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News Release

Chicago

Jones Lang LaSalle Reports Second Quarter 2009 Results

Adjusted EPS of $0.30 per share and adjusted EBITDA of $49 million, excluding Restructuring and certain non-cash co-investment charges


 
CHICAGO, August 4, 2009 – Jones Lang LaSalle Incorporated (NYSE: JLL), the leading integrated financial and professional services firm specializing in real estate, today reported a net loss of $14 million on a U.S. GAAP basis, or $0.40 per share, for the quarter ended June 30, 2009.   Adjusting for Restructuring and certain non-cash co-investment charges in the second quarter of 2009, net income would have been $11 million, or $0.30 per share.  The firm’s adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) were $49 million for the second quarter of 2009 compared with adjusted EBITDA of $55 million for the same period in 2008. 

On a year-to-date basis, the 2009 net loss was $76 million, or $2.15 per share.  The year-to-date adjusted net loss would have been $11 million, or $0.31 per share.  Adjusted EBITDA on a year-to-date basis was $60 million compared with $77 million for the first half of 2008. 

Revenue for the second quarter of 2009 was $576 million, a 13 percent decrease in U.S. dollars, but down only 6 percent in local currency, compared with the second quarter of 2008.  Revenue for the first half of 2009 was $1.1 billion, a 13 percent decrease from $1.2 billion in 2008 but down only 5 percent in local currency.
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Second-Quarter 2009 Highlights:
  • Reported revenue of $576 million, down only 6 percent in local currency despite continued weak market conditions

  • Corporate outsourcing drives Management Services growth

  • Cost actions generate more than $125 million in annualized base compensation and benefits savings

  • Successful equity offering and bank amendment provide improved financial flexibility

  • Significant seasonal improvement in adjusted EBITDA

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Second-quarter results included $15 million of Restructuring charges as well as $15 million of non-cash co-investment charges.  There were $32 million of Restructuring charges and $44 million of non-cash co-investment charges in the first half of 2009.  Restructuring charges are primarily severance related but include integration costs from the 2008 acquisitions of The Staubach Company and Kemper’s.  Restructuring charges are excluded from segment operating results although they are included for consolidated reporting.  The non-cash charges are primarily impairments and are included in Equity losses at the consolidated and segment reporting levels.

 “During the quarter, we continued to strengthen our balance sheet, reduce costs and align the size of our business to market conditions. At the same time, we have been careful to retain our key revenue-generating teams and have increased our market share in many business areas as a result,” said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. “These actions put us in a strong, stable and confident position to drive growth when markets recover.”

Business Line Revenue Comparison for the periods ending June 30, 2009 and 2008:

(in millions, “LC” = local currency)

Business line comparison

Cost Actions

In the second quarter of 2009, the firm continued actions to reduce staff and eliminate significant discretionary spending.  Excluding Restructuring charges, operating expenses were $543 million, compared with $621 million in the second quarter of 2008.  On a local currency basis, operating expenses excluding Restructuring charges were down 6 percent for the quarter.   Operating expenses for the first six months were down 3 percent compared with last year despite the added cost structure from the five acquisitions completed since the second quarter of 2008, including Staubach.  The firm continues its cost discipline and expects to realize over $125 million in annualized compensation and benefits savings from its restructuring actions.


On a year-to-date basis, operating expenses excluding Restructuring charges were $1.0 billion in 2009, compared with $1.2 billion for the first half of 2008.   

Balance Sheet

During the second quarter, the firm issued 6.5 million shares in a common stock offering for $218 million in net proceeds and, simultaneously, amended its credit facilities for increased financial and operational flexibility.   The proceeds from the stock offering were used to repay debt on the firm’s credit facilities.  The outstanding balance on these facilities was $398 million at the end of the second quarter, and the firm was well within its covenant limits.   The firm continues to aggressively manage its balance sheet position with significant reductions in capital expenditures, acquisitions and dividend payments in 2009 compared with 2008. 

Business Segment Second-Quarter Performance Highlights

Investor and Occupier Services

  • Second-quarter revenue in the Americas region was $249 million, an increase of 31 percent over the prior year, primarily as a result of the Staubach acquisition, and an increase of 25 percent over the first quarter of 2009 due to improved seasonal performance.   Revenue for the first half of 2009 was $448 million, compared with $364 million in the first half of 2008.  

    Transaction Services revenue increased 59 percent in the second quarter, to $140 million, and 47 percent year to date, to $246 million.  The region’s total Leasing revenue more than doubled in the quarter, to $123 million, up from $60 million in 2008, and increased 78 percent to $209 million in the first half.  Management Services revenue for the second quarter of 2009 increased 7 percent, to $105 million, with new corporate outsourcing wins being partially offset by reductions in Project & Development Services as clients continue to reduce capital expenditures.  Management Services for the first six months of 2009 increased 4 percent, to $196 million.

    Operating expenses were $230 million in the second quarter of 2009, an increase of 28 percent over the same period of 2008. The year-over-year increase was due to additional cost structure from the Staubach acquisition, including $3 million of non-cash amortization expense related to purchased intangible assets.  Year-to-date operating expenses were $434 million, including $10 million of non-cash amortization from the Staubach acquisition, compared with $353 million for the first half of 2008.

    The region’s EBITDA for the second quarter of 2009 was $31 million compared with $18 million in the second quarter of 2008.


  • EMEA’s second-quarter 2009 revenue was $143 million compared with $236 million in 2008, a decrease of 39 percent, 28 percent in local currency, driven by continued reductions in transaction volumes across the region.  Revenue increased 18 percent over the first quarter of 2009 due to improved seasonal performance.   Revenue on a year-to-date basis was $264 million, compared with $419 million for the first half of 2008.  On a U.S. dollar basis, the decreases were driven by Capital Markets and Hotels, down $28 million in the second quarter, and $54 million year to date, and Leasing revenue, down $28 million for the quarter and $43 million year to date.   Capital Markets and Hotels revenue was down 47 percent in local currency for the quarter and 50 percent on a year-to-date basis.  Leasing was down 32 percent in local currency for the quarter and 27 percent for the first half of 2009.  Management Services revenue, which is primarily annuity revenue, decreased 17 percent for the quarter but only 1 percent in local currency.  For the first half of 2009, Management Services revenue was $94 million, compared with $107 million for the same period in 2008, but was up 6 percent in local currency.

    Operating expenses were $144 million in the second quarter, $286 million year to date, decreases of 39 and 33 percent, respectively, from the prior year.  In local currency, the quarterly and year-to-date decreases were 27 percent and 18 percent, respectively.  Cost reductions were the result of aggressive actions taken across the region and achieved despite the additional cost structure from two acquisitions completed since the second quarter of 2008.

    The region’s EBITDA for the second quarter of 2009 was $4 million compared with $9 million in the second quarter of 2008.


  • Revenue for the Asia Pacific region was $119 million for the second quarter of 2009, compared with $142 million for the same period in 2008.  Revenue increased 14 percent from the first quarter of 2009 due to improved seasonal performance.  On a year-to-date basis, revenue was $224 million in 2009 compared with $259 million in 2008.  Excluding the impact of foreign currency exchange, revenue was down 8 percent in the quarter and 4 percent year to date compared with 2008.

    Management Services revenue in the region increased to $68 million, an 11 percent increase from the second quarter of 2008 and 19 percent in local currency.  On a year-to-date basis, Management Services revenue increased 14 percent, 24 percent in local currency.  The significant year-over-year increase demonstrates the firm’s continued strength in corporate outsourcing, facility management and property management. Transaction Services revenue was $51 million for the quarter, a 35 percent decrease from 2008, 27 percent in local currency.  Transaction Services revenue decreased 35 percent for the first half of the year, 26 percent in local currency, to $88 million.   Within Transaction Services revenue, Capital Markets and Hotels revenue was down 25 percent in local currency in the quarter and 21 percent year to date.  Leasing revenue was down 30 percent in local currency for the quarter and 27 percent in local currency year to date.

    Operating expenses for the region were $117 million for the second quarter, $225 million for the first half of 2009.  With an aggressive focus on costs, operating expenses decreased 15 percent for the quarter, 7 percent in local currency, and 14 percent for the first half, 4 percent in local currency.  The decreases were achieved despite incremental costs related to serving more corporate outsourcing clients and higher occupancy costs compared with the same periods of 2008.

    The region’s EBITDA for the second quarter of 2009 was $6 million compared with $8 million in the second quarter of 2008.

LaSalle Investment Management

LaSalle Investment Management’s second-quarter revenue was $46 million, compared with $93 million in the prior year.  On a year-to-date basis, revenue was $83 million compared with $180 million in the first half of 2008.  Equity losses of $18 million and $47 million, primarily from non-cash charges related to co-investments, were included in second-quarter and first-half 2009 revenue, respectively.  Advisory fees were $59 million in the quarter, down $13 million from the second quarter of 2008, 11 percent in local currency.  Second-quarter 2009 Advisory fees compared favorably with Advisory fees of $60 million in the first quarter of 2009 despite the challenging operating environment.

The business recognized $3 million of Incentive fees in the second quarter of 2009 as a result of liquidating mature funds, and $8 million in the first half of the year, primarily as a result of reaching specified performance objectives against established benchmarks.  Asset sales, a key driver of Incentive and Transaction fees, continued to be limited by the availability of financing.

LaSalle Investment Management raised $1.1 billion of equity from clients during the second quarter of 2009, $1.6 billion year to date, and assets under management were $36.3 billion.  Investments made on behalf of clients totalled $300 million and $600 million for the second quarter and first half of 2009, respectively. 

Summary

The firm has continued to focus on cost reductions to maximize operating results in the midst of the sustained global economic downturn.  New wins in the firm’s Corporate Solutions business and the ability to grow share in many markets contributed to improved seasonal performance in the second quarter.  The firm’s successes in improving its financial position will provide greater operating flexibility to emerge stronger from the current economic environment. 


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, 2008, and in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, 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.

Supplemental Information
Supplemental information regarding the first quarter 2009 earnings call has been posted to the Investor Relations section of the company's Web site:  http://www.joneslanglasalle.com/Pages/InvestorRelations.aspx.