EX-99.1 2 v081667_ex99-1.txt TO BUSINESS EDITOR: Jones Lang LaSalle Reports Record Second Quarter 2007; Net Income of $77.9 Million, $2.32 Per Share CHICAGO, July 24 /PRNewswire-FirstCall/ -- Jones Lang LaSalle Incorporated (NYSE: JLL), the leading integrated global real estate services and money management firm, today reported for the quarter ended June 30, 2007 record net income of $77.9 million, or $2.32 per diluted share of common stock, and net income of $105.2 million, or $3.12 per share, for year-to-date 2007. In 2006, net income for the second quarter was $65.7 million, or $1.94 per share, with year-to-date net income of $70.3 million, or $2.08 per share. Revenue for the second quarter of 2007 was $676 million, an increase of 33 percent compared with 2006, and $1.2 billion for the first half of the year, an increase of 38 percent over the prior year. Operating income for the second quarter of 2007 increased 20 percent to $101.0 million from $84.3 million a year ago, and on a year-to-date basis increased 48 percent to $137.4 million. Included in the 2007 second quarter results was a significant transaction advisory fee earned in the Asia Pacific Hotels business. The 2006 second quarter results included a $109.5 million incentive fee earned by the firm's money management business, LaSalle Investment Management. Positive returns from strategic investments made in 2005 and 2006 and continued favorable market conditions, together with size and timing of transactions, led to strong operating performance from all segments. The Asia Pacific region had the strongest revenue and operating income growth driven by the significant hotel transaction advisory fee. The Americas and EMEA regions continued to deliver solid growth and LaSalle Investment Management generated healthy increases in advisory fee revenue earned from assets under management along with significant incentive fees from performance for clients. Second Quarter 2007 Highlights: -- Revenue increased 33 percent to $676 million -- Operating income increased 20 percent to $101 million -- Asia Pacific Hotels business earned significant advisory fee "The impressive second quarter performance in all our businesses and geographies, together with our strong first quarter, puts us in an excellent position for the second half," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "To build additional momentum, we continue to invest in our operations, and to deepen and strengthen our service delivery to clients," Dyer added. Operating expenses were $575 million for the second quarter of 2007, an increase of 35 percent, and $1.0 billion on a year-to-date basis, a 36 percent increase. Continued additions to capital markets and leasing teams, additional client-service staff, and the expansion of offices contributed to increased operating expenses. Higher incentive compensation costs related to the strong revenue and profit performance also resulted in an increase to operating expenses. Business Segment Second Quarter Performance Highlights Investor and Occupier Services -- In the Americas region, revenue for the second quarter of 2007 was $179 million, an increase of 33 percent over the prior year. The year-to-date revenue was $327 million, an increase of 32 percent over the same period in 2006. Revenue growth in the second quarter was driven both by Management Services, which grew 33 percent, and Transaction Services, which grew 28 percent. On a year-to-date basis, Management Services and Transaction Services revenue increased 24 and 37 percent, respectively, over the prior year. The current quarter's revenue growth benefited from an increased number of large transactions in both local markets and Capital Markets. Second quarter Capital Markets revenue increased 69 percent over the prior year, reflecting the successful investments made over the past two years. Higher volumes in the project and development service business also contributed to the growth. Total operating expenses for the quarter and year to date increased 26 and 25 percent, respectively, over the prior year due to the addition of a significant number of staff and higher incentive compensation expenses driven by growth in both revenue-generating activities and profit performance. -- EMEA's second quarter revenue was $197 million, an increase of 45 percent, and $374 million for the first half of the year, an increase of 56 percent over 2006, with robust growth across all businesses. Transaction Services revenue grew 45 percent for the quarter and 59 percent year to date over the prior year, while Management Services revenue grew approximately 55 percent for both the second quarter and first half of the year. Transaction Services revenue benefited from Capital Markets, which increased 45 and 77 percent for the quarter and first half of the year, respectively, driven by increased market share and continued favorable market activity. Agency Leasing revenue increased 36 percent for the quarter and 30 percent for the first half of the year. Advisory Services revenue, which increased 95 percent for the quarter and 84 percent for the first half of the year over 2006, contributed to the growth in Management Services. Geographically, England and Russia contributed to the region's growth for both the quarter and year to date. England's revenue increased 55 and 40 percent for the second quarter and first half of the year, respectively, compared with 2006, benefiting from the investments made in 2006 and healthy growth in Management Services. Russia's revenue nearly tripled for both the quarter and first half of the year over the prior year driven by the increased volume of valuations completed. Revenue in Germany more than doubled over the prior year on a year-to-date basis with all other countries providing solid year-over-year revenue growth. Two strategic acquisitions were completed during the second quarter of 2007. The firm joined forces with Troostwijk Makelaars, one of the leading and fastest growing independent property advisors in the Netherlands, and the English business expanded its operations with the acquisition of KHK Group, a national 54-person project and development services business. Operating expenses in 2007 increased by 39 percent for the second quarter of 2007 compared with the prior year, and increased 44 percent for the first half of the year. The increase was primarily due to acquisitions, staff additions to service clients and grow market share, and increased incentive compensation resulting from improved revenue and profit performance. -- Revenue for the Asia Pacific region was $211 million for the second quarter, and $298 million for the first half of 2007, a significant increase over the prior year. The growth was driven by the Asia Pacific Hotels business recognizing a transaction advisory fee on the sale of an All Nippon Airways (ANA) portfolio of 13 Japanese assets. This transaction was the latest phase of a long-established global relationship with this client and followed the firm's advisory role in the innovative ANA-InterContinental Hotels Group joint venture in 2006. The region accelerated its momentum with healthy top-line growth in both Transaction and Management Services revenue. Geographically, the second quarter revenue contributions came equally from growth markets (India, Japan, China and Korea) and core markets (Hong Kong, Singapore and Australia). Revenue from the growth markets more than doubled, led by Japan and India, while revenue for the core markets increased 45 percent, led by Singapore and Australia. On a year-to-date basis, revenue from the growth markets was up over 100 percent and core markets' revenue increased 34 percent compared with the same period in 2006. Operating expenses for the region increased as a result of higher incentive compensation driven by the Hotels fee and continued expansion of the operating platform. LaSalle Investment Management LaSalle Investment Management's revenue for the second quarter of 2007 was $95 million and $174 million for the first half of 2007. Excluding the revenue impact of the $109.5 million incentive fee recognized in the second quarter of 2006, revenue for the second quarter of 2007 increased 51 percent, while for the first half of the year revenue increased 39 percent. The growth of annuity-based revenue remained strong, with advisory fees of $54 million for the second quarter of 2007, compared with $43 million in 2006, an increase of 26 percent over the prior year and an increase of 33 percent, to $108 million, on a year-to-date basis. The growth in the annuity revenue was driven by a continued healthy increase in assets under management, which were nearly $46 billion at the end of the second quarter of 2007, an increase of 26 percent over the prior year. Incentive fees were $29.8 million for the second quarter of 2007, and $51.7 million for the first half of 2007, as the firm liquidates its maturing funds. The firm continues to build a portfolio capable of producing incentive fees on a recurring basis. Incentive fees vary significantly from period to period due to both the performance of the underlying investments and the contractual timing of the measurement periods for clients. LaSalle Investment Management raised over $2.8 billion of equity during the second quarter of 2007. Global securities mandates accounted for approximately 50 percent of the year-to-date capital raise of $4.2 billion. Investments made on behalf of clients in the second quarter of 2007 were $2.1 billion, bringing the total investments to $3.4 billion on a year-to-date basis. Summary The firm's aggressive investments made over the last two years to expand market share and client wins, together with its strategic acquisitions, are contributing to the positive results. The globally diverse business platform and service lines, along with the continued overall strength of the global real estate markets, have positioned the firm to expect solid performance from all businesses for the remainder of the year. About Jones Lang LaSalle Jones Lang LaSalle (NYSE: JLL), the only real estate money management and services firm named to FORTUNE magazine's "100 Best Companies to Work For" and Forbes magazine's "400 Best Big Companies," has approximately 160 offices worldwide and operates in more than 450 cities in over 50 countries. With 2006 revenue of over $2.0 billion, the company provides comprehensive integrated real estate and investment management expertise on a local, regional and global level to owner, occupier and investor clients. Jones Lang LaSalle is an industry leader in property and corporate facility management services, with a portfolio of over 1.1 billion square feet worldwide. In 2006, the firm completed capital markets sales and acquisitions, debt financing, and equity placements on assets and portfolios valued at $70.9 billion. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse real estate money management firms, with approximately $45.8 billion of assets under management. For further information, please visit our Web site, http://www.joneslanglasalle.com. 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, 2006 and in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 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. Conference Call The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, July 25 at 9:00 a.m. Eastern. As additional information, please note that, shortly following the public dissemination of our Second Quarter Earnings Release, at approximately 4:30 p.m. Eastern (or soon thereafter) on Tuesday, July 24th, Colin Dyer, Chief Executive Officer of Jones Lang LaSalle, is currently scheduled to appear as a special guest on Bloomberg (U.S.) Television's "Final Word" program. On the program, Mr. Dyer will review company performance and discuss industry trends. A link to the program will be available on Jones Lang LaSalle's Web site at http://www.joneslanglasalle.com/en-gb/investor+relations/ approximately two hours after the program airs. To participate in the teleconference on July 25 at 9 a.m. Eastern, please dial into one of the following phone numbers five to ten minutes before the start time. -- U.S. callers: +1 877 809 9540 -- International callers: +1 706 679 7364 -- Pass code: 7021951 Replay Information Available: (11:00 a.m. EDT) Wednesday, July 25 through Midnight EDT August 1 at the following numbers: -- U.S. callers: +1 800 642 1687 -- International callers: +1 706 645 9291 -- Pass code: 7021951 Live webcast Follow these steps to listen to the webcast: 1. You must have a minimum 14.4 Kbps Internet connection 2. Log on to http://www.videonewswire.com/event.asp?id=41114 and follow instructions 3. Download free Windows Media Player software: (link located under registration form) 4. If you experience problems listening, send an e-mail to webcastsupport@tfprn.com This information is also available on the company's Web site at http://www.joneslanglasalle.com If you have any questions, call Yvonne Peterson of Jones Lang LaSalle's Investor Relations department at +1 312 228 2919. JONES LANG LASALLE INCORPORATED Consolidated Statements of Earnings For the Three and Six Months Ended June 30, 2007 and 2006 (in thousands, except share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Revenue $ 676,086 $ 509,789 $ 1,166,139 $ 846,887 Operating expenses: Compensation and benefits 436,265 318,369 761,922 549,615 Operating, administrative and other 126,517 96,894 242,253 184,557 Depreciation and amortization 12,309 10,378 24,935 20,354 Restructuring credits -- (169) (411) (670) Total operating expenses 575,091 425,472 1,028,699 753,856 Operating income 100,995 84,317 137,440 93,031 Interest expense, net of interest income 3,830 4,478 5,668 7,687 Gain on sale of investments 3,703 -- 6,129 -- Equity in earnings from unconsolidated ventures 6,368 9,593 6,502 8,649 Income before provision for income taxes 107,236 89,432 144,403 93,993 Provision for income taxes 28,632 23,216 38,556 24,397 Net income before cumulative effect of accounting change 78,604 66,216 105,847 69,596 Cumulative effect of change in accounting principle -- -- -- 1,180 Net income $ 78,604 $ 66,216 $ 105,847 $ 70,776 Net income available to common shareholders $ 77,932 $ 65,694 $ 105,175 $ 70,254 Basic earnings per common share $ 2.45 $ 2.07 $ 3.30 $ 2.22 Basic weighted average shares outstanding 31,828,364 31,688,327 31,878,811 31,600,591 Diluted earnings per common share $ 2.32 $ 1.94 $ 3.12 $ 2.08 Diluted weighted average shares outstanding 33,655,359 33,821,945 33,664,471 33,796,465 EBITDA $ 123,375 $ 104,288 $ 175,006 $ 123,214
Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Segment Operating Results For the Three and Six Months Ended June 30, 2007 and 2006 (in thousands) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 INVESTOR & OCCUPIER SERVICES AMERICAS Revenue: Transaction services $ 85,070 $ 66,535 $ 157,759 $ 114,747 Management services 86,021 64,801 156,952 127,062 Equity earnings 270 135 420 284 Other services 7,638 2,891 12,134 5,432 178,999 134,362 327,265 247,525 Operating expenses: Compensation, operating and administrative 153,792 121,332 289,675 229,936 Depreciation and amortization 6,084 5,281 12,006 10,583 159,876 126,613 301,681 240,519 Operating income $ 19,123 $ 7,749 $ 25,584 $ 7,006 EMEA Revenue: Transaction services $ 157,903 $ 109,110 $ 300,041 $ 188,485 Management services 35,181 22,561 67,264 43,782 Equity earnings (loss) 172 (85) (195) (305) Other services 3,730 4,396 6,767 7,365 196,986 135,982 373,877 239,327 Operating expenses: Compensation, operating and administrative 177,830 127,877 335,555 233,596 Depreciation and amortization 3,931 2,840 8,447 5,348 181,761 130,717 344,002 238,944 Operating income $ 15,225 $ 5,265 $ 29,875 $ 383 ASIA PACIFIC Revenue: Transaction services $ 162,312 $ 45,189 $ 201,908 $ 73,837 Management services 47,018 28,041 92,077 55,881 Equity earnings 210 1,633 231 1,850 Other services 1,691 1,529 3,410 2,697 211,231 76,392 297,626 134,265 Operating expenses: Compensation, operating and administrative 165,194 71,556 252,715 128,301 Depreciation and amortization 1,857 1,938 3,630 3,760 167,051 73,494 256,345 132,061 Operating income $ 44,180 $ 2,898 $ 41,281 $ 2,204 LASALLE INVESTMENT MANAGEMENT Revenue: Transaction services $ 5,411 $ 3,886 $ 7,930 $ 14,936 Advisory fees 54,295 43,084 108,214 81,353 Incentive fees 29,817 117,766 51,683 131,310 Equity earnings 5,716 7,910 6,046 6,820 95,239 172,646 173,873 234,419 Operating expenses: Compensation, operating and administrative 65,966 94,498 126,230 142,339 Depreciation and amortization 437 319 852 663 66,403 94,817 127,082 143,002 Operating income $ 28,836 $ 77,829 $ 46,791 $ 91,417 Total segment revenue 682,454 519,382 1,172,641 855,536 Reclassification of equity earnings (6,368) (9,593) (6,502) (8,649) Total revenue $ 676,086 $ 509,789 $ 1,166,139 $ 846,887 Total segment operating expenses $ 575,091 $ 425,641 $ 1,029,110 $ 754,526 Operating income before restructuring items $ 100,995 $ 84,148 $ 137,029 $ 92,361
Please reference attached financial statement notes. JONES LANG LASALLE INCORPORATED Consolidated Balance Sheets June 30, 2007, December 31, 2006, and June 30, 2006 (in thousands)
June 30, June 30, 2007 December 31, 2006 (Unaudited) 2006 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 37,513 50,612 $ 23,879 Trade receivables, net of allowances 581,272 630,121 516,669 Notes and other receivables 60,408 30,079 24,140 Prepaid expenses 30,319 28,040 28,365 Deferred tax assets 48,034 49,230 21,836 Other assets 22,346 19,363 14,342 Total current assets 779,892 807,445 629,231 Property and equipment, at cost, less accumulated depreciation 146,926 120,376 98,507 Goodwill, with indefinite useful lives, at cost, less accumulated amortization 580,237 520,478 500,342 Identified intangibles, with finite useful lives, at cost, less accumulated amortization 38,822 37,583 41,412 Investments in real estate ventures 130,698 131,789 114,035 Long-term receivables 30,744 29,781 25,726 Deferred tax assets 40,967 37,465 72,651 Other assets 47,607 45,031 26,330 $ 1,795,893 $ 1,729,948 $ 1,508,234 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 192,377 $ 221,356 $ 143,660 Accrued compensation 365,679 514,586 245,268 Short-term borrowings 30,239 17,738 15,192 Deferred tax liabilities 2,027 1,426 2,993 Deferred income 22,796 31,896 29,939 Other liabilities 39,593 43,444 34,933 Total current liabilities 652,711 830,446 471,985 Long-term liabilities: Credit facilities 117,710 32,398 284,955 Deferred tax liabilities 1,289 648 2,910 Deferred compensation 47,267 30,668 22,219 Minimum pension liability 20,152 19,252 17,457 Deferred business acquisition obligations 45,439 34,178 32,854 Other liabilities 41,266 31,978 30,242 Total liabilities 925,834 979,568 862,622 Shareholders' equity: Common stock, $.01 par value per share, 100,000,000 shares authorized; 36,821,901, 36,592,864 and 35,841,474 shares issued and outstanding as of June 30, 2007, December 31, 2006, and June 30, 2006, respectively 368 366 358 Additional paid-in capital 706,050 676,270 643,878 Retained earnings 349,705 255,914 162,282 Stock held by subsidiary (219,359) (197,543) (153,026) Stock held in trust (1,427) (1,427) (935) Accumulated other comprehensive income (loss) 34,722 16,800 (6,945) Total shareholders' equity 870,059 750,380 645,612 $1,795,893 $1,729,948 $1,508,234
Please reference attached financial statement notes JONES LANG LASALLE INCORPORATED Summarized Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2007 and 2006 (in thousands) (Unaudited) Six Months Ended June 30, 2007 2006 Cash provided by earnings $ 157,635 $ 115,788 Cash used in working capital (137,332) (147,829) Cash provided by (used in) operating activities 20,303 (32,041) Cash used in investing activities (108,681) (223,011) Cash provided by financing activities 75,279 250,273 Net decrease in cash and cash equivalents (13,099) (4,779) Cash and cash equivalents, beginning of period 50,612 28,658 Cash and cash equivalents, end of period $ 37,513 $ 23,879 Please reference attached financial statement notes JONES LANG LASALLE INCORPORATED Financial Statement Notes 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 as one of the primary metrics for evaluating operating performance and liquidity. The firm believes that an increase in EBITDA is an indicator of improved ability to service existing debt, to sustain potential future increases in debt and to satisfy capital requirements. EBITDA is also used in the calculations of certain covenants related to the firm's revolving credit facility. However, EBITDA should not be considered as an alternative either to net income or net cash provided by operating activities, both of which are determined in accordance with GAAP. Because EBITDA is not calculated under GAAP, the firm's EBITDA may not be comparable to similarly titled measures used by other companies. Below is a reconciliation of net income to EBITDA (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net income $ 78,604 $ 66,216 $105,847 $ 70,776 Add: Interest expense, net of interest income 3,830 4,478 5,668 7,687 Provision for income taxes 28,632 23,216 38,556 24,397 Depreciation and amortization 12,309 10,378 24,935 20,354 EBITDA $123,375 $104,288 $175,006 $123,214 Below is a reconciliation of net cash provided by operating activities, the most comparable cash flow measure on the consolidated statements of cash flows, to EBITDA (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net cash provided by (used in) operating activities $ 202,720 $ 54,945 $ 20,303 $ (32,041) Add: Interest expense, net of interest income 3,830 4,478 5,668 7,687 Change in working capital and non-cash expenses (111,807) 21,649 110,479 123,171 Provision for income taxes 28,632 23,216 38,556 24,397 EBITDA $ 123,375 $ 104,288 $ 175,006 $ 123,214 2. Net debt represents the aggregate of Short-Term Borrowings and Credit Facilities, less Cash and Cash Equivalents. 3. For purposes of segment operating results, the allocation of restructuring charges to our segments has been determined to not be meaningful to investors. Additionally, the performance of segment results has been evaluated without these charges being allocated. 4. The consolidated statements of cash flows are presented in summarized form. For complete consolidated statements of cash flows, please refer to the firm's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, to be filed with the Securities and Exchange Commission shortly. 5. Earnings per common share is calculated by dividing net income available to common shareholders by weighted average shares outstanding. Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net income before cumulative effect of change in accounting principle $ 78,604 $ 66,216 $105,847 $ 69,596 Cumulative effect of change in accounting principle -- -- -- 1,180 Net income 78,604 66,216 105,847 70,776 Dividends on unvested common stock 672 522 672 522 Net income available to common shareholders $ 77,932 $ 65,694 $105,175 $ 70,254 Basic weighted average shares outstanding 31,828,364 31,688,327 31,878,811 31,600,591 Basic income per common share before cumulative effect of change in accounting principle and dividends on unvested common stock $ 2.47 $ 2.09 $ 3.32 $ 2.20 Cumulative effect of change in accounting principle -- -- -- 0.04 Dividends on unvested common stock 0.02 0.02 0.02 0.02 Basic earnings per common share $ 2.45 $ 2.07 $ 3.30 $ 2.22 Diluted weighted average shares outstanding 33,655,359 33,821,945 33,664,471 33,796,465 Diluted income per common share before cumulative effect of change in accounting principle and dividends on unvested common stock $ 2.34 $ 1.96 $ 3.14 $ 2.06 Cumulative effect of change in accounting principle -- -- -- 0.03 Dividends on unvested common stock 0.02 0.02 0.02 0.01 Diluted earnings per common share $ 2.32 $ 1.94 $ 3.12 $ 2.08 6. Europe, Middle East, Africa - EMEA; previously referred to as Europe. SOURCE Jones Lang LaSalle Incorporated -0- 07/24/2007 /CONTACT: Lauralee E. Martin, Chief Operating and Financial Officer of Jones Lang LaSalle Incorporated, +1-312-228-2073 / /First Call Analyst: / /FCMN Contact: / /Web site: http://www.joneslanglasalle.com / (JLL)