chief Executive Officer
The Vistria Group, LLC
Shailesh Rao
Vice President
Asia, Latin America and Emerging Markets
Twitter Inc.
David B. Rickard
Retired Executive Vice President, Chief Financial
Officer and Chief Administrative Officer
CVS Caremark Corporation
Roger T. Staubach
Executive Chairman
Jones Lang LaSalle Americas, Inc.
Committees of the Board of Directors
Audit Committee
Mr. Rickard (Chair), Dame DeAnne,
Ms. Lavelle, Mr. Nesbitt and Ms. Penrose
Compensation Committee
Mr. Lu (Chair), Mr. Bagué, Dame DeAnne,
Ms. Penrose and Mr. Rao
Nominating and Governance Committee
Ms. Penrose (Chair), Mr. Bagué,
Dame DeAnne, Ms. Lavelle, Mr. Lu,
Mr. Nesbitt, Mr. Rao and Mr. Rickard
Global Executive Board
Additional Global Corporate Officers Global Operating Board
Colin Dyer
Chief Executive Officer and President
Charles J. Doyle
Chief Marketing and Communications Officer
Joining our CFO and the Global Corporate
Officers listed to the left:
Christie B. Kelly
Chief Financial Officer
Alastair Hughes
Chief Executive Officer
Asia Pacific
Jeff A. Jacobson
Chief Executive Officer
LaSalle Investment Management
Gregory P. O’Brien
Chief Executive Officer
Americas
Christian Ulbrich
Chief Executive Officer
Europe, Middle East and Africa
Mark K. Engel
Controller
Allan Frazier
Chief Data Officer and Global Head of Data
and Information Management
James S. Jasionowski
Chief Tax Officer
David A. Johnson
Chief Information Officer
Parikshat Suri
Director of Internal Audit
Patricia Maxson
Chief Human Resources Officer
Mark J. Ohringer
General Counsel and Corporate Secretary
Joseph J. Romenesko
Treasurer
Richard Angliss
Clark Ardern
Ron Bedard
Ute Braasch
Pascal Boulicault
Chris Browne
Allison Cancio
Steve Cresswell
Kathryn Ditmars
Peter Downie
Ernie Fiorante
Pushpa Gowda
Maria Grigorova
Claire Handley
Gayle Kantro
Angie Lim
Ciara Mason
Richard Mowthorpe
Sarah Nicholls
Jane Niven
Susan Nuccio
Janice Ochenkowski
Albert Ovidi
Betsy Peck
Mackenzie Phillips
Theresa Reis
Gordon Repp
Mike Ricketts
Warwick Sauer
Nicolas Taylor
Bill Thummel
Ted Tomaras
Seth Weinert
Mary Beth Wise
JLL 2014 Annual Report International Directors
Art Adler • Robert Ageloff • Julian Agnew • Magnus Akerberg • Avi Alkas • Zelick Altman • Richard Angliss • Christopher Archibold • Pedro Azcué
Amy Aznar • Jacques Bagge • Stephan Barczy • Michael Batchelor • Richard Batten • Tom Bayne-Jardine • Peter Belisle • Daniel Bellow
Thomas Beneville • Kristian Bjorson • Richard Bloxam • Linda Bolan • Robert Bonwell • Ian Bottrell • Charles Boudet • David Bowden • Karen Brennan
Benjamin Breslau • James Brown • Christopher Browne • Peter Bulgarelli • Herman Bulls • Dan Burn • Todd Burns • Tracey Byer • Edward Cannon
11
Todd Canter • Ron Cariola • Michael Casolo • Ngai Ching Wong • Samit Chopra • David Churton • Katherine Clemo • Craig Collins • Stephen Collins
Stephen Conry • Elizabeth Cooper • Damian Corbett • Anthony Couse • Graham Coutts • Steve Cresswell • Stuart Crow • Arthur De Haast
Joël De Lafond • Ernst-Jan De Leeuw • Ronald Deyo • Kathryn Ditmars • James Dobleske • James Dolphin • Barry Dorfman • Thomas Doughty
David Doupe • Peter Downie • Charles Doyle • Francis Doyle • Benoit Du Passage • John Duckworth • Marshall Durston • Colin Dyer • Franck Eburderie
Jan Eckert • Jeremy Eddy • Michael Ellis • Mark Engel • Carl Ewert • Rosemary Feenan • Richard Fennell • Michael Fenton
Ernest Fiorante • Margaret Fleming • Jeffrey Flynn • John Forrest • Christopher Fossick • Allan Frazier • Andrew Frost • Shelley Frost • Lorena Fuertes
Mark Gabbay • Soma Garg • James Garvey • John Gates • Rebecca Gates • Paul Glickman • Robin Goodchild • Jacques Gordon • Guy Grainger
Gregory Green • Ian Greenhalgh • Thomas Griffin • Maria Grigorova • Andrew Groom • Robert Hackett • Brian Hake • David Hand • Christoph Härle
Andrew Hawkins
Elizabeth Hayden
Elizabeth Hearle
Scott Hetherington
Christopher Hiatt
Stuart
Hicks
Ph i l ip Hi l l man
Martin Hinge
Our International Directors, joined by their 58,000
colleagues around the world, pursue our vision to be
the real estate expert and strategic advisor of choice
for leading owners, occupiers, developers and investors.
Neil
Hitchen
Christopher Holmes
Martin Horner
Walter Howell
Richard Howling
Alastair Hughes
John Huguenard
Alasdair Humphery
Christopher Hunt • James Hutchinson • Andrew Hynard • Stephen Inglis • Christopher Ireland • David Ironside • Andy Irvine • Vance Jacobs
Jeff Jacobson • James Jasionowski • Emmanuel Joachim • Charles Johnson • David Johnson • Richard Jones • Wade Judge • Yashdeep Kapila
Toshinobu Kasai • Lisa Kaufman • Ping Kee Lee • Christie Kelly • Jason Kern • Kin Keung Fung • Lisa Kiell • Christopher Kiernan • Thomas Kirschbraun
Hector Klerian • Douglas Knaus • Keith Knox • David Kollmorgen • Chun Kong Lau • Mitchell Konsker • Katie Kopec • Robert Kossar • James Koster
Susheel Koul • Stanley Kraska Jr. • Marina Krishnan • Santhosh Kumar • George Ladyman • William Lammersen • David Lathwood • David Leechiu
Nick Lees • James Lewis • Ling Li • Angie Lim • Mei Lin Lim • Philip Ling • Vincent Lottefier • Thierry Loué • Daniel Loughlin • Gregory Lubar
Fabio Maceira • Iain Mackenzie • Ian Mackie • William Maher • Gregory Maloney • Thomas Maloney • Pierre Marin • Simon Marrison
Philip Marsden • Jordi Martin • Patricia Maxson • Thomas McAdam • Richard McBlaine • Michael McCurdy • David McGarry • Geoffrey McIntyre
Brian McMullan • Peter McWilliams • Alistair Meadows • Suphin Mechuchep • Thomas Melody • Elaine Melonides • Simon Merry • Craig Meyer
Brett Miller • Bruce Miller • Ethan Milley • Angus Minford • Hon Ming Lai • Sing Ming Wong • John Minks • Akihiko Mizuno • Marc Montanus
John Moran • Thomas Morande • Gavin Morgan • Lucy Morton • Kristin Mueller • Vivian Mumaw • Jane Murray • Peter Murray • Ramesh Nair
Julian Nairn • Yasuo Nakashima • Peter Nicoletti • Jane Niven • George Noon • Christopher Northam • Richard Norton • Gregory O’Brien
Janice Ochenkowski • Meredith O’Connor • John O’Driscoll • Mark Ohringer • Alberto Ovidi • Scott Panzer • Junbum Park • David Passaglia
Keith Pauley • Adrian Peachey • Elizabeth Peck • JC Pelusi • Jan Pope • Andrew Poppink • Frank Pörschke • Wesley Powell • Neil Prime • Daniel Probst
Daniel Pufunt • Anuj Puri • Vincent Querton • Elysia Ragusa • Stephen Ramseur • Steven Ranck • William Reeves • Luc Renaudin • Andrew Renshaw
Gordon Repp • John Restivo • Adrienne Revai • Jeremy Richards • Matt Richards • Michael Ricketts • Peter Riguardi • Jörg Ritter • David Roberts
Alan Robertson • Christopher Roeder • William Rogers • Joseph Romenesko • Simon Rooney • Christopher Roth • Bruce Rutherford • Daniel Ryan
Felix Sanchez • Julian Sandbach • Stephen Schlegel • Paul Schliesman • Jeffrey Schuth • Cameron Scott • Barry Scribner • Erich Sengelmann
Douglas Sharp • Jeremy Sheldon • Kenneth Siegel • Gagan Singh • Karamjit Singh Narula • Michael Sivewright • Stephen Smith • Jeremy Snoad
Richard Stanley • Roger Staubach • Chris Staveley • Joseph Stolarski • Steven Stratton • Mark Stupples • Allan Swaringen • Richard Sykes • John Talbot
Mary Taylor • Nicolas Taylor • William Teberg • Claus Thomas • James Thomas • Faron Thompson • William Thummel • Lynn Thurber
Michael Tiplady • Alan Tripp • Derek Trulson • Tomasz Trzoslo • Joseph Tsang • Timo Tschammler • Bernard Tyler • Paul Uber • Christian Ulbrich
Jubeen Vaghefi • Timothy Vallance • Andrea Van Gelder • John Vinnicombe • Donald Wagoner • Andrew Watson • Kevin Wayer • Nigel Wheeler
Paul Whitman • Daniel Witte • Giles Wrench • Tim Wright • Mark Wynne-Smith • Holly Yang • Jon Zehner • Ying Zhang • Stephen Zsigray Jr.
JLL 2014 Annual Report Corporate Offices
12
North America
Canada
Calgary
Edmonton
Mississauga
Montreal
North Toronto
Ottawa
Toronto
Vancouver
Mexico
Guadalajara
Mexico City
Monterrey
Tijuana
Puerto Rico
San Juan
United States
Alpharetta, GA
Altamonte Springs, FL
Ann Arbor, MI
Atlanta, GA
Austin, TX
Baltimore, MD
Bellevue, WA
Bethesda, MD
Bethlehem, PA
Birmingham, AL
Boston, MA
Brookfield, WI
Charleston, SC
Charlotte, NC
Cherry Hill, NJ
Chicago, IL
Cincinnati, OH
Cleveland, OH
Columbus, OH
Coral Gables, FL
Dallas, TX
Denver, CO
Des Moines, IA
East Rutherford, NJ
El Segundo, CA
Fort Lauderdale, FL
Fort Worth, TX
Hartford, CT
Honolulu, HI
Houston, TX
Indianapolis, IN
Irvine, CA
Iselin, NJ
Jacksonville, FL
King of Prussia, PA
Las Vegas, NV
Lombard, IL
Los Angeles, CA
Mechanicsburg, PA
Melville, NY
Memphis, TN
Menlo Park, CA
Miami, FL
Minneapolis, MN
Mobile, AL
Montgomery, AL
Nashville, TN
New York, NY
Norfolk, VA
Oakland,CA
Ontario, CA
Orlando, FL
Overland Park, KS
Parsippany, NJ
Philadelphia, PA
Phoenix, AZ
Pittsburgh, PA
Portland, OR
Raleigh, NC
Reno, NV
Richmond, VA
Royal Oak, MI
Sacramento, CA
Salt Lake City, UT
San Antonio, TX
San Diego, CA
San Francisco, CA
Seattle, WA
St. Louis, MO
Stamford, CT
Stockton, CA
Tampa, FL
Valencia, CA
Vienna, VA
Walnut Creek, CA
Washington, DC
Westmont, IL
Wilmington, DE
South America
Argentina
Buenos Aires
Brazil
Rio de Janeiro
São Paulo
Chile
Santiago
Colombia
Bogotá
Africa
Egypt
Cairo
Morocco
Casablanca
Nigeria
Lagos
South Africa
Johannesburg
Note: Some cities have multiple office locations.
JLL 2014 Annual Report Asia
China
Beijing
Chengdu
Chongqing
Guangzhou
Nanjing
Qingdao
Shanghai
Shenyang
Shenzhen
Tianjin
Wuhan
Xi’an
Hong Kong
Admiralty
Kowloon
Quarry Bay
Wan Chai
Europe
Belgium
Antwerp
Brussels
Czech Republic
Prague
Finland
Helsinki
France
Lyon
Marseilles
Paris
Germany
Berlin
Düsseldorf
Frankfurt
Hamburg
Hannover
Köln
Leipzig
Munich
Stuttgart
Hungary
Budapest
Ireland
Dublin
Israel
Tel Aviv
Italy
Milan
Rome
Sweden
Gothenburg
Stockholm
Switzerland
Geneva
Zurich
Turkey
Istanbul
UK
Birmingham
Bristol
Cardiff
Edinburgh
Exeter
Glasgow
Leeds
London
Manchester
Norwich
Nottingham
Southampton
Ukraine
Kiev
Luxembourg
Luxembourg
Netherlands
Amsterdam
Eindhoven
Rotterdam
Poland
Gdan΄sk
Krakow
Warsaw
Wrocław
Portugal
Lisbon
Romania
Bucharest
Russia
Moscow
St. Petersburg
Serbia
Belgrade
Slovakia
Bratislava
Spain
Barcelona
Madrid
Seville
Middle East
Saudi Arabia
Jeddah
Riyadh
United Arab Emirates
Abu Dhabi
Dubai
13
Macau
Macau
Malaysia
Kuala Lumpur
Philippines
Metro Manila
Singapore
Singapore
Sri Lanka
Colombo
Taiwan
Taipei
Thailand
Bangkok
Pattaya
Phuket
Vietnam
Hanoi
Ho Chi Minh City
India
Ahmedabad
Bangalore
Chandigarh
Chennai
Coimbatore
Hyderabad
Kochi
Kolkata
Mumbai
New Delhi
Pune
Indonesia
Bali
Jakarta
Surabaya
Japan
Fukuoka
Osaka
Tokyo
Korea
Seoul
Australia
Australia
Adelaide
Brisbane
Canberra
Gold Coast
Melbourne
Perth
Sydney
New Zealand
Auckland
Christchurch
Wellington
JLL 2014 Annual Report 14
We know cities
More than half the world’s population lives in urban areas
today, and that number is projected to grow to two-thirds
by 2050. In this era of unstoppable urbanization, cities need
to grow, compete, connect and differentiate themselves
to maintain and improve their position in an ever changing
and aggressively competitive hierarchy.
At the same time, clients who invest in and occupy
commercial real estate opportunities in cities profit from
this competition when they make good decisions.
We understand the link between successful business
and successful cities. Our contribution to city futures ranges
from sourcing and moving capital and expertise to cities
across the world, to the design and fit out of individual floors
in office buildings; from the creation of sustainable city
master plans to the introduction of major corporates and
investors to new cities.
Here are a few examples of JLL’s recent work in cities
around the world.
JLL 2014 Annual Report 15
Drexel University Project | Philadelphia, Pennsylvania
Innovation Neighborhood
Helping Drexel University create a 5-million
square foot innovation district in Philadelphia
As the centerpiece of its strategic focus, Drexel University plans to bring together education,
research and corporate partners to form the nucleus of the Innovation Neighborhood,
a five-million square foot innovation district to be developed in Philadelphia’s University City.
The university selected JLL to advise in the selection of a master developer for the project.
The goal of Innovation Neighborhood is to have Philadelphia take its place alongside
Cambridge and Silicon Valley as a world-class technology and innovation hub.
Technology partnerships, corporations, interdisciplinary academic research programs
and business incubators will share a mixed-use environment that includes office, hotel
and conference center, classrooms, retail, residential and cultural destinations. Two assets
make the project possible: the maturation of Drexel’s applied research enterprise and
the university’s collection of urban properties, which are unmatched in the U.S. for
location and potential.
JLL 2014 Annual Report 16
Grand Paris
Promoting an urban, social and economic development
project in the heart of greater Paris
The government-led Grand Paris project is a massive and ambitious multi-year effort designed
to maintain and extend the greater Paris region’s position as a leading international city.
Launched in 2010, the long-range project is scheduled to run to 2030. It revolves around the creation
of a public transport network to link different economic centers and support new development.
Grand Paris envisions the development of office, retail, light industrial and residential property,
along with public facilities and green space.
To educate our clients about the project and introduce them to its implications and opportunities
for commercial real estate investors, JLL has created a series of comprehensive research reports.
The first, “Grand Paris and commercial real estate: future trends,” focuses on three major development
projects associated with the plan.
www.grand-paris.jll.fr/en/home/id/27
JLL 2014 Annual Report 17
Liberty Place
Transforming the southern edge of Sydney’s
central business district
Developed as a joint venture between LaSalle Investment Management’s
Asia Opportunity Fund III and Grocon, an Australian developer and builder,
Liberty Place took an underutilized site at the southern edge of Sydney’s
central business district and developed an award-winning building. The
first major commercial tower to be developed in the city following the global
financial crisis, the building has been pivotal in the ongoing transformation
of this section of Sydney. Its awards include the top Office Award at the
World Architecture Festival.
Liberty Place was designed to the highest standards of environmental
sustainability, earning a 6 Green Star (World Leadership) rating.
LaSalle Investment Management was a partner in the development,
and JLL is the building’s Property Manager. We also advised on the
subsequent sale of LaSalle’s share in the building.
DreamCenter
Creating a cultural and entertainment destination in Shanghai
Successful cities do not shut down at the end of the workday. In addition to being business and financial
hubs, they feature the cultural, entertainment and leisure attractions that attract talented people for work
and tourists for recreation.
DreamCenter will bring an integrated cultural & lifestyle precinct to the Xuhui district of Shanghai. A joint
venture between Hong Kong Lan Kwai Fong Group, DreamWorks Animation and Shanghai China Media
Capital, DreamCenter consists of 12 unique art, cultural and entertainment venues.
Key features include multiple live performances theatres, music halls and black box theatres;
the headquarters of Oriental DreamWorks; an IMAX Cineplex; and the Lan Kwai Fong Entertainment
and Lifestyle District which consists of international quality restaurant and bars, lifestyle retail and
year-round themed events and parties.
Teams of JLL Leasing, Consulting,
Retail, and Property and Asset
Management professionals have
advised on various aspects of
the ambitious DreamCenter project.
DreamCenter | Shanghai, China
Liberty Place | Sydney, Australia
JLL 2014 Annual Report United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934
For the fiscal year ended December 31, 2014
Commission File Number 1-13145
1APR201519305734
Jones Lang LaSalle Incorporated
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of incorporation or organization)
36-4150422
(I.R.S. Employer Identification No.)
200 East Randolph Drive, Chicago, IL
(Address of principal executive offices)
60601
(Zip Code)
Registrant’s telephone number, including area code: 312-782-5800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock ($.01 par value)
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:1) No (cid:2)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes (cid:2) No (cid:1)
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 (cid:1) No (cid:2)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such period that the registrant was required to submit and post such files). Yes (cid:1) No (cid:2)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K (cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Non-accelerated filer (cid:2)
Large accelerated filer (cid:1)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:2) No (cid:1)
The aggregate market value of the voting stock (common stock) held by non-affiliates of the registrant as of the close of business
on July 1, 2014 was $5,611,263,806.
Accelerated filer (cid:2)
The number of shares outstanding of the registrant’s common stock (par value $0.01) as of the close of business on February 23,
2015 was 44,834,250.
Portions of the Registrant’s Proxy Statement for its 2015 Annual Meeting of Shareholders are incorporated by reference in
Part III of this report.
TABLE OF CONTENTS
Item 1.
Business
Item 1A. Risk Factors
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
Item 5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase
of Equity Securities
Item 6.
Selected Financial Data (Unaudited)
Item 7.
Management’s Discussion and Analysis of Financial Conditions
Item 7A. Quantitative and Qualitative Disclosures About Market Risks
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 10. Directors and Executive Officers of the Registrant
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Item 13.
Certain Relationships and Related Transactions
Item 14.
Principal Accountant Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
Power of Attorney
Signatures
Exhibit Index
International Integrated Reporting Council Cross Reference
1
40
68
68
68
69
71
74
100
101
144
144
145
145
145
145
146
146
147
147
148
149
152
ITEM 1. BUSINESS
COMPANY OVERVIEW
Jones Lang LaSalle Incorporated (‘‘Jones Lang LaSalle,’’ which we may refer to as ‘‘JLL,’’ ‘‘we,’’ ‘‘us,’’ ‘‘our,’’
the ‘‘Company’’ or the ‘‘Firm’’) was incorporated in 1997. Our common stock is listed on The New York Stock
Exchange under the symbol ‘‘JLL.’’
We are a financial and professional services firm specializing in real estate. We offer comprehensive integrated
services on a local, regional and global basis to owner, occupier, investor and developer clients seeking
increased value by owning, occupying or investing in real estate. We have more than 230 corporate offices
worldwide from which we provide services to clients in more than 80 countries. We have approximately 58,100
employees, including 33,300 employees whose costs our clients reimburse.
In March 2014, we announced that we will use JLL as our principal trading name. Jones Lang LaSalle
Incorporated remains our legal name. We have registered JLL as a trademark and have also introduced the
following refreshed logo:
1APR201519305734
Using the shorter JLL name in the marketplace is a natural evolution of the firm’s historically rich brand,
recognizing that it is a truly global company located in multiple markets, with a wide range of expertise
applied through many different client services. It also represents its adaptation to different communication
styles in different countries, languages and channels, and especially the use of digital and online channels for
marketing and communications.
JLL delivers an array of Real Estate Services (‘‘RES’’) across three geographic business segments: (1) the
Americas, (2) Europe, Middle East and Africa (‘‘EMEA’’) and (3) Asia Pacific.
LaSalle Investment Management, a wholly-owned member of the Jones Lang LaSalle group that comprises
our fourth business segment and uses LaSalle as its principal trading name, is one of the world’s largest and
most diversified real estate investment management firms. During 2014, we also refreshed the LaSalle brand
and logo as follows:
11MAR201505105529
In 2014, we generated record-setting fee revenue of $4.7 billion across our four business segments, an 18%
increase over 2013 in local currency. We believe we remain well-positioned to take advantage of the
opportunities in a consolidating industry and to navigate successfully the dynamic and challenging markets in
which we compete worldwide.
We are proud to be a preferred provider of global real estate services, an employer of choice, a consistent
winner of industry awards and a valued partner to the largest and most successful companies and institutions
in the global marketplace.
In December 2014, Standard & Poor’s Ratings Services (‘‘S&P’’) announced that it had raised JLL’s
investment grade credit rating to BBB from BBB-. JLL’s issuer and senior unsecured ratings from both S&P
(BBB) and Moody’s Investors Service, Inc. (Baa2) are now aligned as solid investment-grade ratings. The
rating increase follows S&P’s outlook change for JLL to positive in June 2014 and a recently announced
1
change in ratings methodology. In its June analysis, S&P recognized JLL’s conservative financial management,
competitively strong market positions, wide geographic presence and well-executed global growth strategy.
For discussion of our segment results, please see ‘‘Results of Operations’’ and ‘‘Market Risks’’ within Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as Note 3,
Business Segments, in the Notes to Consolidated Financial Statements.
Awards
We won numerous awards with respect to 2014, reflecting the quality of the services we provide to our clients,
the integrity of our people and our desirability as a place to work. As examples, we were named:
(cid:127) One of America’s Best Managed Companies by Forbes
(cid:127) For the sixth consecutive year, one of the Global Outsourcing 100 — International Association of
Outsourcing Professionals
(cid:127) For the seventh consecutive year, one of the World’s Most Ethical Companies by the Ethisphere Institute.
(cid:127) As having a perfect score on the Human Rights Campaign Foundation’s 2015 Corporate Equality Index, a
national benchmarking survey on corporate policies and practices related to LGBT workplace equality
(cid:127) As a Winning ‘‘W’’ Company and were listed on the 2020 Honor Roll by the 2020 Women on Board
(cid:127) As having one of the Top Ten Most Innovative Law Departments, by InsideCounsel.
(cid:127) One of the Best Places to Work by a number of local publications
(cid:127) Best in Class — Real Estate Interactive Media Award for Cities Research Center
(cid:127) Best of the Best — Top Diversity Employer and Top Supplier Diversity Program by Black EOE Journal
(cid:127) McDonald’s Environmental Leader Product of the Year
(cid:127) 2014 Energy Star Sustained Excellence Award by the U.S. Environmental Protection Agency
(cid:127) Best Performing Property Brand by the Managing Partners’ Forum Awards for Management Excellence
(cid:127) Best Property Consultancy: China, Hong Kong, Japan, Philippines, Singapore, Indonesia, and India at the
International Property Awards for Asia Pacific
(cid:127) Investment Agency Team of the Year from UK Property Awards
(cid:127) Best Places to Work in Money Management by Pensions & Investments
(cid:127) Real Estate Investment Management Firm of the Year in Germany by International Fund Awards
(cid:127) Best Performing Fund in Pan-European Property Fund Index by IPD European Property Investment
Awards
2
Services and Clientele
The broad range of real estate services we offer includes (in alphabetical order):
Agency Leasing
Capital Markets
Corporate Finance
Energy and Sustainability Services
Facility Management Outsourcing (Occupiers)
Investment Management
Lease Administration
Logistics and Supply-Chain Management
Mortgage Origination and Servicing
Project and Development Management / Construction
Property Management (Investors)
Real Estate Investment Banking / Merchant Banking
Research
Strategic Consulting and Advisory Services
Tenant Representation
Transaction Management
Valuations
Value Recovery and Receivership Services
We offer these services locally, regionally and globally to real estate owners, occupiers, investors and
developers for a variety of property types, including (in alphabetical order):
Critical Environments and Data Centers
Cultural Facilities
Educational Facilities
Government Facilities
Healthcare and Laboratory Facilities
Hotels and Hospitality Facilities
Industrial and Warehouse Properties
Infrastructure Projects
Military Housing
Office Properties
Residential Properties (Individual and Multi-Family)
Retail Properties and Shopping Malls
Sports Facilities
Transportation Centers
Individual regions and markets may focus on different property types to a greater or lesser extent depending
on local requirements, market conditions and the strength of the business opportunities we perceive.
We work for a broad range of clients who represent a wide variety of industries and are based in markets
throughout the world. Our clients vary greatly in size and complexity. They include for-profit and
not-for-profit entities of all kinds, public-private partnerships and governmental (‘‘public sector’’) entities.
Increasingly, we are also offering services to middle-market companies seeking to outsource real estate
services. Through LaSalle, we invest for clients on a global basis in both publicly traded real estate securities
and private real estate assets and debt obligations. As an example of the breadth and significance of our client
base, we provide services to approximately half of the Fortune 500 companies and approximately 70% of the
Fortune 100 companies.
3
How we earn fees
Property & Facility Management
Management & outsourcing of properties & portfolios
Driven by value enhancement for investors and corporate
occupiers
Leasing
Broker transactions between tenants & landlords
Driven by economic growth and corporate
confidence
Capital Markets & Hotels
Investment sales & finance arrangements
Driven by investor allocations to real estate and
market liquidity
Distinguishing Attributes
Project & Development Services
Design & management of real estate projects
Driven by capital expenditure and expansion decisions
LaSalle Investment Management
Real estate investment management
Driven by investment performance and capital raising
Workplace strategy, valuation, consulting,
advisory and sustainability
Driven by best practices in workplace productivity
Advisory & Other
1APR201523410249
The attributes that enhance our services and distinguish our Firm, which we discuss in more detail below
under ‘‘Competitive Differentiators,’’ include:
(cid:127) Our focus on client relationship management as a means to provide superior client service on an
increasingly coordinated basis;
(cid:127) Our integrated global services platform;
(cid:127) The quality and worldwide reach of our industry-leading research function, enhanced by applications of
technology and our ability to synthesize complex information into practical advice for clients;
(cid:127) Our reputation for consistent and trustworthy service delivery worldwide, as measured by our creation of
best practices and by the skills, experience, collaborative nature and integrity of our people;
(cid:127) Our ability to deliver innovative solutions and technology applications to assist our clients in maximizing
the value of their real estate portfolios;
(cid:127) Our local market knowledge;
(cid:127) The strength of our brand and reputation;
(cid:127) The strength of our financial position;
(cid:127) Our high staff engagement levels;
(cid:127) Our efforts to deliver the best possible returns for investment management clients;
(cid:127) The quality of our internal governance and enterprise risk management; and
(cid:127) Our sustainability leadership.
We have grown our business by expanding our client base and the range of our services and products, both
organically and through a series of strategic acquisitions and mergers. Our extensive global platform and
4
in-depth knowledge of local real estate markets enable us to serve as a single-source provider of solutions for
the full spectrum of our clients’ real estate needs. We began to establish this network of services across the
globe through the 1999 merger of the Jones Lang Wootton companies (‘‘JLW,’’ founded in England in 1783)
with LaSalle Partners Incorporated (‘‘LaSalle Partners,’’ founded in the United States in 1968).
Jones Lang LaSalle History and Acquisition Activities
Prior to our incorporation in Maryland in April 1997 and our initial public offering (the ‘‘Offering’’) of
4,000,000 shares of common stock in July 1997, JLL conducted its real estate services and investment
management businesses as LaSalle Partners Limited Partnership and LaSalle Partners Management Limited
Partnership (collectively, the Predecessor Partnerships). Immediately prior to the Offering, the general and
limited partners of the Predecessor Partnerships contributed all of their partnership interests in the
Predecessor Partnerships in exchange for an aggregate of 12,200,000 shares of common stock.
In March 1999, LaSalle Partners merged its business with that of JLW and changed its name to Jones Lang
LaSalle Incorporated. In connection with the merger, we issued 14,300,000 shares of common stock and paid
cash consideration of $6.2 million.
Since 2005, we have completed more than 60 acquisitions as part of our global growth strategy. These
strategic acquisitions have given us additional share in key geographical markets, expanded our capabilities in
certain service areas and further broadened the global platform we make available to our clients. These
acquisitions have increased our presence and product offering globally, and have included acquisitions in the
United Kingdom, Finland, France, Germany, the Netherlands, Sweden, Poland, Spain, Portugal, Turkey,
Dubai, South Africa, Hong Kong, Singapore, Malaysia, Japan, Indonesia, India, the Philippines, Australia,
Canada, Brazil and the United States.
We believe our market reach strengthens the long-term value of the enterprise in a number of ways, including
by (1) protecting us from episodic volatility or disruption in any specific region, (2) enhancing the expertise of
our people through knowledge sharing among colleagues across the globe and (3) allowing us to identify and
react to emerging trends and risks quickly.
In January 2006, we acquired Spaulding & Slye, a privately held real estate services and investment company
with 500 employees that significantly increased the Firm’s market presence in New England and Washington,
D.C.
In a multi-step acquisition starting in 2007, we acquired the former Trammell Crow Meghraj (‘‘TCM’’), one of
the largest privately held real estate services companies in India. We have combined TCM’s operations with
our Indian operations and we now operate under the JLL brand name throughout India.
In May 2008, we acquired Kemper’s Holding GmbH, making us the largest retail property advisor in
Germany.
In July 2008, we acquired Staubach Holdings Inc. (‘‘Staubach’’), a U.S. real estate services firm specializing in
tenant representation. Staubach, with 1,000 employees, significantly enhanced our presence in key markets
across the United States and made us an industry leader in local, national and global tenant representation.
The acquisition also established us as the market leader in public sector services and added scale to our
industrial brokerage, investment sales, corporate finance and project and development services.
In May 2011, we completed the acquisition of King Sturge, a United Kingdom-based international property
consultancy. The King Sturge acquisition, which extended our historical roots back to its founding in 1760,
significantly enhanced the strength and depth of our service capabilities in the United Kingdom and in
continental Europe, adding approximately 1,400 employees.
5
In 2014, we completed ten new acquisitions that expanded our capabilities in key regional markets: (1) GCL
Europe, a leading French logistics and supply chain firm, (2) Tenzing AB, a Swedish leader in property
investment advice, (3) YY Property Solutions Sdn Bhd, providing real estate agency and investment services
across office, retail, industrial and residential sectors in Malaysia, (4) CLEO Construction Management, a
California-based construction project management services firm that specializes in medical facilities,
(5) Tasaciones Hipotecarias, the regulated real estate valuation subsidiary of BNP Paribas Real Estate Spain,
an important strategic growth initiative for our finance sector business, (6) W.A. Ellis, a U.K.-based firm,
strengthening our residential capability in the central London market and creating a leading prime estate
agency business, (7) CRESA Portland LLC, a leading tenant representative and corporate services provider in
Portland, expanding our Northwest Pacific presence, (8) Coverpoint Foodservice Consultants, U.K.-based
specialist food and beverage advisers, expanding our European Retail & Leisure Consulting team, (9) the
international residential project sales business of Henry Butcher, a leading Malaysian-based real estate
advisory firm, and (10) Novo Interior, expanding our Tetris business in Portugal. We also purchased a portion
of the remaining minority ownership in our Indian operations, for which we had previously recorded a
Minority shareholder redemption liability on our Consolidated Balance Sheet, increasing our total ownership
from 90% to 95%.
We will continue to consider acquisitions that we believe will strengthen our market positions, expand our
service offerings, increase our profitability and supplement our organic growth.
1760
1783
1968
1997 1999
2008
2011
2014
Jones Lang Wootton founded
LaSalle Partners
founded
LaSalle Partners initial
public offering
LaSalle Partners and Jones Lang Wootton
merge to create Jones Lang LaSalle
Integrated global platform
(NYSE ticker “JLL”)
The Staubach Company and
Jones Lang LaSalle combine operations
Largest merger in JLL history transforms
U.S. local markets position
13% compound annual
revenue growth rate since
1999 merger thru 2014
King Sturge (est. 1760) and Jones Lang LaSalle merge EMEA operations
Enhances strength and depth of service capabilities in the UK and EMEA
6APR201518063368
Value Drivers for Providing Superior Client Service and Prospering as a Sustainable Enterprise
Our mission is to deliver exceptional strategic fully-integrated services, best practices and innovative solutions
for real estate owners, occupiers, investors and developers worldwide. We deliver a combination of services,
expertise and technology applications on an integrated global platform that we own (and do not franchise),
the totality of which we believe distinguishes us from our competitors and contributes to service excellence
and customer loyalty. While we face high-quality competition in individual markets, we believe that we have a
unique set of attributes that makes us the best choice for clients seeking real estate and investment
management services on a world-wide basis. We have the size and scale of resources necessary to deliver the
expertise of the Firm wherever clients need it. Our culture of client service, teamwork, and integrity means
that we can marshal those resources to deliver the greatest possible value and results. Our ‘‘client first’’ and
ethical orientation means that our people focus on how we can best provide what our clients need and want,
with integrity and transparency. Our governance and enterprise risk management orientation means that we
have built an enterprise that clients can rely on over the long-term. Our strong intellectual capital, our
long-term approach to business and our ability to anticipate, interpret and respond to the trends influencing
our industry sector mean that we are quick and nimble in adapting to new challenges and opportunities in a
fast changing world and in supporting our clients to do the same. In totality, these aspects result in a
6
sustainable business model that supports and promotes our short, medium and long-term successes and
creates financial and non-financial benefits for our stakeholders and the global community.
Consultancy practices typically do not share our implementation expertise or local market awareness.
Investment banking and investment management competitors generally possess neither our local market
knowledge nor our real estate service capabilities. Traditional real estate firms lack our financial expertise and
operating consistency. Other global competitors, which we believe franchise at least some of their offices
through separate owners, do not have the same level of business coordination or consistency of delivery that
we can provide through our network of wholly-owned offices, directly-employed personnel and integrated
information technology, human resources and financial systems. That network also permits us to promote a
high level of governance, enterprise risk management and integrity throughout the organization and to
leverage our diverse and welcoming culture as a competitive advantage in developing clients, recruiting
employees and acquiring businesses.
We have designed our business model to (1) create value for our clients, shareholders and employees and
(2) establish high-quality relationships with the suppliers we engage and the communities in which we operate.
Our synergistic approach seeks to derive business benefits from the application and intersection primarily of
human resources, financial and intellectual capital and technology. Based on our established presence in, and
intimate knowledge of, local real estate and capital markets worldwide, and supported by our investments in
thought leadership, technology and the use of electronic and digital means to gather, analyze and
communicate information relevant to our constituencies, we believe that we create value for clients by
addressing their local, regional and global real estate needs as well as their broader business, strategic,
operating and longer-term sustainability goals. Given the increasingly global and interconnected marketplace
in which many of our clients compete, our own capacity to deliver global solutions has also become
increasingly important to our business model.
We strive to create a healthy and dynamic balance between (1) activities that will produce short-term value
and returns for our stakeholders through effective management of current transactions and business activities
and (2) investments in people (such as new hires), acquisitions, technologies and systems designed to produce
sustainable returns over the longer term.
Our financial strength and our reputation for integrity, strong governance and transparency, which we believe
are among the strongest in the industry, give our clients confidence in our long-term ability to meet our
obligations to them.
The ability to create and deliver value to our clients drives our revenue and profits, which in turn allows us to
invest in our business and our people, improving productivity and shareholder value. In doing so, we enable
our people to advance their careers by taking on new and increased responsibilities within a dynamic
environment as our business expands geographically, adds adjacent service offerings and develops new
competencies. We are also increasingly able to develop and expand our relationships with suppliers of services
to our own organization as well as to our clients, for whom we serve a significant intermediary role. By
expanding employment both internally and to outsourced providers, we stimulate economically the locations in
which we operate, and we increase the opportunities for those we directly or indirectly employ to engage in
community services and other activities beneficial to society.
7
Attributes of Our Business Model
Our Differentiators
Growth-oriented, globally integrated firm
Advisor and service provider
Local, regional and global market execution
Corporate outsourcing partner
Premier global real estate investment (LaSalle)
Operational excellence
Productivity focus
Broad research capabilities
Strategic data & IT investments
Financial strength
Investment grade balance sheet
Strong cash generator
Disciplined acquirer
Long-term value creation
Market share expansion
Margin focused
Premium brand
1APR201519183954
Global Governance Structure
To achieve our mission, we must establish and maintain an enterprise that will sustain itself over the long term
for the benefit of all of our stakeholders, clients, shareholders, employees, suppliers and communities, among
others. Accordingly, we have committed ourselves to effective corporate governance that reflects best practices
and the highest level of business ethics. For a number of years, we have governed the organization through a
highly coordinated framework within which decisions are deliberated and corporate authority is derived.
GLOBAL STRATEGIC PRIORITIES
To continue to create on-going value for our clients, shareholders and employees, both from current and
longer-term perspectives, we have identified five strategic priorities, which we call the G5. Although we have
grown significantly over the past decade, we believe we have a substantial opportunity to continue to grow and
prosper by providing our core services within our key markets, whose potential remains large given the global
magnitude of commercial and residential real estate, broadly defined. From time to time we may add adjacent
services that are not part of our historical core functions, but we intend these to be opportunistic in nature
and targeted to individual geographical locations. An example is that we have successfully expanded the cross-
border brokerage of high-end residential properties in London with the 2011 King Sturge merger, followed by
8
the acquisition of W.A. Ellis during 2014. A second example is the expansion of the Tetris-branded fit-out
business we originally acquired in France and have been introducing into other countries, including as the
result of additional acquisitions.
G1
G2
G3
G4
Build our local and
regional Markets
business
Strengthen our winning
positions in Corporate
Solutions
Capture the leading share
of global capital flows for
investment sales
Grow LaSalle Investment
Management’s leadership
position
G5 Connections: Differentiate and Sustain
JLL Actions
6APR201518063221
We regularly re-evaluate whether the G5 continue to be the right priorities for best driving the business
forward toward the overall objective of on-going value creation.
G1: Build our Leading Local and Regional Service Operations
Our strength in local and regional markets contributes to the strength of our global service capabilities. Our
financial performance also depends, in great part, on the business we source and execute locally from our
more than 230 wholly-owned offices around the world. We continually seek to leverage our established
business presence in the world’s principal real estate markets to provide expanded and adjacent local and
regional services without a proportionate increase in infrastructure costs. We believe that these capabilities will
continue to fuel our competitive advantage and make us more attractive to current and prospective clients, as
well as to revenue-generating employees such as brokers and client relationship managers.
Metrics: During 2014, we completed 33,500 transactions for landlord and tenant clients, a 16% increase
over 2013, representing 662 million square feet of space.
G2: Strengthen our Leading Position in Corporate Solutions
The accelerating trends of globalization, cost cutting, energy management and the outsourcing of real estate
services by corporate occupiers support our decision to emphasize a truly global Corporate Solutions business
that serves the comprehensive needs of corporate clients. This service delivery capability helps us create new
client relationships, particularly as companies turn to outsourcing their real estate as a way to manage
expenses and to implement sustainable practices. These services have proved to be counter-cyclical, as we have
seen demand for them strengthen when the economy has weakened. In addition, a number of corporate
clients are demanding the cross-regional capabilities that we can deliver.
Metrics: During 2014, we provided corporate facility management services for approximately 1.1 billion
square feet of clients’ real estate, a 5% increase from 2013. From large corporations, we had 58 new
wins, 53 expansions of existing relationships and 22 contract renewals. From middle-market
corporations, we had 61 new wins.
G3: Capture the Leading Share of Global Capital Flows for Investment Sales
Our focus on further developing our ability to provide global Capital Markets services reflects the increasingly
international nature of cross-border money flows into real estate and the global marketing of real estate
9
assets. Our real estate investment banking capability helps provide capital and other financial solutions by
which our clients can maximize the value of their real estate.
Metrics: During 2014, we provided capital markets services for $118 billion of client transactions, a
19% increase from 2013.
G4: Strengthen LaSalle Investment Management’s Leadership Position
With its integrated global platform, LaSalle is well-positioned to serve institutional real estate investors
looking for attractive opportunities around the world. Increasingly, it has also been developing its ability to
serve individual retail investors. LaSalle develops and implements strategies based on a thorough
understanding of investor objectives and knowledge of risks and rewards. We intend to continue to maintain
strong offerings in core products to meet the demand from clients who seek lower risk investments in the
most stable and mature real estate markets. In addition, we continue to strengthen our capabilities in
value-add, opportunistic and debt strategies to meet evolving client objectives.
Metrics: At the end of 2014, LaSalle had assets under management of $53.6 billion, an increase of
13% over 2013 while raising $8.9 billion of capital, the highest since 2007.
G5: Connections: Differentiate and Sustain the Organization by Connecting Across the Firm and with Clients
and other Stakeholders
Connecting. To create real value and new opportunities for our clients, shareholders and employees, we
regularly work to strengthen and fully leverage the links between our people, service lines and geographies to
better connect with our clients and put the Firm’s global expertise and experience to work for them. This
includes constantly striving to leverage use of the Internet and emerging social media to gather, analyze and
disseminate information that will be useful to our clients, employees, vendors and other constituencies.
Linking our operations effectively to make service delivery more efficient not only serves client needs, it also
contributes to our profitability and enhances our ability to identify and manage the enterprise risks inherent in
our business.
Differentiating and Sustaining. We also recognize that the value we deliver to our clients, shareholders,
employees and the global community closely relates to our Firm’s people, brand, ethics and technology. As a
professional services company, the focus on our people is paramount. Because our human capital contributes
strongly to high-quality client service, this includes a focus on areas such as: employee productivity; health,
safety and well-being; talent development and compensation; and diversity. Coupled with a strong brand and
high ethical standards, our active role as good corporate citizens enables our long-lasting presence. Our use of
technology to provide information to our clients and to improve the ability of our people play an undeniable
role in maximizing our clients’ real estate value, shaping our industry’s response to global challenges such as
market risk, climate change and urbanization. These values and culture help us embed sustainability principles
throughout the enterprise and successfully differentiate us from our competition, therefore ensuring we
continue our more than 250 year history.
Metrics: Our Employee Engagement Index, which measures the percentage of survey respondents
reporting high levels of engagement with the Firm and their work reached 73% as measured in 2012,
the last year we conducted a full survey.
10
We have committed resources to each of the G5 priorities in past years and expect to continue to do so in the
future. This strategy has helped us weather economic downturns, continue to grow market share, expand our
services by developing adjacent offerings and take advantage of new opportunities.
Our strategic review has validated the continued potential for our G5 priorities to drive the long-term
sustained growth of our firm and deliver real value to our clients. In order to derive the full advantage of that
potential, we recognize the need to accelerate the development of the G5 in order to meet the challenges of
our dynamic markets and the specific themes we have identified such as globalization and urbanization. We
will do this by targeting our efforts and capital resources to:
(cid:127) Deploy innovative technology that allows our people to mine the depth of our intellectual property in
order to provide the most sophisticated possible advice and service to our clients.
(cid:127) Apply best practices in human resources to supply our businesses with well-trained, engaged and diverse
employees and create an overall culture that serves to retain our top talent.
(cid:127) Promote an updated and modern brand that fully leverages our digital capabilities and clearly reflects the
breadth of our expertise, wisdom, governance and integrity.
(cid:127) Establish and standardize tools and processes that make our operations highly productive and minimize
losses from enterprise risk.
By continuing to invest in the future based on how our strengths can support the needs of our clients, we
intend to enhance our position as an industry leader. Although we have validated our fundamental business
strategies, each of our businesses continually re-evaluates how it can best serve our clients as their needs
change, as technologies and the application of technologies evolve and as real estate markets, credit markets,
economies and political environments exhibit changes, which in each case may be dramatic and unpredictable.
STRATEGY 2020: OUR FUTURE ORIENTATION
During the past four years, we have been conducting a significant internal process called our Strategy 2020
Project, which we designed to identify specific business and operational strategies that we believe will best
drive the continued success of the G5 priorities over the longer term. They include:
(cid:127) Employing an investment philosophy and filters that are focused on growth that will best meet client
needs and concentrate on the most lucrative potential services, markets and cities;
(cid:127) Establishing charters for internal business boards with responsibility for promoting more inter-connected
global approaches, where appropriate, to client services and delivery;
(cid:127) Using technology, including emerging digital, Internet and social media capabilities, to provide
information to clients to help them maximize the value of their real estate portfolios and to mine and
apply our knowledge to improve the ability of our people to provide superior client services;
(cid:127) Deploying additional tools and metrics that will make our people as productive and efficient as possible;
(cid:127) Determining how best to marshal, train, recruit, motivate and retain the human resources that will have
the skill sets, diversity and other abilities necessary to accomplish our strategic objectives;
(cid:127) Continuing to develop our brand and reputation for high quality client service, integrity and intimate local
and global market knowledge;
(cid:127) Building our brand in digital and social media channels; and
11
(cid:127) Continuing to promote best-in-class governance, compliance, enterprise risk management and professional
standards to operate a sustainable organization capable of meeting the significant challenges and risks
inherent in global markets and to minimize disruptions to, and distractions from, the accomplishment of
our corporate mission.
Viewed as complementary strategies, the G5 and Strategy 2020 work in combination to provide both short-
and long-term paths to sustained success for our Firm.
As a professional services organization, the principal capitals we deploy are (1) human resources enabled by
(2) intellectual property in the form of market knowledge, technology and innovation, and a reputation for
quality, expertise and integrity that is reflected by the strength of our brand and (3) financial resources. Our
2020 strategy review confirmed that the historical approach we have taken to our business should sustain us in
the future. We believe there is ample room for growth within our core markets and competencies without
having to resort to particularly different business lines to continue to grow and prosper as a business
organization. We will, however, maintain an open mind to moving into adjacent businesses where local teams
identify specific opportunities.
We also believe that our historical approach to growth through a combination of organic development of
talent and opportunistic acquisitions continues to be the best overall approach for us. Our business model has
natural risk mitigation benefits derived from the diversity of our geographic presence, asset classes served and
complementary service lines. This diversity also provides revenue streams that have both short-term
transactional and longer-term annuity characteristics.
During 2014, we devoted continued significant efforts and resources, including at a meeting of the senior
leaders from across our business, to implement our 2020 strategies and priorities through the deployment of
cross-functional workstreams that have engaged our leadership globally. We expect these workstreams to
continue for the foreseeable future and we have put a mechanism in place for both our Board of Directors
and our Global Executive Board to monitor and influence their progress on a regular basis.
Our Strategy 2020 Project identified certain particular challenges we will need to confront to successfully
implement its goals:
(cid:127) In terms of our financial capital, we recognize the challenge of maintaining healthy short-term profit
margins while continuing to invest in the further growth of the business. As there is constant fee pressure
from our clients that is inherent in a competitive professional services environment, we need to continue
to find additional ways to increase the productivity of our people so that we can drive higher revenue per
person. Additional productivity can be derived by improved application of technology, by continuous
process improvements and through increased staff well-being and training and development, among other
techniques.
(cid:127) In terms of our human capital, we recognize that our investments in talent will continue to be a primary
method of creating long-term value and that continuing business growth will necessitate the growth and
increased flexibility and diversity of our workforce. This can be a challenge, particularly in emerging
markets, where the available pool of talent does not necessarily have the skill sets we need. Consequently,
we may need to establish our own training programs beyond what is typically required for companies in
developed markets. Increased reliance on third-party suppliers may create challenges in terms of due
diligence, performance management and ensuring that third-party personnel have the same level of
commitment and integrity as we demand in our own people. In developed markets, the challenge of
growing a workforce with the requisite skill sets can be frustrated by the targeted efforts of competitors to
hire away our people, including sometimes by offering above-market compensation.
(cid:127) In terms of our intellectual capital, we recognize the challenge of continuing to identify innovations
through which we can provide increasingly valuable services to our clients, including as the result of
12
developing, identifying and successfully applying new technologies to our business processes. We also must
confront the challenges inherent in managing and mining the significant data in our systems so that it can
be made useful to our people and maximized in terms of our ability to analyze it in a sophisticated way
for the benefit of our clients. As we develop our intellectual capital, we need to make sure our brand,
and the awareness it generates in the marketplace, keeps pace with our capabilities and the messages we
want associated with them in the minds of current and prospective clients, employees and other third
parties in the business community and society at large.
Greater alignment with The International Framework
Building on the Strategy 2020 Project and as an important part of our Integrated Reporting approach, in 2014
we proceeded to identify and interrogate a number of additional medium- to long-term global megatrends
with the potential to impact materially upon our business. Using the ‘six capitals’ model advocated by the
International Integrated Reporting Council, this review encompassed a strong focus on non-financial trends, as
potential future challenges and opportunities were identified across all six capitals (financial, human,
intellectual, manufactured, social and natural).
While JLL is most heavily dependent on financial, human and intellectual capital in order to execute its own
operations, significant trends were identified with implications for our business across all six capitals.
Furthermore, changes in the availability of all six capitals’ stocks impact our clients’ businesses, and by
extension, our service provision. Through internal consultation, 21 trends were identified as being significant
for the business in the medium- to long-term. All of these ‘‘Global Trends’’ which we are tracking and/or
actively managing are illustrated in the table below. The ‘‘JLL Activities’’ which address these trends are
summarized in the table below primarily via a combination of references to (1) sections within Items 1 and 1A
in this Form 10-K and (2) resources we publish on our website where relevant points are discussed in more
detail.
13
Type of Capital
Global Trends
JLL Activities
Financial
Continued risk of financial crises
Maintaining our financial strength as a differentiator; Financial Risk Factors
Potential increase in disruptive market
cycles
Enterprise Risk Management; External Market Risk Factors
Enterprise Risk Management; External Market Risk Factors;
Financial Risk Factors
Shift towards emerging markets
G1: Build our Leading Local and Regional Service Operations
Regulatory reform in banking & other
sectors
Growth increasingly dependent on
productivity gains
Global push against tax avoidance
Changing demographics affects
workplace profiles
Growing importance of technology in
the workplace
Strategy 2020 focus on potential growth markets and cities
Enterprise Risk Management; Internal Operational Risk Factors
Strategy 2020 focus on productivity
Enterprise Risk Management; External Market Risk Factors; Financial Risk
Factors
Enterprise Risk Management; Human Resource Risk Factors
G5: Connections
Strategy 2020
Human
Internal HR programs for data & technology and social media
Evolving leadership needs
Leadership pipeline development program
Diversity is equated with ‘‘good
business’’
Strategy 2020
Sustainability Report 2013 (on our website)
Diversity and Inclusion Report (on our website)
Increased risk of cyber-attacks and
data theft
Enterprise Risk Management; Internal Operational Risk Factors
Intellectual
Intellectual capital becomes
increasingly disseminated
Digital technology transforms how
people live and work
Urbanization trends, including rapid
urbanization and ‘megacities’
Manufactured
Changing levels of demand for
different types of real estate
Strategy 2020 focus on technology, digital and social media
Enterprise Risk Management; Internal Operational Risk Factors
Strategy 2020 focus on technology, digital and social media
G1: Build our Leading Local and Regional Service Operations
Strategy 2020 focus on potential growth markets and cities
JLL Cities Research Centre (on our website)
Strategy 2020 focus on most lucrative potential services
JLL Research
Expansion of the global investable
real estate universe
G3: Capture the Leading Share of Global Capital Flows for Investment
Sales
Unprecedented levels of transparency
Code of Business Ethics and Corporate Sustainability
G4: Strengthen LaSalle Investment Management’s Leadership Position
Increasing political instability and
conflict
Businesses need to demonstrate social
contribution
Transparency Report 2013 (on our website)
Enterprise Risk Management; External Market Risk Factors
Enterprise Risk Management; External Market Risk Factors
Sustainability Report 2013 (on our website)
Increase in extreme weather events
Enterprise Risk Management; External Market Risk Factors
Natural resources in increasingly short
supply
Global Sustainability & Cities Research
Enterprise Risk Management; Internal Operational Risk Factors
Sustainability Report 2013 (on our website)
Social
Natural
14
SUSTAINING OUR ENTERPRISE: A BUSINESS MODEL THAT COMBINES CAPITALS TO CREATE
STAKEHOLDER VALUE
We have designed our business model to (1) create value for our clients, shareholders and employees and
(2) establish high-quality relationships with the suppliers we engage and the communities in which we operate.
Our synergistic approach seeks to derive business benefits from the application and intersection primarily of
human resources, financial and intellectual capital and technology. Based on our intimate knowledge of local
real estate and capital markets worldwide, as well as our investments in thought leadership and technology, we
create value for clients by addressing their real estate needs as well as their broader business, strategic,
operating and longer-term sustainability goals. Given the increasingly global and interconnected marketplace
in which many of our clients compete, our own capacity to deliver global solutions has also become
increasingly important to our business model.
We strive to create a healthy and dynamic balance between (1) activities that will produce short-term value
and returns for our stakeholders through effective management of current transactions and business activities
and (2) investments in people (such as new hires), acquisitions, technologies and systems designed to produce
sustainable returns over the longer term.
Our financial strength and our reputation for integrity, strong governance and transparency, which we believe
are among the strongest in the industry, give our clients confidence in our long-term ability to meet our
obligations to them.
We apply our business model to the resources and capitals that we employ to provide services to assets owned
or occupied by our clients. We provide these services through our own employees and, where necessary or
appropriate in the case of property and facility management and project and development services, the
management of third-party contractors. The revenue and profits we earn from those efforts are divided
between further investments in our business, employee compensation and returns to our shareholders. We are
increasingly focused on linking our business and sustainability strategies to promote the goal of creating long-
term value for our shareholders, clients, employees and the global community of which our firm is part. These
efforts help our clients manage their real estate more effectively and efficiently, promote employment globally
and create wealth for our shareholders and employees. In turn, they allow us to be an increasingly impactful
member of, and positive force within, the communities in which we operate. The following reflects a holistic
picture of the inter-relatedness and dependencies of the different factors that constitute our business model
and affect our ability to create value over time.
15
How we create value
our business model
WHAT WE NEED
(cid:127) Financial resources
(cid:127) Client relationships and connectivity
(cid:127) Skilled and diverse people
(cid:127) Intelligence, brand and IT
(cid:127) Buildings and infrastructure
(cid:127) Market, political and social stability
(cid:127) Stable natural environment
WHAT WE CONTRIBUTE
(cid:127) Consistent, high returns for shareholders
(cid:127) Long-term relationships with clients
(cid:127) Diverse and talented employees
(cid:127) Enhanced intelligence, brand and IT
(cid:127) New and improved buildings and
infrastructure
(cid:127) Impacts on employment, education and
wealth distribution
(cid:127) Conserving and depleting the natural
environment
What makes JLL unique:
Real value in a changing world
G5 Strategy 2020
HOW WE DO IT
(cid:127) Client relationship management
(cid:127) Integrated global business model
(cid:127) Industry-leading research
(cid:127) Trustworthy worldwide service
(cid:127) Innovation and technology
(cid:127) Local market knowledge
(cid:127) Strong brand and reputation
(cid:127) Strong financial position
(cid:127) Internal governance & enterprise
risk management
(cid:127) High staff engagement levels
(cid:127) Sustainability leadership
WHAT WE DO FOR CLIENTS
(cid:127) Leasing
(cid:127) Capital Markets
(cid:127) Property & Facility Management
(cid:127) Project Management and Development
(cid:127) Advisory and Consulting
(cid:127) Investment Management
Aligning with the International Framework:
Inputs = What we need
Business activities = How we do it
Outputs = What we do for clients
Outcomes = What we contribute
6APR201518062910
This diagram summarizes how we create value for our shareholders and our broader stakeholders. It starts
with the capital resources — or inputs — that we need to do business. We use these resources to deliver
services — or outputs — for our clients through a number of business activities that we closely manage.
The resources we use are broadly comparable to many other professional services firms globally. However,
what makes JLL unique is that we provide real value in a changing world: both through the implementation of
our G5 business strategy and the medium-term Strategy 2020 to future-proof our business model.
16
Finally, there are outcomes of our business model, which can be both positive and negative. We realize that
these outcomes will eventually become our resources once again, so our business model is designed in a way
that keeps our impact low and our influence on quality resources high. Ultimately, this business model shows
how we seek to derive long-term profit by the sustainable use of all resources.
BUSINESS SEGMENTS
We report our operations as four business segments. We manage our RES product offerings geographically as
(1) the Americas, (2) EMEA and (3) Asia Pacific, and we manage our investment management business
globally as (4) LaSalle.
There are significant risks inherent in conducting a global business. We describe these in detail below in
Item 1A, Risk Factors. Information regarding revenue and operating income or loss, attributable to each of
our segments, is included in ‘‘Segment Operating Results’’ within Item 7, ‘‘Management’s Discussion and
Analysis of Financial Condition and Results of Operations,’’ and within Note 3 of our Notes to Consolidated
Financial Statements. Information concerning the identifiable assets of each of our business segments is also
set forth in Note 3 of our Notes to Consolidated Financial Statements.
REAL ESTATE SERVICES: AMERICAS, EMEA AND ASIA PACIFIC
To address the needs of real estate owners and occupiers, we provide a full range of integrated property,
project management and transaction services locally, regionally and globally through our Americas, EMEA
and Asia Pacific operating segments. We organize our RES in five major product categories:
(cid:127) Leasing;
(cid:127) Capital Markets and Hotels;
(cid:127) Property and Facility Management;
(cid:127) Project and Development Services; and
(cid:127) Advisory, Consulting and Other Services.
17
Across these five broad RES categories, we leverage our deep real estate expertise and experience within the
Firm to provide innovative solutions for our clients. For the year ended December 31, 2014, we derived our
RES revenue from product categories and regional geographies as follows ($ in millions and showing change
from 2013 in local currency):
Americas
EMEA
Asia Pacific
Total RES
Leasing
$1,039.5
Capital Markets & Hotels
Property & Facility
Management - Fee
Gross Revenue
Project & Development
Services - Fee
Gross Revenue
Advisory, Consulting &
Other
$266.6
$454.3
$661.9
$222.7
$225.5
$125.6
19%
22%
13%
31%
20%
21%
10%
Total RES Operating
Fee Revenue
Total Gross Revenue
$295.2
9%
$205.3
23%
$411.8
23%
$141.9
(10%)
$236.9
$338.2
$139.6
$354.7
$232.7
21%
38%
18%
28%
13%
17%
$379.4
$523.6
$72.2
$129.1
$109.9
14%
24%
11%
45%
16%
$1,540.0
$820.3
$1,070.6
$1,523.7
$434.5
$709.3
$468.2
17%
15%
15%
30%
18%
29%
13%
16%
$2,108.7
18%
$1,316.2
$908.7
11%
$4,333.6
6APR201518063841
22%
Note: Segment and Consolidated Real Estate Services (‘‘RES’’) operating revenue exclude Equity earnings (losses). Fee revenue
presentation of Property & Facility Management, Project & Development Services and Total RES Operating Revenue excludes gross
contract costs.
$5,061.5
$1,109.8
$1,632.6
$2,319.1
19%
23%
22%
For Property & Facility Management, Project & Development Services and total RES revenue, the table
above shows ‘‘Fee Revenue,’’ or revenue net of vendor and subcontract costs that are included both in
revenue and expense (‘‘gross contract costs’’). We believe that excluding gross contract costs from revenue in
this presentation gives a more accurate picture of the revenue growth rates in these RES product categories.
18
RES Revenue Mix by Business Lines and Geographies
For the year ended December 31, 2014, our global total fee revenue of $4.7 billion was generated in the
following countries:
Americas (47%)
United States
43%
EMEA (31%)
Americas Other
4%
Other Europe
8%
Germany
France
4%
3%
15%
United Kingdom
2%
Other Asia
6%
Australia
Asia Pacific (22%)
7%
3%
2%
3%
Singapore
India
Japan
Greater
China
(incl. Hong
Kong)
6APR201518062601
In the Americas, our total RES operating revenue for the year ended December 31, 2014, was derived from
the following countries in the proportions indicated below:
United
States 92%
Other
Americas 1%
Canada 2%
Mexico 2%
8APR201516400527
Brazil 3%
19
In EMEA, our total RES operating revenue for the year ended December 31, 2014, was derived from the
following countries in the proportions indicated below:
U.K. 50%
Germany
12%
France 10%
Other
EMEA 8%
Central
Eastern
Europe 4%
Russia 3%
Spain 3%
Netherlands
3%
Belgium 2%
MENA 3%
Italy 2%
6APR201518062755
In Asia Pacific, our total RES operating revenue for the year ended December 31, 2014, was derived from the
following countries in the proportions indicated below:
Australia 29%
Greater China
(inc. Hong Kong)
34%
India 11%
Japan 9%
Singapore 7%
Other Asia 5%
New Zealand 2%
Thailand 3%
13APR201506532551
20
These product categories, and the services we provide within them, include:
1. Leasing Services
Agency Leasing Services executes marketing and leasing programs on behalf of investors, developers, property
companies and public entities to secure tenants, and negotiate leases with terms that reflect our clients’ best
interests. In 2014, we completed approximately 17,300 agency leasing transactions representing approximately
266 million square feet of space. We typically base our agency leasing fees on a percentage of the value of the
lease revenue commitment for consummated leases, although in some cases they are based on a dollar amount
per square foot.
Tenant Representation Services establishes strategic alliances with clients to deliver ongoing assistance to meet
their real estate needs and to help them evaluate and execute transactions to meet their occupancy
requirements. Tenant Representation Services is also an important component of our local market services.
We assist clients by defining space requirements, identifying suitable alternatives, recommending appropriate
occupancy solutions, and negotiating lease and ownership terms with landlords. We help our clients lower
their real estate costs, minimize real estate occupancy risks, improve occupancy control and flexibility, and
create more productive office environments. We employ a multi-disciplinary approach to develop occupancy
strategies linked to our clients’ core business objectives.
We determine Tenant Representation Services fees on a negotiated fee basis. In various markets, landlords
may be responsible for paying them. Fees sometimes reflect performance measures related to targets that we
and our clients establish prior to engagement or, in the case of strategic alliances, at future annual intervals.
We use quantitative and qualitative measurements to assess performance relative to these goals, and incentive
fees may be awarded for superior performance. In 2014, we completed approximately 16,200 tenant
representation transactions representing approximately 396 million square feet of space.
2. Property and Facility Management
Property Management Services provides on-site management services to real estate owners for office, industrial,
retail, multi-family residential and specialty properties. We seek to leverage our market share and buying
power to deliver superior service and value to clients. Our goal is to enhance our clients’ property values
through aggressive day-to-day management. We may provide services through our own employees or through
contracts with third-party providers. We focus on maintaining high levels of occupancy and tenant satisfaction
while lowering property operating costs. During 2014, we provided on-site property management services for
properties totaling approximately 2.3 billion square feet.
We typically provide property management services through an on-site general manager and staff. We support
them with regional supervisory teams and central resources in such areas as training, technical and
environmental services, accounting, marketing and human resources. Our general managers are responsible for
property management activities, client satisfaction and financial results. We do not compensate them with
commissions, but rather with a combination of base salary and a performance bonus that is directly linked to
results they produce for their clients. In some cases, management agreements provide for incentive
compensation relating to operating expense reductions, gross revenue or occupancy objectives or tenant
satisfaction levels. Consistent with industry custom, management contract terms typically range from one to
three years, although some contracts are terminable at will at any time following a short notice period, usually
90 to 120 days, as is typical in the industry.
Integrated Facility Management Services provides comprehensive portfolio and property management services to
corporations and institutions that outsource the management of the real estate they occupy. Properties under
management range from corporate headquarters to industrial complexes. During 2014, Integrated Facility
Management Services managed approximately 1.1 billion square feet of real estate for its clients. Our target
clients typically have large portfolios (usually over one million square feet) that offer significant opportunities
to reduce costs and improve service delivery. The competitive trends of globalization, outsourcing and
21
offshoring have prompted many of these clients to demand consistent service delivery worldwide and a single
point of contact from their real estate service providers. We generally develop performance measures to
quantify the progress we make toward goals and objectives that we have mutually determined. Depending on
client needs, our Integrated Facility Management Services units, either alone or partnering with other business
units to benefit from their particular expertise or local market knowledge, provide services that include
portfolio planning, property management, agency leasing, tenant representation, acquisition, finance,
disposition, project management, development management, energy and sustainability services and land
advisory services. We may provide services through our own employees or through contracts with third-party
providers (as to which we may act in a principal capacity or which we may hire as an agent for our clients).
Our Integrated Facility Management Services units are compensated on the basis of negotiated fees that we
typically structure to include a base fee and a performance bonus. We base performance bonus compensation
on a quantitative evaluation of progress toward performance measures and regularly scheduled client
satisfaction surveys. Integrated Facility Management Services agreements are typically three to five years in
duration, although some contracts are terminable at will upon a short notice period, usually 30 to 60 days, as
is typical in the industry.
We also provide Lease Administration and Auditing Services, helping clients centralize their lease management
processes. Whether clients have a small number of leases or a global portfolio, we assist them by reducing
costs associated with incorrect lease charges, right-sizing their portfolios through lease options, identifying
underutilized assets and ensuring regulatory compliance to mitigate risk.
In the United States, the United Kingdom and selected other countries, we provide Mobile Engineering Services
to clients with large portfolios of sites. Rather than using multiple vendors to perform facility services, these
companies hire JLL to provide HVAC, electrical and plumbing services, and general interior repair and
maintenance. Our multi-disciplined mobile engineers serve numerous clients in a specified geographic area,
performing multiple tasks in a single visit and taking ownership of the operational success of the sites they
service. This service delivery model reduces clients’ operating costs by bundling on-site services and reducing
travel time between sites.
3. Project and Development Services
Project and Development Services provides a variety of services to tenants of leased space, owners in self-
occupied buildings and owners of real estate investments. These include conversion management, move
management, construction management and strategic occupancy planning services. Project and Development
Services frequently manages relocation and build-out initiatives for clients of our Property Management
Services, Integrated Facility Management Services and Tenant Representation Services units. Project and
Development Services also manages all aspects of development and renovation of commercial projects for our
clients, serving as a general contractor in some cases. Additionally, we provide these services to public-sector
clients, particularly to military and government entities and educational institutions, primarily in the United
States and to a limited but growing extent in other countries.
Our Project and Development Services business is generally compensated on the basis of negotiated fees.
Client contracts are typically multi-year in duration and may govern a number of discrete projects, with
individual projects being completed in less than one year.
In EMEA, we provide fit-out and refurbishment services on a principal basis under the Tetris brand, which is
an outgrowth of a previous acquisition completed by our French business.
4. Capital Markets and Hotels
Capital Markets and Hotels Services includes property sales and acquisitions, real estate financings, private
equity placements, portfolio advisory activities and corporate finance advice and execution. We provide these
services with respect to substantially all types of properties. In the United States, we are a Freddie Mac
22
Program Plus(cid:3) Seller/Servicer and operate a multi-family lending and commercial loan servicing platform.
Real Estate Investment Banking Services includes sourcing capital, both in the form of equity and debt,
derivatives structuring and other traditional investment banking services designed to assist investor and
corporate clients in maximizing the value of their real estate. To meet client demands for marketing real estate
assets internationally and investing outside of their home markets, our Capital Markets Services teams
combine local market knowledge with our access to global capital sources to provide superior execution in
raising capital for real estate transactions. By researching, developing and introducing innovative new financial
products and strategies, Capital Markets Services is also integral to the business development efforts of our
other businesses.
Clients typically compensate Capital Markets Services units on the basis of the value of transactions completed
or securities placed. In certain circumstances, we receive retainer fees for portfolio advisory services. Real
Estate Investment Banking fees are generally transaction-specific and conditioned upon the successful
completion of the transaction.
We also deliver specialized Capital Markets Services for hotel and hospitality assets and portfolios on a global
basis including investment sales, mergers and acquisitions and financing. We provide services to assets that
span the hospitality spectrum: luxury properties; resorts; select service and budget hotels; golf courses; theme
parks; casinos; spas; and pubs.
We provide Value Recovery Services to owners, investors and occupiers to help them analyze the impact of a
possible financial downturn on their assets and identify solutions that allow them to respond decisively. In this
area, we address the operational and occupancy needs of banks and insurance companies that are merging
with or acquiring other institutions. We assist banks and insurance companies with challenged assets and
liabilities on their balance sheets by providing valuations, asset management, loan servicing and disposition
services. We provide receivership services and special asset servicing capabilities to lenders, loan servicers and
financial institutions that need help managing defaulted real estate assets. In addition, we provide valuation,
asset management and disposition services to government entities to maximize the value of owned securities
and assets acquired from failed financial institutions or from government relief programs. We also assist
owners by identifying potentially distressed properties and the major occupiers who are facing challenges.
5. Advisory, Consulting and Other Services
Valuation Services provides clients with professional valuation services and helps them determine market values
for office, retail, industrial and mixed-use properties. Such services may involve valuing a single property or a
global portfolio of multiple property types. We conduct valuations, which typically involve commercial
property, for a variety of purposes, including acquisitions, dispositions, debt and equity financings, mergers
and acquisitions, securities offerings (including initial public offerings) and privatization initiatives. Clients
include occupiers, investors and financing sources from the public and private sectors. For the most part, our
valuation specialists provide services outside of the United States. We usually negotiate compensation for
valuation services based on the scale and complexity of each assignment, and our fees typically relate in part
to the value of the underlying assets.
Consulting Services delivers innovative, results-driven real estate solutions that align strategically and tactically
with clients’ business objectives. We provide clients with specialized, value-added real estate consulting services
in such areas as mergers and acquisitions, occupier portfolio strategy, workplace solutions, location advisory,
financial optimization strategies, organizational strategy and Six Sigma process solutions. Our professionals
focus on translating global best practices into local real estate solutions, creating optimal financial and
operational results for our clients.
We also provide Advisory Services for hotels, including hotel valuations and appraisals, acquisition advice, asset
management, strategic planning, management contract negotiation, consulting, industry research and project
and development services for asset types spanning the hospitality spectrum.
23
We typically negotiate compensation for Consulting Services based on work plans developed for advisory
services that vary based on scope and complexity of projects. For transaction services, we generally base
compensation on the value of transactions that close.
We provide Energy and Sustainability Services to occupiers and investors to help them develop their corporate
sustainability strategies, green their real estate portfolios, reduce their energy consumption and carbon
footprint, upgrade building performance by managing Leadership in Energy and Environmental Design
(‘‘LEED’’) construction or retrofits and provide sustainable building operations management. We have more
than 1,500 energy and sustainability accredited professionals. Cumulatively, we have helped our U.S. clients
reduce greenhouse gas emissions by an estimated 11.9 million metric tons and saved them an estimated
$2.5 billion in energy costs from 2007-2013 (see jll.com/sustainability for details). In 2013 alone, we
documented $39 million in estimated energy savings for our U.S. clients and reduced their greenhouse gas
emissions by 220,000 tons. Our sustainability teams worked on a total of 1,852 buildings, a 33% increase
compared to 2012.
We generally negotiate compensation for Energy and Sustainability Services for each assignment based on the
scale and complexity of the project or shared savings.
LASALLE INVESTMENT MANAGEMENT
Our global real estate investment management business, a member of the JLL group that we operate under
the brand name of LaSalle Investment Management, has three priorities:
(cid:127) Deliver superior performance,
(cid:127) Develop and execute investment strategies that meet the specific investment objectives of our clients, and
(cid:127) Deliver uniformly high levels of service globally.
We provide investment management services to institutional and retail investors, including high-net-worth
individuals. We seek to establish and maintain relationships with sophisticated investors who value our global
platform and extensive local market knowledge. As of December 31, 2014, LaSalle managed $53.6 billion of
public real estate securities and private real estate assets, including debt and equity, making us one of the
world’s largest managers of institutional capital invested in real estate assets and securities.
LaSalle provides clients with a broad range of real estate investment products and services in the public and
private capital markets. We design these products and services to meet the differing strategic, risk/return and
liquidity requirements of individual clients. The range of investment alternatives includes private investments
in multiple real estate property types including office, retail, industrial, health care and multi-family
residential, as well as investments in debt. We act either through commingled investment funds or single client
account relationships (‘‘separate accounts’’). We also offer indirect public investments, primarily in publicly
traded real estate investment trusts (‘‘REITs’’) and other real estate equities.
24
The geographic distribution of LaSalle’s assets under management is as follows ($ in billions):
U.K.
$18.5
Public
Securities
$12.0
Continental
Europe
$4.5
Asia Pacific
$5.3
North
America
$13.3
Separate Accounts
Commingled Funds
Public Securities
Total Assets under Management
6APR201518063524
$29.7
11.9
12.0
$53.6
We believe the success of our investment management business comes from our investment performance,
industry-leading research capabilities, experienced investment professionals, innovative investment strategies,
global presence and coordinated platform, local market knowledge and strong client focus. We maintain an
extensive real estate research department whose dedicated professionals monitor real estate and capital
market conditions around the world to enhance current investment decisions and identify future opportunities.
In addition to drawing on public sources for information, LaSalle’s research department utilizes the extensive
local presence of JLL professionals throughout the world to gather and share proprietary insight into local
market conditions.
The investment and capital origination activities of our investment management business have become
increasingly global. We have invested in direct real estate assets in 19 countries across the globe, as well as in
public real estate companies traded on all major stock exchanges. We expect that cross-border investment
management activities, both fund raising and investing, will continue to grow.
Private Investments in Real Estate Properties (Separate Accounts and Fund Management)
In serving our investment management clients, LaSalle is responsible for the acquisition, management, leasing,
financing and divestiture of real estate investments across a broad range of real estate property types. LaSalle
launched its first institutional investment fund in 1979 and currently has a series of commingled investment
funds, including 12 funds that invest in assets in the Americas, 10 funds that invest in assets located in Europe
and seven funds that invest in assets in Asia Pacific. LaSalle also maintains separate account relationships with
investors for whom we manage private real estate investments.
LaSalle is the advisor to Jones Lang LaSalle Income Property Trust, Inc., a non-listed real estate investment
trust launched in 2012 that gives suitable individual investors access to a growing portfolio of diversified
commercial real estate investments.
25
As of December 31, 2014, LaSalle had approximately $41.6 billion in assets under management in commingled
funds and separate accounts.
Some investors prefer to partner with investment managers willing to co-invest their own funds to more
closely align the interests of the investor and the investment manager. We believe that our ability to co-invest
alongside the investments of clients’ funds will continue to be an important factor in maintaining and
continually improving our competitive position. We believe our co-investment strategy strengthens our ability
to raise capital for new real estate investments and real estate funds. At December 31, 2014, we had a total of
$297.1 million of investments in real estate ventures that are included in LaSalle’s $53.6 billion of assets under
management.
We may engage in merchant banking activities in appropriate circumstances. These involve making
investments of the Firm’s capital to acquire properties in order to seed investment management funds before
they have been offered to clients. Historically, we have done this substantially through investment vehicles
such as LaSalle Investment Company II (‘‘LIC II’’) as further described in Note 5, Investment in Real Estate
Ventures within the Notes to Consolidated Financial Statements. We may also provide investment capital
directly, as we have increasingly done more recently.
LaSalle conducts its operations with teams of professionals dedicated to achieving specific client objectives.
We establish investment committees within each region whose members have specialized knowledge applicable
to underlying investment strategies. These committees must approve all investment decisions to make private
market investments. We utilize the investment committee approval process for LaSalle’s investment funds and
for all separate account relationships.
LaSalle is generally compensated for investment management services for private equity investments based on
capital invested and managed (known as advisory fees), with additional fees (known as incentive fees) tied to
investment performance above benchmark levels. In some cases, LaSalle also receives fees tied to acquisitions.
The terms of contracts vary by the form of investment vehicle involved and the type of service we provide.
Our investment funds have various life spans, typically ranging between five and nine years, but in some cases
they are open-ended. Separate account advisory agreements generally have specific terms with ‘‘at will’’
termination provisions, and include fee arrangements that are linked to the market value of the assets under
management, plus in some cases incentive fees.
Investments in Public Equity
LaSalle also offers clients the ability to invest in separate accounts focused on public real estate equity. We
invest the capital of these clients principally in publicly traded securities of real estate investment trusts and
property company equities. As of December 31, 2014, LaSalle had approximately $12.0 billion of assets under
management in these types of investments. LaSalle is typically compensated by securities investment clients on
the basis of the market value of assets under management.
26
REVENUE SUMMARY
For the year ended December 31, 2014, we generated a total of $4.7 billion of fee revenue, meaning revenue
net of gross contract costs for vendor and subcontract costs that are included in revenue and expense, from
the following RES product categories and LaSalle:
Property & Facility Mgmt.
LaSalle Inv. Mgmt.
8%
Advisory &
Other
10%
23%
Project &
Development
Services
9%
17%
Capital Markets
33%
Leasing
6APR201518063064
COMPETITION
As the result of our significant growth over the previous decade, we are now one of the two largest real estate
services and investment management providers on a global basis. We believe that other similar global
providers are significantly smaller in terms of revenue than either of us. We believe that JLL’s geographic
reach, scope of services and scale of resources have become sufficient to provide substantially all of the
services our clients need, wherever they need them. To most effectively serve and retain current clients, and
win new clients, we strive to be the best firm in our industry.
Although there has been, and we expect will continue to be, consolidation within our industry, the totality of
real estate services constituting the industry remains very large and as a whole the provision of these services
remains highly diverse and fragmented. Accordingly, since we provide a broad range of commercial real estate
and investment management services across many geographies, we face significant competition at
international, regional and local levels. Depending on the service, we also face competition from other real
estate service providers, some of which may not traditionally be thought of as such, including institutional
lenders, insurance companies, investment banking firms, investment managers, accounting firms, technology
firms, firms providing outsourcing services of various types (including technology or building products) and
companies that self-provide their real estate services with in-house capabilities. While these competitors may
be global firms that claim to have service competencies similar to ours, many are local or regional firms
which, although substantially smaller in overall size, may be larger in a specific local or regional market.
COMPETITIVE DIFFERENTIATORS
We believe that the key value drivers we list below create several competitive differentiators. These form the
basis of our market positioning as the firm of choice for sophisticated clients seeking an integrated financial
and professional services firm specializing in real estate on a global basis.
27
Client Relationship Management. We support our ability to deliver superior service to our clients through our
ongoing investments in client relationship management and account management. Our goal is to provide each
client with a single point of contact at our firm, an individual who is answerable to, and accountable for, all
the activities we undertake for the client. We believe that we enhance superior client service through best
practices in client relationship management, the practice of seeking and acting on regular client feedback, and
recognizing each client’s own specific definition of excellence.
Our client-driven focus enables us to develop long-term relationships with real estate investors, occupiers and
developers. By developing these relationships, we are able to generate repeat business and create recurring
revenue sources. In many cases, we establish strategic alliances with clients whose ongoing service needs mesh
with our ability to deliver fully integrated real estate services across multiple business units and locations. We
support our relationship focus with an employee compensation and evaluation system designed to reward
client relationship building, teamwork and quality performance, in addition to revenue development.
Integrated Global Business Model. By combining a wide range of high-quality, complementary services and
delivering them at consistently high service levels globally through wholly-owned offices with directly employed
personnel, we develop and implement real estate strategies that meet the increasingly complex and
far-reaching needs of our clients. We also believe that we have secured an established business presence in the
world’s principal real estate markets, with the result that we can grow revenue without a proportionate
increase in infrastructure costs. With operations on six continents and over 230 corporate offices, we have
in-depth knowledge of local and regional markets and can provide a full range of real estate services around
the globe. This geographic coverage, combined with the ability and willingness of our people to communicate
and connect with each other across a common global platform, positions us to serve the needs of our
multinational clients and manage investment capital on a global basis. We anticipate that our cross-selling
potential across geographies and product lines will continue to develop new revenue sources for multiple
business units within JLL.
We also anticipate that over time we will continue to expand our service offerings that are complementary or
adjacent to our current offerings. An example would be providing services to multi-family residential real
estate that complements our current services to commercial clients seeking to develop multi-use properties
that encompass office, retail and residential space. Another example is that we have used our cross-border
capabilities to expand the brokerage business, acquired from King Sturge in 2011, of high-end residential
properties based in London.
Industry-Leading Research Capabilities. We invest in and rely on comprehensive top-down and bottom-up
research to support and guide the development of real estate and investment strategy for our clients. With
approximately 350 research professionals who gather data and cover market and economic conditions around
the world, we are an authority on the economics of commercial real estate. Research also plays a key role in
keeping colleagues throughout the organization attuned to important trends and changing conditions in world
markets. We facilitate the dissemination of this information to colleagues through our company-wide intranet.
We are also devising new approaches through technology, including the use of the Internet and social media
techniques, to make our research, services and property offerings more readily available to our people and our
clients.
We believe that our investments in research, technology, people and thought leadership position our Firm as a
leading innovator in our industry. Our various research initiatives investigate emerging trends to help us
anticipate future conditions and shape new services to benefit our clients. Professionals in our Consulting
Services practice identify and respond to shifting market and business trends to address changing client needs
and opportunities. LaSalle relies on our comprehensive understanding of global real estate and capital
markets to develop new investment products and services tailored to the specific investment goals and risk/
return objectives of our clients. We believe that our commitment to innovation and thought leadership in
sustainability helps us secure and maintain profitable long-term relationships with the clients we target: the
world’s leading real estate owners, occupiers, investors and developers.
28
Delivery of innovative solutions and consistent worldwide service (including through applications of technology). We
believe that our globally coordinated investments in research, technology, people, quality control and
innovation, combined with the fact that our offices are wholly-owned (rather than franchised) and our
professionals are directly employed, enable us to develop, share and continually evaluate best practices across
our global organization. As a result, we are able to deliver the same consistently high levels of client service
and operational excellence substantially wherever our clients’ real estate investment and services needs exist.
Based on our general industry knowledge and specific client feedback, we believe we are recognized as an
industry leader in technology. We possess the capability to provide sophisticated information technology
systems on a global basis to serve our clients and support our employees. For example, FutureView (sm), our
global portfolio optimization tool, allows corporate real estate teams with geographically diverse portfolios to
identify potential rent savings by comparing their lease obligations to our firm’s sophisticated local market
forecasts. OneView by JLL (sm), our client extranet technology, provides clients with detailed and
comprehensive insight into their portfolios, the markets in which they operate and the services we provide to
them.
Connect (sm), our intranet technology, offers our employees easy access to the Firm’s policies, news and
collective thinking regarding our experience, skills and best practices. We also have implemented globally
integrated systems for finance, human resources, and client relationship management, as well as securities
management and trading systems for our investment management business.
We expect that we will continue to seek and implement additional ways in which we can develop and deploy
technology platforms, use the Internet and employ social media techniques as business tools that will
proactively make our own services and the real estate properties we list on the Internet increasingly efficient
and useful to our constituencies and that will support our marketing and client development activities.
Maximizing Values of Real Estate Portfolios. To maximize the values of our real estate investments, LaSalle
capitalizes on its strategic research insights and local market knowledge to develop an integrated approach
that leads to innovative solutions and value enhancement. Our global strategic perspective allows us to assess
pricing trends for real estate and know which investors worldwide are investing actively. This gives us an
advantageous perspective on implementing buying and selling strategies. During hold periods, our local market
research allows us to assess the potential for cash flow enhancement in our clients’ assets based on an
informed opinion of rental-rate trends. When combined, these two perspectives provide us with an optimal
view that leads to timely execution and translates into superior investment performance.
Strong Brand and Reputation. In 2008, we introduced a new global brand positioning and visual identity to
further differentiate us from our competitors. Based on evidence provided by marketing surveys we have
commissioned, the extensive coverage we receive in top-tier business publications, the major awards we receive
in many categories of real estate, sustainability and ethics, as well as our significant, long-standing client
relationships, we believe that large corporations and institutional investors and occupiers of real estate
recognize JLL’s ability to reliably create value in changing market conditions. Our reputation is based on our
deep industry knowledge, excellence in service delivery, integrity and our global provision of high-quality,
professional real estate and investment management services. We believe that the combined strength of the
JLL and LaSalle brands represent a significant advantage when we pursue new business opportunities and is
also a major motivator for talented people to join us around the world.
During 2014, we introduced the more formal use of the name ‘‘JLL,’’ together with refreshed logos for both
JLL and LaSalle, across our businesses. The JLL name, which is also our New York Stock Exchange ticker
symbol, has been used informally for a number of years, and we will use it in co-existence with ‘‘Jones Lang
LaSalle,’’ which remains our legal name. Using the shorter JLL name represents its adaptation to different
communication styles in different countries, languages and channels, and especially the use of digital and
online channels for marketing and communications.
29
We believe we hold the necessary trademarks worldwide with respect to the ‘‘Jones Lang LaSalle,’’ ‘‘JLL’’ and
‘‘LaSalle Investment Management’’ names and the related logos, which we expect to continue to renew as
necessary. We have obtained the right to use the top level domain names of each of ‘‘.jll’’ and ‘‘.lasalle’’ from
the Internet Corporation for Assigned Names and Numbers (‘‘ICANN’’) and are in the process of negotiating
formal usage agreements, after which we will move toward implementation.
Financial Strength. We focus on maintaining financial performance metrics, particularly our leverage and
interest coverage ratios, that allow us to maintain investment grade financial ratings. We believe that
confidence in the financial strength of long-term service providers has become increasingly important to our
clients. We believe that clients are increasingly making financial strength an important criterion when they
select real estate service providers. Accordingly, our ability to present a superior financial condition
distinguishes us as we compete for business.
We also believe that our geographic dispersion and the range of our global service offerings diversify the
sources of our revenue, reducing the overall inherent volatility of operating a real estate services business.
This creates an additional measure of financial stability relative to other firms with more limited service
offerings or that are only local or regional and therefore must rely on the strength of fewer different markets
and services.
For a number of years, we have maintained investment grade ratings from S&P and Moody’s Investor
Services, Inc. In December 2014, S&P announced that it had raised JLL’s investment grade credit rating to
BBB from BBB(cid:5). JLL’s issuer and senior unsecured ratings from both S&P (BBB) and Moody’s Investors
Service (Baa2) are now aligned. Our primary source of credit is our unsecured credit facility (the ‘‘Facility’’)
provided by an international syndicate of banks, which as of December 31, 2014 had a borrowing capacity of
$1.2 billion and a maturity date of October 2018. Subsequent to December 31, 2014, we amended and
expanded the Facility; refer to Note 15, Subsequent Events, within the Notes to Consolidated Financial
Statements for additional discussion. During 2012, both to diversify our sources of credit and take advantage
of historically low interest rates, we issued $275.0 million of long-term senior notes with a ten-year maturity
and a fixed interest rate of 4.4% per annum.
Employee Engagement. As a business whose primary asset is the expertise and capabilities of its people, it is
important to periodically measure and evaluate the level of our employee engagement, their performance
enablement, as defined below, and the effectiveness of our managers. We conducted our most recent
comprehensive survey in full during the summer of 2012 and an abbreviated update survey during 2013. For
both of those surveys, we used an outside provider to conduct the study and then assist us in evaluating the
results.
Using our outside provider’s definitions:
(cid:127) Employee engagement means the extent to which employees are motivated to contribute to organizational
success and are willing to apply discretionary effort to accomplishing tasks important to the achievement
of organizational goals;
(cid:127) Performance enablement means the extent to which an organization is committed to high levels of
customer service and relies upon continuous improvement practices to achieve superior organizational
results; and
(cid:127) Manager effectiveness means the extent to which supervisors are leaders, capable of facilitating team
performance through effectively managing both the tasks and responsibilities as well as facilitating
teamwork and interpersonal relationships.
Our results indicated that our people reported an overall higher level of engagement, performance
enablement and manager effectiveness than the global norms. In all cases, our top quartile of most engaged
employees demonstrated significantly higher results than the top quartile of the global norms. Our Employee
Engagement Index, which measures the percentage of survey respondents reporting high levels of engagement
with the Firm and their work here reached 73% as measured in 2012, our most recent engagement survey.
30
While we were pleased with the results, we are developing and intend to implement various actions to address
specific areas where the data indicated room for improvement or possible concerns. For example, while
engagement for new hires increased, scores for our most tenured employees declined. Additionally, we
recognize that our communication and response to survey feedback could improve. In any event, we believe
that the quality of our people, and their commitment to our organization and to providing a high level of
service to our clients, provides us with an important differentiator within the markets in which we operate.
In our 2013 update survey, 81% of respondents either agreed or strongly agreed that, ‘‘Overall, I am
extremely satisfied with this company as a place to work.’’ This was up 6% from the previous year and 10%
above the global norm measured by our outside provider.
Strong governance, enterprise risk management and integrity. Our overlapping and communicative senior
management and Board of Directors structure promotes an environment of best practices in corporate
governance and controls. We believe that these attributes allow us to infuse a culture of internal
communication and connectivity throughout the organization that is unparalleled in our industry.
Successful management of any organization’s enterprise risks is critical to its long-term viability. We seek to
promote, operate and continually improve a globally integrated enterprise risk management model that
optimizes our overall risk/reward profile through the coordinated and sophisticated interaction of business and
corporate staff functions.
Related to our governance and enterprise risk management efforts, we believe in uncompromising integrity
and the highest ethical conduct. We are proud of the global reputation we have earned and are determined to
protect and enhance it. The integrity our brand represents is one of our most valuable assets and a strong
differentiator for our company.
Sustainability leadership. We have over 180 professionals dedicated to sustainability services for our clients.
Beyond this, we are increasingly integrating sustainability into our own operations as well as the core real
estate services we deliver across the Firm. An example is the sustainability experts in Project and
Development Services who manage green building certifications and the creation of central sustainability roles
to embed sustainability throughout the advice we give. Another example is the efforts that LaSalle is making
to solidify its leadership role in responsible investing and sustainable best practices with the assets it acquires
and manages for clients. Our overall leadership in sustainability is evidenced by our significant thought
leadership, technology, awards and industry involvement.
With sustainability as a key focus, we invest heavily in our research and thought leadership to guide our
clients’ real estate investment and occupation strategies. We continue to develop influential sustainability
research that supports our clients and contributes to the wider industry. Our global publications serve as good
examples of our progress, including the Global Sustainability Perspective, the Real Estate Sustainability
Transparency Index and the Green Blog. We also maintain partnerships with nearly 50 sustainability
organizations and initiatives to further our own and our clients’ sustainability commitments. These include
global efforts such as the World Green Building Council as well as numerous local green building councils.
In our Energy and Sustainability Services business, we have developed industry leading technology platforms
designed to help our clients reduce their environmental footprint and energy costs: (1) OneView Energy and
Sustainability Analytics help us manage an ever-increasing volume of sustainability data on behalf of our
clients around the globe; (2) Portfolio Energy and Environmental Reporting System, (‘‘PEERS’’) provides a
web-based platform for ongoing energy and environmental measurement and reporting including carbon
footprint assessment; (3) Environmental Sustainability Platform is a real-time metering and monitoring
program that enables on-line, real-time monitoring of building energy consumption; and (4) IntelliCommand is
a powerful platform that combines smart technology with building operations expertise and execution to
provide 24/7 real-time remote monitoring and control of facilities. These demonstrate our global expertise in
the provision of technology solutions and advance our role in addressing such global challenges and
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opportunities as climate change and smart buildings. Using our proprietary sustainability platforms, we helped
our clients measure and improve their environmental impact in approximately 126,000 buildings as of 2013.
Our sustainability consulting services benefit a wide range of clients including, for example, Leasing clients
who commission green leases, green interior design and green assessments of prospective buildings; Capital
Markets and Investment Management clients who want green building valuation assessments; and Project and
Development Services clients who request retrofits to existing buildings.
INDUSTRY TRENDS
Since 2010, commercial real estate markets have broadly recovered around the world, although at different
speeds and different levels of strength. As indicated by the Property Clocks (sm) published by JLL’s research
team and provided below, commercial values in most markets continued to rise through 2014, though at
varying rates of growth.
Leasing Values
as of Q4 2014
as of Q4 2014
Capital Values
Hong Kong, Toronto
Mexico City, Shanghai
Toronto, Johannesburg
Singapore, Houston
Shanghai, Washington DC, Mexico City
Berlin, Boston, Los Angeles
Frankfurt, Chicago
Berlin, Frankfurt
Singapore, Houston
San Francisco
Dallas
Beijing
Hong Kong
London
Stockholm, Tokyo
New York
Boston, Los Angeles
Rental Value
growth slowing
Rental Values
falling
Rental Value
growth
accelerating
Rental Values
bottoming
out
Mumbai
Chicago
Amsterdam, Madrid, Dubai, Milan
Paris, Sydney
Brussels, Istanbul
Seoul, Washington DC
Moscow
Sydney, New York,
San Francisco
Dallas
Tokyo, Beijing
London, Stockholm,
Seoul
Paris
Amsterdam
Mumbai, Madrid
Capital Value
growth slowing
Capital Values
falling
Capital Value
growth
accelerating
Capital Values
bottoming
out
Moscow
Sao Paulo
Sao Paulo
Brussels
Milan
Asia Pacific
EMEA
Americas
Based on rents for Grade A space in CBD or equivalent.
US positions relate to the overall market
Source: JLL Research, January 2015
31MAR201510032504
32
Global capital flows for investment sales by region, below, indicate that volumes have continued to expand
since they reached their lowest levels in the wake of the global financial crisis. However, market dynamics
reflect contrasting conditions between the capital markets and the leasing markets. The strong capital markets
have been supported by globally low interest rates, which have been encouraged by the so-called ‘‘quantitative
easing’’ by the U.S. Federal Reserve Bank.
Capital Markets
Americas
EMEA
Asia Pacific
Total
FY 2014 v. FY 2013
Market Volumes
25%
25%
3%
20%
6APR201518062284
On the other hand, the leasing markets have been flatter since corporations have remained financially
cautious in terms of commitments to space expansions and have also been focused on space optimization as a
means to control cost and improve productivity.
Leasing
Americas (U.S. only)
EMEA (Europe only)
Asia Pacific (select markets)
Total
FY 2014 v. FY 2013
Gross Absorption
-5%
6%
16%
Flat
6APR201518063680
We define market volumes for Leasing as gross absorption of office real estate space in square meters for the
United States, Europe and selected markets in Asia Pacific. We define market volumes for Capital Markets as
the US dollar equivalent value of investment sales transactions globally in the office, retail, industrial, hotels,
mixed-use and certain other asset classes (excluding entity-level transactions, development deals and multi-
family residential investment), for individual property assets or portfolios of assets with a value above
$5 million. Our research professionals aggregate this market volume information from a number of sources
globally and make it publicly available through the quarterly publication of our Global Market Perspective
reports. In assessing our market share performance, we compare our own Leasing and Capital Markets
revenue performance to the market volume performance in a region or globally to determine whether we are
growing faster than the overall market.
During 2011 and 2012, additional uncertainty was injected into the markets by the political and economic
challenges that arose within the European Union, particularly as they influenced the credit quality of
sovereign bonds issued by various European countries and the stability and liquidity of European banks. These
pressures seemed to abate somewhat during 2013, but later in 2014 there have been indications of renewed
weakness in the Eurozone as currencies have fallen and deflation concerns have surfaced. Significant negative
developments occurred during 2014 in the relationship between Russia, on the one hand, and the United
States and European countries on the other, with sanctions being applied to trade with Russia and no clear
path to any resolution in the foreseeable future. In late 2014, oil prices began to reduce significantly, which
has put pressure on economies, such as Russia’s, that rely on oil sales. Unemployment has continued to
improve steadily in the United States, although wages have not improved commensurately. Interest rates
remained very low in the United States and the equity markets were strong throughout 2014. Political change
and uncertainty, combined with slower than previous growth, also have led to questions that largely remained
during 2014 about the ability of certain countries in Asia, particularly China and India, to continue to develop
at historical rates, with India showing signs of recovery with a more pro-business government now in place.
33
Conditions in the Middle East remained unstable, or in some cases worsened, during 2014, and lower oil
prices added uncertainty to the picture toward the end of 2014. Commercial interests in the business potential
of the more stable African countries appeared to continue to expand during 2014, although the Ebola
outbreak caused severe concerns in affected countries.
Increasing Demand for Global Services and Globalization of Capital Flows. Many corporations have continued to
pursue growth opportunities in international markets. Many are striving to control costs by outsourcing or
off-shoring non-core business activities. Both trends have increased the demand for global real estate services,
including facility management, tenant representation and leasing, and property and energy management
services. We believe that these trends will favor real estate service providers with the capability to provide
services — and consistently high service levels — in multiple markets around the world. The highly
competitive marketplace for the services we provide, combined with financial pressures experienced by certain
of our competitors have, however, continued to put negative pressure on fees within some of our service lines.
Additionally, real estate capital flows have become increasingly global, as more assets are marketed
internationally and as more investors seek real estate investment opportunities beyond their own borders. This
trend has created new opportunities for investment managers equipped to facilitate international real estate
capital flows and execute cross-border real estate transactions. One example we have seen in particular is that
London residential real estate has become a type of ‘‘reserve currency’’ for wealthy individuals from other
countries who are seeking stability in their investment holdings, which we expect to continue as uncertainty
increases within Russia and the Middle East.
Growth of Outsourcing. In recent years, outsourcing of professional real estate services has increased
substantially, as corporations focused corporate resources on core competencies. Although some continue to
unbundle and separate the sources of their real estate services, large users of commercial real estate services
continue to demonstrate an overall preference for working with single-source service providers able to operate
locally, regionally and globally. The ability to offer a full range of services on this scale requires significant
infrastructure investment, including information technology applications and personnel training. Smaller
regional and local real estate service firms, with limited resources, are less able to make such investments. In
addition, public and other non-corporate users of real estate, including government agencies and health and
educational institutions, have begun to outsource real estate activities as a means of reducing costs. As a
result, we believe there continues to be significant growth opportunities for firms like ours that can provide
integrated real estate services across many geographic markets.
34
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1APR201517575087
In 2014, our Corporate Solutions business has continued to expand its client base as follows:
2014 JLL Client Wins
Large Corporations
Middle Market
Wins
58
Expansions
53
Renewals
22
Wins
61
1APR201517574498
Alignment of Interests of Investors and Investment Managers. Institutional investors continue to allocate
significant portions of their investment capital to real estate. Many investors have shown a desire to commit
their capital to investment managers willing to co-invest their own capital in specific real estate investments or
real estate funds. In addition, investors are increasingly requiring that fees paid to investment managers be
more closely aligned with investment performance. As a result, we believe that investment managers with
co-investment capital, such as LaSalle, will have an advantage in attracting real estate investment capital. In
addition, co-investment may bring the opportunity to provide additional services related to the acquisition,
financing, property management, leasing and disposition of such investments.
We expect institutional capital to continue to flow into real estate as many institutional funds are currently
under-allocated to real estate as an asset class and as interest rates have remained at historically low levels.
We are also seeing institutional investors begin to consolidate their real estate portfolios, moving away from
the spread of smaller managers assembled over the last cycle to larger managers such as LaSalle.
35
Industry Consolidation and Other Trends. We believe that consolidation in our industry will continue as the
larger, more financially and operationally stable companies gain market share and become increasingly capable
of servicing the needs of global clients. We also believe that developed countries will be favored for new
investment as the risk appetite of investors remains conservative. Additionally, selecting service providers with
the best reputation for sustainability leadership, governance, enterprise risk management and ethics will
become increasingly important. Operators and investors seeking efficiencies from developing their supply
chains will want to avoid the significant potential costs and reputational issues associated with compliance
missteps, such as violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or anti-money
laundering regulations.
EMPLOYEES
With the help of aggressive goal setting and performance measurement systems and training, we attempt to
instill in all our people the commitment to be the best in the industry. Our goal is to be the real estate
advisor of choice for clients and the employer of choice in our industry. To achieve that, we intend to continue
to promote human resources techniques that will attract, motivate and retain high quality employees. The
following table details our respective headcount at December 31, 2014 and 2013 (rounded to the nearest
hundred):
Professional non reimbursable employees
Directly reimbursable employees
Total employees
2014
24,800
33,300
58,100
2013
21,900
30,800
52,700
Reimbursable employees include our property and integrated facility management professionals and our
building maintenance employees. The cost of these employees is generally reimbursable by our clients. Our
employees are not members of any labor unions, with the exception of approximately 1,400 directly
reimbursable property maintenance employees in the United States. Approximately 40,800 and 36,700 of our
employees at December 31, 2014 and 2013, respectively, were based in countries other than the United States.
INTELLECTUAL PROPERTY
We regard our technology and other intellectual property, including our brands, as a critical part of our
business.
We hold various trademarks, trade dress and trade names and rely on a combination of patent, copyright,
trademark, service mark, and trade secret laws, as well as contractual restrictions to establish and protect our
proprietary rights. We own numerous domain names, have registered numerous trademarks, and have filed
applications for the registration of a number of our other trademarks and service marks in the United States
and in foreign countries.
Consistent with our belief that we are recognized as an industry leader in technology as discussed above, we
currently have a patented process in the United States for a ‘‘System and Method for Evaluating Real Estate
Financing Structures’’ that assists clients with determining the optimal financing structure for controlling their
real estate assets, including, for example, whether a client should own a particular asset, lease the asset, or
control the asset by means of some other financing structure. We also have a number of pending United
States patent applications to further enable us to provide high levels of client service and operational
excellence. We will continue to file additional patent applications on new inventions, as appropriate,
demonstrating our commitment to technology and innovation.
36
Although we believe our intellectual property plays a role in maintaining our competitive position in a number
of the markets that we serve, we do not believe we would be materially adversely affected by the expiration or
termination of our trademarks or trade names or the loss of any of our other intellectual property rights other
than the ‘‘JLL,’’ ‘‘Jones Lang LaSalle’’ and ‘‘LaSalle Investment Management’’ names, and our Design (Three
Circles) mark that is also trademarked. Our trademark registrations have to be renewed every ten years.
Based on our most recent trademark registrations, the JLL mark would expire in 2024, while the Jones Lang
LaSalle name would expire in 2022 and the Design (Three Circles) mark would expire in 2021. Our LaSalle
Investment Management mark would expire in 2015 if we failed to renew it. Since these intellectual property
rights are important to us, our intention is to renew these trademark registrations when the appropriate time
comes.
CORPORATE GOVERNANCE; CODE OF BUSINESS ETHICS; CORPORATE SUSTAINABILITY AND
RELATED MATTERS
We are committed to the values of effective corporate governance, operating our business to the highest
ethical standards and conducting ourselves in an environmentally and socially responsible manner. We believe
that these values promote the best long-term performance of the Company for the benefit of our
shareholders, clients, staff and other constituencies.
Corporate Governance. We believe our policies and practices reflect corporate governance initiatives that
comply with:
(cid:127) The listing requirements of the New York Stock Exchange (‘‘NYSE’’), on which our Common Stock is
traded;
(cid:127) The corporate governance requirements of the Sarbanes-Oxley Act of 2002, as currently in effect;
(cid:127) U.S. Securities and Exchange Commission (‘‘SEC’’) regulations;
(cid:127) The Dodd-Frank Wall Street Reform and Consumer Protection Act, as currently in effect; and
(cid:127) The General Corporation Law of the State of Maryland, where Jones Lang LaSalle is incorporated.
Our Board of Directors regularly reviews corporate governance developments and modifies our By-Laws,
Guidelines and Committee Charters accordingly. As a result, over the past years we have adopted the
following corporate governance policies and approaches that are considered to be best practices in corporate
governance:
(cid:127) Annual elections of all members of our Board of Directors;
(cid:127) Annual ‘‘say on pay’’ votes by shareholders with respect to executive compensation;
(cid:127) Right of shareholders owning 30% of the outstanding shares of our Common Stock to call a special
meeting of shareholders for any purpose;
(cid:127) Majority voting in Director elections;
(cid:127) Separation of Chairman and CEO roles, with the Chairman serving as Lead Independent Director;
(cid:127) Required approval by the Nominating and Governance Committee of any related-party transactions;
(cid:127) Executive session among the Non-Executive Directors at each in-person meeting;
(cid:127) Annual self-assessment by the Board of Directors and each of its Committees; and
(cid:127) Annual assessment by the Company’s senior executive management of the operation of the Board of
Directors.
Code of Business Ethics. The ethics principles that guide our operations globally are embodied in our Code of
Business Ethics, which applies to all employees of the Company, including our Chief Executive Officer, Chief
37
Financial Officer, Global Controller and the members of our Board of Directors. The Code of Business Ethics
is the cornerstone of our Ethics Everywhere Program, by which we establish, communicate and monitor the
overall elements of our efforts. We are proud of, and are determined to protect and enhance, the global
reputation we have established since, in a service business such as ours, the integrity that our brand represents
is one of our most valuable assets. For a number of years we have applied for and received Ethics InsideTM
certification from NYSE Governance Services, a leading organization dedicated to best practices in ethics,
compliance, corporate governance and citizenship. We believe it is the only available independent verification
of a company’s ethics program. In 2014, for the seventh consecutive year, we were also named to Ethisphere’s
list of the World’s Most Ethical Companies.
We support the principles of the United Nations Global Compact, the United Nations Principles of
Responsible Investing and, given that our clients include a number of the major companies within the
electronic industry, the Electronic Industry Code of Conduct. We are also a member of the Partnering Against
Corruption Initiative sponsored by the World Economic Forum.
Vendor Code of Conduct. JLL expects that each of its vendors, meaning any firm or individual providing a
product or service to JLL or indirectly to our clients as a contractor or subcontractor, will share and embrace
the letter and spirit of our commitment to integrity. While vendors are independent entities, their business
practices may significantly reflect upon us, our reputation and our brand. Accordingly, we expect all vendors
to adhere to the JLL Vendor Code of Conduct, which we publish in multiple languages on our website,
www.jll.com. We continue to evaluate and implement new ways to monitor the quality and integrity of our
supply chain, including developing means by which we can efficiently survey and compare responses about the
ethical environment and riskiness of current and potential suppliers that we engage both for our own firm and
on behalf of clients.
Corporate Sustainability. We encourage and promote the principles of sustainability everywhere we operate,
seeking to improve the communities and environment in which our people work and live. We design our
corporate policies to reflect the highest standards of corporate governance and transparency, and we hold
ourselves responsible for our social, environmental and economic performance. These priorities guide the
interactions we have with our shareholders, clients, employees, regulators and vendors, as well as with all
others with whom we come into contact. We pursue our vision to lead the transformation of the real estate
industry by making a positive impact both in and beyond our business.
We also work to foster an environment that values the richness of our differences and reflects the diverse
world in which we live and work. By cultivating a dynamic mix of people and ideas, we enrich our Firm’s
performance, the communities in which we operate and the lives of our employees. We seek to recruit a
diverse workforce, develop and promote exceptional talent from diverse backgrounds and embrace the varied
experiences of all our employees.
Corporate Political Activities. Given the diversity of the Company’s clients, shareholders, staff and other
constituencies, the general approach of the Company is to not take positions as an organization on social or
political issues or on political campaigns. Accordingly, our use of corporate funds or other resources for
political activities has been negligible. From time to time, the Company may comment on proposed legislation
or regulations that directly affect our business interests and therefore the interests of our shareholders.
Conflicts Minerals. Since we are not a manufacturer, nor do we contract to manufacture, we do not believe
that we engage in the purchase or procurement of conflicts minerals, either for ourselves or our clients.
COMPANY WEBSITE AND AVAILABLE INFORMATION
JLL’s Website address is www.jll.com. On the Investor Relations page on our website, we make available, free
of charge, as soon as reasonably practicable after they are electronically filed with or furnished to the
Securities and Exchange Commission, or SEC: our Annual Report on Form 10-K, our Proxy Statement on
38
Schedule14A, Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, and any amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
or the Exchange Act. You also may read and copy any document we file with the SEC at its public reference
room at 100 F Street, NE, Washington, D.C. 20549. Information about its public reference room can be
obtained by calling the SEC at 1.800.SEC.0330. The SEC maintains an Internet site that contains annual,
quarterly and current reports, proxy statements and other information that we file electronically with the SEC.
The SEC’s Website address is www.sec.gov.
Our Website includes information about our corporate governance. We will also make the following materials
available in print to any shareholder who requests them in writing from our Corporate Secretary at the
address of our principal executive office set forth on the cover page of this 10-K report:
6APR201518064054
(cid:127) Code of Business Ethics;
(cid:127) Vendor Code of Conduct;
(cid:127) Bylaws;
(cid:127) Corporate Governance Guidelines;
(cid:127) Charters for our Audit, Compensation, and Nominating and Governance Committees;
(cid:127) Statement of Qualifications for Members of the Board of Directors;
(cid:127) Complaint Procedures for Accounting and Auditing Matters; and
(cid:127) Statements of Beneficial Ownership of our Equity Securities by our Directors and Officers.
JLL intends to post on its website any amendment or waiver of the Code of Business Ethics with respect to a
member of our Board of Directors or any of the executive officers named in our proxy statement.
Our Sustainability Report is available at www.jll.com/sustainability. Our latest report documents the Firm’s
achievements and challenges within both our services and operations. We take this seriously and are on a
journey to embed sustainability deeply into our business. The report demonstrates how our approach aligns
with our clients, adds value for shareholders and benefits our workforce and the wider community. We
support five key sustainability focus areas: energy and resources; green buildings; client service excellence;
community and supply chain; and workplace well-being and diversity. We adhere to best practice standards,
including CDP (formerly the Carbon Disclosure Project), the Global Reporting Initiative G4 and the
International Integrated Reporting Council.
INTEGRATED REPORTING
Initially as a pilot company from 2012-2014 and now as a part of the business network of the International
Integrated Reporting Council (‘‘IIRC’’), we support the general principles designed to promote
communications and our integrated thinking about how an organization’s strategy, governance and financial
39
and non-financial performance lead to the creation of value over the short, medium and long term. This
Annual Report on Form 10-K focuses on our business strategy and our financial performance, including an
initial attempt to illustrate how being a sustainable enterprise is integral to our success. Our citizenship and
sustainability efforts for ourselves and our clients are reflected primarily in our annual Sustainability Report.
Our governance and remuneration practices are reported primarily in the Proxy Statement for our Annual
Meeting of Shareholders. The mechanisms we use to provide confidence to our clients with respect to our
transparency and fair dealing are summarized in our Transparency Report, which we first published in 2013.
The behaviors and standards we expect of our employees and of the suppliers we engage for our own firm
and on behalf of clients are presented in our Code of Business Ethics and our Vendor Code of Conduct. Our
Corporate Facts document is intended to provide an overall summary of the information we believe will be of
primary interest to our different stakeholders.
We intend this Annual Report to satisfy the requirements of the International Framework (the
‘‘Framework’’) issued by the IIRC in December, 2013 (www.theiirc.org). Following the Exhibit Index, we
present a tie-sheet that cross-references the requirements in the Framework and the locations of our
responses within this Annual Report.
Responsibility for Integrated Reporting. The Finance and Legal Services functions of our Company are
primarily responsible for the integrity of our integrated reporting efforts and acknowledge that we have
applied a collaborative approach in the preparation and presentation of this report. To do so, we have also
engaged the members of our Global Operating Board (the ‘‘GOB’’, which consists of the leaders of our
corporate staff functions in addition to others and is described below in more detail, with respect to the
preparation of the information presented in Items 1 (Business) and 1A (Risk Factors). In our collective
opinion, this report is presented in accordance with the Framework. However, as our effort to comply with the
Framework is done voluntarily, we disclaim any legal liability to the extent that this report is deemed to not
comply with the Framework.
ITEM 1A. RISK FACTORS
General Overview. Our business is complex, dynamic, entrepreneurial and international. Accordingly, it is
subject to a number of significant risks in the ordinary course of its operations. If we cannot or do not
successfully manage the risks associated with the services we provide, our operations, business, operating
results, reputation and/or financial condition could be materially and adversely affected.
One of the challenges of a global business such as ours is to determine in a sophisticated manner the critical
enterprise risks that exist or may newly develop over time as our business evolves. We must then determine
how best to employ reasonably available resources to prevent, mitigate and/or minimize those risks that we are
able to identify as having the greatest potential to cause significant damage from an operational, financial or
reputational standpoint. An important dynamic we must also consider and appropriately manage is how much
and what types of commercial insurance to obtain and how much potential liability may remain uninsured
consistent with the infrastructure that is in place within the organization to identify and properly manage it.
Various factors over which we have no control significantly affect commercial real estate markets. These
include (1) macro movements of the stock, bond, currency and derivatives markets; (2) the political
environment; (3) government policy and regulations, in each case whether at local, national or international
levels; and (4) the cost and availability of natural and non-renewable resources used to operate real estate. As
an example, the severe financial disruption and global recession that occurred during 2008 and 2009 materially
impacted global real estate markets as the volume and pace of commercial real estate transactions contracted
and real estate pricing and leasing in many countries and markets fell substantially. More recently, the Russian
geopolitical developments have significantly impacted the economy in that country, with no clear resolution in
sight, and therefore the willingness for multi-national companies to expand their businesses. Although
commercial real estate markets in most major cities were stable to improved during 2014, primarily as a result
of the low interest rate environment that has been encouraged by the activities of various central banks, their
40
continued recovery has in some cases remained uncertain for various reasons. These include (1) significant
uncertainties arising out of the ongoing financial and political challenges within the European Union;
(2) stubbornly high unemployment and underemployment and/or low middle-class wage growth around the
world, including within the U.S and various European countries in particular; (3) the relative slow-down in
certain economies in Asia, including those of China and India; and (4) uncertainty added to the forecast for
many economies, particularly in Russia and the Middle East, as the result of the sharp drop in oil and
commodity prices later in 2014. Governments are responding to problematic situations in different and
sometimes unpredictable and politically motivated ways. Accordingly, it is inherently difficult to make accurate
predictions about the future movements in the markets in which we operate even as we did see continued
improvement during 2014 and clear strength in the U.S. equities markets.
Governance over Enterprise Risk Management. We attempt to approach enterprise risk issues in a coordinated
way across the globe. We govern our enterprise risk program primarily through our GOB, which includes our
Global Chief Financial Officer, our business segment Chief Operating Officers and the leaders of our
principal corporate staff groups: Finance, Legal Services, Accounting, Insurance, Human Resources, Tax,
Marketing, Information Technology, Business Resumption, Professional Standards, Communications and
Corporate Sustainability. The GOB coordinates its enterprise risk activities with our Internal Audit function,
whose leadership attends GOB meetings and facilitates quarterly risk assessments of our business in order to
determine where to focus its auditing and advisory efforts.
Our Board of Directors and its Committees take active roles in overseeing management’s identification and
mitigation of the Company’s enterprise risks. The Audit Committee focuses on the process by which
management continuously identifies its enterprise risks and monitors the mitigation efforts that have been
established. The Board focuses on substantive aspects of management’s evaluation of our enterprise risks and
the efforts we take to contain and mitigate them. Each of the Compensation Committee and the Nominating
and Governance Committee also monitors and discusses with management those risks that are inherent in the
matters that are within each such Committee’s purview.
As a standing agenda item for its quarterly meetings, the Audit Committee discusses with management the
process that has been followed in order to establish an enterprise risk management report. This report reflects
(1) the then current most significant enterprise risks that management believes the Company is facing; (2) the
efforts management is taking to avoid or mitigate the identified risks; and (3) how the Company’s internal
audit function proposes to align its activities with the identified risks. The management representatives who
regularly attend the Audit Committee meetings and participate in the preparation of the report and the
discussion include our (1) Chief Financial Officer, (2) General Counsel and (3) Director of Internal Audit. At
the meetings, the Director of Internal Audit reviews with the Committee how the report has informed the
decisions about which aspects of the Company Internal Audit will review as part of its regular audit
procedures, as well as how various programmatic activities by Internal Audit have been influenced by the
conclusions drawn in the report.
The enterprise risk management report is provided to the full Board as a regular part of the materials for its
quarterly meetings. At those meetings, the Board asks questions of management about the conclusions drawn
in the enterprise risk management report and makes substantive comments and suggestions. Additionally,
during the course of each year, the Audit Committee (or sometimes the full Board) meets directly on one or
multiple occasions with the senior-most leaders of our critical corporate functions to consider, among other
topics, the enterprise risks those internal organizations face and how they are managing and addressing them.
At each Board meeting, the Chairman of our Audit Committee reports to the full Board on the activities of
the Audit Committee, including with respect to its oversight of the enterprise risk management process. Given
our level of acquisition activities, our Board receives periodic updates on the status of integrating new
businesses and how we are attempting to mitigate the enterprise risks inherent in making acquisitions. We also
discuss with the Board any lessons learned from the acquisitions we have completed and any processes or
approaches we have changed or improved as a result.
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As a regular part of its establishment of executive compensation, the Compensation Committee considers how
the structuring of our compensation programs will affect risk-taking and the extent to which they will drive
alignment with the long-term success of the enterprise and the interests of our shareholders.
In the normal course of its activities, our Nominating and Governance Committee reviews emerging best
practices in corporate governance and stays abreast of changes in laws and regulations that affect the way we
conduct our corporate governance, which represents another important aspect of overall enterprise risk
management.
Risk Mitigation Efforts. We do not attempt to discuss in this section all of the various significant efforts we
employ to attempt to mitigate or contain the risks we identify, although we believe we have a robust program
to do so in a systematic way. These efforts include (1) quarterly reviews by our GOB of operational errors
and litigation situations so that we can consider whether there are steps we can take, such as changes to
policies or additional staff training, that will prevent similar issues from recurring; (2) monthly reviews by our
global team of Ethics Officers of internal ethics matters (starting in 2014, including the cost of investigating
and resolving them) and general external ethics issues as well as consideration of whether there are new or
different activities we can establish within our Ethics Everywhere program in order to proactively address
them; and (3) the activities by our Director of Professional Standards to coordinate enterprise risk mitigation
and prevention among the business, our internal auditors and our other corporate staff functions. One of the
workstreams for the implementation of our Strategy 2020 Project, discussed in more detail above under
‘‘Company Overview,’’ is our ‘‘Getting Safely to 2020’’ Program, by which we are seeking to instill across all of
our business lines more consistent approaches to certain risk mitigation and governance techniques.
Seeking Opportunities in Risks. Risks in business can also mean opportunity if they can be translated into
services that help clients mitigate their own risks and for which they are willing to pay fees that adequately
compensate the provider for the risks being absorbed. An example of how we may be able to monetize the
absorption of risks is our ability to charge fees for taking on, as principal, the risks of performance of
subcontractors so that our clients do not have to bear them directly. Another example is our experience and
ability to conduct business with integrity in emerging markets that are generally perceived to be less
transparent, which allows us to charge fees to multi-national companies that want to expand their footprint
into new markets with the assistance of service providers they can trust to protect their interests and act
according to ethical and other best practices.
Categorization of Enterprise Risks. This section reflects our current views concerning the most significant risks
we believe our business faces, both in the short-term and the long-term. We do not, however, purport to
include every possible risk from which we might sustain a loss. For purposes of the following analysis and
discussion, we generally group the risks we face according to four principal categories:
(cid:127) External Market Risk Factors;
(cid:127) Internal Operational Risk Factors;
(cid:127) Financial Risk Factors; and
(cid:127) Human Resources Risk Factors.
We could appropriately place some of the risks we identify in more than one category, but we have chosen the
one we view as primary. We do not necessarily present the risks below in their order of significance, the
relative likelihood that we will experience a loss or the magnitude of any such loss. Certain of these risks also
may give rise to business opportunities for the Firm, but our discussion of risk factors in Item 1A is limited to
the adverse effects the risks may have on our business.
42
External Market Risk Factors
GENERAL ECONOMIC CONDITIONS AND REAL ESTATE MARKET CONDITIONS CAN HAVE A
NEGATIVE IMPACT ON OUR BUSINESS.
Real estate markets are inherently cyclical. They correlate strongly to local and national economic and
political conditions or, at least, to the perceptions and confidence of investors and users as to the relevant
economic outlook. For example, corporations may be hesitant to expand space or enter into long-term
commitments if they are concerned about the general economic environment. Corporations that are under
individual financial pressure for any reason, or are attempting to more aggressively manage their expenses,
may (1) reduce the size of their workforces, (2) reduce spending on capital expenditures, including with
respect to their offices, (3) permit more of their staff to work from home offices, and/or (4) seek
corresponding reductions in office space and related management services.
We have previously experienced, and expect in the future that we will be negatively impacted by, periods of
economic slowdown or recession and corresponding declines in the demand for real estate and related
services. The global economic crisis during the 2007-2009 period was extraordinary for its worldwide scope,
severity and impact on major financial institutions, as well as the extent of governmental stimulus and
regulatory responses. During the 2011-2014 period, the inability of the European Union to effect a sustainable
resolution of the financial and political instability of certain of its member countries has prevented the return
of a healthy level of confidence to its market, with some exacerbation of these issues resulting from the
geopolitical uncertainty generated by the Russia, Crimea and Ukraine situation. Structural and political issues
have similarly restrained a robust recovery in the United States, which has experienced gradual employment
growth but wage stagnations, and have resulted in inconsistent and less robust development of certain Asian
markets, including in China and India, although the business climate has improved in India during 2014 with
the election of a government perceived to be more pro-business. We have been able to continue to grow our
business largely by gaining market share and as the result of targeted acquisitions. We have been able to take
advantage of the buoyant capital markets that have resulted from continued central bank-influenced low
interest rates, and in 2014 the leasing markets also recovered generally within central business districts, where
we are an historically strong participant. These dynamics have been favorable to our LaSalle business too,
particularly as they have helped us raise new capital to invest and sell properties into strong markets, which
benefits our clients and generates incentive fees and equity earnings. On the other hand, our business in
Russia and Ukraine has been negatively impacted by the general economic and political situation in those
countries although our revenues from them represent a small portion of our total global revenues.
The speed with which markets change, both positively and negatively, has accelerated due to the increased
global interconnectivity that has resulted from the immediacy and availability of information permitted by the
Internet and social media, among other reasons. This has added to the challenges of anticipating and quickly
adapting to changes in business and revenue, particularly since real estate transactions are inherently
complicated and longer-term in nature. A recent example has been the fast drop in oil prices that occurred at
the end of 2014, which has complex potential ramifications in many of the countries in which we conduct
business, although it is unclear how they will ultimately filter through to our specific markets.
Negative economic conditions and declines in the demand for real estate and related services in several
markets or in significant markets could have a material adverse effect as a result of the following factors:
(cid:127)
Decline in Acquisition and Disposition Activity
A general decline in acquisition and disposition activity for commercial real estate can lead to a reduction in
the fees and commissions we receive for arranging such transactions, as well as in fees and commissions we
earn for arranging financing for acquirers. This can affect both our Capital Markets business in our RES
segments as well as our LaSalle business, although not necessarily always negatively. For example, credit
contractions such as those that took place during the recent global financial crisis, negatively impact real
estate pricing and transaction volumes, which will reduce our Capital Markets fees. Additionally, a continued
43
bias by investors toward conservatism means that their appetite for core investment products, which is a
LaSalle strength, remains noticeably higher than for opportunistic or speculative products.
(cid:127)
Decline in the Real Estate Values and Performance, Leasing Activity and Rental Rates
A general decline in the value and performance of real estate and in rental rates can lead to a reduction in
both (1) investment management fees, a significant portion of which is generally based upon the performance
of investments and net asset values, and (2) the value of the co-investments we make with our investment
management clients or merchant banking investments we have made for our own account. Additionally, such
declines can lead to a reduction in fees and commissions that are based on the value of, or revenue produced
by, the properties with respect to which we provide services. This may include fees and commissions (1) for
property management and valuations, (2) generated by our Capital Markets, Hotels and other businesses for
arranging acquisitions, dispositions and financings, and (3) for arranging leasing transactions. Such declines
can also lead to an unwillingness or inability of clients to make new (or honor existing) capital commitments
to funds sponsored by our investment management business, which can result in a decline of both investment
management fees and incentive fees and can also restrict our ability to employ capital for new investments in
current funds or establish new funds.
The general decline in the value and performance of real estate negatively impacted the value of our own
co-investments during 2009 and 2010. As real estate markets have generally improved since 2010, we have
seen the value of these investments return, as reflected in the increase in our equity earnings recognized over
the last four years. The continued conservatism of corporate occupiers to commit to new space, and their
desire to derive more productivity from the same, or a sometimes reduced, real estate footprint, made our
Agency Leasing business more challenging during 2013 but it recovered during 2014 as low interest rates and
the strength of the U.S. equity markets brought confidence back to corporate occupiers.
Historically for companies in our industry, a significant decline in real estate values in a given market has also
generally tended to result in increased litigation and claims regarding advisory and valuation work done prior
to the decline, as well as pressure from investment management clients regarding performance.
(cid:127)
Decline in Value of Real Estate Securities
A general decline in the value of real estate securities (for example, REITS) will have a negative effect on the
value of the portfolios that our LaSalle business manages, and any securities held in accounts that LaSalle
manages, and therefore the fees we earn on assets under management. In addition, a general decline in the
value of real estate securities could negatively impact the amount of money that investors are willing to
allocate to real estate securities and the pace of engaging new investor clients.
(cid:127)
Cyclicality in the Real Estate Markets; Lag in Recovery Relative to Broader Markets
Cyclicality in the real estate markets may lead to cyclicality in our earnings and significant volatility in our
stock price, which in recent years has continued to be highly sensitive to market perception of the global
economy generally and our industry specifically. Real estate markets are also thought to ‘‘lag’’ the broader
economy. This means that even when underlying economic fundamentals improve in a given market, it may
take additional time for these improvements to translate into strength in the real estate markets. This may be
exacerbated when banks delay their resolution of commercial real estate assets whose values are less than
their associated loans.
(cid:127)
Effect of Changes in Non-Real Estate Markets
Changes in non-real estate markets can also affect our business in different ways for different types of
investors. For example, relative strength in the equity markets can lead certain investors to lower the level of
capital allocated to real estate, which in turn can mean that our ability to generate fees from the operation of
our investment management business will be negatively impacted. Strength in the equity markets can also
negatively impact the perception of relative performance of real estate as an asset class, which in turn means
44
that the incentive fees relating to the performance of our investment funds will be negatively impacted. For
those investors who seek to maintain real estate as a relatively fixed percentage of their portfolios and will
periodically rebalance in order to do so, the so-called ‘‘denominator effect’’ can lead to either (1) selling real
estate when the equity markets are weak since that can make real estate investments too great of a proportion
of their portfolios or (2) buying real estate when equity markets are strong in order to maintain the desired
percentage relative to other assets. A low interest rate environment, such as we have experienced in recent
years, can make yields from real estate more attractive compared to bonds and that has supported REIT
stocks.
REAL ESTATE SERVICES AND INVESTMENT MANAGEMENT MARKETS ARE HIGHLY
COMPETITIVE.
We provide a broad range of commercial real estate and investment management services. There is significant
competition on an international, regional and local level with respect to many of these services and in
commercial real estate services generally. Depending on the service, we face competition from other real
estate service providers, institutional lenders, insurance companies, investment banking firms, investment
managers, accounting firms, technology firms, consulting firms, firms providing outsourcing of various types
(including technology, and building products), any of which may be a global, regional or local firm, and
companies that self-provide their real estate services with in-house capabilities.
Many of our competitors are local or regional firms. Although they may be substantially smaller in overall size
than we are, they may be larger than we are in a specific local or regional market. Some of our competitors
have expanded the services they offer in an attempt to gain additional business. Some may be providing
outsourced facility management services in order to sell products to clients (such as HVAC systems) that we
do not offer. In some sectors of our business, particularly Corporate Solutions, some of our competitors may
have greater financial, technical and marketing resources, larger customer bases, and more established
relationships with their customers and suppliers than we have. Larger or better-capitalized competitors in
those sectors may be able to respond faster to the need for technological changes, price their services more
aggressively, compete more effectively for skilled professionals, finance acquisitions more easily, develop
innovative products more effectively and generally compete more aggressively for market share. This can also
lead to increasing commoditization of the services we provide and increasing downward pressure on the fees
we can charge.
New competitors, or alliances among competitors that increase their ability to service clients, could emerge
and gain market share, develop a lower cost structure, adopt more aggressive pricing policies, aggressively
recruit our people at above-market compensation or provide services that gain greater market acceptance than
the services we offer. Some of these may come from non-traditional sources, such as information aggregators.
In order to respond to increased competition and pricing pressure, we may have to lower our prices, loosen
contractual terms (such as liability limitations), develop our own innovative approaches to mining data and
using information, or increase compensation, which may have an adverse effect on our revenue and profit
margins. We may also need to become increasingly productive and efficient in the way we deliver services or
with respect to the cost structure supporting our businesses, which may in turn require more innovative uses
of technology as well as data gathering and data mining.
Our industry has continued to consolidate, as evidenced by alliances in recent history that have resulted in the
Grubb Newmark Knight Frank business and the merger between DTZ and Cassidy Turley, both of which
included firms that had previously had significant financial problems but were able to recapitalize and
reposition themselves. There is an inherent risk that competitive firms may be more successful than we are at
growing through merger and acquisition activity. While we have successfully grown organically and through a
series of acquisitions, sourcing and completing acquisitions are complex and sensitive activities. In light of the
continuing need to provide clients with more comprehensive services on a more productive and cost efficient
basis, we expect increasing acquisition opportunities to emerge and may increase our acquisition activity
compared to recent years. For example, in 2011 we completed the significant acquisition of King Sturge in
Europe after having considerably slowed our acquisition activity from 2008 through 2010. During 2012, 2013
45
and 2014, we completed four, five, and ten acquisitions, respectively. We are considering, and will continue to
consider, acquisitions that we believe will strengthen our market position, increase our profitability and
supplement our organic growth. We have found it relatively more challenging to identify appropriate
acquisition candidates in our investment management business than we have been able to do in our RES
business. In any event, there is no assurance that we will be able to continue our acquisition activity in the
future at the same pace as we have in the past.
We believe we emerged from the global economic downturn in a stronger financial and market share position
relative to certain of our traditional competitors. This may in some cases lead to a willingness on the part of a
competitor to engage in aggressive pricing, advertising or hiring practices in order to maintain market shares
or client relationships. To the extent this occurs, it increases the competitive risks and the fee and
compensation pressures we face, although ramifications will differ from one competitor to another given their
different positions within the marketplace and their different financial situations.
We are substantially dependent on long-term client relationships and on revenue received for services under
various service agreements. Many of these agreements may be canceled by the client for any reason with as
little as 30 to 60 days’ notice, as is typical in the industry. In this competitive market, if we are unable to
maintain these relationships or are otherwise unable to retain existing clients and develop new clients, our
business, results of operations and/or financial condition may be materially adversely affected. The global
economic downturn and continued weaknesses in the markets in which they themselves compete have led to
additional pricing pressure from clients as they themselves came under financial pressure, participated in
governmental bail-out programs or filed for bankruptcy or insolvency protection, as some significant clients
did. These effects have continued to moderate through 2014, but they could increase again in the wake of the
continuing political and economic uncertainties within the European Union, the United States, China, India,
Russia or the Middle East, including as a result of the uncertain results of significantly lower oil prices.
REPUTATIONAL AND BRAND RISKS.
The value and premium status of our brand is one of our most important assets. An inherent risk in
maintaining our brand is that we may fail to successfully differentiate the scope and quality of our service and
product offerings from those of our competitors, or that we may fail to sufficiently innovate or develop
improved products or services that will be attractive to our clients. Additionally, given the rigors of the
competitive marketplace in which we operate, there is the risk that we may not be able to continue to find
ways to operate more productively and more cost-effectively, including by achieving economies of scale, or
that we will be limited in our ability to further reduce the costs required to operate on a globally coordinated
platform.
The dynamic nature of the Internet and social media, which have substantially increased the availability and
transparency of information, could devalue the information that we gather and disseminate as part of our
business model and may harm certain aspects of our brokerage business in the event that principals of
transactions prefer to transact directly with each other. In this regard, we face potential disintermediation
challenges from companies whose primary business is to aggregate and disseminate for compensation the
listing information they obtain from firms like ours that represent commercial landlords offering space to let.
The rapid dissemination and increasing transparency of information, particularly for public companies,
increases the risks to our business that could result from negative media or announcements about ethics lapses
or other operational problems, which could lead clients to terminate or reduce their relationships with us. We
are also subject to misappropriation of one of the names or trademarks we own by third parties that do not
have the right to use them so that they can trade off of the goodwill we have built up in our intellectual
property, and our efforts to police usage of our intellectual property may not be successful in all situations.
THE SEASONALITY OF OUR REAL ESTATE SERVICES BUSINESS EXPOSES US TO RISKS.
Within our Real Estate Services business, our revenue and profits have historically grown progressively by
quarter throughout the year. This is a result of a general focus in the real estate industry on completing or
46
documenting transactions by fiscal-year-end and the fact that certain of our expenses are constant through the
year. Historically, we have reported a relatively smaller profit in the first quarter and then increasingly larger
profit during each of the following three quarters, excluding the recognition of investment-generated
performance fees and co-investment equity gains or losses (each of which can be particularly unpredictable).
The seasonality of our business makes it difficult to determine during the course of the year whether planned
results will be achieved, and thus to adjust to changes in expectations. Additionally, negative economic or
other conditions that arise at a time when they impact performance in the fourth quarter, such as the
particular timing of when larger transactions close or changes in the value of the U.S. dollar against other
currencies, may have a more significant impact than if they occurred earlier in the year. To the extent we are
not able to identify and adjust for changes in expectations or we are confronted with negative conditions that
inordinately impact the fourth quarter of a calendar year, we could experience a material adverse effect on
our financial performance.
As a result of growth in our property management and integrated facility management businesses and other
services related to the growth of outsourcing of corporate real estate services, there has been somewhat less
seasonality in our revenue and profits during the past few years than there was historically, but we believe that
some level of seasonality will always be inherent in our industry and outside of our control. We continued to
experience a level of seasonality in 2014 that was similar to previous years. We are unable to predict whether
the dynamic nature of the markets in which we operate, or any change in their economic or political
structures, will have a material effect on the historical seasonality of our business in 2015 and beyond.
POLITICAL AND ECONOMIC INSTABILITY AND TRANSPARENCY: PROTECTIONISM; TERRORIST
ACTIVITIES; HEALTH EPIDEMICS.
We provide services in over 80 countries with varying degrees of political and economic stability and
transparency. For example, within the past few years certain Middle Eastern, Asian, European and South
American countries have experienced serious political and economic instability that will likely continue to arise
from time to time in countries in which we have operations. It is difficult for us to predict where or when a
significant change in the political leadership or regime within a given country may occur, or what the
implications of such a change will be on our operations given that legislative, regulatory, tax and business
environments can be altered quickly and dramatically. For example, continuing political activities in Russia
and separately in various Middle Eastern countries have significantly disrupted business activity in those
countries. Also, in recent years there have been significant political changes in a number of countries,
including the U.S. and India as examples, resulting in changes to financial, tax, healthcare, governance and
other laws that may directly affect our business and continue to evolve. Starting in the second half of 2011,
debate arose about the continued viability of the European Union and the euro currency, and uncertainties
remain about how this situation may ultimately be resolved.
Our ability to operate our business in the ordinary course and our willingness to commit new resources or
investments may be affected or disrupted in one way or another, such as reductions in revenue, increases in
taxes (due to more aggressive taxation policies), increases in other expenses (such as with respect to employee
healthcare), restrictions on repatriating funds, difficulties in collecting receivables from clients, difficulties in
recruiting staff, increased corruption or other material adverse effects.
In the event that governments engage in protectionist policies which favor local firms over foreign firms or
which restrict cross-border capital flows, our ability to utilize and benefit from our global platform and
integrated business model could be adversely affected. The global downturn also significantly added to the
deficit spending of certain governments in countries where we do business and has called into question the
creditworthiness of some countries, which has not entirely gone away as an issue. More recently, particularly
in Europe, governments instituted austerity programs in an effort to contract spending and avoid defaults on
sovereign debt, some of which resulted in social unrest. The social unrest as the result of the implementation
of the austerity programs has diminished and some European countries seem to have emerged successfully.
There has been some speculation that one or more European countries may stop using the euro as its
47
currency. The United States and the European Union have instituted various sanctions against Russia as a
result of that country’s actions with respect to Ukraine and Crimea. It is inherently difficult to predict what
the consequences to our business may be from these situations as they develop further.
In addition, terrorist activities have escalated in recent years and at times have affected cities in which we
operate. The 2008 terrorist attack in Mumbai, India, where we have a presence, is an example and there have
been serious situations in other cities where we have operations, including London, Boston, Paris, Sydney,
Ottawa and Moscow. To the extent that similar terrorist activities continue to occur, they may adversely affect
our business because they tend to target the same type of high-profile urban areas in which we do business.
Health epidemics that affect the general conduct of business in one or more urban areas (including as the
result of travel restrictions and the inability to conduct face-to-face meetings), such as occurred in the past
from SARS and influenza, or may occur in the future from other types of outbreak, can also adversely affect
the volume of business transactions, real estate markets and the cost of operating real estate or providing real
estate services. During 2014 the Ebola epidemic in certain countries in Africa caused significant concern
globally, although so far it has been contained within Africa.
The increasing globalization by our multi-national clients creates pressure to further expand our own
geographical reach into less developed countries, including for example within Africa, which tends to
exacerbate the above risks. As we continue to provide services in countries that have relatively higher security
risks and lower levels of transparency, our exposure to the risks inherent in doing business in less developed
markets increases.
INFRASTRUCTURE DISRUPTIONS.
Our ability to conduct a global business may be adversely impacted by disruptions to the infrastructure that
supports our businesses and the communities in which they are located. This may include disruptions involving
electrical, communications, information technology, transportation or other services used by JLL or third
parties with which we conduct business. It may also include disruptions as a result of natural disasters such as
hurricanes, earthquakes and floods, whether as a result of climate change or otherwise, political instability,
general labor strikes or turmoil, cyber-attacks or terrorist attacks. These disruptions may occur, for example,
as a result of events affecting only the buildings in which we operate (such as fires), or as a result of events
with a broader impact on the cities where those buildings are located (including, potentially, the longer-term
effects of global climate change). Nearly all of our employees in our primary locations, including Chicago,
London, Singapore and Sydney, work in close proximity to each other in one or more buildings. If a
disruption occurs in one location and our employees in that location are unable to communicate with or travel
to other locations, our ability to service and interact with our clients may suffer, and we may not be able to
successfully implement contingency plans that depend on communication or travel.
The infrastructure disruptions we describe above may also disrupt our ability to manage real estate for clients
or may adversely affect the value of real estate investments we make on behalf of clients. The buildings we
manage for clients, which include some of the world’s largest office properties and retail centers, are used by
numerous people daily. As a result, fires, earthquakes, floods, other natural disasters, defects and terrorist
attacks can result in significant loss of life, and, to the extent we are held to have been negligent in
connection with our management of the affected properties, we could incur significant financial liabilities and
reputational harm. An example during 2012 was Hurricane Sandy, which disrupted our own operations in the
Northeast United States and caused significant flooding damage to buildings we manage for clients in lower
Manhattan, some of which took significant periods of time to recover fully. During 2013 and 2014, Asia
experienced significant, and in some cases unprecedented, typhoon activity.
The occurrence of natural disasters and terrorist attacks can also significantly impact the availability and/or
cost of commercial insurance policies covering real estate, both for our own business and for those clients
whose properties we manage and who may purchase their insurance through the insurance buying programs
48
we make available to them. Sometimes, even where policies are available, specific coverage for wind, flooding,
earthquakes or terrorism may not be available or may be very expensive.
There can be no assurance that the disaster recovery and crisis management procedures we employ will suffice
in any particular situation to avoid a significant loss. Given that our staff is increasingly mobile and less reliant
on physical presence in a Company office, our disaster recovery plans increasingly rely on the availability of
the Internet (including ‘‘cloud’’ technology) and mobile phone technology, so the disruption of those systems,
such as because of a cyber-attack, would likely affect our ability to recover promptly from a crisis situation.
Additionally, our ability to foresee or mitigate the potential consequences to managed properties, and real
estate generally, from the effects of climate change, may be limited. We have significant operations and client
relationships in cities with coastal exposure, such as New York and Florida.
CIVIL AND REGULATORY CLAIMS; LITIGATING DISPUTES IN DIFFERENT JURISDICTIONS.
Substantial civil legal liability or a significant regulatory action against our Firm could have a material adverse
financial effect or cause us significant reputational harm, which in turn could seriously harm our business
prospects. Many legal systems, including in the United States, have fairly significant barriers against recovering
legal fees from plaintiffs that file cases we consider frivolous, so the costs to us of defending such cases can be
substantial even if we prevail.
While we maintain commercial insurance in an amount we believe is appropriate, we also maintain a
significant level of self-insurance for the liabilities we may incur. Although we place our commercial insurance
with only highly-rated companies, the value of otherwise valid claims we hold under insurance policies may
become uncollectible due to the insolvency of the applicable insurance company.
Additionally, the claims we have can be complex and insurance companies can prove difficult or bureaucratic
in resolving claims, which may result in payments to us being delayed or reduced or that we must litigate in
order to enforce an insurance policy claim.
Any disputes we have with third parties, or any government regulatory matters, generally must be adjudicated
within the jurisdiction in which the dispute arose. Therefore, our ability to resolve our disputes successfully
depends on the local laws that apply and the operation of the local judicial system. The timeliness, quality,
transparency, integrity and sophistication of judicial systems vary widely from one jurisdiction to the next. Our
geographic diversity therefore may expose us to disputes in certain jurisdictions that could be challenging to
resolve efficiently and/or effectively, particularly as there appears to be an increasing tendency toward
litigation in emerging markets, where the rule of law is less reliable, legal systems are less mature and
transparent and the potential for judicial corruption remains a practical reality. It also may be more difficult
to collect receivables from clients who do not pay their bills in certain jurisdictions, since resorting to the
judicial system in certain countries may not be an effective alternative given the delays and costs involved.
Internal Operational Risk Factors
CONCENTRATIONS OF BUSINESS WITH CORPORATE AND INVESTOR CLIENTS CAUSES
INCREASED CREDIT RISK AND GREATER IMPACT FROM THE LOSS OF CERTAIN CLIENTS;
INCREASED RISKS FROM HIGHER LIMITATIONS OF LIABILITY IN CONTRACTS.
While our client base remains highly diversified across industries and geographies, we value the expansion of
business relationships with individual corporate clients and institutional investors because of the increased
efficiency and economics (both to our clients and our Firm) that can result from developing repeat business
from the same client and from performing an increasingly broad range of services for the same client. Having
increasingly large and concentrated clients also can lead to greater or more concentrated risks of loss if,
among other possibilities, such a client (1) experiences its own financial problems, which can lead to larger
individual credit risks, (2) becomes bankrupt or insolvent, which can lead to our failure to be paid for services
we have previously provided or funds we have previously advanced, (3) decides to reduce its operations or its
real estate facilities, (4) makes a change in its real estate strategy, such as no longer outsourcing its real estate
49
operations, (5) decides to change its providers of real estate services or (6) merges with another corporation
or otherwise undergoes a change of control, which may result in new management taking over with a different
real estate philosophy or in different relationships with other real estate providers. In the case of LaSalle,
concentration of investor clients can lead to fewer sources of investment capital, which can negatively affect
assets under management in case a higher-volume client withdraws its funds or does not re-invest them. This
is also the case within LaSalle’s securities business and for Jones Lang LaSalle Income Property Trust, Inc.,
which are both dependent on the continued ability and willingness of certain brokerage firms to attract
investment funds from their clients.
Additionally, competitive conditions, particularly in connection with increasingly large clients may require us to
compromise on certain contract terms with respect to the payment of fees, the extent of risk transfer, acting as
principal rather than agent in connection with supplier relationships, liability limitations and other contractual
terms, or in connection with disputes or potential litigation. Where competitive pressures result in higher
levels of potential liability under our contracts, the cost of operational errors and other activities for which we
have indemnified our clients will be greater and may not be fully insured.
The global economic downturn was an example of how risks to our organization increased as the result of the
significant financial distress (which in some cases led to bankruptcy or insolvency) it placed on many
organizations, including some that are clients of ours. Some of our largest clients include companies in the
financial services industry, such as commercial banks, investment banks and insurance companies, and
companies in the auto industry, which were significantly impacted by the global economic downturn and took
a number of years to recover. Political and financial issues in the European Union have continued to
negatively impact the financial condition of companies conducting significant operations in European countries
as the result of contractions in government spending, reduced liquidity from banks and social unrest. More
recently, actions taken by Russia with respect to Crimea and Ukraine have led to economic sanctions by the
United States and the European Union against Russia, which have impacted the Russian economy and the
ability and willingness of businesses in that country to continue to conduct business.
Where we provide services to firms in the financial services industry, including banks and investment banks,
we are experiencing indirectly the increasing extent of the regulatory environment to which they are subject in
the aftermath of the global financial crisis. This increases the cost of doing business with them, which we are
not always able to pass on, as the result of the additional resources and processes we are required to provide
as a critical supplier.
CONTRACTUAL LIABILITIES AS PRINCIPAL AND FOR WARRANTED PRICING.
We may, on behalf of our clients, hire and supervise third-party contractors to provide construction,
engineering and various other services for properties we are managing or developing on behalf of clients.
Depending upon (1) the terms of our contracts with clients, which, for example, may place us in the position
of a principal rather than an agent, or (2) the responsibilities we assume or are legally deemed to have
assumed in the course of a client engagement (whether or not memorialized in a contract), we may be
subjected to, or become liable for, claims for construction defects, negligent performance of work or other
similar actions by third parties we do not control.
Adverse outcomes of property management disputes or litigation could negatively impact our business,
operating results and/or financial condition, particularly if we have not limited in our contracts the extent of
damages to which we may be liable for the consequences of our actions, or if our liabilities exceed the
amounts of the commercial third-party insurance that we carry. Moreover, our clients may seek to hold us
accountable for the actions of contractors because of our role as property manager even if we have technically
disclaimed liability as a legal matter, in which case we may find it commercially prudent to participate in a
financial settlement for purposes of preserving the client relationship.
Acting as a principal may also mean that we pay a contractor before we have been reimbursed by the client,
which exposes us to additional risks of collection from the client in the event of an intervening bankruptcy or
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insolvency of the client. The reverse can occur as well, where a contractor we have paid files bankruptcy or
commits fraud with the funds before completing a project for which we have paid it in part or in full. As part
of our project management business, we may enter into agreements with clients that provide for a warranted
or guaranteed cost for a project that we manage. In these situations, we are responsible for managing the
various other contractors required for a project, including general contractors, in order to ensure that the cost
of a project does not exceed the contract price and that the project is completed on time. In the event that
one of the other contractors on the project does not or cannot perform as a result of bankruptcy or for some
other reason, we may be responsible for any cost overruns as well as the consequences for late delivery. In the
event that for whatever reason we have not accurately estimated our own costs of providing services under
warranted or guaranteed cost contracts, we may lose money on such contracts until such time as we can
legally terminate them. Also, the application of indirect taxes, such as sales taxes, goods and services taxes,
and value added taxes may be less clear for these agreements, potentially impacting our margins.
During an economic downturn in a given country or region generally, we would expect to experience credit-
related problems at a higher level than usual with vendors and contractors due to their increased financial
instability. For example, this became a reality during the global financial crisis.
PERFORMANCE AND FIDUCIARY OBLIGATIONS UNDER CLIENT CONTRACTS; REVENUE
RECOGNITION; SCOPE CREEP; RISING COST OF INSURANCE RESULTING FROM NEGLIGENCE
CLAIMS.
In certain cases we are subject to fiduciary obligations to our clients, which may result in a higher level of
legal obligation compared to basic contractual obligations. These relate to, among other matters, the decisions
we make on behalf of a client with respect to managing assets on its behalf or purchasing products or services
from third parties or other divisions within our Firm. Our services may involve handling substantial amounts
of client funds in connection with managing their properties. They may also involve complicated and
high-profile transactions which involve significant amounts of money. We face legal and reputational risks in
the event we do not perform, or are perceived to have not performed, under those contracts or in accordance
with those obligations, or in the event we are negligent in the handling of client funds or in the way in which
we have delivered our professional services.
We have certain business lines, such as valuations and lease administration, where the size of the transactions
we handle is much greater than the fees we generate from them. As a result, the consequences of errors that
lead to damages can be disproportionately large in the event our contractual protections or our insurance
coverage are inadequate to protect us fully.
The precautions we take to prevent these types of occurrences, which represent a significant commitment of
corporate resources, may nevertheless be ineffective in certain cases. Unexpected costs or delays could make
our client contracts or engagements less profitable than anticipated. Any increased or unexpected costs or
unanticipated delays in connection with the performance of these engagements, including delays caused by
factors outside our control, could have an adverse effect on profit margins.
In the event we perform services for clients without executing sufficient contractual documentation, we may be
unable to realize our full compensation potential or recognize revenue for accounting purposes, and we may
not be able to effectively limit our liability in the event of client disputes. If we perform services for clients
that are beyond, or different from, what were originally contemplated in the governing contracts (known as
‘‘scope creep’’), we may not be fully reimbursed for the services provided, or our potential liability in the case
of a negligence claim may not have been as limited as it normally would have been or may be unclear.
If we make a large insurance claim on our professional indemnity policy due to a situation involving our
negligence, we would expect subsequent premiums to increase materially, the size of deductibles we are
required to retain could increase substantially and the availability of future coverage could be negatively
impacted.
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CO-INVESTMENT, INVESTMENT, MERCHANT BANKING AND REAL ESTATE INVESTMENT BANKING
ACTIVITIES.
An important part of our investment strategy includes investing in real estate, both individually and along with
our investment management clients. As of December 31, 2014, we have potential unfunded commitment
obligations of $176.2 million to fund future co-investments. In order to remain competitive with
well-capitalized financial services firms, we also may make merchant banking investments for which we may
use Firm capital to acquire properties before the related investment management funds have been established
or investment commitments have been received from third-party clients. A strategy that we have not pursued
vigorously, but that still has potential, is to further engage in certain real estate investment banking activities
in which we, either solely or with one or more joint venture partners, would employ capital to assist our
clients in maximizing the value of their real estate. For example, we might acquire a property from a client
that wishes to dispose of it within a certain time frame, after which we would market it for sale as the
principal and therefore assume any related market risk.
We also operate business lines that have as part of their strategy the acquisition, development, management
and sale of real estate. Investing in any of these types of situations exposes us to a number of risks.
Investing in real estate for the above reasons poses the following risks:
(cid:127) We may lose some or all of the capital that we invest if the investments underperform. Real estate
investments can underperform as the result of many factors outside of our control, including the general
reduction in asset values within a particular geography or asset class. Starting in 2007 and continuing
through 2009, for example, real estate prices in many markets throughout the world declined generally as
the result of the significant tightening of the credit markets and the effects of recessionary economies and
significant unemployment. We recognized impairment charges of $2.4 million, $6.5 million, and
$7.9 million for the years ended December 31, 2014, 2013, and 2012, respectively, primarily representing
our co-investment share of the impairment charges against individual assets held by our real estate
ventures. In contrast, as real estate investments benefited from benign interest rate environments globally
and continuing recovery in many of our markets, for the year ended December 31, 2014 we recognized
equity earnings from our co-investments of $48.3 million.
(cid:127) We will have fluctuations in earnings and cash flow as we recognize gains or losses, and receive cash,
upon the disposition of investments, the timing of which is geared toward the benefit of our clients.
(cid:127) We generally hold our investments in real estate through subsidiaries with limited liability; however, in
certain circumstances, it is possible that this limited exposure may be expanded in the future based on,
among other things, changes in applicable laws. To the extent this occurs, our liability could exceed the
amount we have invested.
(cid:127) We make co-investments in real estate in many countries, and this presents risks as described above in
‘‘External Market Risk Factors.’’ This may include changes to tax treaties, tax policy, foreign investment
policy or other local political or legislative changes that may adversely affect the performance of our
co-investments. The global economic downturn increased the chances of significant changes in
government policies generally, the effects of which are inherently difficult to predict. The financial
pressures on government entities that have resulted from weak economies and deficit spending may lead
taxing authorities to more aggressively pursue taxes and question tax strategies and positions.
(cid:127) We generally make co-investments in the local currency of the country in which the investment asset
exists. We will therefore be subject to the risks described below under ‘‘Currency Restrictions and
Exchange Rate Fluctuations.’’
In certain situations, although they have been relatively limited historically, we raise funds from outside
investors where we are the sponsor of real estate investments, developments or projects. To the extent we
return less than the investors’ original investments because the investments, developments or projects have
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underperformed relative to expectations, the investors could attempt to recoup the full amount of their
investments under securities law theories such as lack of adequate disclosure when funds were initially raised.
Sponsoring funds into which retail investors are able to invest may increase this risk.
CORPORATE CONFLICTS OF INTEREST.
All providers of professional services to clients, including our Firm, must manage potential conflicts of
interest. This occurs principally where the primary duty of loyalty we owe to one client may potentially be
weakened or compromised by a relationship we also maintain with another client or third party. Corporate
conflicts of interest arise in the context of the services we provide as a Firm to our different clients. Personal
conflicts of interest on the part of our employees are separately considered as issues within the context of our
Code of Business Ethics. The failure or inability of the Firm to identify, disclose and resolve potential
conflicts of interest in a significant situation could have a material adverse effect.
An example of a potential conflict of interest situation is that in the ordinary course of its business, LaSalle
hires property managers for the investment properties it holds on behalf of clients. In that case, it may hire
JLL to provide such services or it may hire a firm that is a competitor of JLL. In the event it retains JLL, it
may appear to have a conflict of interest with respect to the selection. As a fiduciary with respect to its client
funds, LaSalle resolves such potential conflicts by acting independently of JLL and following certain internal
procedures designed to select the service provider that can best represent the interests of the investment
management client or fund.
Another example is that in certain countries, based upon applicable regulations and local market dynamics, we
have established joint ventures or other arrangements with insurance brokers through which insurance
coverage is offered to clients, tenants in buildings we manage and vendors to those buildings. Although we
fully disclose our arrangements and do not require anyone to use the insurance services, JLL has a financial
interest in the placement of insurance with such third parties and therefore we may be deemed to have
certain conflicts of interest.
There are occasions when one JLL team represents the landlord of a building in leasing its space and a
separate JLL team represents a tenant that is considering, or selects, space in that building. In those
situations, we fully disclose our dual roles to both clients, obtain their informed consent to continue and put
‘‘ethical wall’’ and other protections in place (such as ring-fenced compensation protocols) so that each client
benefits from the zealous representation by its JLL team.
After reductions in the market values of the underlying properties, firms engaged in the business of providing
valuations are inherently subject to a higher risk of claims with respect to conflicts of interest based on the
circumstances of valuations they previously issued. Regardless of the ultimate merits of these claims, the
allegations themselves can cause reputational damage and can be expensive to defend in terms of counsel fees
and otherwise.
CLIENT AND VENDOR DUE DILIGENCE.
There are circumstances where the conduct or identity of our clients could cause us reputational damage or
financial harm or could lead to our non-compliance with certain laws. An example would be the attempt by a
client to ‘‘launder’’ funds through its relationship with us, namely to disguise the illegal source of funds that
are put into otherwise legitimate real estate investments. Additional examples are (1) our inadvertently doing
business with a client that has been listed on one of the ‘‘prohibited persons’’ lists now issued by many
governments around the world and (2) our inadvertently doing business with a private client or governmental
entity within a country that is prohibited under applicable regulations such as those published in the United
States by the Office of Foreign Asset Control (‘‘OFAC’’). We may also from time to time legally invest the
sovereign wealth funds of a government entity client which is subsequently deemed to be inappropriate either
from a reputational or legal standpoint.
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Similar problems can arise with respect to the vendors or suppliers we hire to provide services or products to
us or for our clients. In the normal course of business, we spend significant amounts in order to purchase
goods and services for the properties we manage on behalf of clients. An example would be an intermediary
that makes illegal payments on our behalf or on behalf of a client, even where contrary to our stated policies
and to our specific agreement with such intermediary, under the U.S. Foreign Corrupt Practices Act or the
U.K. Bribery Act.
Our efforts to evaluate clients, vendors and government entities before doing business with them in order not
to do business with a prohibited party, or within a prohibited country, and to avoid attempts to launder
money, make bribery payments or otherwise to exploit their relationship with us may not be successful in all
situations since compliance for a business such as ours is very complex and also since we take a risk-based
approach to the procedures we have employed. The ability to conduct diligence is inherently diminished in
less developed countries with lower level of transparency and fewer public records. Additionally, it is not
always possible to accurately determine the ultimate owners or control persons within our clients’
organizations or other entities with which we do business, particularly if they are actively attempting to hide
such information from regulatory authorities. We may therefore unknowingly be doing business with entities
that are otherwise involved in illegal activities that do not involve us or that are ultimately controlled by
persons with whom engaging in business has been prohibited by applicable regulatory authorities.
BURDEN OF COMPLYING WITH MULTIPLE AND POTENTIALLY CONFLICTING LAWS AND
REGULATIONS AND DEALING WITH CHANGES IN LEGAL AND REGULATORY REQUIREMENTS.
We face a broad range of legal and regulatory environments in the countries in which we do business.
Coordinating our activities to deal with these requirements presents significant challenges. For example, in the
United Kingdom, the Financial Conduct Authority (‘‘FCA’’) regulates the conduct of investment businesses
and the Royal Institute of Chartered Surveyors (‘‘RICS’’) regulates the profession of Chartered Surveyors,
which is the professional qualification required for certain of the services we provide in the United Kingdom,
in each case through upholding standards of competence and conduct. As another example, activities
associated with raising capital, offering investment funds and investment sales are regulated in the United
States by the SEC and in other countries by similar securities regulatory authorities. The real estate
investment trust managed by LaSalle that we launched during 2012 under the name of Jones Lang LaSalle
Income Property Trust, Inc. increased our exposure to these types of regulations.
As a publicly traded company, we are subject to various corporate governance and other requirements
established by statute, pursuant to SEC regulations and under the rules of the New York Stock Exchange.
During the past decade, the Sarbanes-Oxley and Dodd-Frank legislative initiatives in the United States have
added some significant requirements to various aspects of our governance. Additionally, changes in legal and
regulatory requirements can impact our ability to engage in business in certain jurisdictions or increase the
cost of doing so. The legal requirements of U.S. statutes may also conflict with local legal requirements in a
particular country, as, for example, when anonymous hotlines required under U.S. law were construed to
conflict in part with French privacy laws. The jurisdictional reach of laws may be unclear as well, as when laws
in one country purport to regulate the behavior of affiliated corporations within our group that are operating
in other countries. There is some uncertainty, for example, in the jurisdictional reach of the U.K. Bribery Act,
and the standards for illegal activity in that Act are in some ways higher than those established under the U.S.
Foreign Corrupt Practices Act.
Identifying the regulations with which we must comply, and then complying with them is complex. We may not
be successful in complying with regulations in all situations, as a result of which we could be subject to
regulatory actions and fines for non-compliance. The global economic crisis has resulted in an unusual level of
related government and legislative activities, including for example the Dodd-Frank Wall Street Reform and
Consumer Protection Act, which we expect will continue into the future and which exacerbates these risks. We
are also seeing increasing levels of labor regulation in emerging markets, such as China, which affect our
property management business.
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The Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) of the U.S. Securities
Exchange Act of 1934, as amended (‘‘Section 13(r)’’). Section 13(r) requires disclosure where we or any of our
affiliates have knowingly engaged, among other things, in certain transactions involving Iran, the Government
of Iran, or persons or entities designated under certain executive orders. We must also file a notice with the
SEC if any disclosable activities under Section 13(r) have been included in an annual or quarterly report.
Section 13(r) applies to all annual and quarterly reports required to be made after February 6, 2013, and
applies to all contracts, including those in existence on or before that date.
U.S. laws and regulations govern the provision of products and services to, and other trade-related activities
involving, certain targeted countries and parties. These measures include U.S. economic sanctions targeting
Iran, to which the Company is subject. As a result, we have had longstanding policies and procedures to
restrict or prohibit sales of our services into countries that are subject to embargoes and sanctions or to
countries designated as state sponsors of terrorism, such as Iran. In conjunction with such policies, we have
also implemented certain procedures to evaluate whether existing or potential clients appear on the ‘‘Specially
Designated Nationals and Blocked Persons List’’ (‘‘SDN List’’) maintained by the U.S. Treasury Department’s
Office of Foreign Assets Control (‘‘OFAC’’).
In 2013, a U.K. subsidiary of the Company received payment for providing U.K. local property rating
valuation services for a London property owned by the National Iranian Oil Company (‘‘NIOC’’) and certain
of its affiliates, which appear on OFAC’s SDN List. The Company’s compliance personnel identified this
activity. Since learning of this activity, our senior management terminated the provision of any services to
NIOC, and the Company does not otherwise intend to continue the services to NIOC or to otherwise engage
in Iran-related activity contrary to applicable rules and regulations. The gross revenue and net profits
attributable to these activities were approximately £3,500 and £1,153, respectively. Such sales involving NIOC
are insignificant to our overall business and were inadvertently made in violation of our own internal
corporate policies. The Company submitted a report of voluntary disclosure to OFAC regarding these
transactions.
Changes in governments or majority political parties may result in significant changes in enforcement priorities
with respect to employment, health and safety, tax, securities disclosure and other regulations, which in turn
could negatively affect our business.
LICENSING AND REGULATORY REQUIREMENTS.
The brokerage of real estate sales and leasing transactions, property management, construction, mobile
engineering, conducting valuations, trading in securities for clients and the operation of the investment
advisory business, among other business lines, requires us to maintain licenses in various jurisdictions in which
we operate and to comply with particular regulations. We believe that licensing requirements have generally
been increasing in recent years. If we fail to maintain our licenses or conduct regulated activities without a
license or in contravention of applicable regulations, we may be required to pay fines or return commissions.
We may also have a given license suspended or revoked, meaning that we would need to suspend or cease the
business activities for which the license was required. Our acquisition activity increases these risks because we
must successfully transfer licenses of the acquired entities and their staff, as appropriate. Licensing
requirements may also preclude us from engaging in certain types of transactions or change the way in which
we conduct business or the cost of doing so. In addition, because the size and scope of real estate sales
transactions and the number of countries in which we operate or invest have increased significantly during the
past several years, both the difficulty of ensuring compliance with the numerous licensing regimes and the
possible loss resulting from noncompliance have increased. To the extent we expand our service offerings
further into more heavily regulated sectors, such as healthcare, environmental, pharmaceutical, scientific and
medical laboratories, airports and industrial, the regulatory framework within which we operate may get more
complicated and the consequences of noncompliance more serious.
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The regulatory environment facing the investment management industry has also grown significantly more
complex in recent years. Countries are expanding the criteria requiring registration of investment advisors,
whether based in their country or not, and expanding the rules applicable to those that are registered, all in
an effort to provide more protection to investors located within their countries. In some cases, rules from
different countries are applicable to more than one of our investment advisory companies and can conflict
with those of their home countries. Although we believe we have good processes, policies and controls in
place to address the new requirements, these additional registrations and increasingly complex rules increase
the possibility that violations may occur.
These risks also apply separately to the real estate investment trust we launched during 2012 that is managed
by LaSalle. That entity has registered the securities it is issuing with the SEC in the United States and is
subject to regulation as a public company albeit not one separately listed on a stock exchange.
Highly publicized accounting and investment management frauds that occurred in various businesses and
countries during the financial crisis may result in significant changes in regulations that may affect our
investment management business and our broker-dealer entities. Furthermore, the laws and regulations
applicable to our business, both in the United States and in foreign countries, also may change in ways that
materially increase the costs of compliance. Particularly in emerging markets, there can be relatively less
transparency around the standards and conditions under which licenses are granted, maintained or renewed. It
also may be difficult to defend against the arbitrary revocation of a license in a jurisdiction where the rule of
law is less well developed.
As a licensed real estate service provider and advisor in various jurisdictions, we and our licensed employees
may be subject to various due diligence, disclosure, standard-of-care, anti-money laundering and other
obligations in the jurisdictions in which we operate. Failure to fulfill these obligations could subject us to
litigation from parties who purchased, sold or leased properties we brokered or managed or who invested in
our funds. We could become subject to claims by participants in real estate sales or other services claiming
that we did not fulfill our obligations as a service provider or broker. This may include claims with respect to
conflicts of interest where we are acting, or are perceived to be acting, for two or more clients with potentially
contrary interests.
COMPUTER AND INFORMATION SYSTEMS; MANAGEMENT OF DATA.
Our business is highly dependent on our ability to process transactions, gather and disseminate information
and manage various types of client and other data across numerous and diverse markets in many currencies. If
any of our financial, accounting, human resources or other data processing, e-mail, client accounting, funds
processing or electronic information management systems do not operate properly or are disabled, we could
suffer a disruption of our businesses, liability to clients, loss of client data, loss of employee data, regulatory
intervention, breach of confidentiality or other contract provisions, or reputational damage. These systems may
fail to operate properly or become disabled as a result of events that are wholly or partially beyond our
control, including disruptions of electrical or communications services, disruptions caused by natural disasters,
political instability, terrorist attacks, sabotage, computer viruses or problems with the Internet, deliberate
attempts to disrupt our computer systems through ‘‘hacking’’ or other forms of cyber-attack, or our inability to
occupy one or more of our office buildings. As we outsource significant portions of our information
technology functions to third-party providers, we bear the risk of having somewhat less direct control over the
manner and quality of performance than we would if done by our own employees. An example of this is the
increasing use of ‘‘cloud’’ computing whereby we outsource to third parties the maintenance of increasing
amounts of our business records, including electronically maintained documents and emails, rather than
keeping them on our own servers.
We are exposed to the risk of cyber-attacks in the normal course of business. In general, cyber incidents can
result from deliberate attacks or unintentional events. We have observed an increased level of attention
focused on cyber-attacks that include gaining unauthorized access to digital systems for purposes of
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misappropriating assets or sensitive information, corrupting data, or causing operational disruption. During
2013 and 2014, some major corporations reported that they had experienced broad-based theft of customer
and internal data, with material financial and reputational consequences. We are also increasingly recognizing
both the challenges and opportunities involved in mining the data in our systems so that we ‘‘know what we
know’’ and can use that knowledge for the benefit of our clients and our organization in the most
sophisticated possible ways.
Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as
by causing denial-of-service attacks on websites. Cyber-attacks may be carried out by third parties or insiders
using techniques that range from highly sophisticated efforts to electronically circumvent network security or
overwhelm websites to more traditional intelligence gathering and social engineering aimed at obtaining
information necessary to gain access. The objectives of cyber-attacks vary widely and can include theft of
financial assets, intellectual property, or other sensitive information. Cyber-attacks may also be directed at
disrupting our operations.
To the extent that our technology systems interact with those of our clients, they may face similar potential
problems and losses as the result of cyber-attacks through our systems that then impact their systems. Certain
of the high-profile cyber-attacks at other companies have come through the systems of suppliers.
While we have not incurred any material losses related to cyber-attacks, nor are we aware of any specific or
threatened cyber-incidents as of the date of this report, we may incur substantial costs and suffer other
negative consequences if we fall victim to one or more successful cyber-attacks. Such negative consequences
could include remediation costs that may include liability for stolen assets or information and repairing system
damage that may have been caused; increased cyber-security protection costs that may include organizational
changes, deploying additional personnel and protection technologies, training employees, and engaging third-
party experts and consultants; lost revenues resulting from unauthorized use of proprietary information or the
failure to retain or attract clients following an attack; litigation; and reputational damage adversely affecting
client or investor confidence.
The development of new software systems used to operate one or more aspects of our business, particularly
on a customized basis or in order to coordinate or consolidate financial, human resources or other types of
infrastructure data reporting, client accounting or funds processing is complicated. Additionally, the effort may
result in costs that we cannot recoup in the event of the failure to complete a planned software development.
A new software system that has defects may cause reputational issues and client or employee dissatisfaction
and/or damages, with our incurring liabilities and/or experiencing lost business as possible results. The
acquisition or development of software systems is often dependent to one degree or another on the quality,
ability and/or financial stability of one or more third-party vendors, over which we may not have control
beyond the rights we negotiate in our contracts. Different privacy regulations from one country to the next (or
across a region such as the European Union) may restrict our ability to share or collect data on a global basis,
and this may limit the utility of otherwise available technology.
The Firm has implemented significant new financial, human resources, client relationship management,
payables processing, securities management and trading and intranet software systems on a worldwide basis,
and is in the process of transitioning various significant processes to these new systems. This implementation
is complex and involves continuously evolving processes. If the Firm does not implement these new systems
effectively, or if any of the new systems do not operate as intended, the effectiveness of the Firm’s financial
reporting or internal controls could be materially and adversely affected.
Our business is also dependent, in part, on our ability to deliver to our clients the efficiencies and
convenience that technology affords. The effort to gain technological expertise and develop or acquire new
technologies requires us to incur significant expenses. If we cannot offer new technologies as quickly as our
competitors do, we could lose market share. We are increasingly dependent on the Internet and on intranet
technology to gather and disseminate critical business information publicly and also to our employees
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internally. In the event of technology failure, including a failure of outsourced ‘‘cloud’’ computing, or our
inability to maintain robust platforms, we risk competitive disadvantage.
The proliferation of social media and different types of mobile hardware devices have increased the
technology risks that all companies face, including as the result of the failure of staff to understand how to
use them appropriately, which can result in the inadvertent disclosure of confidential information and the
possible contract breaches and reputational damage that can result. A significant aspect of our protection
against hacking relies on our people managing their passwords carefully and not inadvertently assisting in
‘‘phishing’’ attempts designed to provide access to our systems, and our efforts to train our people and provide
appropriate encryption and other protections of mobile devices may not be sufficient to prevent unauthorized
access.
RISKS INHERENT IN MAKING ACQUISITIONS AND ENTERING INTO JOINT VENTURES.
Since 2005, we have completed over 60 acquisitions as part of our global growth strategy. In July 2008, we
acquired Staubach Holdings Inc., a U.S. real estate services firm specializing in tenant representation. In 2011,
we completed eight acquisitions including the acquisition of United Kingdom-based international property
consultancy King Sturge. In addition to King Sturge, we completed acquisitions within the United States,
South Africa, Australia, Singapore and Indonesia. During the period from the beginning of 2012 through the
end of 2014, collectively, we completed 19 acquisitions, in the United States, Australia, Japan, Singapore,
Malaysia, England, France, Sweden, Spain and Portugal. As long as a reasonable level of confidence remains
within the markets, we believe that additional acquisition opportunities will emerge from time to time and that
our industry will continue to consolidate.
Acquisitions subject us to a number of significant risks, any of which may prevent us from realizing the
anticipated benefits or synergies of the acquisition. The integration of companies is a complex and
time-consuming process that could significantly disrupt the businesses of JLL and the acquired company. The
challenges involved in integration and realizing the benefits of an acquisition include:
(cid:127) Diversion of management attention and financial resources from existing operations;
(cid:127) Difficulties in integrating cultures, compensation structures, operations, existing contracts, accounting
processes and methodologies, technology and realizing the anticipated synergies of the combined
businesses;
(cid:127) Failure to identify potential liabilities during the due diligence process;
(cid:127) Failure to identify improper accounting practices during the due diligence process;
(cid:127) Inability to retain the management, key personnel and other employees of the acquired business;
(cid:127) Inability to retain clients of the acquired business;
(cid:127) Exposure to legal, environmental, employment, professional standards, bribery, money-laundering, ethics
and other types of claims for improper activities of the acquired business prior to acquisition, including
those that may not have been adequately identified during the pre-acquisition due diligence investigation
or those which the legal documentation associated with the transaction did not successfully terminate or
transfer;
(cid:127) Addition of business lines in which we have not previously engaged (for example, general contractor
services for ‘‘ground-up’’ construction development projects); and
(cid:127) Potential impairment of intangible assets, which could adversely affect our reported results.
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Our failure to meet the challenges involved in successfully integrating our operations with those of another
company or otherwise to realize any of the anticipated benefits of an acquisition could have a material
adverse effect. Liabilities that we may either knowingly or inadvertently assume may not be fully insured.
Additionally, the price we pay or other resources that we devote may exceed the value we realize, or the value
we could have realized if we had allocated the consideration payable for the acquisition or other resources to
another opportunity.
To a much lesser degree, but nevertheless occasionally, we have entered into joint ventures in order to
conduct certain businesses or enter new geographies, and we will consider doing so in appropriate situations
in the future. Joint ventures have many of the same risk characteristics as we discuss above with respect to
acquisitions, particularly with respect to the due diligence and on-going relationship with the joint venture
partner(s) given that each partner has inherently less control in a joint venture and will be subject to the
authority and economics of the particular structure that is negotiated. Given a particular structure, we may not
have the authority to direct the management and policies of the joint venture. If a joint venture participant
acts contrary to our interest, it could harm our brand, business, results of operations and financial condition.
ENVIRONMENTAL LIABILITIES AND REGULATIONS; CLIMATE CHANGE RISKS; AND AIR QUALITY
RISKS.
The Firm’s operations are affected by federal, state and/or local environmental laws in the countries in which
we maintain office space for our own operations and where we manage properties for clients. We may face
liability with respect to environmental issues occurring at properties that we manage or occupy, or in which we
invest. Various laws and regulations restrict the levels of certain substances that may be discharged into the
environment by properties or they may impose liability on current or previous real estate owners or operators
for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances
at the property. We may face costs or liabilities under these laws as a result of our role as an on-site property
manager or a manager of construction projects. Our risks for such liabilities may increase as we expand our
services to include more industrial and/or manufacturing facilities than has been the case in the past. In
addition, we may face liability if such laws are applied to expand our limited liability with respect to our
co-investments in real estate as discussed above. Within our own operations, we face additional costs from
rising fuel prices which make it more expensive to power our corporate offices.
Given that the Firm’s own operations are generally conducted within leased office building space, we do not
currently anticipate that regulations restricting the emissions of greenhouse gases, or taxes that may be
imposed on their release would result in material costs or capital expenditures. However, we cannot be certain
about the extent to which such regulations will develop as there are higher levels of understanding and
commitments by different governments around the world regarding the risks of climate change and how they
should be mitigated. Regulations relating to climate change may affect the scope of services we provide to
clients in their managed properties, but clients would typically bear any additional costs of doing so under
their contracts with us. In any event, we anticipate that the burden and cost to the Firm of climate change
disclosure and carbon reporting will increase over time.
We anticipate that the potential effects of climate change will increasingly impact the decisions and analysis
that LaSalle makes with respect to the properties it considers for acquisition on behalf of clients since climate
change considerations can impact the relative desirability of locations and the cost of operating and insuring
acquired properties. Future legislation that requires specific performance levels for building operations could
make non-compliant buildings obsolete, which could materially affect investments in properties we have made
on behalf of clients, including those in which we may have co-invested. Climate change considerations will
likely also increasingly be part of the consulting work that JLL does for clients to the extent it is relevant to
the decisions our clients are seeking to make.
We are not aware of any material noncompliance with the environmental laws or regulations currently
applicable to us, and we are not the subject of any material claim for liability with respect to contamination at
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any location. However, these laws and regulations may discourage sales and leasing activities and mortgage
lending with respect to some properties, which may adversely affect both us and the commercial real estate
services industry in general. Environmental contamination or other environmental liabilities may also
negatively affect the value of commercial real estate assets held by entities that are managed by our
investment management business, which could adversely affect the results of operations of this business
segment.
We also anticipate that the potential effects of climate change will increasingly impact our own operations and
those of client properties we manage, especially when they are located in coastal cities. For example, during
2012 our own operations and properties we manage for clients in the northeastern United States and in
particular New York City, were impacted by Hurricane Sandy, in some cases significantly.
Declining air quality in major cities, Beijing being an example, may have consequences for our business in
various ways, including the need to respond to new regulations that affect the management of buildings,
declines in the desire of investors or corporates to invest in or occupy properties in such cities, and our ability
to retain staff in locations that may be relatively undesirable as a place to live.
ABILITY TO CONTINUE TO MAINTAIN SATISFACTORY INTERNAL FINANCIAL REPORTING
CONTROLS AND PROCEDURES.
If we are not able to continue to successfully operate under the requirements of Section 404 of the United
States Sarbanes-Oxley Act of 2002, or if there is a failure of one or more controls over financial reporting due
to fraud, improper execution or the failure of such controls to adjust adequately as our business evolves, then
our reputation, financial results and the market price of our stock could suffer. Our accounting can be
complex and requires that management make judgments with respect to revenue recognition, acquisitions and
other aspects of our business. While we believe that we have adequate internal financial reporting control
procedures in place, we may be exposed to potential risks from this legislation, which requires companies to
evaluate their internal controls and have their controls attested to by their independent registered public
accounting firm on an annual basis. We have evaluated our internal control systems in order to allow our
management to report on, and our independent registered public accounting firm to attest to, our internal
controls over financial reporting as required for purposes of this Annual Report on Form 10-K for the year
ended December 31, 2014. However, there can be no assurance that we will continue to receive a positive
attestation in future years, particularly since standards continue to evolve and are not necessarily being applied
consistently from one independent registered public accounting firm to another. If we identify one or more
material weaknesses in our internal controls in the future that we cannot remediate in a timely fashion, we
may be unable to receive a positive attestation at some time in the future from our independent registered
public accounting firm with respect to our internal controls over financial reporting.
ABILITY TO PROTECT INTELLECTUAL PROPERTY; INFRINGEMENT OF THIRD-PARTY
INTELLECTUAL PROPERTY RIGHTS.
Our business depends, in part, on our ability to identify and protect proprietary information and other
intellectual property such as our service marks, domain names, client lists and information, and business
methods. Existing laws of some countries in which we provide or intend to provide services, or the extent to
which their laws are actually enforced, may offer only limited protections of our intellectual property rights.
We rely on a combination of trade secrets, confidentiality policies, non-disclosure and other contractual
arrangements, and on patent, copyright and trademark laws to protect our intellectual property rights. In
particular, we hold various trademarks and trade names, including our principal trade name, ‘‘JLL.’’ If our
registered trade name were to expire or terminate, our competitive position in certain markets may be
materially and adversely affected. Our inability to detect unauthorized use (for example, by current or former
employees) or take appropriate or timely steps to enforce our intellectual property rights may have an adverse
effect on our business.
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We cannot be sure that the intellectual property that we may use in the course of operating our business or
the services we offer to clients do not infringe on the rights of third parties, and we may have infringement
claims asserted against us or against our clients. These claims may harm our reputation, cost us money and
prevent us from offering some services.
Confidential intellectual property is increasingly stored or carried on mobile devices, such as laptop
computers, tablets and smartphones, which makes inadvertent disclosure more of a risk in the event the
mobile devices are lost or stolen and the information has not been adequately safeguarded or encrypted. This
also makes it easier for someone with access to our systems, or someone who gains unauthorized access by
‘‘hacking’’ or other type of cyber attack, to steal information and use it to the disadvantage of our Firm or our
people. We believe that the risk from cyber attacks has increased significantly as some major companies
during 2013 and 2014 reported that they had experienced broad-based theft of customer and internal data,
with material financial and reputational consequences.
Advances in technology, which permit increasingly large amounts of information to be stored on smaller
devices or on third party ‘‘cloud’’ servers, as well as the proliferation of social media techniques, tend to
exacerbate these risks. On the other hand, cloud capabilities also allow us to do more monitoring of our email
and other knowledge storing mechanisms in order to pro-actively detect misuse of our intellectual property,
and we are in the process of implementing certain additional monitoring systems, as well as various data
analytics designed to detect potential conflicts of interests and other inappropriate behaviors. While we believe
these activities are beneficial from the perspective of protecting our assets, including clients’ intellectual
property to which we may have access, these activities carry certain risks related to compliance with privacy
and other applicable regulations in certain countries.
Financial Risk Factors
WE MAY HAVE INDEBTEDNESS WITH FIXED OR VARIABLE INTEREST RATES AND CERTAIN
COVENANTS WITH WHICH WE MUST COMPLY.
As of December 31, 2014, we had the ability to borrow, from a syndicate of lenders, up to $1.2 billion on an
unsecured revolving credit facility. Borrowings under our Facility bear variable interest rates ranging from
LIBOR plus 1.00% to 1.75% basis points. At December 31, 2014, we had outstanding letters of credit of
$22.0 million under the Facility and no outstanding borrowings. Our average outstanding borrowings under the
Facility were $357.0 million during the year ended December 31, 2014 at an effective interest rate of 1.2%.
Subsequent to December 31, 2014, we amended and expanded the Facility; refer to Note 15, Subsequent
Events, within the Notes to Consolidated Financial Statements for additional discussion. In addition to the
Facility, we also have $275.0 million of unsecured long-term senior notes (the ‘‘Notes’’) that are due in 2022.
The Notes bear an annual interest rate of 4.4%, subject to adjustment if a credit rating assigned to the Notes
is downgraded below an investment grade rating (or subsequently upgraded).
Our outstanding borrowings under the Facility fluctuate during the year primarily due to varying working
capital requirements. For example, payment of annual incentive compensation represents a significant cash
requirement commanding increased borrowings in the first half of the year, while historically the Firm’s
seasonal earnings pattern provides more cash flow in the second half of the year. To the extent we continue
our acquisition activities in the future, the level of our indebtedness could increase materially if we use the
Facility to fund such purchases.
The terms of the Facility, and to a lesser degree the Notes, contain a number of covenants that could restrict
our flexibility to finance future operations or capital needs, or to engage in other business activities that may
be in our best interest. The debt covenants have the effect of limiting our ability, among other things, to:
(cid:127) Encumber or dispose of assets;
(cid:127) Incur significant additional indebtedness;
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(cid:127) Make significant investments;
(cid:127) Engage in significant acquisitions.
In addition, the Facility requires that we comply with various financial covenants, including minimum leverage
and cash interest coverage ratios.
If we are unable to make required payments under the Facility or required by the Notes, or if we breach any
of the covenants, we will be in default, which could cause acceleration of repayment of outstanding amounts
as well as defaults under other existing and future debt obligations.
DOWNGRADES IN OUR CREDIT RATINGS COULD INCREASE OUR BORROWING COSTS OR
REDUCE OUR ACCESS TO FUNDING SOURCES IN THE CREDIT AND CAPITAL MARKETS.
We are currently assigned corporate credit ratings from Moody’s Investors Service, Inc. and Standard and
Poor’s Ratings Services based on their evaluation of our creditworthiness. All of our debt ratings remain
investment grade, but there can be no assurance that we will not be downgraded or that any of our ratings
will remain investment grade in the future. If our credit ratings are downgraded or other negative action is
taken, we could be required, among other things, to pay additional interest and fees on outstanding
borrowings under the Facility. Credit rating reductions by one or more rating agencies could also adversely
affect our access to funding sources, the cost and other terms of obtaining funding as well as our overall
financial condition, operating results and cash flow.
VOLATILITY IN LASALLE INVESTMENT MANAGEMENT INCENTIVE FEE REVENUE.
LaSalle’s portfolio is of sufficient size to periodically generate large incentive fees and equity losses and gains
that significantly influence our earnings and the changes in earnings from one year to the next. Volatility in
this component of our earnings is inevitable due to the nature of this aspect of our business, and the amount
of incentive fees or equity gains or losses we may recognize in future quarters is inherently unpredictable and
relates to market dynamics in effect at the time. The speed with which the real estate markets worldwide
turned from positive to negative starting in 2007 and continuing through 2009 is an example of the market
volatility to which we are subject and over which we have no control. Further, as it relates to portfolio-specific
results, the record magnitude of the combined incentive fees and equity earnings realized during the year
ended December 31, 2014 is expected to moderate in future years. In the case of our commingled funds,
underlying market conditions, particular decisions regarding the acquisition and disposition of fund assets, and
the specifics of the client mandate will determine the timing and size of incentive fees from one fund to
another. For separate accounts, where asset management is ongoing, we also may earn incentive fees at
periodic agreed-upon measurement dates, and they may be related to performance relative to specified
real-estate industry benchmarks and/or absolute return benchmarks.
While LaSalle has focused over the past several years on developing more predictable annuity-type revenue,
incentive fees should continue to be an important part of our revenue and earnings as long as real estate
markets remain healthy. However, it is likely that the volatility described above will continue. For example, in
2006, we recognized one very significant incentive fee from the long-term performance of a separate account
where we had ongoing portfolio management. This incentive fee was payable only once every four years and
was calculated based on the account’s performance relative to a market index. Given the extraordinary fall in
asset prices that many markets experienced starting in 2007, our incentive fees fell significantly through 2010,
and since then have rebounded. Any declines may be partially offset by our ability to take advantage of lower
asset prices as we make new investments, although it is inherently difficult to predict with any confidence how
all of these complicated factors will ultimately affect our future results.
Where incentive fees on a given transaction or portfolio are particularly large, certain clients have attempted
to renegotiate fees even though contractually obligated to pay them, and we expect this to occur from time to
time in the future. Our efforts to collect our fees in these situations may lead to significant legal fees and/or
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significant delays in collection due to extended negotiations, arbitration or litigation. They may also result in
either negotiated reductions in fees that take into account the future value of the relationship or loss of the
client.
VOLATILITY IN HOTELS AND CAPITAL MARKETS FEES.
We have business lines other than LaSalle that also generate fees based on the timing, size and pricing of
closed transactions and these fees may significantly contribute to our earnings and to changes in earnings from
one quarter or year to the next. For example, in 2007 our Hotels business generated one very substantial fee
from the sale of a large portfolio of hotels on behalf of a particular client. Volatility in this component of our
earnings is inevitable due to the nature of these businesses and the amount of the fees we will recognize in
future quarters is inherently unpredictable.
LASALLE’S BANKING AND CLIENT RELATIONSHIPS.
Although not highly leveraged by general industry standards, the investment funds that LaSalle operates in the
ordinary course of business borrow money from a variety of institutional lenders. The loans typically are
secured by liens on specific investment properties, but are otherwise non-recourse. During the global financial
crisis, the values of specific properties were in some cases less than the amount of the outstanding loan on the
property, which gave the lender the right to foreclose on the property, in which case the equity invested by the
fund would be without value. These situations were typically addressed on a case-by-case basis and, because
we generally maintain good relationships with our lenders, we were generally successful in renegotiations to
retain the management of substantially all fund properties, which has given additional time for values to
recover. A similar phenomenon could occur in connection with future economic recessions or liquidity
contractions.
Some clients of LaSalle that had open commitments to provide additional investments and that came under
stress due to the financial downturn became less able financially to honor their commitments and sought to
renegotiate the terms of their commitments or the fees that they pay. These activities did not result in
materially adverse consequences to LaSalle or any of its funds. Clients adversely affected due to a future
downturn may react similarly.
Within a difficult economic environment, raising new funds takes longer and may be less successful as current
and prospective clients may be less able or willing to commit new funds to real estate investments, which are
inherently less liquid than many competing investments. Additionally, certain clients may decide to manage all
or a portion of their real estate investments with internal resources rather than hiring outside investment
managers.
CURRENCY RESTRICTIONS AND EXCHANGE RATE FLUCTUATIONS.
We produce positive flows of cash in various countries and currencies that can be most effectively used to
fund operations in other countries or to repay our indebtedness, which is currently primarily denominated in
U.S. dollars. We face restrictions in certain countries that limit or prevent the transfer of funds to other
countries or the exchange of the local currency to other currencies. We also face risks associated with
fluctuations in currency exchange rates that may lead to a decline in the value of the funds produced in
certain jurisdictions.
Additionally, although we operate globally, we report our results in U.S. dollars, and thus our reported results
may be positively or negatively impacted by the strengthening or weakening of currencies against the U.S.
dollar. As an example, the euro and the pound sterling, each a currency used in a significant portion of our
operations, have fluctuated significantly in recent years. Our revenue from outside of the United States totaled
59% and 56% of our total revenue for 2014 and 2013, respectively. In addition to the potential negative
impact on reported earnings, fluctuations in currencies relative to the U.S. dollar may make it more difficult
to perform period-to-period comparisons of the reported results of operations.
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We are authorized to use currency-hedging instruments, including foreign currency forward contracts,
purchased currency options and borrowings in foreign currency. There can be no assurance that such hedging
will be economically effective. We do not use hedging instruments for speculative purposes.
As currency forward and option contracts are generally conducted off-exchange or over-the-counter (‘‘OTC’’),
many of the safeguards accorded to participants on organized exchanges, such as the performance guarantee
of an exchange clearing house, are generally unavailable in connection with OTC transactions. In addition,
there can be no guarantee that the counterparty will fulfill its obligations under the contractual agreement,
especially in the event of a bankruptcy or insolvency of the counterparty, which would effectively leave us
unhedged.
In 2009 and 2010, many of the most significant governments worldwide enacted economic stimulus measures
of various types. In 2011 and 2012 some of these same governments, particularly within the European Union,
have instituted austerity measures designed to reduce sovereign indebtedness. Additionally, certain questions
have arisen about the viability of the euro and there has been speculation that some countries within the
Eurozone may elect, or may be forced, to revert to the currency they issued prior to the establishment of the
euro. Due to these variables and many other variables, it is inherently difficult to predict how and when these
complicated factors will affect the relative values of currencies and in any event we anticipate significant
continuing volatility in currency exchange rates.
GREATER DIFFICULTY IN COLLECTING ACCOUNTS RECEIVABLE IN CERTAIN COUNTRIES AND
REGIONS.
We face challenges in our ability to efficiently and/or effectively collect accounts receivable in certain countries
and regions. For example, various countries have underdeveloped insolvency laws, and clients often are slow to
pay. In some countries, clients typically tend to delay payments, reflecting a different business culture over
which we do not necessarily have any control. Less-developed countries may have very lengthy or difficult
judicial processes that can make collections through the court system more problematic than they would
otherwise be.
Additionally, weakness in the global economy can put additional financial stress on clients and landlords, who
sometimes are the parties that pay our commissions where we have placed a tenant representation client into
their buildings. This in turn can negatively impact our ability to collect our receivables fully or in a timely
manner. We cannot be sure that the procedures we use to identify and rectify slowly paid receivables, and to
protect ourselves against the insolvencies or bankruptcies of clients, landlords and other third parties with
which we do business, which may involve placing liens on properties or litigating, will be effective in all cases.
INCREASING FINANCIAL RISK OF COUNTERPARTIES, INCLUDING REFINANCING RISK.
The unprecedented disruptions and dynamic changes in the financial markets, and particularly insofar as they
have led to major changes in the status and creditworthiness of some of the world’s largest banks, investment
banks and insurance companies, among others, have generally increased the counterparty risk to us from a
financial standpoint, including with respect to:
(cid:127) obtaining new credit commitments from lenders;
(cid:127) refinancing credit commitments or loans that have terminated or matured according to their terms,
including funds sponsored by our investment management subsidiary which use leverage in the ordinary
course of their investment activities;
(cid:127) placing insurance;
(cid:127) engaging in hedging transactions; and
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(cid:127) maintaining cash deposits or other investments, both our own and those we hold for the benefit of clients,
which are generally much larger than the maximum amount of government-sponsored deposit insurance
in effect for a particular account.
While these risks remain higher than they have been historically, we believe they have moderated as the
financial markets have stabilized in recent years. During 2012, we also diversified some of the counterparty
risk under the Facility by issuing the Notes, the proceeds of which were initially used to reduce the
outstanding loans under the Facility. We believe counterparty financial risks still remain elevated due mainly
to the potential liquidity issues within certain European financial institutions.
We generally attempt to conduct business with only the highest quality and most well-known counterparties,
but there can be no assurance (1) that our efforts to evaluate their creditworthiness will be effective in all
cases (particularly as the quality of credit ratings provided by the nationally recognized rating agencies has
been called into question), (2) that we will always be able to obtain the full benefit of the financial
commitments made to us by lenders, insurance companies, hedging counterparties or other organizations with
which we do business or (3) that we will always be able to refinance existing indebtedness (or commitments to
provide indebtedness) which has matured by its terms, including funds sponsored by our investment
management subsidiary.
Additionally, the ability of government regulatory authorities to adequately monitor and regulate banks,
investment banks, securities firms and insurance companies was significantly called into question during the
downturn (for example, in identifying and preventing ‘‘pyramid schemes,’’ ‘‘bubbles’’ in different asset classes
and other potential systemic failures in a timely fashion), as the result of which the overall risk of
unforeseeable financial loss from engaging in business with ostensibly regulated counterparties has increased.
POTENTIALLY ADVERSE TAX CONSEQUENCES; CHANGES IN TAX LEGISLATION AND TAX RATES.
We face a variety of risks of increased future taxation on our earnings as a corporate taxpayer in the countries
in which we have operations. Moving funds between countries can produce adverse tax consequences in the
countries from which and to which funds are transferred, as well as in other countries, such as the United
States, in which we are potentially subject to the taxation of earnings of other countries’ operations.
Additionally, as our operations are global, we face challenges in effectively gaining a tax benefit for costs
incurred in one country that benefit our operations in other countries.
Changes in tax legislation or tax rates may occur in one or more jurisdictions in which we operate that may
materially increase the cost of operating our business. This includes the potential for significant legislative
policy change in the taxation objectives with respect to the income of multinational corporations, as has
recently been the subject of policy debate and proposals in many countries and in the current Base Erosion
and Profit Shifting project of the Organization for Economic Co-operation and Development. It is also
possible that some governments will make significant changes to their tax policies as part of their responses to
their weakened economies.
Further, interpretations of existing tax law in various countries may change due to the activities of tax
authorities, which we believe are generally increasing the level of examination activities of major corporations,
and the decisions of courts. In addition, the views of the business community and the public on acceptable tax
planning activities, expressed through increased media scrutiny and the activities of non-governmental activist
organizations, may influence further changes in tax law, affecting corporate taxpayers broadly.
We face such risks both in our own business, but also in the investment funds that LaSalle operates. Adverse
or unanticipated tax consequences to the funds can negatively impact fund performance, incentive fees and
the value of co-investments that we have made. We are uncertain as to the ultimate results of these potential
changes or what their effects will be on our business in particular.
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THE CHARTER AND THE BYLAWS OF JONES LANG LASALLE, OR THE MARYLAND GENERAL
CORPORATION LAW, COULD DELAY, DEFER OR PREVENT A CHANGE OF CONTROL.
The charter and bylaws of Jones Lang LaSalle include provisions that may discourage, delay, defer or prevent
a takeover attempt that may be in the best interest of Jones Lang LaSalle shareholders and may adversely
affect the market price of our common stock.
The charter and bylaws provide for:
(cid:127) The ability of the Board of Directors to establish one or more classes and series of capital stock including
the ability to issue up to 10,000,000 shares of preferred stock, and to determine the price, rights,
preferences and privileges of such capital stock without any further shareholder approval;
(cid:127) A requirement that any shareholder action taken without a meeting be pursuant to unanimous written
consent; and
(cid:127) Certain advance notice procedures for Jones Lang LaSalle shareholders nominating candidates for
election to the Jones Lang LaSalle board of directors.
Under the Maryland General Corporation Law (the ‘‘MGCL’’), certain ‘‘Business Combinations’’ (including a
merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or
reclassification of equity securities) between a Maryland corporation and any person who beneficially owns
10% or more of the voting power of the corporation’s shares or an affiliate of the corporation who, at any
time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the
voting power of the then-outstanding voting stock of the corporation (an ‘‘Interested Shareholder’’) or an
affiliate of the Interested Shareholder are prohibited for five years after the most recent date on which the
Interested Shareholder became an Interested Shareholder. Thereafter, any such Business Combination must
be recommended by the board of directors of such corporation and approved by the affirmative vote of at
least (1) 80% of the votes entitled to be cast by holders of outstanding voting shares of the corporation and
(2) 662⁄3% of the votes entitled to be cast by holders of outstanding voting shares of the corporation other
than shares held by the Interested Shareholder with whom the Business Combination is to be effected, unless,
among other things, the corporation’s shareholders receive a minimum price (as defined in the MGCL) for
their shares and the consideration is received in cash or in the same form as previously paid by the Interested
Shareholder for its shares. Pursuant to the MGCL, these provisions also do not apply to Business
Combinations approved or exempted by the board of directors of the corporation prior to the time that the
Interested Shareholder becomes an Interested Shareholder.
Human Resources Risk Factors, Including From Non-Employees
DIFFICULTIES AND COSTS OF STAFFING AND MANAGING INTERNATIONAL OPERATIONS.
The coordination and management of international operations pose additional costs and difficulties. We must
manage operations that are in many time zones and that involve people with language and cultural
differences. Our success depends on finding and retaining people capable of dealing with these challenges
effectively, who will represent the Firm with the highest levels of integrity and who will communicate and
cooperate well with colleagues and clients across multiple geographies. If we are unable to attract and retain
qualified personnel, or to successfully plan for succession of employees holding key management positions, our
growth may not be sustainable, and our business and operating results could suffer. These risks increase as we
continue to grow as an organization and increase the number of staff, which has expanded significantly over
the past decade.
Among the challenges we face in retaining our people is maintaining a compensation system that rewards
them consistent with local market practices and with our profitability. This can be especially difficult where
competitors may be attempting to gain market share by aggressively attempting to hire our best people at
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rates of compensation that are well above the current market level. Another continuing challenge we have is
to maintain compensation systems that align financial incentives with our strategic goals as an organization
and the business and ethics behaviors we want to drive among our people, while at the same time not create
incentives to engage in overly risky business pursuits or behaviors.
We have committed resources to effectively coordinate our business activities around the world to meet our
clients’ needs, whether they are local, regional or global. We also consistently attempt to enhance the
establishment, organization and communication of corporate policies, particularly where we determine that the
nature of our business poses the greatest risk of noncompliance. The failure of our people to carry out their
responsibilities in accordance with our client contracts, our corporate and operating policies, or our standard
operating procedures, or their negligence in doing so, could result in liability to clients or other third parties,
which could have a material adverse effect. This is true not only with respect to individuals we employ
directly, but also individuals who work for third party vendors whom we hire on behalf of clients, especially
where we are acting in a principal capacity.
We believe these risks may be higher for our company than for others given that the nature of our business
requires our people to be spread across numerous corporate offices and client facilities globally, which makes
communications and consistency of standards more challenging. Additionally, the nature of our global
outsourcing business means that we regularly must on-board significant numbers of new staff at one time as
part of the transition into our Firm of new global accounts, which again makes communications of our policies
and driving performance consistency particularly challenging.
An employee we hire may be subject to restrictions under employment agreements with previous employers
that can restrict their activities, and therefore their contribution, for a period of time after they join us. For
example, they may be prohibited from soliciting business from certain clients, or from soliciting other
individuals to join us as employees.
The worldwide credit crisis and economic recession caused us to restructure certain parts of our business in
2009, and to a lesser degree during 2010, in order to size them properly relative to levels of business activity
we expect in the markets in which we compete. These type of activities, which may recur in the future, present
additional risks to the business. When addressing staffing in connection with a restructuring of our
organization or a downturn in economic conditions or activity, we must take into account the employment
laws of the countries in which actions are contemplated. In some cases, this can result in significant costs, time
delays in implementing headcount reductions and, potentially, litigation regarding allegedly improper
employment practices.
NONCOMPLIANCE WITH POLICIES; COMMUNICATIONS AND ENFORCEMENT OF OUR POLICIES
AND OUR CODE OF BUSINESS ETHICS.
The geographic and cultural diversity in our organization makes it more challenging to communicate the
importance of adherence to our Code of Business Ethics and our Vendor Code of Conduct, to monitor and
enforce compliance with its provisions on a worldwide basis, and to ensure local compliance with United
States and English laws that apply globally in certain circumstances. These include the U.S. Foreign Corrupt
Practices Act, the Patriot Act and the Sarbanes-Oxley Act of 2002 in the United States and the Bribery Act in
the United Kingdom.
Breaches of our Code of Business Ethics, particularly by our executive management, could have a material
adverse effect. Breaches of our Vendor Code of Conduct by vendors whom we retain as a principal for client
engagements can also lead to significant losses to clients from financial liabilities that might result.
EMPLOYEE, VENDOR AND THIRD-PARTY MISCONDUCT.
Like any business, we run the risk that employee fraud or other misconduct could occur. In a company such
as ours with over 58,000 employees, it is not always possible to successfully deter employee misconduct, and
67
the precautions we take to prevent and detect this activity may not be effective in all cases. Employee
misconduct, including fraud and involvement in incoming or outgoing bribery situations, can cause significant
financial or reputational harm to any business, from which full recovery cannot be assured. We also may not
have insurance that covers any losses in full or that covers losses from particular criminal acts.
Because we often hire third-party vendors and suppliers to perform services for our own account or for
clients, we are also subject to the consequences of fraud, bribery or misconduct by employees of our vendors,
which also can result in significant financial or reputational harm (even if we have been adequately protected
from a legal standpoint). We have instituted a Vendor Code of Conduct, which is published in multiple
languages on our public Website, and which is intended to communicate to our vendors the standards of
conduct we expect them to uphold. Our contracts with vendors also generally impose a contractual obligation
to comply with that Code.
Anecdotally, the risk that the Company will be the victim of fraud, both from employees and third parties, is
generally thought to increase during times of broad economic stress such as we experienced particularly during
2008 and 2009. An example of a third-party fraud would be attempts to draw on bank accounts by way of
forged checks or by corporate identity theft. We have increasingly experienced both types of attempts in recent
years although none has caused us significant financial loss.
SCRUTINY OF EXECUTIVE COMPENSATION PROGRAMS; AND INFLUENCE OF SHAREHOLDER
ADVOCACY GROUPS.
In recent years, there has been increasing scrutiny of the executive compensation practices of all public
companies in the United States. Shareholders have been given increasing rights to vote on the acceptability of
pay practices and the issuance of equity compensation. Independent shareholder advocacy groups have also
had increasing influence on the decisions of institutional investors on how to vote on executive compensation
matters. In the event that these emerging circumstances result in changes to our pay practices or our ability to
issue equity compensation to executives or otherwise to deduct executive compensation, we may have difficulty
in retaining our executives or we could experience additional tax costs with respect to our compensation
programs.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our principal corporate holding company headquarters are located at 200 East Randolph Drive, Chicago,
Illinois, where we currently occupy over 165,000 square feet of office space under a lease that expires in May
2032. Our regional headquarters for our Americas, EMEA and Asia Pacific businesses are located in Chicago,
London and Singapore, respectively. We have over 230 corporate offices worldwide located in most major
cities and metropolitan areas as follows: 103 offices in 8 countries in the Americas (including 85 in the United
States), 70 offices in 29 countries in EMEA, and 66 offices in 16 countries in Asia Pacific. In addition, we
have on-site property and corporate offices located throughout the world. On-site property management
offices are generally located within properties that we manage and are provided to us without cost.
ITEM 3. LEGAL PROCEEDINGS
The Company has contingent liabilities from various pending claims and litigation matters arising in the
ordinary course of business, some of which involve claims for damages that are substantial in amount. Many
of these matters are covered by insurance (including insurance provided through a captive insurance
company), although they may nevertheless be subject to large deductibles or retentions, and the amounts
being claimed may exceed the available insurance. Although the ultimate liability for these matters cannot be
determined, based upon information currently available, we believe the ultimate resolution of such claims and
litigation will not have a material adverse effect on our financial position, results of operations or liquidity.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
68
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed for trading on the New York Stock Exchange under the symbol ‘‘JLL.’’
As of February 25, 2015, there were 58,136 beneficial holders of our common stock.
The following table sets forth the high and low daily closing prices of our common stock as reported on the
New York Stock Exchange and dividends paid by quarter.
2014
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2013
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Dividends
Stock Price Range
High
Low
Dividends
Per Share
$
$
$
$
$
$
$
$
154.25
136.49
126.96
125.29
102.80
97.10
100.02
100.69
$
$
$
$
$
$
$
$
118.79
123.45
112.57
101.17
82.68
82.15
86.50
85.56
$
$
$
$
0.25
0.23
0.22
0.22
On December 15, 2014, we paid a semi-annual dividend of $0.25 per share of our common stock to holders of
record at the close of business on November 14, 2014. JLL also paid a cash dividend of $0.23 per share of its
common stock on June 13, 2014, to holders of record at the close of business on May 15, 2014. At JLL’s
discretion, a dividend-equivalent in the same amount was also paid simultaneously on outstanding but
unvested restricted stock units granted under the Company’s Stock Award and Incentive Plan. There can be
no assurance that future dividends will be declared since the actual declaration of future dividends and the
establishment of record and payment dates remains subject to final determination by JLL’s Board of Directors.
Transfer Agent
Computershare
P.O. Box 358015
Pittsburgh, PA 15252-8015
Equity Compensation Plan Information
For information regarding our equity compensation plans, including both shareholder approved plans and
plans not approved by shareholders, see Item 12. Security Ownership of Certain Beneficial Owners and
Management.
69
Comparison of Cumulative Total Shareholder Return
COMPARISON OF 5 YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG JLL, THE
S&P 500 INDEX AND OUR PEER GROUP
The following graph compares the cumulative 5-year total return to shareholders of JLL’s common stock
relative to the cumulative total returns of the S&P 500 index, and a customized peer group that includes:
1) CBRE Group Inc. (CBG), a global commercial real estate services company that is publicly traded in the
United States; 2) First Service (FRSV), the publicly traded parent of Colliers International, a global
commercial real estate services provider; and 3) Savills Plc. (SVL.L), a real estate services firm that is traded
on the London Stock Exchange. The graph below assumes that the value of the investment in JLL’s common
stock, the S&P 500 index, and in the peer group (including reinvestment of dividends) was $100 on
December 31, 2009 and tracks it through December 31, 2014.
$250
$200
$150
$100
$50
$-
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
JLL
S&P 500
Peer Group
2009
100
100
100
$
$
$
December 31,
2010
139
115
182
2011
102
117
144
2012
141
136
167
6APR201518062444
2013
172
180
205
2014
253
205
250
JLL
S&P 500
Peer Group
Share Repurchases
We have made no share repurchases under our share repurchase program in 2014 or 2013.
70
ITEM 6. SELECTED FINANCIAL DATA (UNAUDITED)
The following table sets forth our summary historical consolidated financial data. The information should be
read in conjunction with our consolidated financial statements and related notes and ‘‘Management’s
Discussion and Analysis of Financial Condition and Results of Operations’’ included elsewhere herein.
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)
Statements of Operations Data:
YEAR ENDED DECEMBER 31,
2014
2013
2012
2011
2010
Revenue
$ 5,429,603
4,461,591
3,932,830
3,584,544
2,925,613
Operating income
465,664
368,819
289,403
251,205
260,658
Interest expense, net of interest income
(28,321)
(34,718)
(35,173)
(35,591)
(45,802)
Equity earnings (losses) from real estate
ventures
Income before provision for income taxes and
minority interest
Provision for income taxes
48,265
31,343
23,857
6,385
(11,379)
485,608
97,588
365,444
92,092
278,087
69,244
221,999
56,387
203,477
49,038
Net income
388,020
273,352
208,843
165,612
154,439
Net income attributable to noncontrolling
interest
1,957
3,487
793
1,228
537
Net income attributable to the Company
$
386,063
269,865
208,050
164,384
153,902
Dividends on unvested common stock, net
of tax
314
409
494
387
378
Net income available to common shareholders
$
385,749
269,456
207,556
163,997
153,524
Basic earnings per common share before
dividends on unvested common stock
Dividends on unvested common stock, net
of tax
Basic earnings per common share
$
$
8.64
6.10
4.74
3.81
3.64
(0.01)
8.63
(0.01)
6.09
(0.01)
4.73
(0.01)
3.80
(0.01)
3.63
Basic weighted average shares outstanding
44,684,482 44,258,878 43,848,737 43,170,383 42,295,526
Diluted earnings per common share dividends
on unvested common stock
Dividends on unvested common stock, net
of tax
Diluted earnings per common share
$
$
8.53
5.99
4.64
3.71
3.49
(0.01)
8.52
(0.01)
5.98
(0.01)
4.63
(0.01)
3.70
(0.01)
3.48
Diluted weighted average shares outstanding
45,260,563 45,072,120 44,799,437 44,367,359 44,084,154
71
(IN THOUSANDS)
Other Data:
EBITDA (1)
Ratio of earnings to fixed charges (2)
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Assets under management (3)
Total square feet under management
Balance Sheet Data:
YEAR ENDED DECEMBER 31,
2014
2013
2012
2011
2010
605,995
6.93X
476,119
5.33X
390,783
4.26X
338,807
3.86X
319,937
3.73X
498,861
(187,938)
(203,029)
295,235
(164,212)
(128,388)
325,899
(151,252)
(208,741)
211,338
(389,316)
110,535
384,270
(90,876)
(110,760)
$
$
$53,600,000 47,600,000 47,000,000 47,700,000 41,300,000
1,784,000
2,606,000
3,440,000
2,098,000
2,954,000
Cash and cash equivalents
Total assets
Total debt (4)
Deferred business acquisition obligations (5)
Total liabilities
Total Company shareholders’ equity
$
250,413
5,075,336
294,623
118,107
2,652,767
2,386,797
152,726
4,597,353
454,522
135,236
2,406,544
2,179,669
152,159
4,351,499
476,223
213,433
2,392,243
1,951,183
184,454
3,932,636
528,091
299,060
2,238,256
1,691,129
251,897
3,349,861
226,200
298,545
1,777,926
1,568,931
(1) EBITDA represents earnings before interest expense, net of interest income, income taxes, depreciation
and amortization. Although EBITDA is a non-GAAP financial measure, it is used extensively by management
and is useful to investors and lenders as one of the primary metrics for evaluating debt, to sustain potential
future increases in debt and to satisfy capital requirements. EBITDA also is used in the calculations of certain
covenants related to the Facility. However, EBITDA should not be considered as an alternative either to net
income available to common shareholders or net cash provided by operating activities, both of which are
determined in accordance with U.S. generally accepted accounting principles (‘‘U.S. GAAP’’). Because
EBITDA is not calculated under U.S. GAAP, our EBITDA may not be comparable to similarly titled
measures used by other companies.
Below is a reconciliation of our net income to EBITDA ($ in thousands):
YEAR ENDED DECEMBER 31,
2014
2013
2012
2011
2010
Net income attributable to common
shareholders
Interest expense, net of interest income
Provision for income taxes
Depreciation and amortization
EBITDA
$ 385,749
28,321
97,588
94,337
269,456
34,718
92,092
79,853
$ 605,995
476,119
207,556
35,173
69,244
78,810
390,783
163,997
35,591
56,387
82,832
338,807
153,524
45,802
49,038
71,573
319,937
72
Below is a reconciliation of our net cash provided by operating activities, the most comparable cash flow
measure on the statements of cash flows, to EBITDA ($ in thousands):
Net cash provided by operating activities
Interest expense, net of interest income
Provision for income taxes
Change in working capital and non-cash
2014
$ 498,861
28,321
97,588
YEAR ENDED DECEMBER 31,
2011
211,338
35,591
56,387
2013
295,235
34,718
92,092
2012
325,899
35,173
69,244
2010
384,270
45,802
49,038
expenses
EBITDA
(18,775)
54,074
(39,533)
35,491
(159,173)
$ 605,995
476,119
390,783
338,807
319,937
(2) For purposes of computing the ratio of earnings to fixed charges, ‘‘earnings’’ represents net earnings
before income taxes, and certain adjustments for activity relative to equity earnings, plus fixed charges, less
capitalized interest. Fixed charges consist of interest expense, including amortization of debt discount and
financing costs, capitalized interest and one-third of rental expense, which we believe is representative of the
interest component of rental expense.
(3) Assets under management represent the aggregate fair value or cost basis (where an appraisal is not
available) of assets managed by LaSalle. Assets under management data for separate account and fund
management amounts are reported based on a one quarter lag.
(4) Total debt includes long-term borrowing under the Facility, Long-term senior notes and Short-term
borrowing, primarily local overdraft facilities.
(5) Deferred business acquisition obligations include both the short-term and long-term obligations to sellers
of business for acquisitions closed as of December 31, 2014, with the only condition on these payments being
the passage of time. We include these obligations in debt in the calculation of our leverage ratio under the
Facility.
73
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with our Selected Financial Data and
Consolidated Financial Statements, including the notes thereto, appearing elsewhere in this Form 10-K. The
following discussion and analysis contains certain forward-looking statements generally identified by the words
anticipates, believes, estimates, expects, plans, intends and other similar expressions. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause JLL’s actual
results, performance, achievements, plans and objectives to be materially different from any future results,
performance, achievements, plans and objectives expressed or implied by such forward-looking statements. See
the Cautionary Note Regarding Forward-Looking Statements after Part IV, Item 15. Exhibits and Financial
Statement Schedules.
We present our Management’s Discussion and Analysis in six sections, as follows:
(1) An executive summary of our business;
(2) A summary of our critical accounting policies and estimates;
(3) Certain items affecting the comparability of results and certain market and other risks that we face;
(4) The results of our operations, first on a consolidated basis and then for each of our business segments;
(5) Consolidated cash flows; and
(6) Liquidity and capital resources.
EXECUTIVE SUMMARY
JLL provides comprehensive integrated real estate and investment management expertise on a local, regional
and global level to owner, occupier, and investor clients and developers. We are an industry leader in property
and corporate facility management services, with a portfolio of approximately 3.4 billion square feet
worldwide. We deliver our array of RES product offerings across our three geographic business segments:
(1) the Americas, (2) EMEA, and (3) Asia Pacific. Our fourth business segment, LaSalle, a member of the
Jones Lang LaSalle group, is one of the world’s largest and most diversified real estate investment
management firms, with approximately $53.6 billion of assets under management across the globe.
In 2014, we generated revenue of $5.4 billion across our four business segments. In addition to U.S. dollars,
we also generated revenue in euros, British pounds, Australian dollars, Japanese yen, Hong Kong dollars,
Singapore dollars and a variety of other currencies.
The broad range of real estate services we offer includes (in alphabetical order):
Agency Leasing
Capital Markets
Corporate Finance
Energy and Sustainability Services
Facility Management Outsourcing (Occupiers)
Investment Management
Lease Administration
Logistics and Supply-Chain Management
Mortgage Origination and Servicing
Project and Development Management / Construction
Property Management (Investors)
Real Estate Investment Banking / Merchant Banking
Research
Strategic Consulting and Advisory Services
Tenant Representation
Transportation Management
Valuations
Value Recovery and Receivership Services
We work for a broad range of clients that represent a wide variety of industries and are based in markets
throughout the world. Our clients vary greatly in size. They include for-profit and not-for-profit entities of all
kinds, public-private partnerships and governmental (‘‘public sector’’) entities. Increasingly, we are offering services
to smaller middle-market companies that are looking to outsource real estate services. Through our LaSalle
subsidiary, we invest for clients on a global basis in both publicly traded real estate securities and private assets.
74
See Item 1. Business for additional information on the services we provide, as well as our ‘‘Value Drivers for
Providing Superior Client Service and Prospering as a Sustainable Enterprise,’’ our ‘‘Global Strategic
Priorities,’’ our ‘‘Competitive Differentiators,’’ and ‘‘Industry Trends.’’ See also Item 1A. Risk Factors, for the
various risk factors that impact our business.
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
An understanding of our accounting policies is necessary for a complete analysis of our results, financial
position, liquidity and trends. The preparation of our financial statements requires management to make
certain critical accounting estimates and judgments that impact (1) the stated amount of assets and liabilities,
(2) disclosure of contingent assets and liabilities at the date of the financial statements, and (3) the reported
amounts of revenue and expenses during the reporting periods. These accounting estimates are based on
management’s judgment. We consider them to be critical because of their significance to the financial
statements and the possibility that future events may differ from current judgments, or that the use of
different assumptions could result in materially different estimates. We review these estimates on a periodic
basis to ensure reasonableness. Although actual amounts likely differ from such estimated amounts, we believe
such differences are not likely to be material.
Revenue Recognition
The SEC’s Staff Accounting Bulletin No. 101, ‘‘Revenue Recognition in Financial Statements’’ (‘‘SAB 101’’),
as amended by SAB 104, provides guidance on the application of U.S. GAAP to selected revenue recognition
issues. Additionally, the Financial Accounting Standards Board (‘‘FASB’s’’) Accounting Standards Codification
(‘‘ASC’’) 605-45, ‘‘Principal and Agent Considerations,’’ provides guidance when accounting for
reimbursements received from clients.
We earn revenue from the following principal sources:
(cid:127) Transaction commissions;
(cid:127) Advisory and management fees;
(cid:127) Incentive fees;
(cid:127) Project and development management fees; and
(cid:127) Construction management fees.
Some of the contractual terms related to the process of earning revenue from these sources, including
potentially contingent events, can be complex and so require us to make judgments about the timing of when
we should recognize revenue. For a detailed discussion of our revenue recognition policies, see the Revenue
Recognition section of Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated
Financial Statements.
Allowance for Uncollectible Accounts Receivable
We estimate the allowance necessary to provide for uncollectible accounts receivable. This estimate includes
specific accounts from which payment has become unlikely. We also base this estimate on historical
experience, combined with a careful review of current developments and with a strong focus on credit quality.
The process by which we calculate the allowance begins with the individual business units where we identify
specific uncertain accounts. We then reserve for uncertain accounts as part of an overall reserve that is
formulaic and driven by the age profile of the receivables and our historical experience. We review these
allowances on a quarterly basis to ensure they are appropriate. As part of this review, we develop a range of
potential allowances on a consistent formulaic basis. Our allowance for uncollectible accounts receivable as
determined under this methodology was $17.9 million and $18.8 million at December 31, 2014 and 2013,
respectively.
Bad debt expense was $8.2 million, $8.7 million and $6.6 million for the years ended December 31, 2014, 2013
and 2012, respectively. We believe that we have an adequate reserve for our accounts receivables at
December 31, 2014 given the current economic conditions and the credit quality of our clients. However,
75
changes in our estimates of collectability could significantly impact our bad debt expense in the future. For
additional information on our allowance for uncollectible accounts see the Financing Receivables section of
Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements.
Asset Impairments
The property and equipment we use in our business substantially consists of computer equipment and
software, leasehold improvements, and furniture, fixtures and equipment. We have recorded goodwill and
other identified intangibles from a series of acquisitions. We also invest in certain real estate ventures that
own and operate commercial real estate. Historically, these investments have primarily been co-investments in
funds that LaSalle establishes in the ordinary course of business for its clients. These investments include
non-controlling ownership interests generally ranging from less than 1% to 15% of the respective ventures. We
account for these investments under the equity method of accounting or at fair value in the accompanying
Consolidated Financial Statements considering the nature of our ownership and any other interests we hold in
the investments.
Goodwill: Historically we have grown, in part, through a series of acquisitions. Consistent with the services
nature of the businesses we have acquired, the largest asset on our balance sheet is goodwill. We do not
amortize this goodwill; instead, we evaluate goodwill for impairment at least annually. In September 2011, the
FASB issued Accounting Standards Update (‘‘ASU’’) 2011-08, ‘‘Testing Goodwill for Impairment,’’ which
permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to
perform the two-step goodwill impairment test.
We have considered both quantitative and qualitative factors with respect to the performance of our annual
impairment tests of goodwill during the last three years. For each period tested, we determined the fair value
of our reporting units to be substantially in excess of the carrying value primarily considering (1) our market
capitalization in relation to the aggregate carrying value of our net assets, (2) our overall annual financial
performance, and (3) near and longer-term forecasts of operating income and cash flows generated by our
reporting units in relation to the carrying values of the net assets of each reporting unit. In addition to our
annual impairment evaluation, we consider whether events or circumstances have occurred in the period
subsequent to our annual impairment testing which indicate that it is more likely than not an impairment loss
has occurred.
For additional information on goodwill and intangible asset impairment testing see the Business Combinations,
Goodwill and Other Intangible Assets section of Note 2, Summary of Significant Accounting Policies, of the
Notes to Consolidated Financial Statements.
Investments in Real Estate Ventures: We review investments in real estate ventures, except for those reported
at fair value, for indications of whether (1) we may not be able to recover the carrying value of our
investments and (2) our equity investments are other than temporarily impaired. Our assessments consider the
existence of impairment indicators at the underlying real estate assets that comprise the majority of our
investments. We base such assessments, with regard to both the investment and underlying asset levels, on
evaluations of regular updates to future cash flow models and on factors such as operational performance,
market conditions, major tenancy matters, legal and environmental concerns and our ability and intent to
continue to hold each investment. When events or changes in circumstances indicate that the carrying amount
of one of our investments in real estate ventures may be other than temporarily impaired, we consider the
likelihood of recoverability of the carrying amount of our investment as well as the estimated fair value and
record an impairment charge as applicable. Impairment charges to write down the carrying value of the real
estate assets underlying our investments, our proportionate share of which is recognized within Equity
earnings from real estate ventures in the Consolidated Statements of Comprehensive Income, are generally
the result of completing discounted cash flow models to determine fair value. Additionally, we consider a
number of factors, including our share of co-investment cash flows and the fair value of our investments, in
determining whether or not our equity investment is other than temporarily impaired.
76
Impairment charges included within Equity earnings from real estate ventures aggregated to $2.4 million,
$6.5 million, and $7.9 million for the years ended December 31, 2014, 2013, and 2012, respectively. It is
reasonably possible that if real estate values or the periods over which assets are held decline, we may sustain
additional impairment charges on our Investments in real estate ventures in future periods.
For investments in real estate ventures reported at fair value, our investment is increased or decreased each
reporting period by the difference between the fair value of the investment and the carrying value at the
balance sheet date. We reflect these fair value adjustments as gains or losses in our Consolidated Statements
of Comprehensive Income within Equity earnings from real estate ventures. For the years ended
December 31, 2014, 2013, and 2012, we included fair value gains of $7.1 million, $5.1 million, and $2.0 million,
respectively, in Equity earnings.
Income Taxes
We account for income taxes under the asset and liability method. We recognize deferred tax assets and
liabilities for the future tax consequences attributable to (1) differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and (2) operating loss and tax
credit carryforwards. We measure deferred tax assets and liabilities using the enacted tax rates expected to
apply to taxable income in the years in which we expect to recover or settle those temporary differences. We
recognize into income the effect on deferred tax assets and liabilities of a change in tax rates in the period
that includes the enactment date.
Because of the global and cross border nature of our business, our corporate tax position is complex. We
generally provide for taxes in each tax jurisdiction in which we operate based on local tax regulations and
rules. Such taxes are provided on net earnings and include the provision of taxes on substantively all
differences between financial statement amounts and amounts used in tax returns, excluding certain
non-deductible items and permanent differences.
Our global effective tax rate is sensitive to the complexity of our operations as well as to changes in the mix
of our geographic profitability. Local statutory tax rates range from 10% to 40% in the countries in which we
have significant operations. We evaluate our estimated effective tax rate on a quarterly basis to reflect forecast
changes in:
(1) Our geographic mix of income;
(2) Legislative actions on statutory tax rates;
(3) The impact of tax planning to reduce losses in jurisdictions where we cannot recognize the tax benefit of
those losses; and
(4) Tax planning for jurisdictions affected by double taxation.
We reflect the benefit from tax planning when we believe it is probable that it will be successful, which usually
requires that certain actions have been initiated. We provide for the effects of income taxes on interim
financial statements based on our estimate of the effective tax rate for the full year.
Our effective tax rates for years ended December 31, 2014, 2013, and 2012 were 20.1%, 25.2%, and 24.9%,
respectively, which reflected the continued disciplined management of our global tax position. Lower tax rate
jurisdictions (those with effective national and local combined tax rates of 25% or lower, which represents a
difference of 10% or more from the United States federal statutory income tax rate) with meaningful
contributions to our effective tax rate include: Hong Kong (16.5%), Singapore (17%), the United Kingdom
(21.5%), The People’s Republic of China (25%), and the Netherlands (25%). Other tax rate jurisdictions with
effective rates of 25% or lower making meaningful contributions to our global effective tax rate include:
Macau (12%), Cyprus (12.5%), Ireland (12.5%), and Poland (19%).
77
Based on our historical experience and future business plans, we do not expect to repatriate our foreign
source earnings to the United States. As a result, we have not provided deferred taxes on such earnings or the
difference between tax rates in the United States and the various international jurisdictions where we earn
such amounts. Further, there are various limitations on our ability to utilize foreign tax credits on such
earnings when we repatriate them. As such, we may incur taxes in the United States upon repatriation without
credits for foreign taxes paid on such earnings.
We have not provided a deferred U.S. tax liability on the unremitted earnings of international subsidiaries
because it is our intent to permanently reinvest such earnings outside of the United States. If repatriation of
all such earnings were to occur, we estimate that our resulting U.S. tax liability would be approximately
$145 million, net of the benefits of utilization of foreign tax credits and net operating loss carryovers. We
believe that our policy of permanently reinvesting earnings of foreign subsidiaries does not significantly impact
our liquidity.
We have established valuation allowances against deferred tax assets where expected future taxable income
does not support their realization on a more likely than not basis. We formally assess the likelihood of being
able to utilize current tax losses in the future on a country-by-country basis, with the determination of each
quarter’s income tax provision. We establish or increase valuation allowances upon specific indications that the
carrying value of a tax asset may not be recoverable. Alternatively, we reduce valuation allowances upon
(1) specific indications that the carrying value of the tax asset is more likely than not recoverable or (2) the
implementation of tax planning strategies allowing an asset we previously determined not realizable to be
viewed as realizable.
The table below summarizes certain information regarding the gross deferred tax assets and valuation
allowance as of December 31, 2014 and 2013 ($ in millions):
Gross deferred tax assets
Valuation allowance
2014
2013
$ 364.9
62.0
373.1
60.5
The decrease in gross deferred tax assets in 2014 was primarily the result of tax loss carryover utilization.
We evaluate our segment operating performance before tax, and do not consider it meaningful to allocate tax
by segment. Estimations and judgments relevant to the determination of tax expense, assets and liabilities
require analysis of the tax environment and the future profitability, for tax purposes, of local statutory legal
entities rather than business segments. Our statutory legal entity structure generally does not mirror the way
that we organize, manage and report our business operations. For example, the same legal entity may include
both LaSalle and RES businesses in a particular country.
At December 31, 2014, the amount of unrecognized tax benefits was $48.5 million. We believe it is reasonably
possible that matters for which we have recorded $24.2 million of gross unrecognized tax benefits will be
resolved within one year after December 31, 2014. The recognition of tax benefits, and other changes to the
amounts of our unrecognized tax benefits, may occur as the result of ongoing operations, the outcomes of
audits or other examinations by tax authorities, or the passing of statutes of limitations. We do not expect
changes to our unrecognized tax benefits to have a significant impact on net income or the financial position
of the Company. We do not believe that we have material tax positions for which the ultimate deductibility is
highly certain but for which there is uncertainty about the timing of such deductibility.
Self-Insurance Programs
For all of our U.S.-based employees, we have chosen to retain certain risks regarding health insurance and
workers’ compensation rather than purchase third-party insurance. Estimating our exposure to such risks
involves subjective judgments about future developments.
78
We supplement our traditional global insurance program by the use of a captive insurance company to provide
professional indemnity and employment practices insurance on a ‘‘claims made’’ basis. Professional indemnity
claims can be complex and take a number of years to resolve, and it can be difficult to accurately estimate the
ultimate cost of these claims.
(cid:127) Health Insurance: We self-insure our health benefits for all U.S.-based employees, although we purchase
stop-loss coverage on an annual basis to limit our exposure. We self-insure because we believe that on the
basis of our historic claims experience, the demographics of our workforce and trends in the health
insurance industry, we incur reduced expense by self-insuring our health benefits as opposed to
purchasing health insurance through a third party. We estimate our likely full-year cost at the beginning
of the year and expense this cost on a straight-line basis throughout the year. In the fourth quarter, we
estimate the required reserve for unpaid health costs, including those not yet reported, we would need at
year-end. Given the nature of medical claims, it may take up to 24 months for claims to be processed and
recorded. The accrual balance for the 2014 program was $11.0 million at December 31, 2014, and the
accrual balance for the 2013 program was $7.1 million at December 31, 2013.
The table below sets out certain information related to the cost of the health insurance program for the
years ended December 31, 2014, 2013 and 2012 ($ in millions):
Expense to the Company
Employee contributions
Adjustment to prior year reserve
Total program cost
2014
2013
2012
$ 37.1
14.1
(0.2)
29.8
11.8
(0.4)
26.7
10.4
(2.7)
$ 51.0
41.2
34.4
(cid:127) Workers’ Compensation Insurance: We self-insure for workers’ compensation insurance claims because
our workforce has historically experienced fewer claims than is normal for our industry. We purchase
stop-loss coverage to limit our exposure to large, individual claims. We accrue workers’ compensation
expense based on the applicable state’s rate and job classifications. On an annual basis in the third
quarter, we engage in a comprehensive analysis to develop a range of potential exposure, and considering
actual experience, we reserve within that range. We accrue the difference between our estimate of
potential exposure and our reserve. The changes in estimate for the years ended December 31, 2014 and
2013, were credits of $5.8 million and $1.5 million, respectively. There were no material adjustments
recorded for the year ended December 31, 2012. Our accruals for workers’ compensation insurance
claims, which can relate to multiple years, were $24.7 million and $25.2 million at December 31, 2014 and
2013, respectively.
The table below sets out the range and our actual reserve for the past two years ($ in millions):
December 31, 2014
December 31, 2013
MAXIMUM MINIMUM ACTUAL
RESERVE RESERVE
RESERVE
$ 24.7
$ 25.2
21.2
21.1
24.7
25.2
Given the uncertain nature of claim reporting and settlement patterns associated with workers’
compensation insurance, we have accrued at the higher end of the range.
(cid:127) Captive Insurance Company: In order to better manage our global insurance program and support our
risk management efforts, we supplement our traditional insurance program by the use of a wholly-owned
captive insurance company to provide professional indemnity and employment practice liability insurance
coverage on a ‘‘claims made’’ basis. The level of risk retained by our captive insurance company, with
79
respect to professional indemnity claims, is up to $2.5 million per claim, inclusive of the deductible. The
accruals for professional indemnity claims facilitated through our captive insurance company, which relate
to multiple years, were $9.2 million and $6.2 million, as of December 31, 2014 and 2013, respectively.
Professional indemnity insurance claims can be complex and take a number of years to resolve. Within
our captive insurance company, we estimate the ultimate cost of these claims by way of specific claim
accruals developed through periodic reviews of the circumstances of individual claims. When a potential
loss event occurs, management estimates the ultimate cost of the claim and accrues the related cost when
probable and estimable.
NEW ACCOUNTING STANDARDS
See New Accounting Standards section of Note 2 of the Notes to Consolidated Financial Statements.
ITEMS AFFECTING COMPARABILITY
Macroeconomic Conditions
Our results of operations and the variability of these results are significantly influenced by (1) macroeconomic
trends, (2) the geopolitical environment, (3) the global and regional real estate markets, and (4) the financial
and credit markets. These macroeconomic conditions have had, and we expect to continue to have, a
significant impact on the variability of our results of operations.
LaSalle Investment Management Revenue
Our investment management business is in part compensated through the receipt of incentive fees where
performance of underlying funds’ investments exceeds agreed-to benchmark levels. Depending upon
performance and the contractual timing of measurement periods with clients, these fees can be significant and
vary substantially from period to period.
Equity earnings from real estate ventures also may vary substantially from period to period for a variety of
reasons, including as a result of (1) impairment charges, (2) unrealized gains (losses) on investments reported
at fair value, (3) realized gains (losses) on asset dispositions, or (4) incentive fees recorded as Equity earnings.
The timing of recognition of these items may impact comparability between quarters, in any one year, or
compared to a prior year.
The comparability of these items can be seen in Note 3 of the Notes to Consolidated Financial Statements
and is discussed further in Segment Operating Results included herein.
Transactional-Based Revenue
Transactional-based fees for real estate investment banking, capital markets activities and other services within
our RES businesses increase the variability of the revenue we receive that relates to the size and timing of our
clients’ transactions. The timing and the magnitude of these fees can vary significantly from year to year and
quarter to quarter, and from region to region.
Foreign Currency
We conduct business using a variety of currencies but we report our results in U.S. dollars. As a result, the
volatility of currencies against the U.S. dollar may positively or negatively impact our results. This volatility
can make it more difficult to perform period-to-period comparisons of the reported U.S. dollar results of
operations, because such results may indicate a growth or decline rate that might not have been consistent
with the real underlying growth or decline rate in the local operations. Consequently, we provide information
about the impact of foreign currencies in the period-to-period comparisons of the reported results of
operations in our discussion and analysis of financial condition in the Results of Operations section below.
80
MARKET RISKS
Market Risk
The principal market risks we face due to the risk of loss arising from adverse changes in market rates and
prices are:
(cid:127) Interest rates on the Facility; and
(cid:127) Foreign exchange risks.
In the normal course of business, we manage these risks through a variety of strategies, including hedging
transactions using various derivative financial instruments such as foreign currency forward contracts. We enter
into derivative instruments with high credit-quality counterparties and diversify our positions across such
counterparties in order to reduce our exposure to credit losses. We do not enter into derivative transactions
for trading or speculative purposes.
Interest Rates
We centrally manage our debt, considering investment opportunities and risks, tax consequences and overall
financing strategies. We are primarily exposed to interest rate risk on the Facility, which as of December 31,
2014 had a borrowing capacity of $1.2 billion and consisted of revolving credit that is available for working
capital, investments, capital expenditures and acquisitions. Our average outstanding borrowings under the
Facility were $357.0 million during 2014, with an effective interest rate of 1.2%. We had outstanding letters of
credit of $22.0 million under the Facility and no outstanding borrowings at December 31, 2014. The Facility
bears a variable rate of interest based on market rates. Subsequent to December 31, 2014, we amended and
expanded the Facility; refer to Note 15, Subsequent Events, within the Notes to Consolidated Financial
Statements for additional discussion.
In November 2012, in an underwritten public offering, we issued $275.0 million of Long-term senior notes due
in November 2022. The Notes bear interest at an annual rate of 4.4%, subject to adjustment if a credit rating
assigned to the Notes is downgraded below an investment grade rating (or subsequently upgraded). The
issuance of these Notes at a fixed interest rate has helped to limit the Company’s exposure to future
movements in interest rates.
Our overall interest rate risk management objective is to limit the impact of interest rate changes on earnings
and cash flows and to lower our overall borrowing costs. To achieve this objective, in the past we have entered
into derivative financial instruments such as interest rate swap agreements when appropriate and we may do
so in the future. We did not enter into any such agreements in the prior three years and we had no such
agreements outstanding at December 31, 2014.
Foreign Exchange
Foreign exchange risk is the risk that we will incur economic losses due to adverse changes in foreign currency
exchange rates. Our revenue from outside of the United States totaled 59% and 56% of our total revenue for
2014 and 2013, respectively. Operating in international markets means that we are exposed to movements in
foreign exchange rates, most significantly by the British pound (15% of revenue for 2014) and the euro (13%
of revenue for 2014).
We mitigate our foreign currency exchange risk principally by (1) establishing local operations in the markets
we serve and (2) invoicing customers in the same currency as the source of the costs. The impact of
translating expenses incurred in foreign currencies into U.S. dollars offsets the impact of translating revenue
earned in foreign currencies into U.S. dollars. In addition, British pound and Singapore dollar expenses
incurred as a result of our regional headquarters being located in London and Singapore, respectively, act as a
partial operational hedge against our translation exposures to British pounds and Singapore dollars.
We enter into forward foreign currency exchange contracts to manage currency risks associated with
intercompany loan balances. At December 31, 2014, we had forward exchange contracts in effect with a gross
81
notional value of $2.03 billion ($1.19 billion on a net basis) and a net fair value loss of $7.7 million. This net
carrying loss is generally offset by a carrying gain in associated intercompany loans.
Although we operate globally, we report our results in U.S. dollars. As a result, the strengthening or
weakening of the U.S. dollar may positively or negatively impact our reported results. The following table sets
forth the revenue derived from our most significant currencies ($ in millions):
United States dollar
British pound
Euro
Australian dollar
Hong Kong dollar
Chinese yuan
Singapore dollar
Japanese yen
Indian rupee
Other currencies
Total revenue
2014 % of Total
2013 % of Total
$2,214.1
833.4
701.8
303.1
170.5
169.2
157.7
155.1
155.1
569.6
$5,429.6
40.8% $1,954.3
636.3
15.3
595.9
12.9
285.3
5.6
134.6
3.1
137.7
3.1
96.7
2.9
122.0
2.9
117.5
2.9
381.3
10.5
43.8%
14.3
13.4
6.4
3.0
3.1
2.2
2.7
2.6
8.5
100.0% $4,461.6
100.0%
We estimate that had euro-to-U.S. dollar exchange rates been 10% higher throughout the course of 2014, our
reported operating income would have increased by $10.4 million. Had the British pound-to-U.S. dollar
exchange rates been 10% higher throughout the course of 2014, our reported operating income would have
increased by $1.9 million. These hypothetical calculations estimate the impact of translating results into U.S.
dollars and do not include an estimate of the impact a 10% increase in the U.S. dollar against other
currencies would have on our foreign operations.
Seasonality
Our quarterly revenue and profits tend to grow progressively by quarter throughout the year. This is a result
of a general focus in the real estate industry on completing or documenting transactions by fiscal-year-end and
the fact that certain expenses are constant through the year. Historically, we have reported a relatively smaller
profit in the first quarter and then increasingly larger profits during each of the following three quarters,
excluding the recognition of investment-generated performance fees and co-investment equity gains or losses
(each of which can be unpredictable). We generally recognize such performance fees and realized
co-investment equity gains or losses when assets are sold, the timing of which is geared toward the benefit of
our clients. Non-variable operating expenses, which we treat as expenses when incurred during the year, are
relatively constant on a quarterly basis.
Inflation
Our operating expenses fluctuate with our revenue and general economic conditions including inflation.
However, we do not believe that inflation has had a material impact on our results of operations during the
three year period ended December 31, 2014.
RESULTS OF OPERATIONS
We operate in a variety of currencies but report our results in U.S. dollars. As a result, the volatility of these
currencies against the U.S. dollar may positively or negatively impact our reported results. This volatility may
result in the reported U.S. dollar revenue and expenses showing increases or decreases between years that
may not be consistent with the real underlying increases or decreases in local currency operations. In order to
provide more meaningful year-to-year comparisons of our reported results, we have included detail of the
movements in certain reported lines of the Consolidated Statements of Comprehensive Income in both U.S.
dollars and in local currencies in the tables throughout this section.
82
We define market volumes for Leasing as gross absorption of office real estate space in square meters for the
United States, Europe and selected markets in Asia Pacific. We define market volumes for Capital Markets as
the US dollar equivalent value of investment sales transactions globally.
Reclassifications
We report Equity earnings (losses) from real estate ventures in the Consolidated Statements of
Comprehensive Income after Operating income. However, for segment reporting we reflect Equity earnings
(losses) from real estate ventures within Total revenue. See Note 3 of the Notes to Consolidated Financial
Statements for Equity earnings (losses) reflected within segment revenue, as well as discussion of how the
Chief Operating Decision Maker (as defined in Note 3) measures segment results with Equity earnings
(losses) included in segment revenue. Certain prior year amounts have been reclassified to conform to the
current presentation. These reclassifications have not been material and have not affected reported net
income.
Year Ended December 31, 2014 Compared with Year Ended December 31, 2013
($ in millions)
Revenue
Real Estate Services:
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
LaSalle Investment Management
Fee revenue
Gross contract costs
Total revenue
Operating expenses, excluding gross contract
costs
Gross contract costs
Depreciation and amortization
Restructuring and acquisition charges
Total operating expenses
Operating income
2014
2013
Change in
U.S. dollars
% Change
in Local
Currency
$
$
$
$
$
1,540.0
820.3
1,070.6
434.5
468.2
368.1
4,701.7
727.9
5,429.6
4,099.2
727.9
94.3
42.5
4,963.9
465.7
1,321.7
716.1
947.7
372.4
414.2
254.7
4,026.8
434.8
4,461.6
3,559.8
434.8
79.9
18.3
4,092.8
368.8
218.3
104.2
122.9
62.1
54.0
113.4
674.9
293.1
968.0
539.4
293.1
14.4
24.2
871.1
96.9
17%
15%
13%
17%
13%
45%
17%
67%
22%
15%
67%
18%
n.m.
21%
26%
17%
15%
15%
18%
13%
45%
18%
71%
23%
16%
71%
18%
n.m.
22%
30%
(1) Amounts adjusted to remove the impact of gross contract costs.
n.m. — not meaningful
REVENUE
In 2014, fee revenue was $4.7 billion, an 18% increase in local currency from 2013, led by a 45% local
currency increase in LaSalle, a 17% increase in Leasing, and 15% increases in both Capital Markets & Hotels
and Property & Facility Management. Fee revenue growth was not only broad-based by service category, but
also geographically, with double-digit year-over-year growth in local currency in all four business segments.
Our full-year growth resulted in part from fourth-quarter fee revenue increasing 19% in local currency to
$1.6 billion, with all segments reporting year-over-year local currency fee revenue growth of 15% or more in
the fourth quarter.
83
LaSalle achieved its revenue growth compared with 2013 through increases of (1) $91.7 million in incentive
fees, which arise from property dispositions at increased values and reflect investment performance for clients,
as well as positive market conditions for executing such dispositions at gains, (2) $12.6 million in advisory fees
from new mandates and real estate funds, partially offset by the impact of portfolio sales, and (3) $9.1 million
in transaction fees from increased investment activity for capital raised. The 17% increase in Leasing revenue
reflects outperformance against overall market volumes as separately reported by JLL Research, that were
mixed across markets. The 15% increase in Capital Markets & Hotels revenue followed a 40% revenue
increase in 2013, against global investment volume increases of 20% and 21% over the last two years as
separately reported by JLL Research. Property & Facility Management fee revenue grew 15% in local
currency due to new real estate outsourcing client wins and expansions of existing relationships, driving growth
in our annuity RES businesses. Project & Development Services fee revenue increased 18% in local currency,
with positive contributions from each geographic segment, led by a 20% increase in Americas and an 18%
increase in EMEA.
Our total revenue increased 22% in U.S. dollars and 23% in local currency. When comparing 2014 and 2013
full-year average currency exchange rates, year-over-year weakening in major Asia Pacific currencies, with the
Japanese yen decreasing 8%, the Australian dollar decreasing 7% and the Indian rupee decreasing 4%, was
partially offset by the British pound increasing 5%, which limited the impact of currency movements on
revenue on a full-year basis.
OPERATING EXPENSES
In 2014, operating expenses, excluding gross contract costs (‘‘fee-based operating expenses’’) increased to
$4.1 billion, a year-over-year increase of 16% in local currency. This increase was due to costs to support
higher revenue levels, increased incentive compensation due to higher transaction volumes and our continued
investment in our operating platform to drive growth and efficiencies. Depreciation and amortization expenses
increased 18%, reflecting increased capital expenditures which also support continued investment in our
platform. Fee-based operating margins, excluding restructuring and acquisition charges, improved to 10.9% for
2014 from 9.7% for 2013, as a result of increased revenue and operating efficiencies as described above.
Total 2014 operating expenses included $42.5 million of restructuring and acquisition charges, $34.5 million of
which related to the write-off of an indemnification asset that arose from prior period acquisition activity,
which itself was offset by the recognition of a related previously unrecognized tax benefit of an equal amount
in the provision for income taxes, and therefore had no impact on net income. The remaining $8.0 million of
restructuring and acquisition charges were primarily for severance, lease exit charges and other acquisition and
integration costs.
INTEREST EXPENSE
Net interest expense for 2014 was $28.3 million, down from $34.7 million in 2013, primarily the result of lower
cost of debt from the renewal of our Facility in October 2013 and lower average borrowings in 2014. In the
renewal of the Facility in October 2013, the range in pricing for borrowing under the Facility decreased from
LIBOR plus 1.125% to 2.25% to LIBOR plus 1.00% to 1.75%. The average outstanding borrowings under the
Facility decreased from $450.5 million during the year ended December 31, 2013 to $357.0 million for the
comparable period in 2014, and deferred acquisition obligations decreased from $140.6 million at
December 31, 2013 to $122.0 million at December 31, 2014.
84
EQUITY EARNINGS FROM REAL ESTATE VENTURES
In 2014, we recognized equity earnings of $48.3 million from our investments in real estate ventures,
compared with $31.3 million in 2013, resulting primarily from the sale of assets within LaSalle funds, reflecting
positive investment performance for clients.
PROVISION FOR INCOME TAXES
The provision for income taxes was $97.6 million in 2014, which represents an effective tax rate of 20.1%. See
the Income Tax discussion in the Summary of Critical Accounting Policies and Estimates and Note 8 of the
Notes to Consolidated Financial Statements for a further discussion of our effective tax rate.
NET INCOME
Net income attributable to common shareholders for the year ended December 31, 2014 was $385.7 million,
or $8.52 per diluted weighted average share, compared with net income attributable to common shareholders
of $269.5 million, or $5.98 per diluted weighted average share, for the year ended December 31, 2013.
SEGMENT OPERATING RESULTS
We manage and report our operations as four business segments:
The three geographic regions of RES including:
(1) Americas,
(2) EMEA, and
(3) Asia Pacific;
and
(4) LaSalle, which offers investment management services on a global basis.
Each geographic region offers our full range of real estate services, including tenant representation and
agency leasing, capital markets and hotels, property management, facility management, project and
development services, and advisory, consulting and valuation services. We consider ‘‘property management’’ to
be services provided to non-occupying property investors and ‘‘facility management’’ to be services provided to
owner-occupiers. LaSalle provides investment management services to institutional investors and
high-net-worth individuals.
For segment reporting, we show revenue net of gross contract costs in our RES segments. Excluding these
costs from revenue and expenses in a ‘‘net’’ presentation of ‘‘fee revenue’’ and ‘‘fee-based operating expense’’
more accurately reflects how we manage our expense base and operating margins. See Note 2, Revenue
Recognition, of the Notes to Consolidated Financial Statements for additional information on our gross and
net accounting. For segment reporting we also show Equity earnings (losses) from real estate ventures within
our revenue line, since the related activity is an integral part of LaSalle. Finally, our measure of segment
results also excludes Restructuring and acquisition charges.
85
AMERICAS — REAL ESTATE SERVICES
($ in millions)
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
Equity earnings
Fee revenue
Gross contract costs
Total revenue
$
$
$
Operating expenses, excluding gross contract costs $
Gross contract costs
Operating income
$
2014
1,039.5
266.6
454.3
222.7
125.6
0.8
2,109.5
210.4
2,319.9
1,890.1
210.4
219.4
2013
877.7
218.9
407.5
187.7
114.2
0.5
1,806.5
112.1
1,918.6
1,622.5
112.1
184.0
Change in
U.S. dollars
% Change
in Local
Currency
161.8
47.7
46.8
35.0
11.4
0.3
303.0
98.3
401.3
267.6
98.3
35.4
18%
22%
11%
19%
10%
60%
17%
88%
21%
16%
88%
19%
19%
22%
13%
20%
10%
41%
18%
96%
22%
17%
96%
19%
(1) Amounts adjusted to remove the impact of gross contract costs.
Fee revenue for the Americas was $2.1 billion, an increase of 18% from 2013. Revenue growth was broad-
based, with Leasing up 19%, Capital Markets & Hotels up 22%, Property & Facility Management up 13%,
and Project & Development Services up 20%, compared with last year. The Leasing results reflected
outperformance against market volumes in terms of gross absorption, which declined in the U.S. in 2014 as
separately reported by JLL Research. The Capital Markets increases were driven by increases in real estate
investment banking and multi-family investment sales, as well as record performance in Hotels transactions
and other activity for the Americas. Property & Facility Management and Project & Development Services
increased from new client contract wins and expansions of existing relationships, driving growth in our annuity
RES businesses. Geographically, in addition to the U.S., operations in each of Canada and Latin America
contributed to transaction and annuity revenue growth.
Fee-based operating expenses were $1.9 billion for the year, an increase of 17% from 2013 due to supporting
higher revenue activity and new client wins. Operating income was $219.4 million for 2014, compared with
$184.0 million in 2013, up 19%, and operating income margin calculated on a fee revenue basis was 10.4% for
2014 compared with 10.2% for 2013.
86
EMEA — REAL ESTATE SERVICES
($ in millions)
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
Equity losses
Fee revenue
Gross contract costs
Total revenue
2014
295.2
411.8
236.9
139.6
232.7
—
1,316.2
316.4
1,632.6
$
$
$
Operating expenses, excluding gross contract costs $
Gross contract costs
1,195.4
316.4
Operating income
$
120.8
(1) Amounts adjusted to remove the impact of gross contract costs.
n.m. — not meaningful
Change in
U.S. dollars
% Change
in Local
Currency
23.7
78.5
44.3
22.2
29.0
0.5
198.2
111.8
310.0
166.7
111.8
31.5
9%
24%
23%
19%
14%
n.m.
18%
55%
23%
16%
55%
35%
9%
23%
21%
18%
13%
n.m.
17%
54%
23%
15%
54%
45%
2013
271.5
333.3
192.6
117.4
203.7
(0.5)
1,118.0
204.6
1,322.6
1,028.7
204.6
89.3
EMEA’s full-year fee revenue was $1.3 billion, an increase of 17% from 2013. Revenue growth was driven by
Capital Markets & Hotels, up 23%, Property & Facility Management, up 21%, and Project & Development
Services, up 18%, compared with last year. Capital Markets revenue increases were generally in line with
market investment volume increases of approximately 25% as separately reported by JLL Research, with
revenue increases driven by the U.K., Germany, France and Sweden. Leasing revenue grew 9% in local
currency, also generally in line with market volumes that increased by approximately 6% in Europe in 2014 as
separately reported by JLL Research. Property & Facility Management and Project & Development Services
increased due to business wins from European multinationals and expansions of our Tetris fit-out business,
driving growth in our annuity RES businesses. Growth in the region for the year overall was broad-based, led
by the U.K., Germany, France, Spain, MENA, Ireland, Belgium, Sweden, and the Netherlands. EMEA
finished the year with fourth-quarter fee revenue of $475 million, an increase of 24%, with double-digit
revenue growth in all service lines, led by a 42% local currency increase in Capital Markets & Hotels.
Fee-based operating expenses were $1.2 billion for the year, compared with $1.0 billion last year, an increase
of 15% from 2013 due to supporting higher revenue activity, including work from new clients and increased
incentive compensation due to higher transaction volumes. Operating income was $120.8 million for 2014,
compared with $89.3 million for 2013, and operating income margin calculated on a fee revenue basis was
9.2% for 2014 compared with 8.2% for 2013.
87
ASIA PACIFIC — REAL ESTATE SERVICES
($ in millions)
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
Equity earnings
Fee revenue
Gross contract costs
Total revenue
Operating expenses, excluding gross contract costs
Gross contract costs
Operating income
2014
205.3
141.9
379.4
72.2
109.9
0.4
909.1
201.1
1,110.2
824.9
201.1
84.2
$
$
$
$
$
(1) Amounts adjusted to remove the impact of gross contract costs.
n.m. — not meaningful
Change in
U.S. dollars
% Change
in Local
Currency
32.8
(22.0)
31.8
4.9
13.6
0.3
61.4
83.0
144.4
54.5
83.0
6.9
19%
(13)%
9%
7%
14%
n.m.
7%
70%
15%
7%
70%
9%
23%
(10)%
14%
11%
16%
n.m.
11%
76%
19%
11%
76%
15%
2013
172.5
163.9
347.6
67.3
96.3
0.1
847.7
118.1
965.8
770.4
118.1
77.3
Asia Pacific fee revenue grew to $909.1 million in 2014, an increase of 11% in local currency from 2013.
Revenue growth was driven by Leasing, up 23%, and Property & Facility Management, up 14%, compared
with last year. The Leasing results outperformed market volumes of 16% higher gross absorption in 2014 as
separately reported by JLL Research. Capital Markets & Hotels revenue was down 10% for the year following
a 54% increase in the prior year, but was up 5% in the fourth quarter. Property & Facility Management fee
revenue increased 14%, with demand for the services continuing to grow with increases in both the quality of
property inventory in the region and in outsourcing by Asian companies. Fourth-quarter fee revenue was
$302.5 million, an increase of 16% in local currency from 2013. Revenue growth for the fourth quarter and
the year was led by Greater China and India geographically, but was also broad-based across the region’s
Property & Facility Management platform.
Asia Pacific’s total revenue increased 15% in U.S. dollars and 19% in local currency. The difference between
the local currency increase and the U.S. dollar increase was driven by the year-over-year weakening in the
Japanese yen decreasing 8%, the Australian dollar decreasing 7% and the Indian rupee decreasing 4%.
Fee-based operating expenses were $824.9 million for 2014, an increase of 11% in local currency due to
supporting higher revenue activity and new clients. Operating income margin calculated on a fee revenue basis
increased to 9.3% for 2014 from 9.1% in 2013.
88
LASALLE INVESTMENT MANAGEMENT
($ in millions)
Advisory fees
Transaction fees and other
Incentive fees
Equity earnings
Total segment revenue
Operating expenses
Operating income
n.m. — not meaningful
2014
235.6
27.2
105.3
47.0
415.1
283.1
132.0
$
$
$
Change in
U.S. dollars
% Change
in Local
Currency
12.6
9.1
91.7
15.8
129.2
65.1
64.1
6%
50%
n.m.
51%
45%
30%
94%
5%
53%
n.m.
51%
46%
31%
95%
2013
223.0
18.1
13.6
31.2
285.9
218.0
67.9
LaSalle’s total segment revenue for the year ended December 31, 2014, which included $27.2 million of
transaction fees and $105.3 million of incentive fees, was $415.1 million, up 46% in local currency from 2013.
Advisory fees were $235.6 million for 2014, up 5% in local currency from 2013, and up 9% in the fourth
quarter. The movement in advisory fees was primarily due to adding new mandates and real estate funds,
partially offset by portfolio sales. Equity earnings for the year ended December 31, 2014 were $47.0 million, a
51% increase in local currency as compared with the year ended December 31, 2013, driven by gains from
disposition activity and from increases in asset values.
Operating expenses were $283.1 million and $218.0 million for the years ended December 31, 2014 and 2013,
respectively, with increases driven by compensation on increased transaction and incentive fee activity.
Operating income was $132.0 million for the year ended December 31, 2014, resulting in an operating income
margin of 31.8%, compared with $67.9 million and an operating income margin of 23.7% for the year ended
December 31, 2013.
In 2014, LaSalle’s capital raising momentum continued with $8.9 billion in equity commitments obtained
during the year. Assets under management were $53.6 billion as of December 31, 2014, compared with
$47.6 billion at December 31, 2013. The net increase in assets under management included $11.0 billion of
acquisitions and takeovers, $8.6 billion of dispositions and withdrawals, $4.3 billion of net valuation increases
and $0.7 billion of net reductions due to foreign currency movements. Assets under management increased by
$0.6 billion during the fourth quarter as a result of $4.4 billion of acquisitions and takeovers, $2.8 billion of
dispositions and withdrawals, $0.5 billion of net valuation increases and $1.5 billion of net reductions due to
foreign currency movements.
89
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
($ in millions)
Revenue
Real Estate Services:
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
LaSalle Investment Management
Fee revenue
Gross contract costs
Total revenue
Operating expenses, excluding gross contract costs
Gross contract costs
Depreciation and amortization
Restructuring and acquisition charges
Total operating expenses
Operating income
2013
2012
Change in
U.S. dollars
% Change
in Local
Currency
$
$
$
$
$
1,321.7
716.1
947.7
372.4
414.2
254.7
4,026.8
434.8
4,461.6
3,559.8
434.8
79.9
18.3
4,092.8
368.8
1,273.1
516.1
850.7
355.8
383.1
261.4
3,640.2
292.6
3,932.8
3,226.6
292.6
78.8
45.4
3,643.4
289.4
48.6
200.0
97.0
16.6
31.1
(6.7)
386.6
142.2
528.8
333.2
142.2
1.1
(27.1)
449.4
79.4
4%
39%
11%
5%
8%
(3)%
11%
49%
13%
10%
49%
1%
(60)%
12%
27%
4%
40%
14%
6%
9%
(1)%
12%
51%
15%
12%
51%
2%
(71)%
14%
32%
(1) Amounts adjusted to remove the impact of gross contract costs.
REVENUE
In 2013, fee revenue was $4.0 billion, a 12% increase in local currency from 2012, driven by a 40% local
currency increase in Capital Markets & Hotels and a 14% local currency increase in Property & Facility
Management fee revenue. Fee revenue growth was broad-based, with double-digit year-over-year growth in
local currency in all three geographic segments. This full-year growth was due in part to fourth-quarter fee
revenue increasing 17% in local currency to $1.3 billion, with all three of our geographic segments reporting
year-over-year local currency fee revenue growth of 15% or more in the fourth quarter.
Leasing revenue grew 4% in local currency, reflecting outperformance against market volumes that increased
only 1% globally due to hesitancy of corporate occupiers to make leasing decisions. Leasing revenue in the
Americas and EMEA grew 6% and 7% in local currency, respectively, and decreased 7% in local currency in
Asia Pacific, outperforming a regional market volume decrease of 12%. The most significant revenue growth
was in Capital Markets & Hotels which increased 40% in local currency driven by strong growth across all
geographic segments and significantly exceeded the growth in global investment volumes, which increased
21%. Property & Facility Management fee revenue grew 14% in local currency due to new real estate
outsourcing client wins, driving growth in our annuity RES businesses. Project & Development Services fee
revenue increased 6% in local currency, with positive contributions from each geographic segment, led by a
9% increase in EMEA. LaSalle’s advisory fees were comparable with the prior year in local currency, with
increases from new mandates and real estate funds offset by the impact of portfolio sales that contributed to
$13.6 million of incentive fees and $31.2 million of equity earnings during 2013.
Our total revenue increased 13% in U.S. dollars and 15% in local currency. The difference between the local
currency increase and the U.S. dollar increase was driven primarily by the year-over-year weakening in major
Asia Pacific currencies, with the Japanese yen decreasing 22%, the Indian rupee decreasing 10% and the
Australian dollar decreasing 7% when comparing 2013 and 2012 full-year average currency exchange rates.
90
OPERATING EXPENSES
In 2013, operating expenses, excluding gross contract costs increased to $3.6 billion, a year-over-year increase
of 10%, 12% in local currency. This increase was due to costs to support higher revenue levels, increased
incentive compensation due to higher transaction volumes and our continued investment in our operating
platform to drive growth and efficiencies. Increased revenue and operating efficiencies resulted in improved
operating margins. Fee-based operating margins, excluding restructuring and acquisition charges, as well as
King Sturge intangible amortization of $2.2 million and $4.9 million for 2013 and 2012, respectively, were
9.7% and 9.3% for 2013 and 2012, respectively.
Total operating expenses included $18 million of restructuring and acquisition charges, primarily for severance
related to position eliminations, as well as integration costs from the King Sturge acquisition.
INTEREST EXPENSE
Net interest expense for 2013 was $34.7 million, down slightly from $35.2 million in 2012. Interest expense
decreased by $9.9 million due to a reduction in interest accretion on deferred acquisition obligations, which
decreased from $213.4 million at December 31, 2012, to $135.2 million at December 31, 2013. This decrease
was offset by a $10.0 million increase in interest expense as a result of the diversification of our debt with the
November 2012 issuance of $275.0 million 10-year long-term senior notes at a fixed rate of 4.4%. Net interest
expense also decreased in 2013 due to lower average borrowings and improved pricing under the Facility.
EQUITY EARNINGS FROM REAL ESTATE VENTURES
In 2013, we recognized equity earnings of $31.3 million from our investments in real estate ventures,
compared with $23.9 million in 2012, resulting primarily from the sale of assets within LaSalle funds, reflective
of positive investment performance.
PROVISION FOR INCOME TAXES
The provision for income taxes was $92.1 million in 2013, which represents an effective tax rate of 25.2%. See
the Income Tax discussion in the Summary of Critical Accounting Policies and Estimates and Note 8 of the
Notes to Consolidated Financial Statements for a further discussion of our effective tax rate.
NET INCOME
Net income attributable to common shareholders for the year ended December 31, 2013 was $269.5 million,
or $5.98 per diluted weighted average share, compared with net income attributable to common shareholders
of $207.6 million, or $4.63 per diluted weighted average share, for the year ended December 31, 2012.
AMERICAS — REAL ESTATE SERVICES
($ in millions)
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
Equity earnings
Fee revenue
Gross contract costs
Total revenue
Operating expenses, excluding gross contract
costs
Gross contract costs
Operating income
2013
877.7
218.9
407.5
187.7
114.2
0.5
1,806.5
112.1
1,918.6
1,622.5
112.1
184.0
$
$
$
$
$
2012
829.6
168.5
358.8
182.1
107.0
—
1,646.0
77.0
1,723.0
1,478.9
77.0
167.1
(1) Amounts adjusted to remove the impact of gross contract costs.
n.m. — not meaningful
91
Change in
U.S. dollars
% Change
in Local
Currency
48.1
50.4
48.7
5.6
7.2
0.5
160.5
35.1
195.6
143.6
35.1
16.9
6%
30%
14%
3%
7%
n.m.
10%
46%
11%
10%
46%
10%
6%
29%
14%
4%
7%
n.m.
10%
48%
12%
10%
48%
10%
Fee revenue for the Americas was $1.8 billion, an increase of 10% from 2012. Capital Markets & Hotels
increased 29%, significantly outpacing broader market investment volumes which increased 18% in the region.
Property & Facility Management fee revenue increased 14% driven by new client wins. Leasing revenue grew
6%, in line with a slow leasing market that started to show signs of improvement in the fourth quarter of
2013. The Americas region finished the year with fee revenue of $604.7 million in the fourth quarter, an
increase of 15% from last year. On a geographic basis the Americas’ revenue increase for the full year was
due to growth in the U.S. and Canada and was partially offset by a decline in Latin America, primarily
resulting from soft market conditions in Brazil.
Fee-based operating expenses were $1.6 billion for the year, an increase of 10% from 2012 due to supporting
higher revenue activity and new client wins. Operating income was $184.0 million for 2013, compared with
$167.1 million in 2012, and operating income margin calculated on a fee revenue basis was 10.2% for both
years, though the margin increased by 60 basis points in the fourth quarter of 2013 compared with the fourth
quarter of 2012.
EMEA — REAL ESTATE SERVICES
($ in millions)
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
Equity losses
Fee revenue
Gross contract costs
Total revenue
Operating expenses, excluding gross contract
costs
Gross contract costs
Operating income
2013
271.5
333.3
192.6
117.4
203.7
(0.5)
1,118.0
204.6
1,322.6
1,028.7
204.6
89.3
$
$
$
$
$
2012
250.0
235.1
171.4
106.5
189.1
(0.3)
951.8
120.8
1,072.6
897.5
120.8
54.3
Change in
U.S. dollars
% Change
in Local
Currency
21.5
98.2
21.2
10.9
14.6
(0.2)
166.2
83.8
250.0
131.2
83.8
35.0
9%
42%
12%
10%
8%
67%
17%
69%
23%
15%
69%
64%
7%
41%
12%
9%
8%
67%
17%
66%
22%
14%
66%
60%
(1) Amounts adjusted to remove the impact of gross contract costs.
EMEA’s full-year fee revenue was $1.1 billion, an increase of 17% from 2012. Capital Markets & Hotels
increased 41% in local currency, significantly outpacing broader market investment volumes which increased
21% in the region. Revenue growth was broad-based across the region and led by the U.K., Germany, France,
Russia, and the Netherlands, with revenue growth rates ranging from 15% to 28%. EMEA finished the year
with fourth-quarter fee revenue of $407.6 million, an increase of 24% in local currency, with double-digit
revenue growth in all service lines, led by a 33% local currency increase in Capital Markets & Hotels.
EMEA’s Leasing revenue grew 7% in local currency, significantly outpacing market volumes that decreased
4% in the region in 2013. Leasing revenue growth was led by France, the U.K. and Germany, particularly in
the second half of 2013. EMEA Leasing performance was bolstered by a 21% local currency revenue increase
in the fourth quarter, despite market leasing volumes decreasing 7% in the region compared with the fourth
quarter of 2012.
92
Fee-based operating expenses were $1.0 billion for the year, an increase of 14% from 2012 due to supporting
higher revenue activity, new clients and increased incentive compensation due to higher transaction volumes.
Adjusted operating income margin, which excludes King Sturge amortization of $2.2 million and $4.9 million
for 2013 and 2012, respectively, calculated on a fee revenue basis was 8.2% and 6.2% for 2013 and 2012,
respectively.
ASIA PACIFIC — REAL ESTATE SERVICES
($ in millions)
Leasing
Capital Markets & Hotels
Property & Facility Management (1)
Project & Development Services (1)
Advisory, Consulting and Other
Equity earnings
Fee revenue
Gross contract costs
Total revenue
Operating expenses, excluding gross contract costs
Gross contract costs
Operating income
Change in
U.S. dollars
% Change
in Local
Currency
(21.0)
51.4
27.1
0.1
9.3
—
66.9
23.3
90.2
54.9
23.3
12.0
(11)%
46%
8%
—%
11%
n.m.
9%
25%
10%
8%
25%
18%
(7)%
54%
15%
6%
14%
n.m.
14%
35%
17%
13%
35%
32%
2012
193.5
112.5
320.5
67.2
87.0
0.1
780.8
94.8
875.6
715.5
94.8
65.3
2013
$ 172.5
163.9
347.6
67.3
96.3
0.1
$ 847.7
118.1
$ 965.8
$ 770.4
118.1
$
77.3
(1) Amounts adjusted to remove the impact of gross contract costs.
n.m. — not meaningful
Asia Pacific fee revenue grew to $847.7 million in 2013, an increase of 14% in local currency from 2012.
Capital Markets & Hotels revenue increased 54% in local currency for the year ended December 31, 2013,
significantly outpacing broader market investment volumes which increased 29% in the region. Property &
Facility Management fee revenue increased 15%, primarily due to new client wins. We continue to gain
market share in the Asia Pacific region, and in 2013 we won nearly 70% of our corporate outsourcing
opportunities we pursued. Leasing revenue decreased 7% in local currency from 2012 as corporate clients in
many Asia Pacific markets remained hesitant to make new leasing commitments, resulting in a 12% decrease
in market leasing volumes in the region. Fourth-quarter fee revenue was $271.3 million, an increase of 16% in
local currency from 2012. Geographically, revenue growth for the fourth quarter and the year was led by
Greater China and Australia, but was also broad-based across the region’s Property & Facility Management
platform.
Asia Pacific’s total revenue increased 10% in U.S. dollars and 17% in local currency. The difference between
the local currency increase and the U.S. dollar increase was driven by the year-over-year weakening in the
Japanese yen decreasing 22%, the Indian rupee decreasing 10% and the Australian dollar decreasing 7%.
Fee-based operating expenses were $770.4 million for 2013, an increase of 13% in local currency due to
supporting higher revenue activity and new clients. Operating income margin calculated on a fee revenue basis
increased to 9.1% for 2013 from 8.4% in 2012.
93
LASALLE INVESTMENT MANAGEMENT
($ in millions)
Advisory fees
Transaction fees and other
Incentive fees
Equity earnings
Total segment revenue
Operating expenses
Operating income
2013
$ 223.0
18.1
13.6
31.2
$ 285.9
218.0
$
67.9
2012
228.1
10.5
22.8
24.0
285.4
213.5
71.9
Change in
U.S. dollars
% Change
in Local
Currency
(5.1)
7.6
(9.2)
7.2
0.5
4.5
(4.0)
(2)%
72%
(40)%
30%
—%
2%
(6)%
(1)%
76%
(40)%
30%
2%
4%
(5)%
LaSalle’s total segment revenue for the year ended December 31, 2013 was $285.9 million, up 2% in local
currency from 2012. Advisory fees were $223.0 million for 2013, a 1% local currency decrease from 2012. The
movement in advisory fees was the result of adding new mandates and real estate funds, offset by portfolio
sales. Equity earnings for the year ended December 31, 2013 were $31.2 million, a 30% increase in local
currency as compared with the year ended December 31, 2012, driven by gains from disposition activity and
from increases in asset values.
Operating expenses were $218.0 million and $213.5 million for the years ended December 31, 2013 and 2012,
respectively. Operating income was $67.9 million for the year ended December 31, 2013, resulting in an
operating income margin of 23.7%, compared with $71.9 million and an operating income margin of 25.2%
for the year ended December 31, 2012.
In 2013, LaSalle’s capital raising momentum continued with $7 billion in equity commitments obtained during
the year. Assets under management were $47.6 billion as of December 31, 2013, compared with $47.0 billion
at December 31, 2012. The net increase in assets under management included $8.4 billion of acquisitions,
$7.4 billion of dispositions and withdrawals, and $900 million of reductions due to foreign currency
movements. Assets under management increased by $900 million during the fourth quarter primarily due to
$1.8 billion of acquisitions and takeovers, $1.7 billion of dispositions and withdrawals, and $1.0 billion of
increases due to foreign currency movements.
CONSOLIDATED CASH FLOWS
Cash Flows from Operating Activities
During 2014, cash flows provided by operating activities were $498.9 million, an increase of $203.7 million
from the $295.2 million of cash flows provided by operating activities in 2013. The year-over-year increase was
primarily the result of growth in our business, as evidenced by a 42%, or $114.7 million, increase in net
income, coupled with improved working capital management.
During 2013, cash flows provided by operating activities were $295.2 million, a net decrease of $30.7 million
from the $325.9 million of cash flows provided by operating activities in 2012. The year-over-year decrease was
primarily the result of the growth of receivables in 2013 outpacing receivables growth in 2012, driven by
increased revenue.
Cash Flows from Investing Activities
In 2014, we used $187.9 million for investing activities, a $23.7 million increase from the $164.2 million used
in 2013. In 2014, capital expenditures increased $46.2 million year-over-year due primarily to increased
investments in our information technology platform and a $15.5 million increase in property acquisitions and
capital expenditures by certain consolidated investments designated as variable interest entities (‘‘VIEs’’). In
94
2013, we realized $13.6 million of proceeds from the sale of assets held by these VIEs, with no corresponding
activity in 2014. We allocate net assets and net income of these consolidated VIEs entirely to the
noncontrolling interest holders as Noncontrolling interest in our Consolidated Balance Sheets and as Net
income attributable to noncontrolling interest in our Consolidated Statements of Comprehensive Income.
These increases from capital expenditures in cash used for investing activities were partially offset by a
decrease in cash used for business acquisitions and an increase in cash distributions, net of contributions, from
our real estate ventures. In 2014, we spent $38.2 million on business acquisitions, a $19.3 million
year-over-year decrease as compared to 2013. In 2014, we realized net distributions from our real estate
ventures of $6.0 million as compared to $9.6 million of net contributions in 2013, a year-over-year increase in
cash inflows of $15.6 million. The net distributions realized in 2014 were primarily a result of capital markets
activity at certain of our co-investments. These can vary significantly from period to period.
In 2013, we used $164.2 million for investing activities, a $12.9 million increase from the $151.3 million used
in 2012. This increase was primarily due to a $29.8 million increase in cash used for acquisition activity, and
partially offset by a $19.2 million decrease in net cash used for investments in real estate ventures. In 2013, we
used $57.5 million for business acquisitions, including $12.3 million for five new acquisitions and $45.2 million
for contingent earn-out consideration related to acquisitions completed in prior years, including $36.9 million
related to the 2008 Staubach acquisition. In 2013, our net investment in our real estate ventures, capital
contributions less distributions, was $9.6 million, compared to $28.8 million in 2012. The timing of our
investments in and distributions from our real estate ventures is driven by the timing of asset sales and other
client related considerations and thus can vary significantly from period to period.
Cash Flows from Financing Activities
We used $203.0 million for financing activities in 2014, a $74.6 million year-over-year increase from the
$128.4 million used for financing activities in 2013. This increase was primarily due to a year-over-year
increase of $142.1 million in net repayments of borrowings under the Facility. Improved operating cash flows
and working capital position have allowed us to increase our repayments of outstanding borrowings under the
Facility such that at December 31, 2014 we had no outstanding borrowings under the Facility. Partially
offsetting the year-over-year increase in net repayments of borrowings under the Facility was a reduction in
payments of deferred business acquisition obligations along with an increase in financing-related cash inflows
attributable to the previously discussed consolidated VIEs. Payments of deferred business acquisition
obligations decreased $33.1 million year-over-year due primarily to a $34.7 million deferred business obligation
payment made in 2013 for the 2008 Staubach acquisition. Financing activities in 2014 also included net
proceeds of $18.7 million related to the origination of real estate mortgage loans and contributions of
$11.4 million from noncontrolling interest holders for the acquisition of property by the previously discussed
consolidated VIEs. Comparable activity during 2013 was minimal.
In 2013 and 2012, we made significant reductions in our total debt, paying down our deferred acquisition
obligations in 2013 and reducing borrowings under the Facility net of the issuance of Long-term senior notes
in 2012. These reductions were the main driver of the $128.4 million and $208.7 million of cash used for
financing activities in 2012 and 2013, respectively. The largest year-over-year change was due to a decrease in
cash used for deferred acquisition payments, which decreased to $72.5 million in 2013, compared with
$143.8 million in 2012.
LIQUIDITY AND CAPITAL RESOURCES
We finance our operations, co-investment activity, share repurchases and dividend payments, capital
expenditures and business acquisitions with internally generated funds, borrowings from our credit facilities,
and through issuance of our Long-term senior notes.
Credit Facility
On October 4, 2013, we renewed the Facility which, among other things, increased our borrowing capacity to
$1.2 billion and extended the maturity date to October 4, 2018. Additionally, the Facility requires us to
95
maintain a maximum cash flow leverage ratio of 3.50 to 1 through maturity and permits add-backs to adjusted
EBITDA for charges related to any future restructuring initiatives and permitted acquisitions. As a result of
the Facility renewal, the range in pricing decreased from LIBOR plus 1.125% to 2.25% to LIBOR plus 1.00%
to 1.75%. As of December 31, 2014, pricing on the Facility was LIBOR plus 1.00%. Proceeds from the Facility
renewal were used to repay all amounts outstanding under our previously existing credit facility. We had
outstanding letters of credit of $22.0 million under the Facility and no outstanding borrowings at
December 31, 2014. We had outstanding letters of credit of $19.8 million and $155.0 million of outstanding
borrowings under the Facility at December 31, 2013. The average outstanding borrowings under the Facility
were $357.0 million and $450.5 million during the years ended December 31, 2014 and 2013, respectively.
Subsequent to December 31, 2014, we amended and expanded the Facility to a borrowing capacity of
$2.0 billion; refer to Note 15, Subsequent Events, within the Notes to Consolidated Financial Statements for
additional discussion.
We will continue to use the Facility for working capital needs (including payment of accrued incentive
compensation), co-investment activities, dividend payments, share repurchases, capital expenditures and
acquisitions.
Short-Term Borrowings
In addition to our Facility, we have the capacity to borrow up to an additional $44.9 million under local
overdraft facilities. We had short-term borrowings (including capital lease obligations and local overdraft
facilities) of $19.6 million and $24.5 million at December 31, 2014 and 2013, respectively, of which
$14.6 million and $22.8 million at December 31, 2014 and 2013, respectively, were attributable to local
overdraft facilities.
Long-Term Senior Notes
In November 2012, in an underwritten public offering, we issued $275.0 million of Long-term senior notes due
November 2022. The Notes bear interest at an annual rate of 4.4%, subject to adjustment if a credit rating
assigned to the Notes is downgraded below an investment grade rating (or subsequently upgraded). Interest is
payable semi-annually on May 15 and November 15 of each year.
See Note 10, Debt, of the Notes to Consolidated Financial Statements for additional information on the
Facility, short-term borrowings and long-term senior notes.
Co-Investment Activity
As of December 31, 2014, we had total investments of $297.1 million in approximately 50 separate property or
fund co-investments. Return of capital exceeded funding of co-investments by $6.0 million for the year ended
December 31, 2014. Funding of co-investments exceeded return of capital by $9.6 million and $28.8 million for
the years ended December 31, 2013 and 2012, respectively. We expect to continue to pursue co-investment
opportunities with our investment management clients in the Americas, EMEA and Asia Pacific.
Co-investment remains important to the continued growth of LaSalle’s business.
See Note 5, Investment in Real Estate Ventures, of the Notes to Consolidated Financial Statements for
additional information on our co-investment activity.
Share Repurchase and Dividend Programs
Since October 2002, our Board of Directors has approved five share repurchase programs. At December 31,
2014, we have 1,563,100 shares that we remain authorized to repurchase under the current share repurchase
program. We have made no share repurchases in the last three years under this authorization. Our current
share repurchase program allows JLL to purchase our common stock in the open market and in privately
negotiated transactions.
96
Our Board declared and paid total annual dividends and dividend-equivalents of $0.48, $0.44 and $0.40 per
common share in 2014, 2013 and 2012, respectively. In December 2014, we paid a semi-annual cash dividend
of $0.25 per share. There can be no assurance that we will declare dividends in the future since the actual
declaration of future dividends and the establishment of record and payment dates, remains subject to final
determination by the Company’s Board of Directors.
Capital Expenditures
Capital expenditures for the years ended December 31, 2014 and 2013 were $156.9 million and $110.7 million,
respectively. Our capital expenditures are primarily for information systems, computer hardware and
improvements to leased office space. Included in capital expenditures for the years ended December 31, 2014
and 2013 are $24.2 million and $8.7 million, respectively, of property acquisitions and capital expenditures and
property acquisitions made by certain VIEs for which we have been determined to be the primary beneficiary
and thus required to consolidate the underlying entities (see Note 5, Investment in Real Estate Ventures, of
the Notes to the Consolidated Financial Statements for further information on our consolidated VIE
investments). The net assets and net income of the consolidated VIEs are allocated entirely to the
noncontrolling interest holders as Noncontrolling interest on our Consolidated Balance Sheets and as Net
income attributable to noncontrolling interest in our Consolidated Statements of Comprehensive Income.
Business Acquisitions
In 2014, we paid $38.2 million for acquisitions and we also paid $39.3 million to satisfy deferred acquisition
obligations, which included $33.2 million for the 2011 King Sturge acquisition.
Terms for our acquisitions have typically included cash paid at closing with provisions for additional
consideration and earn-out payments subject to certain contract provisions and performance. Deferred
business acquisition obligations totaled $118.1 million and $135.2 million on our Consolidated Balance Sheets
at December 31, 2014 and 2013, respectively. These obligations represent the current discounted values of
payments to sellers of businesses for which our acquisition has closed as of the balance sheet dates and for
which the only remaining condition on those payments is the passage of time. At December 31, 2014, we had
the potential to make earn-out payments for a maximum of $43.5 million on 18 acquisitions that are subject to
the achievement of certain performance conditions. We anticipate that the majority of these earn-outs will
come due at various times over the next four years assuming the achievement of the applicable performance
conditions.
Our 2007 acquisition of an Indian real estate services company has provisions for payments to be made for
the repurchase of the remaining shares exchanged in the merger. These payments will be based on the
performance of our combined Indian operations and accordingly are not quantifiable at this time. An estimate
of these obligations based on the original value of shares exchanged is reflected on our balance sheet within
the $11.2 million Minority shareholder redemption liability.
Our 2014 acquisition of Tenzing, a Swedish commercial real estate services provider specializing in capital
markets, included a redeemable noncontrolling interest in the form of an option agreement that allows us to
purchase, and the noncontrolling shareholder to put to us, this noncontrolling interest in the acquired
company in annual increments for the four years following acquisition at a price determined by the profit
generated by the acquiree. We have recorded this redeemable noncontrolling interest on our Consolidated
Balance Sheet as of December 31, 2014 at $13.4 million based on the estimated redemption price, increased
for post-acquisition earnings attributable to the noncontrolling interest holder and adjusted for foreign
currency translation rates.
We are considering, and will continue to consider, acquisitions that we believe will strengthen our market
position, increase our profitability and supplement our organic growth.
97
Repatriation of Foreign Earnings
Based on our historical experience and future business plans, we do not expect to repatriate our foreign
source earnings to the United States. We believe that our policy of permanently investing earnings of foreign
subsidiaries does not significantly impact our liquidity. As of December 31, 2014 and 2013, we had total cash
and cash equivalents of $250.4 million and $152.7 million, respectively, of which approximately $222.0 million
and $126.6 million, respectively, was held by our foreign subsidiaries.
Restricted Net Assets
We face regulatory restrictions in certain countries that limit or prevent the transfer of funds to other
countries or the exchange of the local currency to other currencies. The total assets of these countries in
aggregate totaled 5% of our total assets at December 31, 2014 and 2013.
Contractual Obligations
We have obligations and commitments to make future payments under contracts in the normal course of
business. The following table summarizes our minimum contractual obligations as of December 31, 2014 ($ in
millions):
PAYMENTS DUE BY PERIOD
LESS THAN
CONTRACTUAL OBLIGATIONS
TOTAL 1 YEAR 1-3 YEARS 3-5 YEARS
$
1. Debt obligations
2. Interest on debt obligations
3. Business acquisition obligations
4. Minority shareholder redemption
liability
5. Lease obligations
6. Deferred compensation
7. Defined benefit plan obligations
8. Vendor and other purchase obligations
9. Other
289.6
121.2
122.0
11.2
671.5
47.9
90.5
167.8
—
Total
$
1,521.7
14.6
12.3
50.9
11.2
138.2
3.1
8.2
52.2
—
290.7
—
24.2
61.2
—
208.2
22.9
16.5
69.7
—
402.7
—
24.2
9.9
—
134.9
16.3
17.4
44.7
—
247.4
MORE THAN
5 YEARS
275.0
60.5
—
—
190.2
5.6
48.4
1.2
—
580.9
1. Debt Obligations. As of December 31, 2014, we had no borrowings outstanding under our Facility and
$14.6 million under local overdraft facilities. We had the ability to borrow up to $1.2 billion on the Facility
with a maturity date in 2018. Subsequent to December 31, 2014, we amended and expanded the Facility; refer
to Note 15, Subsequent Events, within the Notes to Consolidated Financial Statements for additional
discussion. Additionally, we had the capacity to borrow up to an additional $44.9 million under local overdraft
facilities. In November 2012, in an underwritten public offering, we issued $275.0 million of 4.4% Senior
Notes due November 2022.
2. Interest on Debt Obligations. Our debt obligations incur interest charges primarily at variable rates. For
purposes of preparing an estimated projection of interest on debt obligations for this table, we have estimated
our future interest payments based on our borrowing rates as of December 31, 2014 and assuming each of our
debt obligations is held to maturity.
3. Business acquisition obligations. Our business acquisition obligations represent payments to sellers of
businesses for acquisitions that were closed as of December 31, 2014, with the only condition on those
payments being the passage of time. The $122.0 million total represents $118.1 million on a present value
basis as reported in Deferred business acquisition obligations in our Consolidated Balance Sheet, and
$3.9 million of imputed interest reducing the obligations to their present value.
98
The contractual obligations table above does not include possible contingent earn-out payments associated
with our acquisitions. At December 31, 2014, we had the potential to make earn-out payments on 18
acquisitions that are subject to the achievement of certain performance conditions. The maximum amount of
the potential earn-out payments was $43.5 million at December 31, 2014. We anticipate that the majority of
these earn-out payments will come due at various times over the next three years assuming the achievement of
the applicable performance conditions.
4. Minority shareholder redemption liability. The estimated price to purchase the remaining interest in our
Indian operations held by the selling shareholders of the business we acquired in 2007 is $11.2 million.
However, the final purchase price of the remaining interest in our India subsidiary will be based on a formula
for which we cannot definitively determine the amount of this future payment at this time.
5. Lease obligations. Our lease obligations primarily consist of operating leases of office space in various
buildings for our own use as well as operating leases for equipment. The total of minimum rentals to be
received in the future as sublessor under noncancelable operating subleases as of December 31, 2014 was
$16.1 million.
6. Deferred compensation. Deferred compensation obligations in the table above represent payments expected
to be made pursuant to long-term deferred compensation plans and are inclusive of amounts attributable to
service conditions that were satisfied as of December 31, 2014, as well as service conditions expected to be
satisfied in future periods. The contractual obligations table above does not include a provision for a deferred
compensation plan for certain U.S. employees that allows them to defer portions of their compensation. We
invest directly in insurance contracts which yield returns to fund these deferred compensation obligations. We
recognize an asset for the amount that could be realized under these insurance contracts at the balance sheet
date, and the deferred compensation obligation is adjusted to reflect the changes in the fair value of the
amount owed to the employees. This plan is recorded on our Consolidated Balance Sheet at December 31,
2014 as Deferred compensation plan assets of $111.2 million, and long-term Deferred compensation liabilities
of $107.9 million. Additionally excluded from the table above is a retirement benefits liability of $7.1 million,
as the timing of payment of which is uncertain as of December 31, 2014.
7. Defined benefit plan obligations. The defined benefit plan obligations represent estimates of the expected
benefits to be paid out by our defined benefit plans. We will fund these obligations from the assets held by
these plans. If the assets these plans hold are not sufficient to fund these payments, JLL will fund the
remaining obligations. We have historically funded pension costs as actuarially determined and as applicable
laws and regulations require. We expect to contribute $12.6 million to our defined benefit pension plans in
2015.
8. Vendor and other purchase obligations. Our other purchase obligations primarily relate to various
information technology servicing agreements, telephone communications and other administrative support
functions.
9. Other. We have made capital commitments to certain unconsolidated joint ventures that are entitled to call
up to a maximum of $139.9 million as of December 31, 2014. We are not able to predict if, when, or in what
amounts such capital calls will be made, and therefore we exclude such commitments from the above table.
However, in relation to this activity, we made capital contributions and advances to investments in real estate
ventures of $56.4 million, $37.2 million and $106.3 million in 2014, 2013 and 2012, respectively. Separately, our
Consolidated Balance Sheet as of December 31, 2014 reflects $13.4 million of Redeemable noncontrolling
interest, representing the noncontrolling interest retained by the seller of the Swedish subsidiary that we
acquired during 2014. The acquisition documents include an option agreement that allows the Company to
purchase, and the noncontrolling interest holder to put to the Company, the noncontrolling interest in the
acquired company in annual increments during the four years following the acquisition at a price determined
by the profit of the acquiree.
99
In the Notes to Consolidated Financial Statements, see Note 10, Debt, for additional information on
long-term debt obligations, see Note 4, Business Combinations, Goodwill and Other Intangible Assets, for
additional information on business acquisition obligations and redeemable noncontrolling interest balances,
see Note 11, Leases, for additional information on lease obligations, see Note 7, Retirement Plans, for
additional information on defined benefit plan obligations, and see Note 5, Investments in Real Estate
Ventures, for additional information on our unconsolidated joint ventures.
Off-Balance Sheet Arrangements
We have unfunded capital commitments to LIC II, an unconsolidated joint venture that serves as a vehicle for
our co-investment activity, and to direct investments for future fundings of co-investments in underlying funds,
totaling a maximum of $176.2 million as of December 31, 2014. See our discussion of unfunded commitments
in Note 5, Investments in Real Estate Ventures, of the Notes to Consolidated Financial Statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding market risk is included in Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations under the caption ‘‘Market Risks’’ and is incorporated by reference
herein.
Disclosure of Limitations
As the information presented above includes only those exposures that exist as of December 31, 2014, it does
not consider those exposures or positions that could arise after that date. The information represented herein
has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate and
foreign currency fluctuations will depend on the exposures that arise during the period, the hedging strategies
at the time and interest and foreign currency rates.
100
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Page
JONES LANG LASALLE INCORPORATED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm, KPMG LLP, on Consolidated Financial
Statements
Report of Independent Registered Public Accounting Firm, KPMG LLP, on Internal Control Over
Financial Reporting
Consolidated Balance Sheets as of December 31, 2014 and 2013
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and
2012
102
103
104
105
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2014, 2013 and 2012
106
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012
Notes to Consolidated Financial Statements
Quarterly Results of Operations (Unaudited)
107
108
142
101
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Jones Lang LaSalle Incorporated:
We have audited the accompanying consolidated balance sheets of Jones Lang LaSalle Incorporated and
subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of
comprehensive income, changes in equity and cash flows for each of the years in the three-year period ended
December 31, 2014. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Jones Lang LaSalle Incorporated and subsidiaries as of December 31, 2014 and 2013, and the
results of their operations and their cash flows for each of the years in the three-year period ended December 31,
2014, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of December 31, 2014, based on
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February 27, 2015 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Chicago, Illinois
February 27, 2015
102
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Jones Lang LaSalle Incorporated:
We have audited Jones Lang LaSalle Incorporated and subsidiaries’ internal control over financial reporting as of
December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on
Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, Jones Lang LaSalle Incorporated and subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2014, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of the Company as of December 31, 2014 and 2013, and the
related consolidated statements of comprehensive income, changes in equity and cash flows for each of the years
in the three-year period ended December 31, 2014, and our report dated February 27, 2015 expressed an
unqualified opinion on those consolidated financial statements.
Chicago, Illinois
February 27, 2015
/s/ KPMG LLP
103
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2014 AND 2013
($ in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents
Trade receivables, net of allowances of $17,861 and $18,783
Notes and other receivables
Warehouse receivables
Prepaid expenses
Deferred tax assets, net
Other
Total current assets
Property and equipment, net of accumulated depreciation of $418,332 and $374,030
Goodwill, with indefinite useful lives
Identified intangibles, net of accumulated amortization of $124,920 and $116,393
Investments in real estate ventures, including $113,602 and $78,941 at fair value
Long-term receivables
Deferred tax assets, net
Deferred compensation plan
Other
Total assets
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities
Accrued compensation
Short-term borrowings
Deferred tax liabilities, net
Deferred income
Deferred business acquisition obligations
Warehouse facilities
Minority shareholder redemption liability
Other
Total current liabilities
Credit facility
Long-term senior notes
Deferred tax liabilities, net
Deferred compensation
Deferred business acquisition obligations
Minority shareholder redemption liability
Other
Total liabilities
Redeemable noncontrolling interest
Company shareholders’ equity:
Common stock, $.01 par value per share, 100,000,000 shares authorized; 44,828,779 and 44,447,958 shares
issued and outstanding
Additional paid-in capital
Retained earnings
Shares held in trust
Accumulated other comprehensive loss
Total Company shareholders’ equity
Noncontrolling interest
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
104
2014
2013
$
250,413
1,375,035
181,377
83,312
64,963
135,251
27,825
152,726
1,237,514
94,519
—
56,491
130,822
52,156
2,118,176
1,724,228
368,361
1,907,924
38,841
297,142
85,749
90,897
111,234
57,012
295,547
1,900,080
45,579
287,200
65,353
104,654
85,049
89,663
$
5,075,336
4,597,353
$
630,037
990,678
19,623
16,554
104,565
49,259
83,312
11,158
141,825
528,505
810,425
24,522
11,274
104,410
36,040
—
—
143,248
2,047,011
1,658,424
—
275,000
17,082
125,857
68,848
—
118,969
155,000
275,000
18,029
103,199
99,196
20,667
77,029
2,652,767
13,449
2,406,544
—
448
961,850
1,631,145
(6,407)
(200,239)
2,386,797
22,323
444
945,512
1,266,967
(8,052)
(25,202)
2,179,669
11,140
2,409,120
2,190,809
$
5,075,336
4,597,353
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 ($ in thousands, except share data)
Revenue
Operating expenses:
Compensation and benefits
Operating, administrative and other
Depreciation and amortization
Restructuring and acquisition charges
Total operating expenses
Operating income
Interest expense, net of interest income
Equity earnings from real estate ventures
Income before income taxes and noncontrolling interest
Provision for income taxes
Net income
Net income attributable to noncontrolling interest
Net income attributable to the Company
Dividends on unvested common stock, net of tax benefit
Net income attributable to common shareholders
Basic earnings per common share
Basic weighted average shares outstanding
Diluted earnings per common share
Diluted weighted average shares outstanding
Other comprehensive income:
Net income attributable to the Company
Change in pension liabilities, net of tax
Foreign currency translation adjustments
Comprehensive income attributable to the Company
See accompanying notes to consolidated financial statements.
2014
2013
2012
$
5,429,603
4,461,591
3,932,830
3,258,673
1,568,424
94,337
42,505
4,963,939
2,817,059
1,177,545
79,853
18,315
4,092,772
2,546,965
972,231
78,810
45,421
3,643,427
465,664
368,819
289,403
(28,321)
48,265
(34,718)
31,343
(35,173)
23,857
485,608
97,588
388,020
1,957
386,063
314
365,444
92,092
273,352
3,487
269,865
409
278,087
69,244
208,843
793
208,050
494
385,749
269,456
207,556
8.63
6.09
4.73
44,684,482
44,258,878
43,848,737
8.52
5.98
4.63
45,260,563
45,072,120
44,799,437
386,063
(37,086)
(137,951)
211,026
269,865
19,171
(53,319)
235,717
208,050
1,647
41,056
250,753
$
$
$
$
$
105
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED
DECEMBER 31, 2014, 2013 AND 2012 ($ in thousands, except share data)
Common Stock
Shares Amount
December 31, 2011
43,470,271 $
Net income
Shares issued under stock
compensation programs
Shares repurchased for payment
—
756,434
of taxes on stock awards
(172,663)
Tax adjustments due to vestings
and exercises
Amortization of stock
compensation
Shares held in trust
Dividends paid, $0.40 per share
Change in pension liabilities, net
of tax
Foreign currency translation
adjustments
Increase in amount attributable to
noncontrolling interest
—
—
—
—
—
—
—
December 31, 2012
44,054,042 $
Net income
Shares issued under stock
compensation programs
—
550,821
Shares repurchased for payment
of taxes on stock awards
(156,905)
Tax adjustments due to vestings
and exercises
Amortization of stock
compensation
Shares held in trust
Dividends paid, $0.44 per share
Change in pension liabilities, net
of tax
Foreign currency translation
adjustments
Decrease in amounts attributable
to noncontrolling interest
—
—
—
—
—
—
—
December 31, 2013
44,447,958 $
Net income(1)
Shares issued under stock
compensation programs
Shares repurchased for payment
—
511,508
of taxes on stock awards
(130,687)
Tax adjustments due to vestings
and exercises
Amortization of stock
compensation
Shares held in trust
Dividends paid, $0.48 per share
Change in pension liabilities, net
of tax
Foreign currency translation
adjustments
Increase in amounts attributable
to noncontrolling interest
—
—
—
—
—
—
—
435
—
8
(2)
—
—
—
—
—
—
—
441
—
5
(2)
—
—
—
—
—
—
—
444
—
5
(1)
—
—
—
—
—
—
—
Company Shareholders’ Equity
Additional
Other
Paid-In Retained Shares Held Comprehensive Noncontrolling
Interest
Capital
(Loss) Income
Earnings
in Trust
Total
Equity
904,968
827,297
(7,814)
(33,757)
3,251 $ 1,694,380
—
208,050
3,697
(11,654)
3,323
31,921
—
—
—
—
—
—
—
(18,219)
—
—
—
—
—
—
—
—
—
—
—
227
—
—
—
—
932,255
1,017,128
(7,587)
—
269,865
1,250
(14,275)
3,579
22,703
—
—
—
—
—
—
—
—
—
—
(20,026)
—
—
—
—
—
—
—
—
(465)
—
—
—
—
—
—
—
—
—
—
1,647
41,056
—
8,946
—
—
—
—
—
—
—
19,171
(53,319)
793
208,843
—
—
—
—
—
—
3,705
(11,656)
3,323
31,921
227
(18,219)
1,647
41,056
4,029
4,029
8,073 $ 1,959,256
3,487
273,352
—
—
—
—
—
—
—
—
1,255
(14,277)
3,579
22,703
(465)
(20,026)
19,171
(53,319)
—
(420)
(420)
945,512
1,266,967
(8,052)
(25,202)
11,140 $ 2,190,809
—
386,063
2,388
(15,953)
9,661
20,242
—
—
—
—
—
—
—
(21,885)
—
—
—
—
—
—
—
—
—
—
—
1,645
—
—
—
—
—
—
—
—
—
—
—
(37,086)
770
386,833
—
—
—
—
—
—
—
2,393
(15,954)
9,661
20,242
1,645
(21,885)
(37,086)
(137,951)
— (137,951)
—
10,413
10,413
December 31, 2014
44,828,779 $
448
961,850
1,631,145
(6,407)
(200,239)
22,323 $ 2,409,120
(1) Excludes net income attributable to redeemable noncontrolling interest of $1,187 for the year ended December 31, 2014.
See accompanying notes to consolidated financial statements.
106
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2014, 2013 AND 2012 ($ in thousands)
Cash flows used in operating activities:
Net income
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization
Equity earnings from real estate ventures
Loss (gain) on the disposition of assets
Distributions of earnings from real estate ventures
Provision for loss on receivables and other assets
Amortization of deferred compensation
Accretion of interest on deferred business acquisition obligations
Amortization of debt issuance costs
Change in:
Receivables
Prepaid expenses and other assets
Deferred tax assets, net
Excess tax benefit from share-based payment arrangements
Accounts payable, accrued liabilities and accrued compensation
Net cash provided by operating activities
Cash flows used in investing activities:
Net capital additions — property and equipment
Proceeds from the sale of assets
Business acquisitions
Capital contributions to real estate ventures
Distributions of capital from real estate ventures
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from borrowings under credit facility
Repayments of borrowings under credit facility
Issuance of senior notes, net
Payments of deferred business acquisition obligations and earn-outs
Debt issuance costs
Shares repurchased for payment of employee taxes on stock awards
Excess tax adjustment from share-based payment arrangements
Common stock issued under option and stock purchase programs
Payment of dividends
Capital lease payments
Other loan proceeds, net
Noncontrolling interest contributions (distributions), net
Net cash used in financing activities
Effect of currency exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest
Income taxes, net of refunds
Non-cash investing activities:
Business acquisitions, contingent consideration
Capital leases
Non-cash financing activities:
Deferred business acquisition obligations
Redeemable noncontrolling interest
See accompanying notes to consolidated financial statements.
107
2014
2013
2012
$
388,020
273,352
208,843
94,337
(48,265)
3,065
19,521
8,201
20,242
5,260
3,626
(264,025)
(48,824)
19,813
(9,661)
307,551
79,853
(31,343)
(2,555)
13,672
8,715
22,703
7,837
4,437
(267,550)
(45,014)
28,058
(3,579)
206,649
498,861
295,235
(156,927)
1,207
(38,196)
(56,434)
62,412
(110,684)
13,604
(57,544)
(37,217)
27,629
78,810
(23,857)
—
10,641
6,586
32,276
17,744
4,375
(90,495)
(33,986)
(12,600)
(3,323)
130,885
325,899
(94,758)
—
(27,706)
(106,322)
77,534
(187,938)
(164,212)
(151,252)
1,664,000
(1,827,801)
—
(39,344)
—
(15,954)
9,661
2,393
(21,885)
(4,191)
18,725
11,367
1,957,791
(1,979,500)
—
(72,482)
(4,614)
(14,277)
3,579
1,255
(20,026)
—
940
(1,054)
1,690,142
(2,017,000)
272,396
(143,768)
(946)
(11,656)
3,323
3,705
(18,219)
—
13,282
—
(203,029)
(128,388)
(208,741)
(10,207)
97,687
152,726
$
250,413
(2,068)
567
152,159
152,726
1,799
(32,295)
184,454
152,159
$
$
$
20,160
88,459
10,296
21,190
21,486
14,186
22,850
84,951
9,215
—
13,195
—
15,480
75,930
7,373
—
36,281
—
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
Jones Lang LaSalle Incorporated (‘‘Jones Lang LaSalle,’’ which we may refer to as ‘‘JLL,’’ ‘‘we,’’ ‘‘us,’’ ‘‘our,’’
the ‘‘Company’’ or the ‘‘Firm’’) was incorporated in 1997. We have more than 230 corporate offices worldwide
from which we provide services to clients in more than 80 countries. We have approximately 58,100
employees, including 33,300 employees whose costs are reimbursed by our clients. We provide comprehensive
integrated real estate and investment management expertise on a local, regional and global level to owner,
occupier and investor clients. We are an industry leader in property and corporate facility management
services, with a portfolio of approximately 3.4 billion square feet worldwide. LaSalle Investment Management
(‘‘LaSalle’’), a member of the Jones Lang LaSalle group, is one of the world’s largest and most diversified real
estate investment management firms, with approximately $53.6 billion of assets under management.
The following table shows the revenue for the major product categories into which we group these services for
the years ended December 31, 2014, 2013 and 2012 ($ in millions):
Real Estate Services:
Leasing
Capital Markets & Hotels
Property & Facility Management
Project & Development Services
Advisory, Consulting and Other
LaSalle Investment Management
Total revenue
2014
2013
2012
$
$
1,540.0
820.3
1,523.7
709.3
468.2
368.1
5,429.6
1,321.7
716.1
1,199.5
555.4
414.2
254.7
4,461.6
1,273.1
516.1
1,012.9
486.2
383.1
261.4
3,932.8
Individual regions and markets focus on different property types, depending on local requirements and market
conditions.
We work for a broad range of clients that represent a wide variety of industries and are based in markets
throughout the world. Our clients vary greatly in size and include for-profit and not-for-profit entities of all
kinds, public-private partnerships and governmental (public sector) entities. Increasingly, we are offering
services to smaller middle-market companies that are looking to outsource real estate services. We provide
real estate investment management services on a global basis for both public and private assets through our
LaSalle subsidiary. Our integrated global business model, industry-leading research capabilities, client
relationship management focus, consistent worldwide service delivery and strong brand are attributes that
enhance our services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
Our Consolidated Financial Statements include the accounts of JLL and its majority-owned and controlled
subsidiaries. We have eliminated all intercompany balances and transactions in our Consolidated Financial
Statements. Investments in real estate ventures over which we exercise significant influence, but do not
control, are accounted for either under the equity method or at fair value.
When applying principles of consolidation, we begin with Accounting Standards Update (‘‘ASU’’) 2009-17,
‘‘Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities,’’ in determining whether an investee entity is a variable interest entity (‘‘VIE’’) or a voting
interest entity. ASU 2009-17 draws a distinction between voting interest entities, which are embodied by
common and traditional corporate and partnership structures, and VIEs, broadly defined as entities for which
108
control is achieved through means other than voting rights. For voting interest entities, the interest holder
with control through majority ownership and majority voting rights consolidates the entity. For VIEs,
determination of the ‘‘primary beneficiary’’ drives the accounting. We identify the primary beneficiary of a
VIE as the enterprise that has both of the following characteristics: (1) the power to direct the activities of
the VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb
losses or receive benefits of the VIE that could potentially be significant to the entity. We perform this
analysis on an ongoing basis. When we determine we are the primary beneficiary of a VIE, we consolidate our
investment in the VIE; when we determine we are not the primary beneficiary of the VIE, we account for our
investment in the VIE under the equity method or at fair value.
If an entity is not a VIE, but is a limited partnership or similar entity, we apply guidance from Accounting
Standards Codification (‘‘ASC’’) Topic 810 related to investments in joint ventures, and consider rights held by
limited partners which may preclude consolidation by a sole general partner. The assessment of limited
partners’ rights and their impact on the presumption of control of the limited partnership by the sole general
partner should be made when an investor becomes the general partner, and reassessed if (1) there is a change
to the terms or in the exercisability of the rights of the limited partners, (2) the general partner increases or
decreases its ownership of limited partnership interests, or (3) there is an increase or decrease in the number
of outstanding limited partnership interests.
Our determination of the appropriate accounting method to apply for all other investments is based on the
level of influence we have in the underlying entity. When we have an asset advisory contract with a real estate
limited partnership, the combination of our limited partner interest and the advisory agreement generally
provides us with significant influence over such real estate limited partnership. Accordingly, we account for
such investments either under the equity method or at fair value. We eliminate transactions with such
subsidiaries to the extent of our ownership in the related subsidiary.
For less-than-wholly-owned consolidated subsidiaries, noncontrolling interest is the portion of equity not
attributable, directly or indirectly, to the Company. The Company evaluates whether noncontrolling interests
possess any redemption features outside of the Company’s control. If such features are determined to exist,
the noncontrolling interests are presented outside of permanent equity on our Consolidated Balance Sheets
within Redeemable noncontrolling interest. Redeemable noncontrolling interests are adjusted to the greater of
their fair value or carrying value at each balance sheet date through a charge to Additional paid-in capital, if
necessary. If classification and presentation outside of permanent equity is not considered necessary,
noncontrolling interests are presented as a component of permanent equity on our Consolidated Balance
Sheets. Within our Consolidated Statements of Comprehensive Income, revenues, expenses and net income
(loss) from less-than-wholly-owned consolidated subsidiaries are reported at the consolidated amounts,
including both the amounts attributable to the Company and noncontrolling interests, and the income or loss
that is attributable to the noncontrolling interest holders is reflected in Net income attributable to
noncontrolling interest.
Changes in amounts attributable to noncontrolling interests are reflected in the Consolidated Statements of
Changes in Equity. Changes in amounts attributable to redeemable noncontrolling interests are presented in
the following table ($ in millions):
Redeemable noncontrolling interests as of January 1, 2014
Business combinations (see Note 4)
Net income
Impact of exchange rate movements
Redeemable noncontrolling interests as of December 31, 2014
$
$
—
14.2
1.2
(2.0)
13.4
109
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles (‘‘U.S. GAAP’’) requires us to make estimates and assumptions about future events that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenue and expenses during the reporting periods. Such
estimates include the value of purchase consideration, valuation of accounts receivable, investments in real
estate ventures, goodwill, intangible assets, other long-lived assets, legal contingencies, assumptions used in the
calculation of income taxes, incentive compensation, self-insurance program liabilities, and retirement and
other post-employment benefits, among others.
These estimates and assumptions are based on management’s best estimate and judgment. We evaluate these
estimates and assumptions on an ongoing basis using historical experience and other factors, including the
current economic environment, which we believe to be reasonable under the circumstances. We adjust such
estimates and assumptions when facts and circumstances dictate. Market factors, such as illiquid credit
markets, volatile equity markets and foreign currency fluctuations can increase the uncertainty in such
estimates and assumptions. Because future events and their effects cannot be determined with precision,
actual results could differ significantly from these estimates. Changes in those estimates resulting from
continuing changes in economic environment will be reflected in the financial statements in future periods.
Although actual amounts likely differ from such estimated amounts, we believe such differences are not likely
to be material.
Reclassifications
We have classified certain prior year amounts to conform to the current presentation. These reclassifications
have not been material and have not affected reported net income. Within the Consolidated Statements of
Cash Flows for the years ended December 31, 2013 and 2012, we reclassified $2.1 million and $(1.8) million,
respectively, to increase (decrease) net cash provided by operating activities and reflect the offsetting amounts
within Effect of currency exchange rate changes on cash and cash equivalents to conform to the current
presentation.
Revenue Recognition
We earn revenue from the following principal sources:
(cid:127) Transaction commissions;
(cid:127) Advisory and management fees;
(cid:127) Incentive fees;
(cid:127) Project and development management fees; and
(cid:127) Construction management fees.
We recognize transaction commissions related to leasing services and capital markets services as revenue when
we provide the related service unless future contingencies exist. Advisory and management fees related to
property and facility management services, valuation services, corporate property services, consulting services
and investment management are recognized in the period in which we perform the related services. We
recognize incentive fees in the period earned, based on the performance of funds’ investments, contractual
benchmarks and other contractual formulas. If future contingencies exist, we defer recognition of the related
revenue until the respective contingencies have been satisfied.
We recognize project and development management and construction management fees by applying the
percentage of completion method of accounting. The efforts expended method is used to determine the extent
of progress towards completion for project and development management fees, and the costs incurred to total
estimated costs method is used for construction management fees.
Certain construction management fees, which are gross construction services revenue reported net of
subcontract costs, were $6.2 million, $8.0 million, and $8.1 million for the years ended December 31, 2014,
110
2013 and 2012, respectively. Gross construction services revenue totaled $112.1 million, $148.9 million, and
$132.3 million and subcontract costs totaled $105.9 million, $140.9 million, and $124.2 million for the years
ended December 31, 2014, 2013 and 2012, respectively.
We included costs in excess of billings on uncompleted construction contracts of $3.4 million and $4.4 million
in Trade receivables, and billings in excess of costs on uncompleted construction contracts of $7.9 million and
$7.4 million in Deferred income, respectively, as of December 31, 2014 and 2013, respectively.
Gross and Net Accounting
We follow the guidance of ASC Topic 605-45, ‘‘Principal and Agent Considerations,’’ when accounting for
reimbursements received from clients. In certain of our businesses, primarily those involving management
services, our clients reimburse us for expenses incurred on their behalf. We base the treatment of
reimbursable expenses for financial reporting purposes upon the fee structure of the underlying contract.
Accordingly, we report a contract that provides for fixed fees, fully inclusive of all personnel and other
recoverable expenses, on a gross basis. When accounting on a gross basis, our reported revenue comprises the
entire amount billed to our client and our reported expenses include all costs associated with the client.
Certain contractual arrangements in our project and development services, including fit-out business activities
and our facility management services, tend to have characteristics that result in accounting on a gross basis. In
Note 3, Business Segments, for client assignments in property and facility management and in project and
development services that are accounted for on a gross basis, we identify the gross contract costs, including
vendor and subcontract costs (‘‘gross contract costs’’), and present separately their impact on both revenue
and operating expense in our Real Estate Services (‘‘RES’’) segments. We exclude these gross contract costs
from revenue and operating expenses in determining ‘‘fee revenue’’ and ‘‘fee-based operating expenses’’ in our
segment presentation.
We account for a contract on a net basis when the fee structure is comprised of at least two distinct elements,
namely (1) a fixed management fee and (2) a separate component that allows for scheduled reimbursable
personnel costs or other expenses to be billed directly to the client. When accounting on a net basis, we
include the fixed management fee in reported revenue and net the reimbursement against expenses. We base
this accounting on the following factors, which define us as an agent rather than a principal:
(cid:127) The property owner or client, with ultimate approval rights relating to the employment and compensation
of on-site personnel, and bearing all of the economic costs of such personnel, is determined to be the
primary obligor in the arrangement;
(cid:127) Reimbursement to JLL is generally completed simultaneously with payment of payroll or soon thereafter;
(cid:127) The property owner is contractually obligated to fund all operating costs of the property from existing
cash flow or direct funding from its building operating account and JLL bears little or no credit risk; and
(cid:127) JLL generally earns no margin on the reimbursement aspect of the arrangement, obtaining
reimbursement only for actual costs incurred.
We account for the majority of our service contracts on a net basis. These net costs aggregated approximately
$1.8 billion, $1.6 billion and $1.5 billion for the years ended December 31, 2014, 2013 and 2012, respectively.
The presentation of expenses pursuant to these arrangements under either a gross or net basis has no impact
on operating income, net income or cash flows.
Contracts accounted for on a gross basis resulted in certain costs reflected in revenue and operating expenses
(gross contract costs) of $727.9 million, $434.8 million, and $292.6 million for the years ended December 31,
2014, 2013 and 2012, respectively.
111
Cash and Cash Equivalents
We consider all highly-liquid investments purchased with maturities of less than three months to be cash
equivalents. The carrying amount of cash equivalents approximates fair value due to the short-term maturity
of these investments.
Financing Receivables
We account for Trade receivables, Notes and other receivables, Long-term receivables and Warehouse
receivables as financing receivables.
Trade Receivables
Pursuant to contractual arrangements, Trade receivables, net of allowances include unbilled amounts of
$339.1 million and $260.4 million at December 31, 2014 and 2013, respectively.
We estimate the allowance necessary to provide for uncollectible accounts receivable. The estimate includes
specific amounts for which payment has become unlikely. We also base this estimate on historical experience
combined with a review of current developments and client credit quality. The process by which we calculate
the allowance begins with the individual business units where specific uncertain accounts are identified and
reserved as part of an overall reserve that is formulaic and driven by the age profile of the receivables and our
historical experience. We then review these allowances on a quarterly basis to ensure they are appropriate.
The following table details the changes in the allowance for uncollectible receivables for each of the three
years ended December 31, 2014, 2013 and 2012 ($ in millions):
Allowance at January 1
Charged to income
Write-off of uncollectible receivables
Reserves acquired from acquisitions
Impact of exchange rate movements and other
Allowance at December 31
2014
18.8
8.2
(7.8)
0.9
(2.2)
17.9
$
$
2013
19.5
8.7
(8.5)
—
(0.9)
18.8
2012
20.6
6.6
(7.9)
—
0.2
19.5
Notes and Other Receivables and Long-Term Receivables
We make ongoing assessments of the collectability of outstanding Notes and other receivables and Long-term
receivables, considering both objective and subjective factors such as the age profile of outstanding balances,
the contractual terms of repayment and credit quality. Aspects of credit quality considered in our assessments
of collectability include historical experience, current developments and the status of our broader business
relationship with the obligor. We record an allowance against the outstanding balance when our assessments
result in a determination that payment has become unlikely. After all collection efforts have been exhausted
by management, the outstanding balance considered uncollectible is written off against the reserve.
Historically, credit quality deterioration to the point of impairment or non-performance in our Notes and
other receivables and Long-term receivables has been limited and has not had a material impact on our
Consolidated Financial Statements.
Warehouse Receivables
We originate mortgages upon receiving contractual purchase commitments from the Federal Home Loan
Mortgage Corporation (‘‘Freddie Mac’’). Loans are generally funded by our warehouse facility at prevailing
market rates and repaid within a one-month period when Freddie Mac buys the loans, while we retain the
servicing rights. We carry Warehouse receivables at the lower of cost or fair value based on the commitment
price, in accordance with ASC Topic 948, Financial Services-Mortgage Banking. Historically, we have not
experienced any credit quality deterioration or balances considered uncollectible with respect to our
warehouse receivables. Upon surrender of control over the warehouse receivables, we account for the transfer
as a sale.
112
Mortgage Servicing Rights
We retain certain servicing rights in connection with the origination and sale of mortgage loans. We record
mortgage servicing rights based on the fair value of these rights on the date the loans are sold, resulting in net
gains, which we record as Revenue in our Consolidated Statements of Comprehensive Income. At both
December 31, 2014 and 2013, we had $5.8 million of mortgage servicing rights carried at the lower of
amortized cost or fair value in Identified intangibles on our Consolidated Balance Sheets. We amortize
servicing rights in proportion to and over the estimated period that net servicing income is projected to be
received.
We evaluate mortgage servicing assets for impairment on an annual basis, or more often if circumstances or
events indicate a change in fair value. There have been no instances of impairment during all periods
presented. Mortgage servicing rights do not actively trade in an open market with readily available observable
prices; therefore, if necessary, the fair value of these rights would be determined based on certain assumptions
and judgments that are Level 3 within the fair value hierarchy, including the estimation of the present value of
future cash flows to be realized from servicing the underlying mortgages.
Property and Equipment
We record property and equipment at cost and depreciate these assets over their relevant useful lives. We
capitalize certain direct costs relating to internal-use software development when incurred during the
application development phase. We review property and equipment for impairment whenever events or
circumstances indicate that the carrying value of an asset group may not be recoverable. We record an
impairment loss to the extent that the carrying value exceeds the estimated fair value. We did not recognize
any significant impairment losses related to property and equipment during the years ended December 31,
2014, 2013 or 2012.
We calculate depreciation and amortization on property and equipment for financial reporting purposes by
using the straight-line method based on the estimated useful lives of our assets. Depreciation and amortization
expense related to property and equipment for the years ended December 31, 2014, 2013 and 2012 was
$84.2 million, $71.0 million, and $66.2 million, respectively. The following table shows the gross value of major
asset categories at December 31, 2014 and 2013, as well as the standard depreciable lives for each of these
asset categories ($ in millions):
Category
Furniture, fixtures and equipment
Computer equipment and software
Leasehold improvements
Automobiles and other
Total
Total accumulated depreciation
Net property and equipment
$
2014
90.9
429.8
197.7
68.3
786.7
418.3
$
368.4 $
2013
88.2
375.3
179.4
26.6
669.5
374.0
295.5
Depreciable Life
1 to 13 years
1 to 10 years
1 to 18 years
4 to 20 years
Business Combinations, Goodwill and Other Intangible Assets
We have historically grown, in part, through a series of acquisitions. Consistent with the services nature of the
businesses we have acquired, we have recorded significant goodwill and intangible assets resulting from these
acquisitions. These intangible assets are primarily comprised of management contracts and customer backlog
that we acquired as part of these acquisitions and amortize over their estimated useful lives.
We evaluate goodwill for impairment at least annually. ASU 2011-08, ‘‘Testing Goodwill for Impairment’’
permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to
perform the two-step goodwill impairment test. We define our four reporting units as the three geographic
regions of RES: Americas RES; Europe, Middle East and Africa (‘‘EMEA’’) RES; and Asia Pacific RES, and
LaSalle.
113
We have considered both qualitative and quantitative factors with respect to the performance of our annual
impairment test of goodwill and determined the fair value of our reporting units to be substantially in excess
of the carrying value, primarily considering (1) our market capitalization in relation to the aggregate carrying
value of our net assets, (2) our overall financial performance during the year at both the reporting unit and
consolidated reporting levels, and (3) near and longer-term forecasts of operating income and cash flows
generated by our reporting units in relation to the carrying values of the net assets of each reporting unit.
In addition to our annual impairment evaluation, we evaluate whether events or circumstances have occurred
in the period subsequent to our annual impairment testing that indicate it is more likely than not an
impairment loss has occurred. It is possible our determination that goodwill for a reporting unit is not
impaired could change in the future if current economic conditions deteriorate. We will continue to monitor
the relationship between the Company’s market capitalization and carrying value, as well as the ability of our
reporting units to deliver current and projected EBITDA and cash flows sufficient to support the carrying
values of the net assets of their respective businesses.
We evaluate our Identified intangibles for impairment annually or if other events or circumstances indicate
that the carrying value may be impaired.
See Note 4 for additional information on goodwill and other intangible assets.
Investments in Real Estate Ventures
We invest in certain ventures that primarily own and operate commercial real estate across a wide array of
sectors including retail, residential and office on a global basis. Historically, these investments have primarily
been co-investments in funds that our LaSalle business establishes in the ordinary course of business for its
clients. These investments take the form of ownership interests generally ranging from less than 1% to 15% of
the respective ventures and based upon investment-specific objectives, are typically formed with anticipated
five to nine year investment periods. During the course of investment periods, in many instances the terms of
the underlying investment agreements limit the transferability of the Company’s ownership interests to distinct
events or circumstances, the timing or existence of which cannot be estimated. When in place, such
restrictions are a result of the Company’s role beyond that of a passive investor, which generally means an
advisory or management responsibility on behalf of the other investors who are typically clients of our LaSalle
business. We primarily account for these investments under the equity method, however, as further discussed
below, we report certain of our investments at fair value utilizing information provided by investees.
For real estate limited partnerships in which the Company is a general partner, the entities are generally
well-capitalized and grant the limited partners substantive participating rights, such as the right to replace the
general partner without cause, to dissolve or liquidate the partnership, to approve the sale or refinancing of
the principal partnership assets, or to approve the acquisition of principal partnership assets. We generally
account for such general partner interests under the equity method.
For limited partnerships in which the Company is a limited partner, the Company has concluded that it does
not have a controlling interest in these limited partnerships. When we have an asset advisory contract with the
limited partnership, the combination of our limited partner interest and the advisory agreement generally
provides us with significant influence over the real estate limited partnership venture. Accordingly, we account
for such investments under the equity method or at fair value.
For investments in real estate ventures accounted for under the equity method, we maintain an investment
account that is (1) increased by contributions made and by our share of net income of the real estate
ventures, and (2) decreased by distributions received and by our share of net losses of the real estate ventures.
Our share of each real estate venture’s net income or loss, including gains and losses from capital
transactions, is reflected in our Consolidated Statements of Comprehensive Income as Equity earnings from
real estate ventures. See ‘‘Principles of Consolidation’’ above for additional discussion of the accounting for
our co-investments.
114
We review our investments in real estate ventures, except those investments otherwise reported at fair value,
for indications of whether we may not be able to recover the carrying value of our investments and whether
our investments are other than temporarily impaired. When events or changes in circumstances indicate that
the carrying amount of one of our investments may be other than temporarily impaired, we consider the
likelihood of recoverability of the carrying amount of our investment as well as the estimated fair value and
record an impairment charge as applicable. We consider a number of factors, including our share of
co-investment cash flows and the fair value of our co-investments, in determining whether or not our
investment is other than temporarily impaired.
For investments in real estate ventures reported at fair value, we maintain an investment account that is
increased or decreased each reporting period by the difference between the fair value of the investment and
the carrying value at the balance sheet date. These fair value adjustments are reflected as gains or losses in
our Consolidated Statements of Comprehensive Income within Equity earnings from real estate ventures. For
the years ended December 31, 2014, 2013 and 2012, we recognized fair value gains of $7.1 million,
$5.1 million and $2.0 million, respectively, that are included in Equity earnings from real estate ventures. The
fair value of these investments at the balance sheet date is determined generally using net asset value
(‘‘NAV’’) per share (or its equivalent), a Level 3 input in the fair value hierarchy, provided by the investee.
Refer to Note 5 for additional information regarding investments reported at fair value.
We report Equity earnings from real estate ventures in the Consolidated Statements of Comprehensive
Income after Operating income. However, for segment reporting we reflect Equity earnings (losses) from real
estate ventures as a component of revenue. See Note 3 for Equity earnings (losses) reflected within segment
revenue, as well as discussion of how the Chief Operating Decision Maker (as defined in Note 3) measures
segment results with Equity earnings (losses) included in segment revenue.
See Note 5 for additional information on investments in real estate ventures.
Stock-Based Compensation
Stock-based compensation in the form of restricted stock units is a significant element of our compensation
programs. We determine the fair value of restricted stock units based on the market price of the Company’s
common stock on the grant date and amortize it on a straight-line basis over the associated vesting period for
each separately vesting portion of an award. We reduce stock-based compensation expense for estimated
forfeitures each period and adjust expense accordingly upon vesting or actual forfeitures.
We also have a ‘‘noncompensatory’’ Stock Purchase Plan (‘‘ESPP’’) for U.S. employees and a Jones Lang
LaSalle Savings Related Share Option Plan (‘‘Save As You Earn’’ or ‘‘SAYE’’) for U.K. and Irish employees.
The fair value of options granted under the SAYE plan are determined on the grant date and amortized over
the associated vesting period.
See Note 6 for additional information on our stock compensation plans.
Income Taxes
We account for income taxes under the asset and liability method. We recognize deferred tax assets and
liabilities for the expected future tax consequences of events that have been included in our financial
statements or tax returns. Under this method, we determine deferred tax assets and liabilities based on the
differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
An increase or decrease in a deferred tax asset or liability that results from a change in circumstances, and
that causes a change in our judgment about expected future tax consequences of events, would be included in
the tax provision when the changes in circumstances and our judgment occurs. Deferred income taxes also
reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is established if we
believe it is more likely than not that all or some portion of a deferred tax asset will not be realized. An
115
increase or decrease in a valuation allowance that results from a change in circumstances, and that causes a
change in our judgment about the ability to realize the related deferred tax asset, would be included in the tax
provision when the changes in circumstances and our judgment occurs.
See Note 8 for additional information on income taxes.
Derivatives and Hedging Activities
We do not enter into derivative financial instruments for trading or speculative purposes. However, in the
normal course of business we do use derivative financial instruments in the form of forward foreign currency
exchange contracts to manage selected foreign currency risks. At December 31, 2014, we had forward
exchange contracts in effect with a gross notional value of $2.03 billion ($1.19 billion on a net basis) with a
net fair value loss of $7.7 million. At December 31, 2013, we had forward exchange contracts in effect with a
gross notional value of $1.96 billion ($1.01 billion on a net basis) with a net fair value loss of $0.1 million.
We currently do not use hedge accounting for these contracts, which are marked-to-market each period with
changes in unrealized gains or losses recognized in earnings and offset by foreign currency gains and losses on
associated intercompany loans and other foreign currency balances. We include the gains and losses on these
forward foreign currency exchange contracts as a component of our overall net foreign currency gains and
losses that are included in Operating, administrative and other expense.
We have considered the counterparty credit risk related to these forward foreign currency exchange contracts
and do not deem any counterparty credit risk to be material at December 31, 2014.
Foreign Currency Translation
We prepare the financial statements of our subsidiaries located outside the United States using local currency
as the functional currency. The assets and liabilities of these subsidiaries are translated to U.S. dollars at the
rates of exchange at the balance sheet date with the resulting translation adjustments included as a separate
component of equity in the Consolidated Balance Sheets (Accumulated other comprehensive loss) and in the
Consolidated Statements of Comprehensive Income (Other comprehensive income-foreign currency translation
adjustments).
The $200.2 million of Accumulated other comprehensive loss on our Consolidated Balance Sheet at
December 31, 2014, consists of $136.8 million of net foreign currency translation losses and $63.4 million of
unrecognized losses on pension plans, recorded net of tax. The $25.2 million of Accumulated other
comprehensive loss on our Consolidated Balance Sheet at December 31, 2013, consists of $1.1 million of net
foreign currency translation gains offset by $26.3 million of unrecognized losses on pension plans recorded net
of tax.
Income and expenses are translated at the average monthly rates of exchange. We include gains and losses
from foreign currency transactions in net earnings as a component of Operating, administrative and other
expense. Net foreign currency losses were $8.5 million, $3.9 million, and $4.3 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
The effect of currency exchange rate changes on Cash and cash equivalents is presented as a separate caption
in the Consolidated Statements of Cash Flows.
Cash Held for Others
We manage significant amounts of cash and cash equivalents in our role as agent for certain of our investment
and property management clients. We do not include such amounts in our Consolidated Balance Sheets.
116
Taxes Collected from Clients and Remitted to Governmental Authorities
We account for tax assessed by a governmental authority that is based on a revenue or transaction value (i.e.,
sales, use, and value added taxes) on a net basis, excluded from revenue, and recorded as current liabilities
until paid.
Commitments and Contingencies
We are subject to various claims and contingencies related to lawsuits and taxes as well as commitments under
contractual obligations. Many of these claims are covered under our current insurance programs, subject to
deductibles. We recognize the liability associated with a loss contingency when a loss is probable and
estimable.
See Note 13 for additional information on commitments and contingencies.
Earnings Per Share; Net Income Available to Common Shareholders
The difference between basic weighted average shares outstanding and diluted weighted average shares
outstanding represents the dilutive impact of our common stock equivalents. Common stock equivalents
consist of shares to be issued under employee stock compensation programs. See Note 6 for additional
information on our stock compensation plans.
New Accounting Standards
In July 2013, the Financial Accounting Standards Board (‘‘FASB’’) issued ASU 2013-11, ‘‘Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward or a Tax Credit Carryforward Exists,’’
which provides guidance for the financial statement presentation of such unrecognized tax benefits. ASU
2013-11 became effective for us on January 1, 2014, and resulted in the reclassification of $11.1 million of
unrecognized tax benefits to reduce our deferred tax assets. These unrecognized tax benefits were previously
classified as current taxes payable within Accounts payable and accrued liabilities and are now classified within
Deferred tax assets, net as a reduction to net operating loss carryforwards.
On May 28, 2014, the FASB issued ASU No. 2014-09, ‘‘Revenue from Contracts with Customers,’’ which
requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of
promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in
U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017.
Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect
transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated
financial statements and related disclosures. The Company has not yet selected a transition method nor has it
determined the effect of the standard on its ongoing financial reporting.
(3) BUSINESS SEGMENTS
We manage and report our operations as four business segments:
The three geographic regions of RES:
(1) Americas,
(2) EMEA, and
(3) Asia Pacific;
and
(4) LaSalle, which offers investment management services on a global basis.
Each geographic region offers our full range of Real Estate Services, including agency leasing and tenant
representation, capital markets and hotels, property management, facility management, project and
development management, energy management and sustainability, construction management, and advisory,
consulting and valuation services. We consider ‘‘property management’’ to represent services provided to
non-occupying property investors and ‘‘facilities management’’ to represent services provided to owner-
occupiers. LaSalle provides investment management services to institutional investors and high-net-worth
individuals.
117
Operating income represents total revenue less direct and allocated indirect expenses. We allocate all indirect
expenses to our segments, other than interest and income taxes, as nearly all expenses incurred benefit one or
more of the segments. Allocated expenses primarily consist of corporate global overhead. We allocate these
corporate global overhead expenses to the business segments based on the budgeted operating expenses of
each segment.
For segment reporting, we present revenue net of gross contract costs in our RES segments. Excluding these
costs from revenue and expenses results in a ‘‘net’’ presentation of ‘‘fee revenue’’ and ‘‘fee-based operating
expenses’’ that we believe more accurately reflects how we manage our expense base and operating margins.
See Note 2 for additional information on our gross and net accounting policies. For segment reporting, we
present Equity earnings from real estate ventures within total segment revenue, since the related activity is an
integral part of LaSalle. Finally, our measure of segment results excludes Restructuring and acquisition
charges.
The Chief Operating Decision Maker of JLL measures the segment results net of gross contract costs,
inclusive of Equity earnings from real estate ventures, and excluding Restructuring and acquisition charges.
We define the Chief Operating Decision Maker collectively as our Global Executive Board, which is
comprised of our Global Chief Executive Officer, Global Chief Financial Officer and the Chief Executive
Officers of each of our reporting segments.
118
Summarized financial information by business segment for 2014, 2013 and 2012 is as follows ($ in thousands):
Real Estate Services
Americas
Revenue
Equity earnings (losses)
Total segment revenue
Gross contract costs
Total segment fee revenue
Operating expenses:
2014
2013
2012
$
2,319,136
775
2,319,911
(210,380)
1,918,092
549
1,918,641
(112,097)
1,723,025
(3)
1,723,022
(76,929)
2,109,531
1,806,544
1,646,093
Compensation, operating and administrative expenses
Depreciation and amortization
Total segment operating expenses
Gross contract costs
2,045,330
55,215
2,100,545
(210,380)
1,689,365
45,285
1,734,650
(112,097)
1,513,594
42,333
1,555,927
(76,929)
Total fee-based segment operating expenses
1,890,165
1,622,553
1,478,998
Operating income
EMEA
Revenue
Equity earnings (losses)
Total segment revenue
Gross contract costs
Total segment fee revenue
Operating expenses:
$
$
219,366
183,991
167,095
1,632,657
17
1,632,674
(316,440)
1,323,201
(535)
1,322,666
(204,596)
1,072,909
(310)
1,072,599
(120,817)
1,316,234
1,118,070
951,782
Compensation, operating and administrative expenses
Depreciation and amortization
Total segment operating expenses
Gross contract costs
Total fee-based segment operating expenses
Operating income
1,488,033
23,763
1,511,796
(316,440)
1,212,797
20,547
1,233,344
(204,596)
1,195,356
1,028,748
$
120,878
89,322
996,639
21,644
1,018,283
(120,817)
897,466
54,316
119
Continued: Summarized financial information by business segment for 2014, 2013 and 2012 is as follows
($ in thousands):
2014
2013
2012
Real Estate Services
Asia Pacific
Revenue
Equity earnings
Total segment revenue
Gross contract costs
Total segment fee revenue
Operating expenses:
Compensation, operating and administrative expenses
Depreciation and amortization
Total segment operating expenses
Gross contract costs
Total fee-based segment operating expenses
Operating income
LaSalle
Revenue
Equity earnings
Total segment revenue
Operating expenses:
Compensation, operating and administrative expenses
Depreciation and amortization
Total segment operating expenses
Operating income
Segment Reconciling Items:
Total segment revenue
Reclassification of equity earnings
Total revenue
$
$
$
$
$
1,109,701
447
1,110,148
(201,073)
909,075
1,012,639
13,301
1,025,940
(201,073)
824,867
84,208
368,109
47,026
415,135
281,094
2,059
283,153
131,982
965,626
129
965,755
(118,089)
847,666
876,239
12,216
888,455
(118,089)
770,366
77,300
254,672
31,200
285,872
216,203
1,805
218,008
67,864
875,476
150
875,626
(94,816)
780,810
797,396
12,886
810,282
(94,816)
715,466
65,344
261,420
24,020
285,440
211,567
1,947
213,514
71,926
5,477,868
48,265
5,429,603
4,492,934
31,343
4,461,591
3,956,687
23,857
3,932,830
Total segment operating expenses before restructuring and
acquisition charges
4,921,434
4,074,457
3,598,006
Operating income before restructuring and acquisition
charges
Restructuring and acquisition charges
Operating income
508,169
42,505
$
465,664
387,134
18,315
368,819
334,824
45,421
289,403
120
Identifiable assets by segment are those assets that are used by or are a result of each segment’s business.
Corporate assets are principally cash and cash equivalents, office furniture and computer hardware and
software. The following table reconciles segment identifiable assets to consolidated assets and segment
investments in real estate ventures to consolidated investments in real estate ventures ($ in millions):
2014
2013
INVESTMENTS
IDENTIFIABLE IN REAL ESTATE IDENTIFIABLE IN REAL ESTATE
VENTURES
INVESTMENTS
VENTURES
ASSETS
ASSETS
Real Estate Services:
Americas
EMEA
Asia Pacific
LaSalle
Corporate
Consolidated
$
$
2,368.4
1,328.6
775.1
476.2
127.0
5,075.3
8.7 $
3.1
4.4
280.9
—
297.1 $
2,009.5
1,321.2
681.1
473.3
112.3
4,597.4
3.6
2.8
2.2
278.6
—
287.2
The following table reconciles segment property and equipment expenditures to consolidated property and
equipment expenditures ($ in millions):
Real Estate Services:
Americas
EMEA
Asia Pacific
LaSalle
Corporate
Total capital expenditures
Less proceeds on dispositions
Net capital expenditures
2014
62.9
40.4
16.4
2.0
35.2
156.9
—
156.9
$
$
2013
47.0
19.2
15.3
2.0
27.3
110.8
(0.1)
110.7
2012
42.6
21.6
9.1
3.7
18.5
95.5
(0.7)
94.8
The following table sets forth the 2014 and 2013 revenue and assets from our most significant currencies
($ in millions):
TOTAL REVENUE
TOTAL ASSETS
United States dollar
British pound
Euro
Australian dollar
Hong Kong dollar
Chinese yuan
Singapore dollar
Japanese yen
Indian rupee
Other currencies
$
2013
1,954.3
636.3
595.9
285.3
134.6
137.7
96.7
122.0
117.5
381.3
4,461.6
$
2014
2,809.0
749.3
507.3
158.6
118.2
93.1
124.8
44.1
122.6
348.3
5,075.3
2013
2,562.1
756.1
468.8
150.8
102.9
92.1
66.9
35.9
93.3
268.5
4,597.4
$
$
2014
2,214.1
833.4
701.8
303.1
170.5
169.2
157.7
155.1
155.1
569.6
5,429.6
121
We face restrictions in certain countries that limit or prevent the transfer of funds to other countries or the
exchange of the local currency to other currencies. The assets of these countries represented approximately
5% of our total assets at both December 31, 2014 and 2013.
(4) BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
2014 Business Combinations Activity
During the year ended December 31, 2014, we completed ten new acquisitions located in the United States,
Spain, Portugal, France, Sweden, England and Malaysia. These acquisitions included: (1) Tenzing, a Swedish
commercial real estate services provider specializing in capital markets, (2) W.A. Ellis, a London-based
residential agency and valuation firm, (3) CRESA Portland, a tenant representation and corporate services
firm located in Portland, Oregon, and (4) CLEO Construction Management, a California-based project
management services firm that specializes in medical facilities. We also purchased a portion of the minority
ownership in our Indian operations, for which we had previously recorded a minority shareholder redemption
liability on the Consolidated Balance Sheet, increasing our ownership from 90% to 95%. As of December 31,
2014, our estimated obligation of $11.2 million to purchase the remaining 5% is reflected within Minority
shareholder redemption liability on the Consolidated Balance Sheet.
The aggregate terms of these acquisitions included: (1) cash paid at closing of $38.2 million, (2) consideration
subject only to the passage of time of $21.5 million, (3) earn-out consideration subject to provisions that will
be paid upon certain conditions being met, which was recorded at the acquisition date fair value of
$10.3 million and (4) a redeemable noncontrolling interest of $14.2 million. The acquisition we completed in
Sweden includes a redeemable noncontrolling interest in the form of an option agreement that allows the
Company to purchase, and the noncontrolling shareholder to put to the Company, this noncontrolling interest
in the acquired company in annual increments for the four years following acquisition at a price determined
by the profit generated by the acquiree. Of the $69.5 million of total additions to goodwill during the year
ended December 31, 2014, we anticipate being able to amortize and deduct $13.6 million for tax purposes.
During the year ended December 31, 2014, we also paid $39.3 million for deferred business acquisition and
earn-out obligations for acquisitions completed in prior years.
2013 Business Combinations Activity
In 2013, we completed five new acquisitions located in the United States, Japan and Singapore. Total
consideration paid in 2013 for acquisitions of $57.5 million consisted of (1) $12.3 million paid at closing for
the aforementioned five 2013 acquisitions and (2) $45.2 million for contingent earn-out consideration related
to acquisitions completed in prior years, including $36.9 million representing the final earn-out payment for
the 2008 Staubach acquisition. Also, in relation to acquisitions completed in prior years, we paid $72.5 million
of deferred acquisition obligations, primarily consisting of $29.7 million for the 2011 King Sturge acquisition
and $34.7 million for the 2008 Staubach acquisition.
Terms of these acquisitions included: (1) cash paid at closing of $12.3 million, (2) consideration subject only to
the passage of time recorded as Deferred business acquisition obligations at an acquisition date fair value of
$13.2 million, and (3) additional consideration subject to earn-out provisions that will be paid only if certain
conditions are achieved, recorded as current and long-term liabilities, at their estimated acquisition date fair
value of $9.2 million. These acquisitions resulted in goodwill of $26.5 million, which we anticipate being able
to amortize and deduct for tax purposes, and identifiable intangibles of $8.3 million. During 2013, we also
increased goodwill by $17.3 million for contingent earn-out payments recorded when the performance
conditions on acquisitions completed prior to 2009 were achieved.
Earn-Out Payments
As of December 31, 2014, we had the potential to make earn-out payments on 18 previous acquisitions that
are subject to the achievement of certain performance conditions. The maximum amount of the potential
earn-out payments for these acquisitions was $43.5 million at December 31, 2014, for which we have accrued
122
$25.1 million on our Consolidated Balance Sheet within Other current and Other long-term liabilities.
Assuming the achievement of the applicable performance conditions, we anticipate that the majority of these
earn-out payments will be paid over the next four years. Adjustments to earn-out liabilities in periods
subsequent to the completion of acquisitions are reflected within Restructuring and acquisition charges in the
Consolidated Statements of Comprehensive Income. Refer to Note 14, Restructuring and Acquisition Charges,
for additional discussion.
Goodwill and Other Intangible Assets
We had $1.9 billion of goodwill and unamortized intangibles at December 31, 2014. Significant portions of our
goodwill and unamortized intangibles are denominated in currencies other than the U.S. dollar, which means
that a portion of the movements in the reported book value of these balances is attributable to movements in
foreign currency exchange rates. The tables below detail the foreign exchange impact on our goodwill and
intangible balances. The $1.9 billion of goodwill and unamortized intangibles consists of: (1) goodwill of
$1.9 billion with indefinite useful lives that is not amortized, (2) identifiable intangibles of $31.8 million that
will be amortized over their remaining finite useful lives, and (3) $7.0 million of identifiable intangibles with
indefinite useful lives that are not amortized.
The following table details, by reporting segment, the current year movements in goodwill with indefinite
useful lives ($ in millions):
Real Estate Services
Americas
965.0
$
EMEA
625.1
30.7
(0.5)
Asia
Pacific
244.3
4.7
(11.1)
237.9
(0.7)
(6.4)
230.8
LaSalle Consolidated
1,853.8
19.4
—
—
19.4
—
(1.0)
18.4
43.8
2.5
1,900.1
69.5
(61.7)
1,907.9
8.4
14.1
647.6
56.6
(53.8)
650.4
Balance as of January 1, 2013
Additions, net of adjustments
Impact of exchange rate movements
Balance as of December 31, 2013
$
995.2
Additions, net of adjustments
Impact of exchange rate movements
13.6
(0.5)
Balance as of December 31, 2014
$
1,008.3
123
The following table details, by reporting segment, the current year movements in the gross carrying amount
and accumulated amortization of our identifiable intangibles ($ in millions):
Gross Carrying Amount
Balance as of January 1, 2013
Americas
91.2
$
EMEA
42.3
Real Estate Services
Additions
Adjustment for fully amortized intangibles
Impact of exchange rate movements
10.2
—
—
Balance as of December 31, 2013
$
101.4
Asia
Pacific
13.8
0.4
(3.5)
(0.9)
9.8
—
(0.3)
9.5
LaSalle Consolidated
156.3
9.0
—
—
(1.3)
7.7
—
(0.7)
7.0
10.6
(3.5)
(1.4)
162.0
5.9
(4.2)
163.7
—
—
0.8
43.1
3.8
(3.1)
43.8
2.1
(0.1)
103.4
Additions
Impact of exchange rate movements
Balance as of December 31, 2014
Accumulated Amortization
Balance as of January 1, 2013
Amortization expense
Adjustment for fully amortized intangibles
Impact of exchange rate movements
Balance as of December 31, 2013
Amortization expense
Impact of exchange rate movements
Balance as of December 31, 2014
Net book value as of December 31, 2014
$
$
$
$
$
(71.3)
(26.5)
(12.4)
(0.1)
(110.3)
(6.9)
—
—
(78.2)
(6.7)
—
(84.9)
(2.3)
—
(0.6)
(29.4)
(3.9)
2.3
(31.0)
(0.6)
3.5
0.8
(8.7)
(0.5)
0.3
(8.9)
—
—
—
(0.1)
—
—
(0.1)
(9.8)
3.5
0.2
(116.4)
(11.1)
2.6
(124.9)
18.5
12.8
0.6
6.9
38.8
We amortize our identifiable intangible assets with finite lives on a straight-line basis over their useful lives.
The remaining weighted average amortization period of these identifiable intangible assets is 2.8 years and the
remaining estimated future amortization expense by year at December 31, 2014 is as follows ($ in millions):
2015
2016
2017
2018
2019
Thereafter
Total
$
$
10.2
6.4
5.7
3.9
2.4
3.2
31.8
(5) INVESTMENTS IN REAL ESTATE VENTURES
As of December 31, 2014 and 2013, we had investments in real estate ventures of $297.1 million and
$287.2 million, respectively. We account for the majority of our investments in real estate ventures under the
equity method of accounting, however, we report certain of our direct investments at fair value. Our
investments are primarily co-investments in approximately 50 separate property or commingled funds for
which we also have an advisory agreement. Our investment ownership percentages in these funds generally
range from less than 1% to 15%.
124
Approximately 55% of our $297.1 million balance in Investments in real estate ventures as of December 31,
2014 was attributable to investment vehicles which, utilizing our capital and outside capital primarily provided
by institutional investors, invest in certain real estate ventures that own and operate real estate. Of this
amount, the majority was placed with LaSalle Investment Company II (‘‘LIC II’’), in which we held an
effective ownership interest of 48.78%.
At December 31, 2014, LIC II had unfunded capital commitments to underlying funds of $154.2 million and a
$20.0 million revolving credit facility (the ‘‘LIC II Facility’’), principally for working capital needs. LIC II’s
exposure to the liabilities and losses of the underlying real estate ventures in which it has invested is limited to
existing capital contributions and remaining unfunded capital commitments. Considering our proportionate
share of LIC II’s commitments to underlying funds and our exposure to fund our proportionate share of the
then outstanding balance on the LIC II Facility, our maximum potential unfunded commitment to LIC II was
$107.4 million as of December 31, 2014. We expect LIC II to draw down on our commitment over the next
three to five years to satisfy its existing commitments to underlying real estate ventures.
The following table summarizes the above discussion relative to LIC II as of December 31, 2014
($ in millions):
Our effective ownership interest in co-investment vehicle
Our maximum potential unfunded commitments
Our share of unfunded capital commitments to underlying funds
Our maximum exposure assuming facilities are fully drawn
Our share of exposure on outstanding borrowings
$
48.78%
107.4
75.2
9.8
6.4
Exclusive of our LIC II commitment structure, we have potential unfunded commitment obligations to other
like investment vehicles or direct investments, the aggregate maximum of which is $68.8 million as of
December 31, 2014.
Our investments in real estate ventures include investments in entities classified as VIEs that we analyze for
potential consolidation. We had equity method investments, either directly or indirectly, of $4.3 million and
$2.6 million at December 31, 2014 and December 31, 2013, respectively, in entities classified as VIEs. We
evaluate each of these VIEs to determine whether we might have the power to direct the activities that most
significantly impact the entity’s economic performance. In certain circumstances, we have determined that we
either did not have the power to direct the key activities, or shared power with other investors, lenders, or
other actively-involved third parties. Additionally, our exposure to loss is limited to our investment in the
VIEs. Therefore, we concluded that we would not be deemed to have a controlling financial interest in or be
the primary beneficiary of these VIEs and therefore do not consolidate them in our Consolidated Financial
Statements. In other circumstances, we have determined we are the primary beneficiary of certain other VIEs
and accordingly, consolidate such entities. The assets of the consolidated VIEs are available only for the
settlement of the obligations of the respective entities. The mortgage loans of the consolidated VIEs are
non-recourse to JLL.
125
Summarized balance sheets for our consolidated VIEs as of December 31, 2014 and 2013 are as follows
($ in millions):
Property and equipment, net
Investment in real estate venture
Other assets
Total assets
Mortgage loans payable, included in other long-term liabilities
Total liabilities
Members’ equity
Total liabilities and members’ equity
2014
37.8
5.0
3.5
46.3
29.3
29.3
17.0
46.3
$
$
$
$
2013
14.4
—
1.6
16.0
10.7
10.7
5.3
16.0
Summarized statements of operations for our consolidated VIEs for the years ended December 31, 2014, 2013
and 2012 are as follows ($ in millions):
Revenue
Gain on Sale of Investment
Operating and other expenses
Net income
2014
4.2
—
(3.9)
0.3
$
$
2013
1.0
2.9
(0.6)
3.3
2012
0.7
—
(0.3)
0.4
The following table summarizes the combined financial information for our unconsolidated real estate
ventures (including those held via LIC II) accounted for under either the equity method of accounting or at
fair value ($ in millions):
Balance Sheets:
Investments in real estate, net of depreciation
Total assets
$
10,060.4
12,613.1
10,567.4
13,741.8
14,042.7
16,942.5
2014
2013
2012
Mortgage indebtedness
Other borrowings
Total liabilities
Total equity
Statements of Operations:
Revenue
Net income
3,979.2
754.6
5,487.1
7,126.0
5,109.4
486.2
6,313.8
7,428.0
9,173.3
346.8
9,449.6
7,492.9
$
1,397.6
1,099.1
1,605.2
906.2
1,871.9
776.0
Impairment
We review our investments in real estate ventures on a quarterly basis, or as otherwise deemed necessary, for
indications that we may not be able to recover the carrying value of our investments and whether such
investments are other than temporarily impaired. Our assessments consider the existence of impairment
indicators at the underlying real estate assets that comprise the majority of our investments. Such assessments,
in regards to both the investment and underlying asset levels, are based on evaluations of regular updates to
future cash flow models and on factors such as operational performance, market conditions, major tenancy
matters, legal and environmental concerns, and our ability and intent to hold each investment. When events or
changes in circumstances indicate that the carrying amount of one of our investments in real estate ventures
may be other than temporarily impaired, we consider the likelihood of recoverability of the carrying amount
126
of our investment as well as the estimated fair value and record an impairment charge as applicable.
Impairment charges to write down the carrying value of the real estate assets underlying our investments, our
proportionate share of which is recognized within Equity earnings from real estate ventures, are generally the
result of completing discounted cash flow models that primarily rely upon Level 3 inputs to determine fair
value. Impairment charges recorded within Equity earnings from real estate ventures aggregated to
$2.4 million, $6.5 million, and $7.9 million for the years ended December 31, 2014, 2013, and 2012,
respectively.
Fair Value
We report our investments in certain real estate ventures at fair value. For such investments, we increase or
decrease our investment each reporting period by the estimated change in fair value, which activity is reflected
as gains or losses in our Consolidated Statements of Comprehensive Income within Equity earnings from real
estate ventures. At December 31, 2014, 2013, and 2012, we had $113.6 million, $78.9 million, and
$63.6 million, respectively, of investments that were reported at fair value. Fair value was generally estimated
utilizing NAV per share (or its equivalent), a Level 3 input in the fair value hierarchy, as provided by our
investees. Critical inputs to NAV estimates included valuations of the underlying real estate assets and
borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates,
rental and expense growth rates and asset-specific market borrowing rates. No adjustments to NAV estimates
provided by investees, including adjustments to contemplate any restrictions to the transferability of ownership
interests embedded within investment agreements to which we are a party, were considered necessary based
upon the following factors: (1) our understanding of the methodology utilized and inputs incorporated to
estimate NAV at the investee level derived through LaSalle’s role as advisor or manager of these ventures;
(2) consideration of market demand for the specific types of real estate assets held by each venture; and
(3) contemplation of real estate and capital markets conditions in the localities in which these ventures
operate.
The following table shows the movement in our investments in real estate ventures that were reported at fair
value ($ in millions):
Fair value investments as of January 1,
$
Investments
Distributions
Net fair value gain
Foreign currency translation adjustments, net
2014
78.9
35.2
(3.1)
7.1
(4.5)
Fair value investments as of December 31,
$
113.6
2013
63.6
16.8
(3.4)
5.1
(3.2)
78.9
2012
23.2
64.5
(26.7)
2.0
0.6
63.6
(6) STOCK-BASED COMPENSATION
The Jones Lang LaSalle Amended and Restated Stock Award and Incentive Plan (‘‘SAIP’’) provides for the
granting of various stock awards to eligible employees of JLL. Such awards include restricted stock units and
options to purchase a specified number of shares of common stock, although we have not granted stock
options since 2003. There were approximately one million shares available for grant under the SAIP at
December 31, 2014. We also have a stock-based compensation plan for our United Kingdom and Ireland-
based employees, the SAYE plan, that allows for the purchase of stock at a 15% discount from the market
price at the beginning of the plan’s three and five year vesting periods.
127
Stock-based compensation expense is included within Compensation and benefits expense in our Consolidated
Statements of Comprehensive Income. Share-based compensation expense for the years ended December 31,
2014, 2013 and 2012 consisted of the following ($ in millions):
Restricted stock unit awards
U.K. SAYE
2014
19.3
1.1
20.4
$
$
2013
21.3
1.0
22.3
2012
31.6
0.9
32.5
We amortize the fair value of share-based compensation on a straight-line basis over the associated vesting
periods for each separately vesting portion of an award. Employees age 55 or older, with a sum of age plus
years of service with the Company which meets or exceeds 65, are eligible to be considered for receipt of
retirement benefits upon departure from the Company. These award provisions trigger application of certain
elements of ASC Topic 718, ‘‘Compensation — Stock Compensation,’’ whereby the recognition of
compensation expense for restricted stock unit awards granted to employees meeting the age plus service
criteria is accelerated such that all expense is recognized by the time that these employees are considered for
retirement eligible.
Restricted Stock Unit Awards
Historically, a significant portion of restricted stock units granted each year were awarded in the first quarter
of the year under our Stock Ownership Program (the ‘‘SOP’’). The SOP generally required that between 10%
to 20% of incentive compensation (or ‘‘bonus’’) of certain senior employees be deferred and delivered in
restricted stock units. Under the SOP plan, we granted approximately 365,000 shares of restricted stock in
2012. Subsequent to the 2012 grant, we terminated the SOP and thus no additional restricted stock units have
been issued under the SOP. Since the start of the SOP, our employee population has grown significantly and
other aspects of our compensation programs have evolved, as a result of which we have determined that
(1) there are other more targeted and strategic approaches we can take in order to enhance our equity
incentive compensation programs, and (2) we can do so in a way that will be less dilutive to shareholders than
the SOP would be if we continued this plan.
Restricted stock unit activity for the years ended December 31, 2014, 2013, and 2012 is as follows:
Unvested at January 1, 2012
Granted
Vested
Forfeited
Unvested at December 31, 2012
Granted
Vested
Forfeited
Unvested at December 31, 2013
Granted
Vested
Forfeited
Unvested at December 31, 2014
Unvested shares expected to vest
Shares
(thousands)
1,362.3
Weighted Average
Grant Date
Fair Value
66.29
$
Weighted
Average
Remaining
Contractual
Life
606.3
(577.7)
(45.0)
1,345.9
$
244.4
(522.8)
(42.2)
1,025.3
$
160.5
(426.6)
(13.9)
745.3
723.5
$
$
128
67.34
62.24
66.52
68.50
91.01
70.51
62.38
73.09
119.88
60.14
80.74
90.43
90.56
1.91
2.03
2.38
2.38
We determine the fair value of restricted stock units based on the market price of the Company’s common
stock on the grant date. As of December 31, 2014, we had $27.4 million of remaining unamortized deferred
compensation related to unvested restricted stock units. We will recognize the remaining cost of unvested
restricted stock units outstanding at December 31, 2014 over varying periods into 2019.
Shares vested during the years ended December 31, 2014, 2013 and 2012, had grant date fair values of
$25.7 million, $36.9 million, and $36.0 million, respectively. Shares granted during the years ended
December 31, 2014, 2013 and 2012 had grant date fair values of $19.2 million, $22.2 million and $40.8 million,
respectively.
Other Stock Compensation Programs
As previously discussed, we also maintain the SAYE plan, a stock-based compensation plan for our United
Kingdom and Ireland-based employees. Under this plan, employees make an annual election to contribute to
the plan to purchase stock at a 15% discount from the market price at the beginning of the plan’s three and
five year vesting periods. There were approximately 507,000 shares available for grant under the SAYE plan at
December 31, 2014.
Options activity under the SAYE plan for the years ended December 31, 2014 and 2013 are as follows:
Options granted
Exercise price — options granted
Options exercised
Weighted average exercise price
2014
47,600
105.54 $
78,771
26.10 $
$
$
2013
25,400
77.65
22,241
47.32
The fair values of options granted under the SAYE plan are amortized over their respective vesting periods.
There were approximately 176,400 and 227,800 options outstanding under the SAYE plan at December 31,
2014 and 2013, respectively.
(7) RETIREMENT PLANS
Defined Contribution Plans
We have a qualified profit sharing plan that is subject to United States Internal Revenue Code Section 401(k)
for eligible U.S. employees. We make employer contributions under this qualified profit sharing plan that are
included in the accompanying Consolidated Statements of Comprehensive Income. For the years ended
December 31, 2014, 2013 and 2012 our employer contributions were $17.1 million, $15.7 million and
$13.5 million, respectively. Related trust assets of the Plan are managed by trustees and are excluded from the
accompanying Consolidated Financial Statements.
We maintain several defined contribution retirement plans for eligible non-U.S. employees. Our contributions
to these plans were approximately $27.4 million, $23.4 million and $22.1 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
Defined Benefit Plans
We maintain four contributory defined benefit pension plans in the United Kingdom, Ireland and Holland to
provide retirement benefits to eligible employees. It is our policy to fund the minimum annual contributions
required by applicable regulations. We use a December 31 measurement date for our plans.
129
Net periodic pension cost for the years ended December 31, 2014, 2013 and 2012 consisted of the following
($ in millions):
Employer service cost — benefits earned during the period
Interest cost on projected benefit obligation
Expected return on plan assets
Net amortization of deferrals
Recognized actuarial loss
Net periodic pension cost
2014
3.7
16.1
(24.5)
1.0
0.2
(3.5)
$
$
2013
3.9
14.3
(19.9)
2.1
0.5
0.9
2012
4.0
14.2
(17.3)
2.1
0.1
3.1
The following tables provide reconciliations of projected benefit obligations and plan assets (the net of which
is our funded status), as well as the funded status and accumulated benefit obligations, of our defined benefit
pension plans as of December 31, 2014 and 2013 ($ in millions):
Change in benefit obligation:
Projected benefit obligation, beginning of year
Service cost
Interest cost
Plan participants’ contributions
Benefits paid
Actuarial loss
Changes in currency translation rates
Other
Projected benefit obligation, end of year
Change in plan assets:
Fair value of plan assets, beginning of year
Actual return on plan assets
Plan contributions
Benefits paid
Changes in currency translation rates
Other
Fair value of plan assets, end of year
Funded status and net amount recognized
Accumulated benefit obligation, end of year
2014
358.2
3.7
16.1
0.6
(8.2)
88.4
(29.3)
(2.3)
427.2
2014
383.1
55.5
14.6
(8.2)
(28.4)
(2.3)
414.3
2013
339.2
3.9
14.3
0.6
(8.4)
3.7
8.3
(3.4)
358.2
2013
333.9
38.6
13.2
(8.4)
9.7
(3.9)
383.1
(12.9)
24.9
423.7
354.3
$
$
$
$
$
$
The accumulated benefit obligation was calculated based on the actuarial present value of the vested benefits
to which employees are entitled if they terminate their employment immediately.
Defined benefit pension plan amounts recorded in the accompanying Consolidated Balance Sheets as of
December 31, 2014 and 2013 include the following ($ in millions):
Net pension (liabilities) assets
Accumulated other comprehensive loss
$
2014
(12.9)
92.4
2013
24.9
42.0
130
Amounts in Accumulated other comprehensive loss yet to be recognized as components of net periodic
pension cost are comprised of $91.6 million of actuarial losses and $0.8 million of prior service cost as of
December 31, 2014. We anticipate that $4.7 million of this accumulated other comprehensive loss will be
recognized as net periodic pension cost in 2015.
The ranges of assumptions we used in developing the projected benefit obligation as of December 31 and in
determining net periodic benefit cost for the years ended December 31 were as follows:
2014
2013
2012
Discount rate used in determining
present values
Annual increase in future
compensation levels
Expected long-term rate of return on
assets
2.25% to 3.70% 4.00% to 4.65% 3.50% to 4.70%
0.00% to 3.50% 0.00% to 3.85% 0.00% to 3.40%
2.70% to 7.00% 4.10% to 7.00% 4.70% to 6.64%
The discount rate assumptions used for these pension plans were derived from the expected yield of
investment grade bonds with durations consistent with the liabilities of these plans. A general market-wide
decrease in the yield of investment grade bonds was the primary driver of the decrease in discount rate
assumptions comparing 2014 to 2013 and 2012 in the table above. Accordingly, this decrease in discount rate
assumptions was the primary driver of the actuarial losses reflected within the year ended December 31, 2014.
The expected long-term rate of return on assets is based on the current level of expected returns on risk-free
investments (primarily government bonds), the historical level of the risk premium associated with the other
asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The
expected return for each asset class is then weighted based on the target asset allocation to develop the
expected long-term rate of return on assets assumption for the portfolio. The actual return on plan assets for
the years ended December 31, 2014 and 2013 has exceeded our projected long-term rate of return on assets
due to favorable market conditions that have generated asset returns in excess of historical trends and
long-term expectations.
Plan assets consist of diversified portfolios principally comprised of equity and debt securities. The investments
and investment policies of these defined benefit plans are controlled by the trustees of each plan. The primary
investment objective of these trusts is to invest plan assets in such a manner that members’ benefit
entitlements can be paid when they come due. Plan assets are invested with a long-term focus to achieve a
return on investment that is based on levels of liquidity and investment risk that the trustees, in consultation
with the Company’s management, believe are prudent and reasonable. These trusts set investment target
allocations, but generally are not prohibited by the Company from investing in certain types of assets. The
pension plan assets held no derivative instruments at December 31, 2014 and 2013.
The fair value of plan assets of the United Kingdom and Irish plans was determined using quoted market
prices, Level 1 inputs, and significant observable inputs, Level 2 inputs. The fair value of plan assets at
December 31, 2014, determined using Level 1 inputs was $263.2 million, and using Level 2 inputs was
$102.3 million. The expected long-term rate of return on these assets is based on historical trends for similar
asset classes, as well as current economic conditions.
The Company’s defined benefit plan in the Netherlands has its assets invested with a third party insurance
company that guarantees the payments of benefits earned under this plan. The fair value of the plan assets
were $48.8 million and $31.2 million at December 31, 2014 and 2013, respectively. The valuation of these
assets was determined with the assistance of a third party insurance company and is considered a Level 3
measurement.
131
The allocation of pension plan assets at December 31, 2014 and 2013 is as follows:
Equity securities
U.K. equities
Non-U.K. equities
Debt securities
Corporate bonds
Government and other
Cash and other
2014
2013
15%
30%
30%
5%
20%
17%
32%
31%
3%
17%
100%
100%
The actual asset allocation at December 31, 2014 approximates the plan’s target asset allocation percentages.
Future contributions and payments — We expect to contribute $12.6 million to our defined benefit pension
plans in 2015. Additionally, the following pension benefit payments, which reflect expected future service, as
appropriate, are expected to be paid ($ in millions):
Pension Benefit Payments
2015
2016
2017
2018
2019
2020 to 2024
Total
$
$
8.2
8.2
8.3
8.6
8.8
48.4
90.5
(8) INCOME TAXES
For the years ended December 31, 2014, 2013 and 2012, our provision for income taxes consisted of the
following ($ in millions):
U.S. Federal:
Current
Deferred
State and Local:
Current
Deferred
International:
Current
Deferred
Total
2014
2013
2012
$
$
$
$
$
$
$
11.1
30.3
41.4
6.5
0.3
6.8
66.3
(16.9)
49.4
97.6
4.7
11.9
16.6
2.6
(1.4)
1.2
58.4
15.9
74.3
92.1
11.1
0.7
11.8
3.6
0.2
3.8
62.7
(9.1)
53.6
69.2
132
In 2014, our current tax expense was reduced by $23.5 million, and our deferred tax expense was increased by
a corresponding amount, due to the utilization of net operating loss carryovers. In 2013 and 2012, our current
tax expense was reduced by $53.3 million and increased by $20.2 million, respectively, due to the utilization of
prior years’ net operating loss carryovers and to the generation of additional net operating loss carryovers.
Income tax expense for the years ended December 31, 2014, 2013, and 2012 differed from the amounts
computed by applying the U.S. federal income tax rate of 35% to earnings before provision for income taxes
as a result of the following ($ in millions):
Computed ‘‘expected’’ tax expense
$ 170.0
35.0 %
$ 127.9
35.0 % $
97.3
35.0 %
2014
2013
2012
Increase (reduction) in income taxes from:
State and local income taxes, net of federal
income tax benefit
Amortization of goodwill and other intangibles
Nondeductible expenses
International earnings taxed at varying rates
Valuation allowances
Return to provision adjustment
Recognition of tax benefit, net of nondeductible
indemnification asset write-off
Other, net
Total
5.1
(5.2)
5.1
(59.1)
7.4
(0.2)
1.0 %
(1.1)%
1.0 %
(12.2)%
1.5 %
— %
1.4
(5.7)
2.1
(38.9)
5.9
1.2
0.4 %
(1.6)%
0.6 %
(10.6)%
1.6 %
0.3 %
2.7
(7.7)
1.2
(33.5)
13.6
(5.9)
1.0 %
(2.8)%
0.4 %
(12.1)%
5.0 %
(2.1)%
(22.4)
(3.1)
(4.6)%
(0.5)%
—
(1.8)
— %
(0.5)%
—
1.5
— %
0.5 %
$
97.6
20.1 %
$
92.1
25.2 % $
69.2
24.9 %
With respect to international earnings taxed at varying rates, we have operations which constitute a taxable
income tax presence in 74 countries or other taxable jurisdictions outside of the United States which are
treated as such by the United States Internal Revenue Code. All of those countries had income tax rates
lower than the combined United States federal and state income tax rate in 2014.
With respect to jurisdictions in which we operate with very low tax rates, income from Hong Kong (16.5%),
Singapore (17%), the United Kingdom (21.5%), The People’s Republic of China (25%), and the Netherlands
(25%) represent the most significant components of the international earnings line item in our effective tax
rate reconciliation. Other very low rate tax jurisdictions with meaningful contributions to the international
earnings line item in our effective tax rate reconciliation include Macau (12%), Cyprus (12.5%), Ireland
(12.5%), and Poland (19%). In the aggregate, these very low tax rate jurisdictions contributed over two thirds
of the difference between the actual income tax provision for international earnings and the equivalent
provision at the United States statutory rate in 2014. The remaining difference was contributed by earnings in
jurisdictions with effective tax rates above 25% and by earnings of insignificant amounts in very low tax rate
jurisdictions other than those noted above.
In defining very low tax rate jurisdictions, we consider effective tax rates which applied in 2014 based upon
income levels and including national and municipal, state or provincial taxes also based upon income levels,
which may cause those effective rates to differ from the maximum national statutory rates for the jurisdictions.
We consider jurisdictions with a tax rate of 25% or lower to be very low tax rate jurisdictions, which
represents a difference of 10% or more from the United States federal statutory income tax rate.
133
For the years ended December 31, 2014, 2013, and 2012 our income before taxes from domestic (U.S.) and
international sources was as follows ($ in millions):
Domestic
International
Total
2014
111.2
374.4
485.6
$
$
2013
102.8
262.6
365.4
2012
100.1
178.0
278.1
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities are presented below ($ in millions):
Deferred tax assets attributable to:
Accrued expenses
U.S. federal and state loss and credit carryovers
Allowances for uncollectible accounts
International loss carryovers
Investments in real estate ventures
Pension liabilities
Deferred tax assets
Less: valuation allowances
Net deferred tax assets
Deferred tax liabilities attributable to:
Property and equipment
Intangible assets
Income deferred for tax purposes
Other
Deferred tax liabilities
2014
2013
2012
$
$
$
$
$
153.0
14.6
6.8
136.9
33.6
20.0
364.9
(62.0)
302.9
1.6
101.7
1.6
5.5
110.4
128.6
56.9
6.1
133.5
38.8
9.2
373.1
(60.5)
312.6
5.7
91.7
2.2
6.8
106.4
90.0
82.6
6.2
147.4
39.1
14.8
380.1
(53.8)
326.3
4.7
82.1
2.0
2.0
90.8
We have not provided a deferred tax liability on the unremitted foreign earnings of international subsidiaries
because it is our intent to permanently reinvest such earnings outside of the United States. If repatriation of
all such earnings were to occur, we estimate that our resulting U.S. federal and state tax liability would be
approximately $144.6 million, net of the benefits of utilization of foreign tax credits and net operating loss
carryovers.
As of December 31, 2014, we had an available U.S. net operating loss carryover of $11.8 million which will
begin to expire in 2029; U.S. state net operating loss carryovers of $10.0 million, which expire at various dates
through 2029; and international net operating loss carryovers of $531.4 million, which primarily do not have
expiration dates. The change in deferred tax balances for net operating loss carryovers from 2013 to 2014
includes increases from current year losses, and decreases from current year estimated utilization.
As of December 31, 2014, we believe it is more likely than not that the net deferred tax assets of
$192.5 million will be realized based upon our estimates of future income and the consideration of net
operating losses, earnings trends and tax planning strategies. Valuation allowances have been provided with
regard to the tax benefit of certain international net operating loss carryovers, for which we have concluded
that recognition is not yet appropriate under ASC Topic 740, ‘‘Income Taxes.’’ In 2014, we reduced valuation
allowances by $6.6 million on some jurisdictions’ net operating losses due to the utilization or expiration of
those losses, and we increased valuation allowances by $14.1 million for other jurisdictions based upon
circumstances that caused us to establish or continue to provide valuation allowances on current or prior year
134
losses in addition to those provided in prior years. The balance of movement in valuation allowances
comparing December 31, 2014 to December 31, 2013 was attributable to the effect of changes in foreign
currency exchange rates.
As of December 31, 2014, our net current liability for income tax was $44.8 million, consisting of a current
receivable of $59.3 million and current payable of $104.1 million.
The Company or one or more of its subsidiaries files income tax returns in the United States (including 47
states and 25 cities and the District of Columbia and Puerto Rico), the United Kingdom (including England
and Scotland), Australia, Germany, The People’s Republic of China (including Hong Kong and Macau),
France, Japan, Singapore, India, The Netherlands, and Spain as well as 59 other countries. Generally, the
Company’s open tax years include those from 2010 to the present, although reviews of taxing authorities for
more recent years have been completed or are in process in a number of jurisdictions.
As of December 31, 2014, the Company is under examination in the United Kingdom, France, Germany,
India, Indonesia, and Taiwan. In the United States, the Company is under examination by the Internal
Revenue Service and the State of Massachusetts.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended
December 31, 2014 and 2013 is as follows ($ in millions):
Balance at January 1
Additions based on tax positions related to the current year
Decrease for the reversals of tax positions of prior years
Reductions for use in settlements with taxing authorities
Lapse of statute of limitations
Balance at December 31
$
$
2014
81.1
6.8
(4.7)
(0.2)
(34.5)
2013
87.2
3.6
(8.0)
(0.3)
(1.4)
$
48.5
$
81.1
The $34.5 million reduction in unrecognized tax benefits noted above was offset by a restructuring and
acquisition charge related to the write-off of an indemnification asset of equal amount that arose from prior
period acquisition activity. These two items offset each other in net income for the year ended December 31,
2014.
We believe it is reasonably possible that matters for which we have recorded $24.2 million of gross
unrecognized tax benefits will be resolved within one year after December 31, 2014, including $12.8 million of
such benefits for which related indemnification assets are recorded. The recognition of tax benefits, and other
changes to the amounts of our unrecognized tax benefits, may occur as the result of ongoing operations, the
outcomes of audits or other examinations by tax authorities, or the passing of statutes of limitations. We do
not expect changes to our unrecognized tax benefits to have a significant impact on net income or the
financial position of the Company. We do not believe that we have material tax positions for which the
ultimate deductibility is highly certain, but there is uncertainty about the timing of such deductibility.
We recognize interest accrued and penalties, if any, related to income taxes as a component of income tax
expense. During the years ended December 31, 2014, 2013, and 2012, we recognized approximately
$0.5 million, $0.9 million, and $(0.1) million, respectively, in interest expense (income) and no penalties. We
had approximately $4.7 million and $11.0 million of accrued interest at December 31, 2014 and 2013,
respectively.
135
(9) FAIR VALUE MEASUREMENTS
ASC 820, ‘‘Fair Value Measurements and Disclosures,’’ establishes a framework for measuring fair value
highlighted by the following three-tier fair value hierarchy:
(cid:127) Level 1. Observable inputs such as quoted prices for identical assets or liabilities in active markets;
(cid:127) Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or
indirectly; and
(cid:127) Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity
to develop its own assumptions.
There were no transfers among levels of valuations during the three year period ended December 31, 2014.
Financial Instruments
Our financial instruments include Cash and cash equivalents, Trade receivables, Notes and other receivables,
Warehouse receivables, Accounts payable, Short-term borrowings, Warehouse facility, Credit facility,
Long-term senior notes and foreign currency exchange contracts. The estimated fair value of Cash and cash
equivalents, Trade receivables, Notes and other receivables, Warehouse receivables, Accounts payable, and the
Warehouse facility approximates their carrying amounts due to the short maturity of these instruments. The
estimated fair value of our Credit facility and Short-term borrowings approximates their carrying value given
the variable interest rate terms and market spreads.
We estimate that the fair value of our Long-term senior notes was $285.3 million and $262.6 million at
December 31, 2014 and 2013, respectively, using dealer quotes that are Level 2 inputs in the fair value
hierarchy. The actual carrying value of our Long-term senior notes was $275.0 million at December 31, 2014
and 2013.
We record Warehouse receivables at the lower of cost or fair value based on the commitment purchase price.
When applicable we determine the fair value of Warehouse receivables based on readily observable Level 2
inputs.
Recurring Fair Value Measurements
The following table categorizes by level in the fair value hierarchy the estimated fair value at December 31,
2014 and 2013 of our assets and liabilities that are measured at fair value on a recurring basis ($ in millions):
December 31, 2014
December 31, 2013
Level 2
Level 3
Level 2
Level 3
Assets
Foreign currency forward contracts receivable
$
Deferred compensation plan assets
Investments in real estate ventures — fair value
10.5
111.2
—
— $
—
113.6
Total assets at fair value
$
121.7
113.6 $
Liabilities
Foreign currency forward contracts payable
Deferred compensation plan liabilities
Total liabilities at fair value
$
$
18.2
107.9
126.1
— $
—
— $
13.0
85.1
—
98.1
13.1
85.9
99.0
—
—
78.9
78.9
—
—
—
136
We regularly use foreign currency forward contracts to manage our currency exchange rate risk related to
intercompany lending and cash management practices. We determine the fair value of these contracts based
on current market rates. The inputs for these valuations are Level 2 inputs in the fair value hierarchy. At
December 31, 2014, these forward exchange contracts had a gross notional value of $2.03 billion ($1.19 billion
on a net basis) and were recorded on our Consolidated Balance Sheet as a current asset of $10.5 million and
a current liability of $18.2 million. At December 31, 2013, these forward exchange contracts had a gross
notional value of $1.96 billion ($1.01 billion on a net basis) and were recorded on our Consolidated Balance
Sheet as a current asset of $13.0 million and a current liability of $13.1 million.
The revaluations of our foreign currency forward contracts resulted in a net loss of $7.7 million, $0.1 million
and $5.7 million, for the years ended December 31, 2014, 2013 and 2012, respectively. Gains and losses from
the revaluation of these contracts are recognized as a component of Operating, administrative and other
expense and are offset by the gains and losses recognized on the revaluation of intercompany loans and other
foreign currency balances such that the impact to net income was not significant for the three years ended
December 31, 2014.
The asset and liability positions recorded for our foreign currency forward contracts are based on the net
payable or net receivable position with the financial institutions from which we purchase these contracts. The
$10.5 million asset at December 31, 2014 was comprised of gross contracts with receivable positions of
$12.5 million and payable positions of $2.0 million. The $18.2 million liability position at December 31, 2014
was comprised of gross contracts with receivable positions of $1.1 million and payable positions of
$19.3 million. At December 31, 2013, the $13.0 million asset was comprised of gross contracts with receivable
positions of $13.8 million and payable positions of $0.8 million. The $13.1 million liability position at
December 31, 2013, was comprised of gross contracts with receivable positions of $1.3 million and payable
positions of $14.4 million.
We maintain a deferred compensation plan for certain of our U.S. employees that allows them to defer
portions of their compensation. We invest directly in insurance contracts which yield returns to fund these
deferred compensation obligations. We recognize an asset for the amount that could be realized under these
insurance contracts at the balance sheet date, and the deferred compensation obligation is adjusted to reflect
the changes in the fair value of the amount owed to the employees. The inputs for this valuation are Level 2
inputs in the fair value hierarchy. This plan was recorded on our Consolidated Balance Sheet at December 31,
2014 as Deferred compensation plan assets of $111.2 million, long-term Deferred compensation liabilities of
$107.9 million, and as a reduction of equity, Shares held in trust, of $6.4 million. This plan was recorded on
our Consolidated Balance Sheet at December 31, 2013 as Deferred compensation plan assets of $85.1 million,
long-term Deferred compensation liabilities of $85.9 million, and as a reduction of equity, Shares held in trust,
of $8.1 million.
We report certain direct investments in real estate ventures at fair value. We had $113.6 million and
$78.9 million at December 31, 2014 and 2013, respectively, of direct investments in real estate ventures that
were reported at fair value. For these fair value investments in real estate ventures, we increase or decrease
our investment each reporting period by the change in the fair value of these investments. These fair value
adjustments are reflected as gains or losses in our Consolidated Statements of Comprehensive Income within
Equity earnings from real estate ventures. As discussed in Note 5, Investments in Real Estate Ventures, we
determine the fair value of these investments generally using NAV per share (or its equivalent), a Level 3
input in the fair value hierarchy, provided by investees.
Non-Recurring Fair Value Measurements
We review our investments in real estate ventures, except those investments otherwise reported at fair value,
on a quarterly basis, or as otherwise deemed necessary, for indications of whether we may not be able to
recover the carrying value of our investments and whether such investments are other than temporarily
impaired. When the carrying amount of the investment is in excess of the estimated future undiscounted cash
flows, we use a discounted cash flow approach or other acceptable method to determine the fair value of the
137
investment in computing the amount of the impairment. Our determination of fair value primarily relies on
Level 3 inputs. We did not recognize any significant impairment losses during the years ended December 31,
2014, 2013 or 2012. See Note 5, Investments in Real Estate Ventures.
(10) DEBT
Credit Facility
At December 31, 2014, we had a $1.2 billion unsecured revolving credit facility (the ‘‘Facility’’) scheduled to
mature on October 4, 2018. At December 31, 2014, we had outstanding letters of credit of $22.0 million and
no outstanding borrowings under the Facility. We had outstanding letters of credit of $19.8 million and
$155.0 million of outstanding borrowings under the Facility at December 31, 2013. The average outstanding
borrowings under the Facility were $357.0 million and $450.5 million during the years ended December 31,
2014 and 2013, respectively.
The pricing on the Facility ranges from LIBOR plus 1.00% to 1.75%. As of December 31, 2014, pricing on
the Facility was LIBOR plus 1.00%. The effective interest rates on our credit facility were 1.2% and 1.4%
during the years ended December 31, 2014 and 2013, respectively.
We remained in compliance with all covenants under our Facility as of December 31, 2014. The Facility
requires us to maintain a leverage ratio that does not exceed 3.50 to 1 and a minimum cash interest coverage
ratio of 3.00 to 1.
Included in debt for the calculation of the leverage ratio is the present value of deferred business acquisition
obligations and included in Adjusted EBITDA (as defined in the Facility) are, among other things, (1) an
add-back for stock-based compensation expense, (2) the addition of the EBITDA of acquired companies
earned prior to acquisition, and (3) add-backs for certain impairment and non-recurring charges. In addition,
we are restricted from, among other things, incurring certain levels of indebtedness to lenders outside of the
Facility and disposing of a significant portion of our assets. Lender approval or waiver is required for certain
levels of cash acquisitions and co-investment.
On February 25, 2015 we amended and expanded the Facility to a borrowing capacity of $2.0 billion with a
scheduled maturity of February 2020; refer to Note 15, Subsequent Events, for additional discussion.
We will continue to use the Facility for working capital needs (including payment of accrued incentive
compensation), co-investment activities, dividend payments, share repurchases, capital expenditures and
acquisitions.
Short-Term Borrowings
In addition to our Facility, we have the capacity to borrow up to an additional $44.9 million under local
overdraft facilities. We had short-term borrowings (including capital lease obligations and local overdraft
facilities) of $19.6 million and $24.5 million at December 31, 2014 and 2013, respectively, of which
$14.6 million and $22.8 million at December 31, 2014 and 2013, respectively, were attributable to local
overdraft facilities.
Long-Term Senior Notes
In November 2012, in an underwritten public offering, we issued $275.0 million of Long-term senior notes due
November 2022 (the ‘‘Notes’’). The Notes bear interest at an annual rate of 4.4%, subject to adjustment if a
credit rating assigned to the Notes is downgraded below an investment grade rating (or subsequently
upgraded). Interest is payable semi-annually on May 15 and November 15.
138
(11) LEASES
We lease office space in various buildings for our own use. The terms of these non-cancelable operating leases
provide for us to pay base rent and a share of operating expenses and real estate taxes in excess of defined
amounts. We also lease equipment under both operating and capital lease arrangements.
Minimum future lease payments (e.g., base rent for leases of office space) due in each of the next five years
ending December 31 and thereafter are as follows ($ in millions):
OPERATING LEASES
2015
2016
2017
2018
2019
Thereafter
Minimum lease payments
$
$
137.7
118.7
88.9
72.7
62.0
190.2
670.2
As of December 31, 2014, we have accrued liabilities related to excess lease space of $7.9 million, including
$3.8 million related to excess lease space as a result of combining King Sturge’s offices with our offices. The
total of minimum rentals to be received in the future as sublessor under noncancelable operating subleases as
of December 31, 2014 was $16.1 million.
Total rent expense, including office space and other rentals, was $141.0 million, $131.2 million and
$131.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.
(12) TRANSACTIONS WITH AFFILIATES
As part of our co-investment strategy, we have equity interests in real estate ventures, some of which have
certain of our officers as trustees or board of director members, and from which we earn advisory and
management fees. Included in the accompanying Consolidated Financial Statements is revenue of
$143.3 million, $125.7 million, and $147.7 million for 2014, 2013 and 2012, respectively, as well as receivables
of $15.1 million and $14.4 million at December 31, 2014 and 2013, respectively, related to transactions with
affiliates that are primarily a result of transactions with the real estate ventures in which we have equity
interests.
The outstanding balance of loans to employees at December 31, 2014 and 2013 are shown in the following
table ($ in millions): (1)
Loans related to co-investments (2)
Advances, travel and other (3)
2014
2013
$
$
8.6
75.0
83.6
6.4
62.5
68.9
(1) The Company does not extend credit or provide personal loans to any director or executive officer of the
Company.
(2) These nonrecourse loans have been made to allow employees the ability to participate in investment fund
opportunities.
(3) Consists primarily of commissions and other compensation advances to employees that are amortized
based on performance over required service periods.
139
(13) COMMITMENTS AND CONTINGENCIES
We are a defendant in various litigation matters arising in the ordinary course of business, some of which
involve claims for damages that are substantial in amount. Many of these litigation matters are covered by
insurance (including insurance provided through a consolidated captive insurance company as further
discussed below), but they may nevertheless be subject to large deductibles and the amounts being claimed
may exceed the available insurance. Although the ultimate liability for these matters cannot be determined,
based upon information currently available, we believe the ultimate resolution of such claims and litigation
will not have a material adverse effect on our financial position, results of operations or liquidity.
In order to better manage our global insurance program and support our risk management efforts, we
supplement our traditional insurance coverage for certain types of claims by using a wholly-owned captive
insurance company. The level of risk retained by our captive insurance company, with respect to professional
indemnity claims, is up to $2.5 million per claim, inclusive of the deductible. When a potential loss event
occurs, management estimates the ultimate cost of the claim and accrues the related cost in Other current and
long-term liabilities on our Consolidated Balance Sheets when probable and estimable. The following table
shows the professional indemnity reserve activity and the related payments made during the years ended
December 31, 2014 and 2013 ($ in millions):
January 1, 2012
New claims
Claims paid
December 31, 2012
New claims
Prior year claims adjustments
Claims paid
December 31, 2013
New claims
Prior year claims adjustments
Claims paid
December 31, 2014
Reserve
Activity
1.0
0.8
(0.2)
1.6
5.7
(0.2)
(0.9)
6.2
7.4
(0.8)
(3.6)
9.2
$
$
$
$
(14) RESTRUCTURING AND ACQUISITION CHARGES
For the year ended December 31, 2014, we recognized $42.5 million of Restructuring and acquisition charges,
of which $34.5 million was related to the write-off of an indemnification asset that arose from prior period
acquisition activity. This activity was partially offset by $3.9 million of net credit adjustments to earn-out
liabilities that arose from prior period acquisition activity. The write-off was offset by the recognition of a
related previously unrecognized tax benefit of an equal amount in the provision for income taxes, and
therefore had no impact on net income. After consideration of the write-off of the indemnification asset and
net credit adjustments to earn-out liabilities, the remaining $11.9 million of expense consisted of (1) severance,
(2) lease exit charges and fair value reserve adjustments, and (3) other acquisition and information technology
integration costs. For the year ended December 31, 2013 and 2012, we recognized $18.3 million and
$45.4 million, respectively, of expense consisting of (1) severance, (2) King Sturge employee retention bonuses,
(3) lease exit charges and fair value changes, and (4) other acquisition and information technology integration
costs.
140
The following table shows the restructuring and acquisition accrual activity, exclusive of the $34.5 million
indemnification asset write-off and $3.9 million adjustment to earn-out liabilities, and the related payments
made during the years ended December 31, 2014, 2013 and 2012 ($ in millions):
January 1, 2012
Accruals
Fixed Asset Disposals
Payments made
December 31, 2012
Accruals
Payments made
December 31, 2013
Accruals
Payments made
December 31, 2014
Retention
Bonuses
Other
Lease Acquisition
Costs
Exit
7.6
8.1
—
(10.5)
5.2
0.1
(4.9)
0.4
—
(0.4)
—
7.9
8.4
—
(4.3)
12.0
(1.4)
(4.7)
5.9
3.2
(4.9)
4.2
4.8
16.5
(2.7)
(14.4)
4.2
7.3
(11.1)
0.4
3.5
(3.5)
0.4
Severance
$
11.7
12.4
—
(14.1)
10.0
12.3
(18.5)
3.8
5.2
(6.0)
3.0
$
$
$
Total
32.0
45.4
(2.7)
(43.3)
31.4
18.3
(39.2)
10.5
11.9
(14.8)
7.6
We expect that accrued severance and other accrued acquisition costs will be paid during the first half of 2015.
Lease exit payments are dependent on the terms of various leases, which extend as far out as 2017.
(15) SUBSEQUENT EVENTS
On February 25, 2015, we amended and expanded our Facility, which resulted in: (1) an increase in our
borrowing capacity from $1.2 billion to $2.0 billion; (2) an extension of the maturity date from October 4,
2018 to February 25, 2020; (3) increases in certain add-backs to Adjusted EBITDA (as defined in the Facility)
for the calculation of the leverage ratio to provide additional operating flexibility; and (4) a range of pricing
from LIBOR plus 1.00% to 2.05%, with current pricing unchanged at LIBOR plus 1.00%. Under this new
agreement, our leverage ratio cannot exceed 3.50 to 1, except immediately following a material acquisition, in
which case, the leverage ratio maximum is 4.00 to 1 for up to four consecutive quarters. Other key terms and
conditions of the Facility were unchanged as part of the current amendment and expansion.
141
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The tables on the following pages set forth certain unaudited consolidated statements of operations data for
each of our past eight quarters. In our opinion, this information has been presented on the same basis as the
audited Consolidated Financial Statements appearing elsewhere in this report, and includes all adjustments,
consisting only of normal recurring adjustments and accruals, that we consider necessary for a fair
presentation. The unaudited consolidated quarterly information should be read in conjunction with our
Consolidated Financial Statements and the notes thereto as well as the ‘‘Summary of Critical Accounting
Policies and Estimates’’ section within ‘‘Management’s Discussion and Analysis of Financial Condition and
Results of Operations.’’ The operating results for any quarter are not necessarily indicative of the results for
any future period.
We note the following points regarding how we prepare and present our financial statements on a periodic
basis.
Periodic Accounting for Incentive Compensation
An important part of our overall compensation package is incentive compensation, which we typically pay to
employees in the year after it is earned. In our interim financial statements, we have accrued for incentive
compensation based on the percentage of compensation costs and adjusted operating income relative to
forecasted compensation costs and adjusted operating income for the full year, as substantially all incentive
compensation pools are based upon full year results. The impact of this incentive compensation accrual
methodology is that we accrue less compensation in the first six months of the year, with the majority of our
incentive compensation accrued in the second half of the year, particularly in the fourth quarter. We exclude
from the standard accrual methodology incentive compensation pools that are not subject to the normal
performance criteria. These pools are generally accrued for on a straight-line basis.
Income Taxes
We provide for the effects of income taxes on interim financial statements based on our estimate of the
effective tax rate for the full year. We assess our effective tax rate on a quarterly basis and reflect the benefit
from tax planning actions when we believe it is probable they will be successful. We account for the
cumulative catch-up impact of any change in estimated effective tax rate in the quarter that a change is made.
Seasonality
Our quarterly revenue and profits tend to grow progressively by quarter throughout the year. This is a result
of a general focus in the real estate industry on completing or documenting transactions by fiscal-year-end and
the fact that certain expenses are constant through the year. Historically, we have reported a relatively smaller
profit in the first quarter and then increasingly larger profits during each of the following three quarters,
excluding the recognition of investment-generated performance fees and co-investment equity gains or losses
(each of which can be particularly unpredictable). Such performance fees and co-investment equity gains are
generally recognized when assets are sold, the timing of which is geared toward the benefit of our clients.
Non-variable operating expenses, which are treated as expenses when they are incurred during the year, are
relatively constant on a quarterly basis.
142
JONES LANG LASALLE INCORPORATED QUARTERLY INFORMATION-2014 (UNAUDITED)
($ in thousands, except share data)
MARCH 31
JUNE 30
SEPT. 30
DEC. 31 YEAR 2014
Revenue:
Real Estate Services:
Americas
EMEA
Asia Pacific
LaSalle Investment Management
Less:
Equity earnings from real estate ventures
Total revenue
Operating expenses:
Real Estate Services:
Americas
EMEA
Asia Pacific
LaSalle Investment Management
Plus:
Restructuring charges
Total operating expenses
Operating income
Net income attributable to common
shareholders
Basic earnings per common share
Diluted earnings per common share
$
447,317
311,882
214,623
72,523
545,049
395,643
267,481
81,522
581,631
368,577
272,906
162,413
745,914
556,572
355,138
98,677
$ 2,319,911
1,632,674
1,110,148
415,135
8,903
12,491
19,552
7,319
48,265
1,037,442
1,277,204
1,365,975
1,748,982
5,429,603
430,320
316,790
213,473
56,167
498,281
370,864
251,711
59,234
533,645
352,248
257,796
94,865
638,299
471,894
302,960
72,887
2,100,545
1,511,796
1,025,940
283,153
35,958
5,458
(37)
1,126
42,505
1,052,708
1,185,548
1,238,517
1,487,166
4,963,939
(15,266)
91,656
127,458
261,816
465,664
$
$
$
15,902
71,766
104,284
193,797
0.36
0.35
1.61
1.58
2.33
2.30
4.33
4.29
$
$
$
385,749
8.63
8.52
143
JONES LANG LASALLE INCORPORATED QUARTERLY INFORMATION-2013 (UNAUDITED)
($ in thousands, except share data)
MARCH 31
JUNE 30
SEPT. 30
DEC. 31 YEAR 2013
Revenue:
Real Estate Services:
Americas
EMEA
Asia Pacific
LaSalle Investment Management
Less:
Equity earnings from real estate ventures
Total revenue
Operating expenses:
Real Estate Services:
Americas
EMEA
Asia Pacific
LaSalle Investment Management
Plus:
Restructuring charges
Total operating expenses
Operating income
Net income available to common
shareholders
Basic earnings per common share
Diluted earnings per common share
$
361,684
244,905
190,015
64,866
431,565
267,610
228,319
70,965
484,037
318,372
237,038
73,929
641,355
491,779
310,383
76,112
$ 1,918,641
1,322,666
965,755
285,872
5,482
9,076
6,574
10,211
31,343
855,988
989,383
1,106,802
1,509,418
4,461,591
347,012
246,508
187,577
51,623
396,206
254,524
214,972
51,257
439,096
300,451
218,106
57,132
552,336
431,861
267,800
57,996
1,734,650
1,233,344
888,455
218,008
3,168
6,602
4,919
3,626
18,315
835,888
923,561
1,019,704
1,313,619
4,092,772
20,100
65,822
87,098
195,799
368,819
$
$
$
13,155
46,290
62,857
147,154
0.30
0.29
1.05
1.03
1.42
1.39
3.31
3.26
$
$
$
269,456
6.09
5.98
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND
PROCEDURES
The Company has established disclosure controls and procedures to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made known to the officers who certify the
Company’s financial reports and to the members of senior management and the Board of Directors.
Based on management’s evaluation as of December 31, 2014, the principal executive officer and principal
financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the
supervision and with the participation of our management, including our principal executive officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
144
framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations (‘‘COSO’’) of the Treadway Commission. Based on our evaluation under the framework in
Internal Control-Integrated Framework, our management concluded that our internal control over financial
reporting was effective as of December 31, 2014.
KPMG LLP, the Independent Registered Public Accounting Firm that audited the Consolidated Financial
Statements included in this Annual Report on Form 10-K, issued an audit report on the Company’s internal
control over financial reporting. That Report of Independent Registered Public Accounting Firm is included in
Item 8. Financial Statements and Supplementary Data.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes to the Company’s internal controls over financial reporting during the quarter ended
December 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s
internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated by reference to the material in Jones Lang LaSalle’s
Proxy Statement for the 2015 Annual Meeting of Shareholders (the ‘‘Proxy Statement’’) under the captions
‘‘Directors and Corporate Officers,’’ and ‘‘Section 16(a) Beneficial Ownership Reporting Compliance’’ and in
Item 1 of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the material in the Proxy Statement
under the caption ‘‘Executive Compensation.’’
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The information required by this item is incorporated by reference to the material in the Proxy Statement
under the caption ‘‘Common Stock Security Ownership of Certain Beneficial Owners and Management.’’
145
The following table provides information as of December 31, 2014 with respect to Jones Lang LaSalle’s
common shares issuable under our equity compensation plans (in thousands, except exercise price):
NUMBER OF
SECURITIES
TO BE ISSUED
EXERCISE PRICE
UPON EXERCISE OF OUTSTANDING
OPTIONS,
WARRANTS AND
OF OUTSTANDING
OPTIONS, WARRANTS
AND RIGHTS
WEIGHTED
NUMBER OF SECURITIES
AVERAGE REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
EQUITY COMPENSATION
PLANS (EXCLUDING
SECURITIES
RIGHTS REFLECTED IN COLUMN (A))
(A)
724
n/a
724
166
166
890
(B)
90.59
n/a
73.54
(C)
957
113
1,070
507
507
1,577
PLAN CATEGORY
Equity compensation plans
approved by security holders
SAIP (1)
ESPP (2)
Subtotal
Equity compensation plans not
approved by security holders
SAYE (3)
Subtotal
Total
Notes:
(1)
In 1997, we adopted the SAIP, which provides for the granting of options to purchase a specified number of shares
of common stock and other stock awards to eligible participants of Jones Lang LaSalle.
(2)
(3)
In 1998, we adopted an ESPP for eligible U.S. based employees. Under this plan, employee contributions for stock
purchases were enhanced through an additional contribution of a 5% discount on the purchase price. Effective
April 1, 2009, the 5% discount has been discontinued and purchases are broker-assisted on the open market.
In November 2001, we adopted the SAYE plan for eligible employees of our U.K. based operations. In November
2006, the SAYE plan was extended to employees in our Ireland operations. Under this plan, employee contributions
for stock purchases are enhanced by us through an additional contribution of a 15% discount on the purchase price.
Options granted under the SAYE plan vest over a period of three to five years. The original SAYE plan was not
approved by shareholders since such approval was not required under applicable rules at the time of the adoption of
this plan. In 2006, our shareholders approved an amendment to the SAYE plan that increased the number of shares
reserved for issuance by 500,000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this item is incorporated by reference to the material appearing in the Proxy
Statement under the caption ‘‘Certain Relationships and Related Transactions.’’
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated by reference to the material appearing in the Proxy
Statement under the caption ‘‘Information about the Independent Registered Public Accounting Firm.’’
146
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report:
1.
2.
Financial Statements. See Index to Consolidated Financial Statements in Item 8 of this report.
Financial Statement Schedules. No financial statement schedules are included because they are not
required or are not applicable, or the required information is set forth in the applicable statements or
related notes.
3. Exhibits. A list of exhibits is set forth in the Exhibit Index, which immediately precedes the exhibits and
is incorporated by reference herein.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this filing and elsewhere (such as in reports, other filings with the United States
Securities and Exchange Commission, press releases, presentations and communications by JLL or its
management and written and oral statements) regarding, among other things, future financial results and
performance, achievements, plans and objectives, dividend payments and share repurchases may constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause
JLL’s actual results, performance, achievements, plans and objectives to be materially different from any of the
future results, performance, achievements, plans and objectives expressed or implied by such forward-looking
statements.
We discuss those risks, uncertainties and other factors in this report in Item 1A. Risk Factors; Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations; Item 7A.
Quantitative and Qualitative Disclosures About Market Risk; Item 8. Financial Statements and Supplementary
Data-Notes to Consolidated Financial Statements; and elsewhere, and the other reports we file with the
United States Securities and Exchange Commission. Important factors that could cause actual results to differ
from those in our forward-looking statements include (without limitation):
(cid:127) The effect of political, economic and market conditions and geopolitical events;
(cid:127) The logistical and other challenges inherent in operating in numerous different countries;
(cid:127) The actions and initiatives of current and potential competitors;
(cid:127) The level and volatility of real estate prices, interest rates, currency values and other market indices;
(cid:127) The outcome of pending litigation; and
(cid:127) The impact of current, pending and future legislation and regulation.
Moreover, there can be no assurance that future dividends will be declared since the actual declaration of
future dividends, and the establishment of record and payment dates, remain subject to final determination by
the Company’s Board of Directors.
Accordingly, we caution our readers not to place undue reliance on forward-looking statements, which speak
only as of the date on which they are made. Except to the extent required by applicable securities law, JLL
expressly disclaims any obligation or undertaking to publicly update or revise any forward-looking statements
to reflect any changes in events or circumstances or in its expectations or results.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each of Jones Lang LaSalle Incorporated, a Maryland
corporation, and the undersigned Directors and officers of Jones Lang LaSalle Incorporated, hereby
constitutes and appoints Colin Dyer, Christie B. Kelly and Mark K. Engel its, his or her true and lawful
attorneys-in-fact and agents, for it, him or her and in its, his or her name, place and stead, in any and all
capacities, with full power to act alone, to sign any and all amendments to this report, and to file each such
amendment to this report, with all exhibits thereto, and any and all documents in connection therewith, with
the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as it, he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully
do or cause to be done by virtue hereof.
147
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the
27th day of February, 2015.
JONES LANG LASALLE INCORPORATED
By
/s/ Christie B. Kelly
Christie B. Kelly
Executive Vice President and Chief Financial Officer
(Authorized Officer and Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on the 27th day of February,
2015.
Signature
Title
/s/ Sheila A. Penrose
Sheila A. Penrose
/s/ Colin Dyer
Colin Dyer
/s/ Hugo Bagu´e
Hugo Bagu´e
/s/ Dame DeAnne Julius
Dame DeAnne Julius
/s/ Kate S. Lavelle
Kate S. Lavelle
/s/ Ming Lu
Ming Lu
/s/ Martin H. Nesbitt
Martin H. Nesbitt
/s/ Shailesh Rao
Shailesh Rao
/s/ David B. Rickard
David B. Rickard
/s/ Roger T. Staubach
Roger T. Staubach
/s/ Christie B. Kelly
Christie B. Kelly
/s/ Mark K. Engel
Mark K. Engel
Chairman of the Board of Directors and Director
President and Chief Executive Officer and Director
(Principal Executive Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Executive Vice President and Global Controller
(Principal Accounting Officer)
148
EXHIBIT
NUMBER
DESCRIPTION
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
Articles of Restatement of Jones Lang LaSalle Incorporated filed with the Maryland Department
of Assessments and Taxation on June 24, 2014 (Incorporated by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (File No. 001-13145))
Second Amended and Restated Bylaws of the Registrant effective as of November 3, 2014
(Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2014 (File No. 001-13145))
Form of certificate representing shares of Jones Lang LaSalle Incorporated common stock
(Incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001 (File No. 001-13145))
Indenture, dated as of November 9, 2012 between Jones Lang LaSalle Incorporated and The
Bank of New York Mellon Trust Company, National Association (Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated November 9, 2012 (File No. 001-13145))
First Supplemental Indenture (including the form of 4.400% Senior Notes due 2011), dated as of
November 9, 2012 between Jones Lang LaSalle Incorporated and The Bank of New York Mellon
Trust Company, National Association (Incorporated by reference to Exhibit 4.2 to the Report on
Form 8-K dated November 9, 2012 (File No. 001-13145)
Multicurrency Credit Agreement dated as of October 4, 2013 (Incorporated by reference to
Exhibit 99.1 to the Current Report on Form 8-K dated October 7, 2013 (File No. 001-13145))
Amended and Restated Multicurrency Credit Agreement dated as of February 25, 2015
(Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K dated
February 26, 2015 (File No. 001-13145))
Amended and Restated Stock Award and Incentive Plan dated as of April 15, 2012 (as approved
by the Shareholders of Jones Lang LaSalle Incorporated on May 31, 2012 and incorporated by
reference to Schedule 14A filed on April 20, 2012 (File No. 001-13145))
Form of Jones Lang LaSalle Incorporated Restricted Stock Unit Agreement (Under the
Amended and Restated Stock Award and Incentive Plan) used for the Non-Executive Directors’
Annual Grants (Incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K
for the year ended December 31, 2004 (File No. 001-13145))
Form of Jones Lang LaSalle Incorporated Restricted Stock Unit Agreement (Under the
Amended and Restated Stock Award and Incentive Plan) used for Employees’ Annual Grants
Amended and Restated Severance Pay Plan effective July 1, 2010 (Incorporated by reference to
Exhibit 10.9 to the Annual Report on Form 10-K for the year ended December 31, 2011 (File
No. 001-13145))
Senior Executive Services Agreement with Alastair Hughes dated as of March 9, 1999
(Incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K for the year
ended December 31, 2005 (File No. 001-13145))
149
EXHIBIT
NUMBER
10.8
DESCRIPTION
Letter Agreement between Colin Dyer and Jones Lang LaSalle Incorporated dated as of July 16,
2004 and accepted July 19, 2004 (Incorporated by reference to Exhibit 99.2 to the Current
Report on Form 8-K dated July 21, 2004 (File No. 001-13145))
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Amendment No. 1 to Letter Agreement between Colin Dyer and Jones Lang LaSalle
Incorporated dated as of August 30, 2004 (Incorporated by reference to Exhibit 10.19 to the
Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 001-13145))
Amendment No. 2 to Letter Agreement between Colin Dyer and Jones Lang LaSalle
Incorporated dated as of December 1, 2005 (Incorporated by reference to Exhibit 10.20 to the
Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 001-13145))
Letter Agreement Regarding Compensation of the Chairman of the Board of Directors dated as
of January 1, 2005 (Incorporated by reference to Exhibit 99.1 to the Periodic Report on
Form 8-K dated January 10, 2005 (File No. 001-13145))
LaSalle Investment Management Long Term Incentive Compensation Program, amended and
restated January 1, 2013 (Incorporated by reference to Exhibit 10.12 to the Annual Report on
Form 10-K for the year ended December 31, 2013 (File No. 001-13145))
Jones Lang LaSalle Incorporated Deferred Compensation Plan, as amended and restated
effective January 1, 2009 (Incorporated by reference to Exhibit 10.25 to the Annual Report on
Form 10-K for the year ended December 31, 2008 (File No. 001-13145))
Jones Lang LaSalle Incorporated First Amendment to Deferred Compensation Plan dated as of
December 5, 2011 (Incorporated by reference to Exhibit 4.2 to the Registration Statement on
Form S-8 dated March 28, 2012 (File No. 333-180405))
Jones Lang LaSalle Incorporated Non-Executive Director Compensation Plan Summary of Terms
and Conditions, Amended and Restated as of January 1, 2012 (Incorporated by reference to
Exhibit 10.19 to the Annual Report on Form 10-K for the year ended December 31, 2011 (File
No. 001-13145))
Jones Lang LaSalle Incorporated Stock Ownership Program, effective as of March 31, 2011
(Incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K for the year
ended December 31, 2011 (File No. 001-13145))
Jones Lang LaSalle Incorporated GEB 2010-2014 Long-Term Incentive Compensation Program
effective as of January 1, 2010 (Incorporated by reference to Exhibit 10.1 to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 2010).
CEO Performance Incentive Agreement dated as of April 19, 2012 between Jones Lang LaSalle
Incorporated and Colin Dyer (Incorporated by reference to Exhibit 99.1 to the Current Report
on Form 8-K dated April 19, 2012 (File No. 001-13145))
150
EXHIBIT
NUMBER
10.19
10.20
10.21
DESCRIPTION
Letter Agreement dated May 15, 2013 between Jones Lang LaSalle Incorporated and Christie B.
Kelly (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated
May 16, 2013 (File No. 001-13145))
Letter Agreement dated January 16, 2014 between Jones Lang LaSalle Incorporated and
Gregory P. O’Brien (Incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K (File No. 001-13145))
Letter Agreement dated April 15, 2014 between Jones Lang LaSalle Incorporated and Alastair
Hughes (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K
(File 001-13145))
11
Statement concerning computation of per share earnings (filed in Item 8, Consolidated
Statements of Comprehensive Income)
12.1*
Computation of Ratio of Earnings to Fixed Charges
21.1*
List of Subsidiaries
23.1*
Consent of Independent Registered Public Accounting Firm
24.1*
Power of Attorney (Set forth on page preceding signature page of this report)
31.1*
31.2*
32.1*
101*
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The following materials from the Company’s Annual Report on Form 10-K for the year ended
December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language):
(1) Consolidated Balance Sheets at December 31, 2014 and 2013, (2) Consolidated Statements of
Comprehensive Income for the years ended December 31, 2014, 2013 and 2012, (3) Consolidated
Statements of Equity for the years ended December 31, 2014, 2013 and 2012, (4) Consolidated
Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012, and (5) Notes
to Consolidated Financial Statements.
*
Filed herewith
151
INTERNATIONAL INTEGRATED REPORTING COUNCIL CROSS REFERENCE
The table below provides a cross reference to the requirements of The International Framework (the
‘‘Framework’’) issued by the International Integrated Reporting Council (‘‘IIRC’’) (December, 2013 Version)
and the Location of the Responses in the Jones Lang LaSalle Annual Report on Form 10-K.
Requirement in IIRC Framework
Section
Requirement
1.12
Form of report and relationship with other
information
1.17-1.18
Application of the Framework
1.20
Responsibility for an integrated report
3.3
3.6
Strategic focus and future orientation
Connectivity of information
3.10
Stakeholder relationships
3.17
Materiality
Conciseness
Reliability and completeness
Consistency and comparability
Location in Jones Lang LaSalle 10-K
Page
39
152
40
8, 11
15
15
6
Title of Section
Integrated Reporting
International Integrated Reporting Council
Cross Reference
Integrated Reporting: Responsibility for
Integrated Reporting
Global Strategic Priorities; Strategy 2020: Our
Future Orientation
Sustaining our Enterprise: A Business Model
that Combines Capitals to Create Stakeholder
Value
Sustaining our Enterprise: A Business Model
that Combines Capitals to Create Stakeholder
Value
Value Drivers for Providing Superior Client
Service and Prospering as a Sustainable
Enterprise
Throughout
1, 40
Company Overview; Item 1A: Risk Factors
71
74
Item 6: Selected Financial Data
Item 7: Management’s Discussion and Analysis
of Financial Condition and Results of
Operations
Organizational overview and external
environment
1, 27, 32
Company Overview; Competition; Competitive
Differentiators; Industry Trends
Governance
Business model
Risks and opportunities
Strategy and resource allocation
Performance
Outlook
8
15
40
8, 11
71
74
Global Governance Structure
Sustaining our Enterprise: A Business Model
that Combines Capitals to Create Stakeholder
Value
Item 1A: Risk Factors
Global Strategic Priorities; Strategy 2020: Our
Future Orientation
Item 6: Selected Financial Data
Item 7: Management’s Discussion and Analysis
of Financial Condition and Results of
Operations
8, 11, 40
Global Strategic Priorities; Strategy 2020: Our
Future Orientation; Item 1A: Risk Factors
Basis of preparation and presentation
40
Integrated Reporting: Responsibility for
Integrated Reporting
152
3.36
3.39
3.54
4.4
4.8
4.10
4.23
4.27
4.30
4.34
4.40
Company Information
Jones Lang LaSalle Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
tel +1 312 782 5800
JLL
www.jll.com
LaSalle
www.lasalle.com
Regional Contact Information
Each of our businesses—JLL Real Estate
Services and LaSalle—operates in the Americas,
EMEA and Asia Pacific. Regional contact
information for these businesses may be found
on the websites referenced above.
Independent Registered
Public Accounting Firm
KPMG LLP
200 East Randolph Drive
Chicago, Illinois 60601
Stock Transfer Agent, Registrar
and Dividend Paying Agent
Computershare
P.O. BOX 30170
College Station, TX 77842-3170
US Toll free: +1 866 210 8055
www.computershare.com/investor
Overnight correspondence:
Computershare
211 Quality Circle, Suite 210
College Station, TX 77845
Shareholder online inquiries:
web.queries@computershare.com
Investor Relations
Requests for the 2014 JLL Annual Report
on Form 10-K (which will be provided free
of charge) and other inquiries from investors
should be directed to:
Jones Lang LaSalle Incorporated
Investor Relations Department
200 East Randolph Drive
Chicago, Illinois 60601
tel +1 312 782 5800
www.jll.com
NYSE and SEC Certifications
Sustainability
With our 250+ year history, we promote the
principles of sustainability in all of our transactions,
services and operations. This enables our vision
to lead the transformation of the real estate industry
by making a positive impact both in and beyond
our business. JLL works to foster a dynamic mix
of people and ideas that enriches our firm’s
performance, the communities in which we operate
and the lives of our employees. We design our
corporate policies to reflect the highest standards
of corporate governance and transparency. These
actions illustrate that we hold ourselves responsible
for our social, environmental and economic performance.
We also extend our influence in sustainability
through the services we provide to clients, which
is where we can drive the largest impact, as well
as in the wider industry. JLL’s culture of sustainability
guides the interactions we have with our shareholders,
clients, employees, vendors and the wider community.
For additional information about our sustainability
efforts, please visit www.jll.com/sustainability.
Cautionary Note Regarding Forward-
Looking Statements
Certain statements in this Annual Report may
constitute forward-looking statements that involve
known and unknown risks, uncertainties and other
factors that may cause JLL’s actual results to be
materially different from any future results implied
by such forward-looking statements. Please see
our 2014 Form 10-K for a discussion of such risks,
uncertainties and other factors.
Integrated Reporting
Following our involvement in the Pilot Program,
we now participate as a Business Network
member in the International Integrated Reporting
Council. We support the IIRC’s principles that
are designed to promote communications about
how an organization’s strategy, governance,
performance, and prospects lead to the creation
of value over the short, medium and long term.
As required, during 2014 our Chief Executive
Officer certified to the New York Stock Exchange
that he was not aware of any violation by JLL of
NYSE corporate governance listing standards.
In addition, JLL has filed with the Securities and
Exchange Commission, as exhibits to its 2014
Annual Report on Form 10-K, the certifications
of its Chief Executive Officer and Chief Financial
Officer required under Section 302 of the
Sarbanes-Oxley Act of 2002 regarding the
quality of its public disclosure.
JLL Code of Business Ethics
JLL stands for uncompromising integrity and
the highest ethical conduct. We are proud of,
and are determined to protect and enhance,
the global reputation we have established.
In a service business such as ours, the integrity
that our brand represents is one of our most
valuable assets.
In 2015, for the
eighth consecutive
year, our firm was
designated as one
of the World’s Most
Ethical Companies by the Ethisphere Institute,
a leading organization dedicated to best practices
in ethics, compliance, corporate governance
and citizenship. We have also been Ethics
InsideTM certified by the NYSE Governance
Council. The JLL Code of Business Ethics,
which may be found in multiple languages on
our website, contains the ethics policies that
everyone who does business on behalf of our
firm must follow. Reports of possible violations
of our Code of Business Ethics may be made to
our global Ethics Hotline at +1 877 540 5066 or
by contacting https://www.jllethicsreports.com.
JLL Vendor Code of Conduct
JLL expects that each of its vendors, meaning
any firm or individual providing a product or
service to JLL or indirectly to our clients as
a contractor or subcontractor, will share and
embrace the letter and spirit of our commitment
to integrity. While vendors are independent
entities, their business practices may significantly
reflect upon us, our reputation and our brand.
Accordingly, we expect all vendors to adhere
to the JLL Vendor Code of Conduct, which may
be found in multiple languages on our website.
Reports of possible violations of our Vendor
Code of Conduct may be made to our global
Ethics Hotline or through the Web address
indicated above.
www.jll.com
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