Business Segments

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS

We manage and report our operations as four business segments:

The three geographic regions of Real Estate Services (“RES”):

(1) Americas,

(2) Europe, Middle East and Africa (“EMEA”),

(3) Asia Pacific;

and

(4) LaSalle Investment Management ("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 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.

Operating income represents total revenue less direct and indirect allocable expenses. We allocate all 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 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 for additional information on our gross and net accounting. For segment reporting we also show Equity earnings (losses) from real estate ventures within total segment revenue, since the related activity is an integral part of LaSalle. Finally, our measure of segment results also excludes restructuring charges and certain acquisition related costs. Certain prior year amounts have been reclassified among reporting segments to conform with our current presentation of business segment results. These amounts relate to the presentation of revenue and associated expense and have an insignificant impact on previously reported operating income.

The Chief Operating Decision Maker of Jones Lang LaSalle measures the segment results net of gross contract costs, with Equity earnings (losses) from real estate ventures, and without 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.

Summarized financial information by business segment for 2013, 2012 and 2011 is as follows ($ in thousands):

	2013			2012		2011
Real Estate Services
Americas
Revenue	$	1,918,092		1,723,025		1,504,797
Equity earnings (losses)	549			(3	)	2,682
Total segment revenue	1,918,641			1,723,022		1,507,479
Gross contract costs	(112,097		)	(76,929	)	(14,875	)
Total segment fee revenue	1,806,544			1,646,093		1,492,604
Operating expenses:
Compensation, operating and administrative expenses	1,689,365			1,513,594		1,307,067
Depreciation and amortization	45,285			42,333		38,502
Total segment operating expenses	1,734,650			1,555,927		1,345,569
Gross contract costs	(112,097		)	(76,929	)	(14,875	)
Total fee-based segment operating expenses	1,622,553			1,478,998		1,330,694
Operating income	$	183,991		167,095		161,910
EMEA
Revenue	$	1,323,201		1,072,909		991,824
Equity losses	(535		)	(310	)	(304	)
Total segment revenue	1,322,666			1,072,599		991,520
Gross contract costs	(204,596		)	(120,817	)	(91,699	)
Total segment fee revenue	1,118,070			951,782		899,821
Operating expenses:
Compensation, operating and administrative expenses	1,212,797			996,639		933,460
Depreciation and amortization	20,547			21,644		29,378
Total segment operating expenses	1,233,344			1,018,283		962,838
Gross contract costs	(204,596		)	(120,817	)	(91,699	)
Total fee-based segment operating expenses	1,028,748			897,466		871,139
Operating income	$	89,322		54,316		28,682

Continued: Summarized financial information by business segment for 2013, 2012 and 2011 is as follows ($ in thousands):

	2013			2012		2011
Real Estate Services
Asia Pacific
Revenue	$	965,626		875,476		816,301
Equity earnings	129			150		178
Total segment revenue	965,755			875,626		816,479
Gross contract costs	(118,089		)	(94,816	)	(103,892	)
Total segment fee revenue	847,666			780,810		712,587
Operating expenses:
Compensation, operating and administrative expenses	876,239			797,396		738,107
Depreciation and amortization	12,216			12,886		12,203
Total segment operating expenses	888,455			810,282		750,310
Gross contract costs	(118,089		)	(94,816	)	(103,892	)
Total fee-based segment operating expenses	770,366			715,466		646,418
Operating income	$	77,300		65,344		66,169
LaSalle
Revenue	$	254,672		261,420		271,622
Equity earnings	31,200			24,020		3,829
Total segment revenue	285,872			285,440		275,451
Operating expenses:
Compensation, operating and administrative expenses	216,203			211,567		215,745
Depreciation and amortization	1,805			1,947		2,750
Total segment operating expenses	218,008			213,514		218,495
Operating income	$	67,864		71,926		56,956
Segment Reconciling Items:
Total segment revenue	$	4,492,934		3,956,687		3,590,929
Reclassification of equity earnings	31,343			23,857		6,385
Total revenue	4,461,591			3,932,830		3,584,544
Total segment operating expenses before restructuring and acquisition charges	4,074,457			3,598,006		3,277,212
Operating income before restructuring and acquisition charges	387,134			334,824		307,332
Restructuring and acquisition charges	18,315			45,421		56,127
Operating income	$	368,819		289,403		251,205

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 thousands).

	2013			2012
	IDENTIFIABLE ASSETS		INVESTMENTS IN REAL ESTATE VENTURES	IDENTIFIABLE ASSETS		INVESTMENTS IN REAL ESTATE VENTURES
Real Estate Services:
Americas	$	2,009,465	3,622	$	1,928,430	3,656
EMEA	1,321,197		2,728	1,212,640		3,001
Asia Pacific	681,122		2,228	691,187		2,300
LaSalle	473,305		278,622	430,865		259,150
Corporate	112,264		—	88,377		—
Consolidated	$	4,597,353	287,200	$	4,351,499	268,107

The following table reconciles segment property and equipment expenditures to consolidated property and equipment expenditures ($ in thousands).

	2013			2012		2011
Real Estate Services:
Americas	$	46,995		42,588		33,437
EMEA	19,206			21,574		20,476
Asia Pacific	15,320			9,120		18,763
LaSalle	1,947			3,660		3,348
Corporate	27,333			18,549		16,144
Total Capital Expenditures	110,801			95,491		92,168
Less proceeds on dispositions	(117		)	(733	)	(630	)
Net Capital Expenditures	$	110,684		94,758		91,538

The following table sets forth the 2013 and 2012 revenue and assets from our most significant currencies ($ in thousands).

	TOTAL REVENUE			TOTAL ASSETS
	2013		2012	2013		2012
United States dollar	$	1,954,354	1,754,064	$	2,562,112	2,469,853
British pound	636,288		516,135	756,096		684,546
Euro	595,947		482,729	468,750		421,426
Australian dollar	285,280		277,181	150,849		179,096
Chinese yuan	137,660		114,403	92,104		79,602
Hong Kong dollar	134,605		98,043	102,862		93,312
Japanese yen	121,965		139,858	35,889		41,187
Indian rupee	117,524		113,847	93,343		92,553
Singapore dollar	96,661		93,987	66,889		74,461
Other currencies	381,307		342,583	268,459		215,463
	$	4,461,591	3,932,830	$	4,597,353	4,351,499

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 were 5% of our total assets at both December 31, 2013 and 2012.