Press Release: Jones Lang LaSalle Incorporated
November 7, 2001
CHICAGO and LONDON -- Jones Lang LaSalle Incorporated (NYSE: JLL), the leading global real estate services and
investment management firm, Monday reported third quarter adjusted net income of $12.6 million, or $ 0.41 per share,
exceeding the First Call consensus estimate by $0.03 per share. Revenues for the third quarter were $216.6 million,
off only three percent from the previous year's period. The firm's adjusted results exclude $24.5 million of non-recurring
charges incurred during the quarter. Comparable results for the third quarter of 2000 included adjusted net income
of $12.2 million, or $0.40 per share, which excluded $18.2 million of non-cash compensation expense associated
with the Jones Lang Wootton merger.
Including the effect of these non-operational charges, third quarter results for 2001 reported under Generally
Accepted Accounting Principles (GAAP) were a loss of $6.2 million, or $0.21 per share. On a GAAP basis, results
for the third quarter of 2000 were a loss of $5.7 million, or $0.22 per share.
In recognition of the difficult economic environment, the company is implementing a program that will even more
closely align its business operations with anticipated client needs in 2002. Jones Lang LaSalle expects the program,
which will be finalized by year-end, to produce annualized savings of at least $45 million, and the company will
take additional restructuring charges of at least $40 million in the fourth quarter to cover associated severance
and other costs. Certain of the non-recurring charges in the third quarter reflect the commencement of this program,
particularly related to restructuring the Asia Pacific business and exiting two small non- strategic businesses
in the United States. Other elements of the charges include the writedown of E-commerce investments and costs associated
with the bankruptcy of two insurance providers.
``In light of the recent profound shock to an already slowing global economy, we are pleased that our third quarter
earnings were slightly above the mid-point of our projected range,'' said Stuart L. Scott, Chairman and Chief Executive
Officer of Jones Lang LaSalle. ``Due to uncertainty regarding the timing of a recovery from the current global
economic environment, we have instituted an extensive review of our operating plans for the remainder of 2001 and
for next year. We have a goal of reducing costs on an annualized basis by at least $45 million while continuing
to remain focused on constantly improving client service levels.''
Mr. Scott continued: ``With regard to our full year results, the revenue planned in the fourth quarter, coupled
with aggressive expense controls, are sufficient to enable us to achieve our adjusted EPS target of $1.31, excluding
one time charges. However, there is some risk to our ability to execute all this work in the quarter given the
slowness we are experiencing in closing transactions in the current environment.''
Business Segment Performance Highlights
Chris Peacock, President and Chief Operating Officer of Jones Lang LaSalle, said: ``With the weakness of the global
economy, we have actively managed costs in the face of the slowdown in revenues. More importantly, in these difficult
times, our clients around the world continue to turn to us for assistance in managing their real estate expenses.
In fact, we have had a record year in forging new alliances and key client relationships, which demonstrates the
validity of our global platform and the expertise of our talented people.''
The following summary of business segment results compares the third quarter of 2001 to the same period of the
previous year. The segment results, which exclude the non-recurring charges of $24.5 million discussed above, have
been restated to reflect both the consolidation of the former Hotel Services segment into the regional Owner and
Occupier Services segments and the implementation of SAB 101 for the year 2000.
Owner and Occupier Services
-- The Americas region reported a decline in revenues of $5.3 million, to
$74.9 million, driven by lower activity in all business lines except
Project & Development Management, where revenues were up almost 10
percent. Operating expenses for the period were $5.5 million lower
than the same period in the prior year, reflecting a combination of
cost containment initiatives and the timing of the recognition of
incentive compensation. As a result, operating income for the third
quarter was $8.4 million, $0.3 million higher than the third quarter of
2000.
-- In Europe, third quarter revenues were $5.4 million lower than the same
period of 2000. The decline reflects reduced activity in many parts of
the region, particularly the UK and France, partially offset by growth
in Germany, Holland and Sweden. Headcount increases and the timing of
incentive compensation recognition produced operating costs that were
$3.2 million higher than the same period in the previous year. As a
result, operating income for the third quarter was $4.0 million, down
$8.5 million on the prior year.
-- Revenue for Asia Pacific in the third quarter of 2001 was
$32.5 million, essentially flat with the same period in 2000. The
region's operating results improved by $2.5 million compared to the
prior year period due to a combination of cost reduction benefits and
the timing of incentive compensation recognition.
Investment Management
-- LaSalle Investment Management reported third quarter revenues of
$33.4 million, 10 percent higher than the same period in the previous
year, as the segment benefitted from a significant incentive fee
related to the sale of a hotel investment. The comparable quarter in
2000 also included two significant incentive fees. Operating income of
$12.9 million increased 39 percent over the prior year period.
Jones Lang LaSalle is the world's leading real estate services and investment management firm, operating across
more than 100 markets on five continents. The company provides comprehensive integrated expertise, including management
services, implementation services and investment management services on a local, regional and global level to owners,
occupiers and investors. Jones Lang LaSalle is also the industry leader in property and corporate facility management
services, with a portfolio of approximately 700 million square feet (65 million square meters) under management
worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest
and most diverse real estate investment management firms, with more than $23 billion of assets under management.
Statements in this press release regarding, among other things, future financial results and performance, achievements,
plans and objectives may be considered forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors
which may cause actual results, performance, achievements, plans and objectives of Jones Lang LaSalle to be materially
different from those expressed or implied by such forward-looking statements. Factors that could cause actual results
to differ materially include those discussed under ``Business,'' ``Management's Discussion and Analysis of Financial
Condition and Results of Operations,'' ``Quantitative and Qualitative Disclosures about Market Risk,'' and elsewhere
in Jones Lang LaSalle's Annual Report on Form 10-K for the year ended December 31, 2000, in Jones Lang LaSalle's
Proxy Statement dated April 6, 2001, in Jones Lang LaSalle's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2001 and June 30, 2001 and in other reports filed with the Securities and Exchange Commission. Statements
speak only as of the date of this release. Jones Lang LaSalle expressly disclaims any obligation or undertaking
to update or revise any forward-looking statements contained herein to reflect any change in Jones Lang LaSalle's
expectations or results, or any change in events.
JONES LANG LASALLE INCORPORATED
Adjusted Actual Consolidated Statements of Earnings
For the Three and Nine Months Ended September 30, 2001 and 2000
(in thousands, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2001 Adjusted 2000 Adjusted 2001 Adjusted 2000 Adjusted
Actual(A) Actual(A)(B)(C) Actual(A) Actual(A)(B)(C)
Revenue:
Fee based services $212,516 $220,945 $602,466 $617,848
Equity in
earnings from
unconsolidated
ventures 2,820 1,116 6,677 15,803
Other income 1,262 2,029 3,145 3,344
Total revenue 216,598 224,090 612,288 636,995
Operating expenses:
Compensation and
benefits 130,923 134,349 393,311 407,122
Operating,
administrative
and other 47,750 51,378 151,116 154,742
Depreciation and
amortization 12,044 10,298 35,466 31,789
Total operating
expenses excluding
non-recurring and
restructuring
charges 190,717 196,025 579,893 593,653
Adjusted operating
income excluding
non-recurring and
restructuring
charges 25,881 28,065 32,395 43,342
Interest expense, net
of interest income 4,957 8,226 15,784 21,565
Adjusted income
before provision
for income taxes 20,924 19,839 16,611 21,777
Net provision for
income taxes 8,615 7,535 6,976 8,276
Minority interests in
earnings (losses) of
subsidiaries (318) 72 213 60
Adjusted net
income excluding
non-recurring
and restructuring
charges $12,627 $12,232 $9,422 $13,441
Adjusted income
per common share (D) $0.41 $0.40 $0.30 $0.44
Adjusted weighted
average shares
outstanding (D) 31,005,514 30,755,066 30,929,379 30,679,303
Adjusted EBITDA
Calculation (E)
Adjusted operating
income 25,881 28,065 32,395 43,342
Depreciation and
amortization 12,044 10,298 35,466 31,789
Minority
interests in
EBITDA 346 (184) (577) (203)
Adjusted EBITDA $38,271 $38,179 $67,284 $74,928
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Consolidated Statements of Earnings
For the Three and Nine Months Ended September 30, 2001 and 2000
(in thousands, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,September 30,September 30,September 30,
2001 2000(B)(C) 2001 2000(B)(C)
Revenue:
Fee based services $212,516 $220,945 $602,466 $617,848
Equity in earnings
from unconsolidated
ventures 2,820 1,116 6,677 15,803
Other income 1,262 2,029 3,145 3,344
Total revenue 216,598 224,090 612,288 636,995
Operating expenses:
Compensation and
benefits 130,923 134,349 393,311 407,122
Operating,
administrative and
other 47,750 51,378 151,116 154,742
Depreciation and
amortization 12,044 10,298 35,466 31,789
Total operating
expenses before
non-recurring and
restructuring
charges 190,717 196,025 579,893 593,653
Operating income
before non-recurring
and restructuring
charges 25,881 28,065 32,395 43,342
Non-operational non-
recurring charges 21,051 18,191 23,162 55,382
Restructuring
charges 3,439 - 4,978 -
Total operating
expenses 215,207 214,216 608,033 649,035
Operating income
(loss) 1,391 9,874 4,255 (12,040)
Interest expense, net
of interest income 4,957 8,226 15,784 21,565
Income (loss)
before provision for
income taxes and
minority interest (3,566) 1,648 (11,529) (33,605)
Net provision for
income taxes 2,933 7,232 800 7,305
Minority interests in
earnings (losses) of
subsidiaries (318) 72 213 60
Net loss before
cumulative effect
of change in
accounting principle $(6,181) $(5,656) $(12,542) $(40,970)
Cumulative effect of
change in accounting
principle - - - (14,249)
Net loss $(6,181) $(5,656) $(12,542) $(55,219)
Basic loss per common
share before
cumulative effect of
change in accounting
principle $(0.21) $(0.22) $(0.42) $(1.66)
Cumulative effect of
change in accounting
principle - - - (0.58)
Basic loss per common
share $(0.21) $(0.22) $(0.42) $(2.24)
Basic weighted average
shares outstanding 30,077,867 25,168,964 29,991,041 24,701,106
Diluted loss per
common share before
cumulative effect of
change in accounting
principle $(0.21) $(0.22) $(0.42) $(1.66)
Cumulative effect of
change in accounting
principle - - - (0.58)
Diluted loss per
common share $(0.21) $(0.22) $(0.42) $(2.24)
Diluted weighted
average shares
outstanding 30,077,867 25,168,964 29,991,041 24,701,106
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Segment Operating Results
For the Three and Nine Months ended September 30, 2001 and 2000
(in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 2000
2001 Adjusted 2001 Adjusted
Adjusted Actual Adjusted Actual
Actual(A) (A)(B)(C) Actual (A) (A)(B)(C)
OWNER & OCCUPIER SERVICES -
AMERICAS
Revenue:
Implementation
services $34,677 $42,963 $96,605 $103,546
Management services 39,959 37,001 110,889 96,958
Equity earnings
(losses) (249) (444) 86 (510)
Other services 315 224 1,038 599
Intersegment revenue 189 412 899 790
74,891 80,156 209,517 201,383
Operating expenses:
Compensation,
operating and
administrative 60,385 67,020 188,631 185,292
Depreciation and
amortization 6,104 4,991 18,094 15,858
Operating income (F) $8,402 $8,145 $2,792 $233
EUROPE
Revenue:
Implementation
services $53,782 $61,768 $173,334 $193,359
Management services 21,567 18,770 66,826 60,137
Other services 579 731 1,015 1,280
75,928 81,269 241,175 254,776
Operating expenses:
Compensation,
operating and
administrative 68,771 65,853 214,765 222,928
Depreciation and
amortization 3,153 2,882 9,338 8,502
Operating income (F) $4,004 $12,534 $17,072 $23,346
ASIA PACIFIC
Revenue:
Implementation
services $21,356 $19,525 $53,317 $63,234
Management services 10,867 12,011 34,217 32,505
Other services 316 1,040 1,013 1,400
32,539 32,576 88,547 97,139
Operating expenses:
Compensation,
operating and
administrative 30,141 32,918 88,108 95,347
Depreciation and
amortization 1,824 1,539 5,099 4,577
Operating income
(loss) (F) $574 $(1,881) $(4,660) $(2,785)
INVESTMENT MANAGEMENT -
Revenue:
Implementation
services $316 $1,317 $2,155 $5,315
Advisory fees 29,993 27,598 65,072 62,802
Equity earnings 3,069 1,560 6,591 16,313
Other services 51 26 130 57
33,429 30,501 73,948 84,487
Operating expenses:
Compensation,
operating and
administrative 19,565 20,348 53,822 59,087
Depreciation and
amortization 963 886 2,935 2,852
Operating income(F) $12,901 $9,267 $17,191 $22,548
Total segment revenue $216,787 $224,502 $613,187 $637,785
Intersegment revenue
eliminations (189) (412) (899) (790)
Total revenue $216,598 $224,090 $612,288 $636,995
Total segment operating
expenses $190,906 $196,437 $580,792 $594,443
Intersegment operating
expense eliminations (189) (412) (899) (790)
Total operating
expenses before
non-recurring and
restructuring charges $190,717 $196,025 $579,893 $593,653
Operating income before
non-recurring and
restructuring charges $25,881 $28,065 $32,395 $43,342
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Consolidated Balance Sheets
September 30, 2001, December 31, 2000 and September 30, 2000
(in thousands)
(Unaudited)
September September
30, December 31, 30,
2001 2000 (C) 2000 (B)(C)
ASSETS
Current assets:
Cash and cash equivalents $10,871 $18,843 $17,467
Trade receivables, net of allowances 195,959 244,201 200,831
Notes receivable and advances to
real estate ventures 3,213 4,286 3,466
Other receivables 8,624 6,655 4,397
Prepaid expenses 11,821 10,811 10,857
Deferred tax assets 24,445 23,959 24,245
Other assets 22,564 12,306 10,433
Total current assets 277,497 321,061 271,696
Property and equipment, at cost, less
accumulated
depreciation 93,096 90,306 82,730
Intangibles resulting from business
acquisitions and JLW merger,
net of accumulated amortization 333,468 350,129 351,638
Investments in real estate ventures 49,058 74,565 71,412
Other investments - 12,884 12,410
Long-term receivables, net 21,296 23,136 23,360
Prepaid pension asset 15,338 18,730 19,239
Deferred tax assets 9,327 12,317 5,222
Debt issuance costs 5,827 4,848 5,235
Other assets, net 5,575 6,069 6,851
$810,482 $914,045 $849,793
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $95,616 $111,738 $82,639
Accrued compensation 78,297 170,323 109,131
Short-term borrowings 10,193 8,836 13,293
Deferred tax liabilities 198 226 36
Other liabilities 21,154 16,583 18,499
Total current liabilities 205,458 307,706 223,598
Long-term liabilities:
Credit facilities 114,709 85,565 146,493
Notes 150,234 155,546 146,378
Deferred tax liabilities 5,890 9,547 6,629
Other 19,948 22,776 14,141
Total liabilities 496,239 581,140 537,239
Commitments and contingencies
Minority interest in consolidated
subsidiaries 768 567 640
Stockholders' equity:
Common stock, $.01 par value per
share, 100,000,000 shares
authorized;
30,093,055, 30,700,150 and
30,861,683 shares issued and
outstanding as of
September 30, 2001, December 31,
2000 and September 30, 2000,
respectively 301 307 309
Additional paid-in capital 458,058 461,272 452,648
Unallocated ESOT shares - - (7)
Deferred stock compensation (3,083) (4,322) (21,574)
Retained deficit (119,652) (107,110) (105,269)
Stock held in trust (1,658) (397) -
Accumulated other comprehensive
income (20,491) (17,412) (14,193)
Total stockholders' equity 313,475 332,338 311,914
$810,482 $914,045 $849,793
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
CURRENCY ANALYSIS OF REVENUES AND ADJUSTED OPERATING INCOME
(in millions)
(Unaudited)
Pound Australian US
Sterling Euro Dollar Dollar Other TOTAL
(G) (G)
$ $ $ $ $ $
REVENUES (B)
2001
Q1, 2001 45.6 43.1 11.2 73.1 24.1 197.1
Q2, 2001 41.6 35.0 10.6 81.8 29.6 198.6
Q3, 2001 38.0 39.1 12.5 97.4 29.6 216.6
2000
Q1, 2000 48.0 39.2 12.4 63.0 27.0 189.6
Q2, 2000 50.2 47.3 15.9 82.7 27.2 223.3
Q3, 2000 42.7 44.7 13.6 97.6 25.5 224.1
ADJUSTED OPERATING INCOME (A)(B)(G)
2001
Q1, 2001 -0.4 8.7 -0.5 -4.2 -3.5 0.1
Q2, 2001 1.8 3.9 -0.8 3.9 -2.4 6.4
Q3, 2001 -2.3 9.0 -0.7 23.4 -3.5 25.9
2000
Q1, 2000 4.4 7.9 -0.2 -14.3 0.0 -2.2
Q2, 2000 2.0 10.4 0.4 7.4 -2.8 17.4
Q3, 2000 1.1 14.1 -1.4 14.3 0.0 28.1
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Financial Statement Notes
(A) Adjusted results for the three and nine months ended September 30,
2001 exclude non-recurring and restructuring charges.
Non-recurring charges include the write-down of investments in e-
commerce, reserves against potential liabilities
associated with the bankruptcy of two insurance providers and the
asset impairment costs associated with exiting
two non-strategic businesses in the Americas. Restructuring charges
include severance and professional fees associated
with the realignment of our Asia Pacific business and exiting
two non-strategic businesses in the Americas.
Adjusted results for the three and nine months ended September 30,
2000 exclude merger related non-recurring charges
representing non-cash compensation expense resulting from the
issuance of shares to former employees of Jones Lang Wootton.
There will be no merger related non-recurring charges in 2001. This
analysis is not intended to be a presentation in accordance
with generally accepted accounting principles.
(B) The income statements for the three and nine months ended September
30, 2000, as well as the balance sheet as of
September 30, 2000, have been restated to include the impact of
adopting SAB 101 as of January 1, 2000.
(C) Certain prior year amounts have been reclassified to conform with the
current presentation.
(D) Adjusted earnings per common share represents adjusted net earnings
divided by the weighted average committed shares
outstanding. Committed shares are inclusive of shares subject to
forfeiture, vesting and indemnity provisions which are not
considered in the calculation of weighted average basic or diluted
shares outstanding under generally accepted accounting
principles. As of December 31, 2000, all forfeiture, vesting and
indemnity provisions have been removed, therefore for 2001,
these shares are included in the weighted average shares outstanding
under generally accepted accounting principles.
(E) Adjusted EBITDA represents earnings before interest expense, income
taxes, depreciation and amortization, and excludes
Minority Interests in EBITDA. For the three and nine months ended
September 30, 2001, Adjusted EBITDA excludes
non-recurring and restructuring charges. For the three and nine
months ended September 30, 2000, Adjusted EBITDA
excludes merger related non-recurring charges.
(F) For purposes of this analysis non-recurring and restructuring charges
have not been allocated to the segments.
(G) The objective of this presentation is to provide guidance as to the
key currencies that the Company does business
in and their significance to reported revenues and adjusted operating
income. The adjusted operating income sourced
in pound sterling and US dollars understates the profitability of the
businesses in the United Kingdom and America
because it includes the locally incurred expenses of our global
offices in London and Chicago, respectively,
as well as the European regional office in London.
SOURCE: Jones Lang LaSalle Incorporated