United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 30, 2019~~March 31, 2020

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number 1-13145

Jones Lang LaSalle Incorporated

(Exact name of registrant as specified in its charter)

Maryland

36-4150422

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

200 East Randolph Dr,

Chicago,

60601

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code:

(312)

782-5800

Former name, former address and former fiscal year, if changed since last report: Not Applicable



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01	JLL	The New York Stock Exchange

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

~~Securities registered pursuant to Section 12(b) of the Act:~~



~~Title of each class~~	~~Trading Symbol~~	~~Name of each exchange on which registered~~
~~Common Stock, par value $0.01~~	~~JLL~~	~~The New York Stock Exchange~~

The number of shares outstanding of the registrant's common stock (par value $0.01) as of the close of business on ~~August 2, 2019~~April 30, 2020 was ~~51,521,620.~~

51,630,564.

Table of Contents



Part I	Financial Information

Item 1.	Condensed Consolidated Financial Statements:	3

	Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3

	Statements of Comprehensive Income for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

	Statements of Changes in Equity for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	5

	Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	76

	Notes to Condensed Consolidated Financial Statements	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3026

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5142

Item 4.	Controls and Procedures	5242

Part II	Other Information

Item 1.	Legal Proceedings	5343

Item 1A.	Risk Factors	5343

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 5.	Other Information	5443

Item 6.	Exhibits	5645

Signature		5746

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS


(in millions, except share and per share data)	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets	(unaudited)						(unaudited)
Current assets:
Cash and cash equivalents	$	411.2		480.9			$	720.7		451.9
Trade receivables, net of allowances of $68.7 and $52.0	1,725.9			1,854.0
Trade receivables, net of allowance of $69.0 and $68.1							1,724.7			2,034.3
Notes and other receivables	375.0			363.0			444.0			472.8
Reimbursable receivables	1,442.1			1,540.5			1,528.3			1,671.2
Warehouse receivables	403.1			331.2			1,026.8			527.1
Short-term contract assets	342.5			314.7
Short-term contract assets, net of allowance of $1.8 and $-							325.8			333.4
Prepaid & other	330.3			321.7			427.0			377.9
Total current assets	5,030.1			5,206.0			6,197.3			5,868.6
Property and equipment, net of accumulated depreciation of $611.8 and $588.3	583.3			567.9
Property and equipment, net of accumulated depreciation of $685.6 and $660.7							678.4			701.9
Operating lease right-of-use assets	601.1			—			806.5			804.4
Goodwill	2,730.7			2,697.8			4,104.3			4,168.2
Identified intangibles, net of accumulated amortization of $180.3 and $169.8	336.1			336.9
Investments in real estate ventures, including $272.8 and $247.3 at fair value	375.5			356.9
Identified intangibles, net of accumulated amortization of $236.1 and $214.8							658.7			682.6
Investments in real estate ventures, including $302.0 and $328.6 at fair value							390.8			404.2
Long-term receivables	221.3			199.0			255.8			250.2
Deferred tax assets, net	206.2			210.1			232.4			245.4
Deferred compensation plan	297.7			258.2			374.2			349.9
Other	198.9			192.7			202.4			197.2
Total assets	$	10,580.9		10,025.5			$	13,900.8		13,672.6
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	1,037.2		1,261.4			$	1,096.2		1,289.4
Reimbursable payables	980.2			1,090.7			1,053.2			1,245.8
Accrued compensation & benefits	1,059.3			1,604.5			1,044.2			1,729.2
Short-term borrowings	118.7			32.7			125.2			120.1
Short-term contract liabilities and deferred income	148.1			190.4			152.7			158.8
Short-term acquisition-related obligations	91.0			78.5			68.6			74.4
Warehouse facilities	384.0			317.9			936.6			515.9
Short-term operating lease liabilities	133.4			—			154.0			153.4
Other	218.6			185.7			356.7			203.2
Total current liabilities	4,170.5			4,761.8			4,987.4			5,490.2
Credit facility, net of debt issuance costs of $14.1 and $15.9	485.9			(15.9		)
Long-term debt, net of debt issuance costs of $3.4 and $3.7	669.6			671.5
Credit facility, net of debt issuance costs of $11.4 and $12.3							1,438.6			512.7
Long-term debt, net of debt issuance costs of $2.9 and $3.1							656.1			664.6
Deferred tax liabilities, net	30.2			32.7			87.5			106.0
Deferred compensation	314.9			277.8			368.4			374.3
Long-term acquisition-related obligations	146.2			175.8			106.7			124.1
Long-term operating lease liabilities	552.6			—			734.9			751.2
Other	327.2			387.3			483.7			436.2
Total liabilities	6,697.1			6,291.0			8,863.3			8,459.3
Redeemable noncontrolling interest	8.5			—			8.6			8.6
Company shareholders' equity:
Common stock, $0.01 par value per share, 100,000,000 shares authorized; 45,762,688 and 45,599,418 shares issued and outstanding	0.5			0.5
Common stock, $0.01 par value per share, 100,000,000 shares authorized; 51,810,592 and 51,549,654 shares issued; 51,622,839 and 51,549,654 outstanding							0.5			0.5
Additional paid-in capital	1,069.6			1,057.3			1,969.6			1,962.8
Retained earnings	3,207.8			3,095.7			3,578.7			3,588.3
Treasury stock, at cost, 187,753 and - shares							(25.0		)	—
Shares held in trust	(5.9		)	(5.8		)	(5.6		)	(5.7		)
Accumulated other comprehensive loss	(450.0		)	(456.2		)	(571.2		)	(427.8		)
Total Company shareholders’ equity	3,822.0			3,691.5			4,947.0			5,118.1
Noncontrolling interest	53.3			43.0			81.9			86.6
Total equity	3,875.3			3,734.5			5,028.9			5,204.7
Total liabilities and equity	$	10,580.9		$	10,025.5
Total liabilities, redeemable noncontrolling interest and equity							$	13,900.8		$	13,672.6

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(in millions, except share and per share data) (unaudited)	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in millions, except share and per share data) (unaudited)	2019			2018		2019			2018		2020			2019
Revenue:
Revenue before reimbursements	$	2,348.2		2,163.3		$	4,309.8		4,054.4		$	2,233.0		1,961.6
Reimbursements	1,918.3			1,740.4		3,777.3			3,404.5		1,863.0			1,859.0
Total revenue	$	4,266.5		3,903.7		$	8,087.1		7,458.9		$	4,096.0		3,820.6
Operating expenses:
Compensation and benefits	$	1,354.8		1,240.5		$	2,518.6		2,337.7		$	1,324.5		1,163.8
Operating, administrative and other	772.1			737.8		1,479.4			1,435.1		774.8			707.3
Reimbursed expenses	1,918.3			1,740.4		3,777.3			3,404.5		1,863.0			1,859.0
Depreciation and amortization	45.5			46.3		92.0			88.4		55.0			46.5
Restructuring and acquisition charges (credits)	25.7			(11.1	)	44.3			(10.4	)
Restructuring and acquisition charges											14.1			18.6
Total operating expenses	4,116.4			3,753.9		7,911.6			7,255.3		$	4,031.4		3,795.2
Operating income	150.1			149.8		175.5			203.6		$	64.6		25.4
Interest expense, net of interest income	13.6			14.3		23.2			28.1		14.6			9.6
Equity earnings from real estate ventures	10.2			10.2		15.2			23.8
Other income	0.8			1.7		0.5			4.2
Equity (losses) earnings											(28.3		)	5.0
Other income (expense)											0.9			(0.3	)
Income before income taxes and noncontrolling interest	147.5			147.4		168.0			203.5		22.6			20.5
Income tax provision	36.2			37.6		35.5			51.1
Income tax provision (benefit)											5.0			(0.7	)
Net income	111.3			109.8		132.5			152.4		17.6			21.2
Net income attributable to noncontrolling interest	0.6			1.8		0.5			4.1
Net income (loss) attributable to noncontrolling interest											12.3			(0.1	)
Net income attributable to the Company	110.7			108.0		132.0			148.3		5.3			21.3
Dividends on unvested common stock, net of tax benefit	0.2			0.2		0.2			0.2
Net income attributable to common shareholders	$	110.5		107.8		$	131.8		148.1		$	5.3		21.3
Basic earnings per common share	$	2.42		2.37		$	2.88		3.26		$	0.10		0.47
Basic weighted average shares outstanding (in 000's)	45,749			45,493		45,712			45,468		51,612			45,674
Diluted earnings per common share	$	2.40		2.35		$	2.86		3.23		$	0.10		0.46
Diluted weighted average shares outstanding (in 000's)	46,040			45,951		46,029			45,922		52,458			46,019
Dividends declared per share	$	0.43		0.41		$	0.43		0.41
Net income attributable to the Company	$	110.7		108.0		$	132.0		148.3		$	5.3		21.3
Change in pension liabilities, net of tax	(0.8		)	—		(1.8		)	—		—			(1.0	)
Foreign currency translation adjustments	(23.3		)	(102.6	)	8.0			(50.8	)	(143.4		)	31.3
Comprehensive income attributable to the Company	$	86.6		5.4		$	138.2		97.5
Comprehensive (loss) income attributable to the Company											$	(138.1	)	51.6

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE ~~SIX~~THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2020 AND 2019 ~~AND 2018~~



	Company Shareholders' Equity
	Common Stock				Additional				Shares
(in millions, except share and per share data) (unaudited)	Outstanding				Paid-In		Retained		Held in		Treasury						Total
(in millions, except share and per share data) (unaudited)	Shares		Amount		Capital		Earnings		Trust		Stock		AOCI⁽¹⁾		NCI⁽²⁾		Equity
December 31, 2019	51,549,654		$	0.5	1,962.8		3,588.3		(5.7	)	—		(427.8	)	86.6		$	5,204.7
Net income	—		—		—		5.3		—		—		—		12.3		17.6
Shares issued under stock-based compensation programs	363,308		—		4.4		—		—		—		—		—		4.4
Shares repurchased for payment of taxes on stock-based compensation	(102,370	)	—		(16.2	)	—		—		—		—		—		(16.2		)
Amortization of stock-based compensation	—		—		18.6		—		—		—		—		—		18.6
Shares held in trust	—		—		—		—		0.1		—		—		—		0.1
Cumulative effect from adoption of new accounting for credit losses	—		—		—		(14.9	)	—		—		—		—		(14.9		)
Repurchase of common stock	(187,753	)	—		—		—		—		(25.0	)	—		—		(25.0		)
Foreign currency translation adjustments	—		—		—		—		—		—		(143.4	)	—		(143.4		)
Decrease in amounts attributable to noncontrolling interest	—		—		—		—		—		—		—		(17.0	)	(17.0		)
March 31, 2020	51,622,839		$	0.5	1,969.6		3,578.7		(5.6	)	(25.0	)	(571.2	)	81.9		$	5,028.9

Company Shareholders' Equity
Accumulated
Additional Shares Other
(in millions, except share and
per share data) (unaudited)
Common Stock Paid-In Retained Held in Comprehensive Noncontrolling Total
Shares Amount Capital Earnings Trust Loss Interest Equity
December 31, 2018 45,599,418
$ 0.5
1,057.3
3,095.7
(5.8 ) (456.2 ) 43.0
$ 3,734.5
Net income —
—
—
21.3
—
—
(0.1 ) 21.2
Shares issued under stock-based compensation programs 198,575
—
2.0
—
—
—
—
2.0
Shares repurchased for payment of taxes on stock-based compensation (58,750 ) —
(9.7 ) —
—
—
—
(9.7 )
Amortization of stock-based compensation —
—
7.0
—
—
—
—
7.0
Change in pension liabilities, net of tax —
—
—
—
—
(1.0 ) —
(1.0 )
Foreign currency translation adjustments —
—
—
—
—
31.3
—
31.3
Increase in amounts attributable to noncontrolling interest —
—
—
—
—
—
9.8
9.8
March 31, 2019 45,739,243
$ 0.5
1,056.6
3,117.0
(5.8 ) (425.9 ) 52.7
$ 3,795.1
Net income⁽¹⁾
—
—
—
110.7
—
—
0.5
111.2
Shares issued under stock-based compensation programs 31,820
—
0.8
—
—
—
—
0.8
Shares repurchased for payment of taxes on stock-based compensation (8,375 ) —
(0.7 ) —
—
—
—
(0.7 )
Amortization of stock-based compensation —
—
12.9
—
—
—
—
12.9
Dividends paid —
—
—
(19.9 ) —
—
—
(19.9 )
Shares held in trust —
—
—
—
(0.1 ) —
—
(0.1 )
Change in pension liabilities, net of tax —
—
—
—
—
(0.8 ) —
(0.8 )
Foreign currency translation adjustments —
—
—
—
—
(23.3 ) —
(23.3 )
Increase in amounts attributable to noncontrolling interest —
—
—
—
—
—
0.1
0.1
June 30, 2019
45,762,688
$ 0.5
1,069.6
3,207.8
(5.9 ) (450.0 ) 53.3
$ 3,875.3

(1) ~~Excludes net~~AOCI: Accumulated other comprehensive income ~~attributable to redeemable noncontrolling~~(loss)

(2) NCI: Noncontrolling interest ~~of $0.1 million for the three months ended June 30, 2019.~~

~~Table of Contents~~

~~JONES LANG LASALLE INCORPORATED~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018~~


	Company Shareholder's Equity																	Company Shareholder's Equity
											Accumulated																Accumulated
					Additional				Shares		Other											Additional			Shares		Other
(in millions, except share and per share data) (unaudited)	Common Stock				Paid-In		Retained		Held in		Comprehensive		Noncontrolling		Total			Common Stock				Paid-In		Retained	Held in		Comprehensive		Noncontrolling		Total
(in millions, except share and per share data) (unaudited)	Shares		Amount		Capital		Earnings		Trust		Loss		Interest		Equity			Shares		Amount		Capital		Earnings	Trust		Loss		Interest		Equity
December 31, 2017	45,373,817		$	0.5	1,037.3		2,649.0		(5.9	)	(340.8	)	38.1		$	3,378.2
December 31, 2018																		45,599,418		$	0.5	1,057.3		3,095.7	(5.8	)	(456.2	)	43.0		$	3,734.5
Net income	—		—		—		40.3		—		—		2.3		42.6			—		—		—		21.3	—		—		(0.1	)	21.2
Shares issued under stock-based compensation programs	172,157		—		0.3		—		—		—		—		0.3			198,575		—		2.0		—	—		—		—		2.0
Shares repurchased for payment of taxes on stock-based compensation	(55,536	)	—		(8.7	)	—		—		—		—		(8.7		)	(58,750	)	—		(9.7	)	—	—		—		—		(9.7		)
Amortization of stock-based compensation	—		—		8.8		—		—		—		—		8.8			—		—		7.0		—	—		—		—		7.0
Shares held in trust	—		—		—		—		(0.1	)	—		—		(0.1		)
Change in pension liabilities, net of tax																		—		—		—		—	—		(1.0	)	—		(1.0		)
Foreign currency translation adjustments	—		—		—		—		—		51.8		—		51.8			—		—		—		—	—		31.3		—		31.3
Increase in amounts attributable to noncontrolling interest	—		—		—		—		—		—		0.5		0.5			—		—		—		—	—		—		9.8		9.8
Acquisition of redeemable noncontrolling interest	—		—		2.3		—		—		—		—		2.3
March 31, 2018	45,490,438		$	0.5	1,040.0		2,689.3		(6.0	)	(289.0	)	40.9		$	3,475.7
Net income	—		—		—		108.0		—		—		1.8		109.8
Shares issued under stock-based compensation programs	5,077		—		0.1		—		—		—		—		0.1
Shares repurchased for payment of taxes on stock-based compensation	(344	)	—		(0.1	)	—		—		—		—		(0.1		)
Amortization of stock-based compensation	—		—		6.7		—		—		—		—		6.7
Dividends paid	—		—		—		(18.9	)	—		—		—		(18.9		)
Foreign currency translation adjustments	—		—		—		—		—		(102.6	)	—		(102.6		)
Decrease in amounts attributable to noncontrolling interest	—		—		—		—		—		—		(4.5	)	(4.5		)
June 30, 2018	45,495,171		$	0.5	1,046.7		2,778.4		(6.0	)	(391.6	)	38.2		$	3,466.2
March 31, 2019																		45,739,243		$	0.5	1,056.6		3,117.0	(5.8	)	(425.9	)	52.7		$	3,795.1

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended June 30,					Three Months Ended March 31,
(in millions) (unaudited)	2019			2018		2020			2019
Cash flows used in operating activities:
Net income	$	132.5		152.4		$	17.6		21.2
Adjustments to reconcile net income to net cash used in operating activities:
Distributions of earnings from real estate ventures	6.1			19.1		3.6			3.0
Other adjustments, net	107.9			60.7		132.2			37.5
Changes in working capital, net	(729.6		)	(500.1	)	(699.5		)	(613.2	)
Net cash used in operating activities	(483.1		)	(267.9	)	(546.1		)	(551.5	)
Cash flows used in investing activities:
Net capital additions – property and equipment	(83.8		)	(71.0	)	(44.4		)	(44.6	)
Net investment asset activity (less than wholly-owned)	(19.2		)	(10.6	)	(3.2		)	(15.6	)
Business acquisitions, net of cash acquired	(28.3		)	(11.2	)	—			(26.7	)
Capital contributions to real estate ventures	(35.6		)	(20.6	)	(54.0		)	(11.0	)
Distributions of capital from real estate ventures	19.8			27.5		13.4			7.6
Other, net	5.4			2.2		(2.3		)	(0.7	)
Net cash used in investing activities	(141.7		)	(83.7	)	(90.5		)	(91.0	)
Cash flows provided by financing activities:
Proceeds from borrowings under credit facility	2,545.0			1,780.0		2,555.0			1,279.0
Repayments of borrowings under credit facility	(2,045.1		)	(1,365.0	)	(1,630.0		)	(754.1	)
Net proceeds from short-term borrowings	86.0			16.4		6.6			86.3
Payments of deferred business acquisition obligations and earn-outs	(26.6		)	(26.3	)	(9.8		)	(24.5	)
Payment of dividends	(19.9		)	(18.9	)
Repurchase of common stock						(25.0		)	—
Other, net	8.1			(3.0	)	(13.5		)	6.1
Net cash provided by financing activities	547.5			383.2		883.3			592.8
Effect of currency exchange rate changes on cash and cash equivalents	1.9			(14.4	)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash						(21.1		)	0.7
Net change in cash, cash equivalents and restricted cash	(75.4		)	17.2		225.6			(49.0	)
Cash, cash equivalents and restricted cash, beginning of the period	634.2			471.7		652.1			634.2
Cash, cash equivalents and restricted cash, end of the period	$	558.8		488.9		$	877.7		585.2
Supplemental disclosure of cash flow information:
Restricted cash, end of the period	$	147.6		196.1
Restricted cash, beginning of period						$	200.2		153.3
Restricted cash, end of period						157.0			195.7
Cash paid during the period for:
Interest	23.1			20.7		$	9.3		4.3
Income taxes, net of refunds	120.2			50.6		44.4			37.5
Operating leases	83.3			—		47.1			41.1
Non-cash activities:
Business acquisitions, including contingent consideration	1.5			1.7
Business acquisitions (including contingent consideration)						$	—		1.5
Deferred business acquisition obligations	6.5			—		—			6.5

See accompanying notes to Condensed Consolidated Financial Statements.

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JONES LANG LASALLE INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.	INTERIM INFORMATION

Readers of this quarterly report should refer to the audited financial statements of Jones Lang LaSalle Incorporated ("JLL," which may also be referred to as "the Company" or as "we," "us" or "our") for the year ended December 31, ~~2018,~~2019, which are included in our ~~2018~~2019 Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission ("SEC") and also available on our website (www.us.jll.com), since we have omitted from this quarterly report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to the "Summary of Critical Accounting Policies and Estimates" section within Item 7. Management's Discussion and Analysis of Financial Condition and Result of Operations and to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in our ~~2018~~2019 Annual Report on Form 10-K for further discussion of our significant accounting policies and estimates.

Our Condensed Consolidated Financial Statements as of ~~June 30, 2019,~~March 31, 2020, and for the ~~periods~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ are unaudited. In the opinion of management, we have included all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the Condensed Consolidated Financial Statements for these interim periods.

Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses. This is the result of a general focus in the real estate industry on completing transactions by calendar year end, while certain expenses are recognized evenly throughout the year. Our LaSalle Investment Management ("LaSalle") segment generally earns investment-generated performance fees on clients' real estate investment returns when assets are sold, the timing of which is geared toward the benefit of our clients, as well as co-investment equity gains and losses, primarily dependent on underlying valuations. Within our Real Estate Services ("RES") segments, revenue from transaction-based activities (e.g. leasing and capital markets) is driven by the size and timing of our clients' transactions and can fluctuate significantly from period to period.

A significant portion of our compensation and benefits expense is from incentive compensation plans, which we generally accrue throughout the year based on progress toward annual performance targets. This process can result in significant fluctuations in quarterly compensation and benefits expense from period to period. Non-variable operating expenses, which we recognize when incurred during the year, are relatively constant on a quarterly basis.

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, which we base on forecasted income by country and expected enacted tax rates; as required, we adjust for the impact of discrete items in the quarters in which they occur. Changes in the geographic mix of income, including as a result of the COVID-19 pandemic, can impact our estimated effective tax rate.

As a result of the items mentioned above, the results for the periods ended ~~June 30, 2019 and 2018~~March 31 are not fully indicative of what our results will be for the full fiscal year.

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2.	NEW ACCOUNTING STANDARDS

Recently adopted accounting guidance

In ~~February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, which increases transparency and comparability by requiring the recognition of lease assets and lease liabilities on the balance sheet, as well as requiring the disclosure of key information about leasing arrangements. On January 1, 2019, we adopted ASU No. 2016-02, ~~Leases (ASC Topic 842)~~, on a modified retrospective basis under the optional transition method. Therefore, the application of the provisions of this ASU are effective January 1, 2019, and comparative periods are presented in accordance with ASC Topic 840. Additionally, we elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward (1) our historical lease classification and assessments for expired and existing leases, and (2) our historical accounting for initial direct costs for existing leases. We elected not to record on the Condensed Consolidated Balance Sheets any lease whose term is 12 months or less and does not include a purchase option that we are reasonably certain to exercise. We also elected to account for the non-lease components within our leases as part of the single lease component to which they are related. The most significant impact of the adoption of this ASU was an increase to the Condensed Consolidated Balance Sheets to reflect operating lease right-of-use assets and lease liabilities, which are primarily associated with our office leases around the world. Our accounting for finance leases was not materially impacted. See Note 9, Leases, for additional information on the impact of ASC 842 adoption.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment~~, which eliminates Step 2 from the goodwill impairment test. The annual goodwill impairment test will require companies to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge when the carrying amount exceeds the fair value of the reporting unit. This ASU is effective for annual and interim goodwill impairment tests beginning after December 15, 2019, with early adoption permitted. We adopted this guidance effective January 1, 2019, and, as a result, will no longer apply Step 2 when performing the goodwill impairment test. This guidance had no material impact on our financial statements and related disclosures.

~~Recently issued accounting guidance, not yet adopted~~

In June 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses ~~(Topic~~(ASC Topic 326), which ~~creates~~created a new framework to evaluate financial instruments, such as trade receivables, for expected credit losses. This new framework ~~replaces~~replaced the existing incurred loss approach and is expected to result in more timely recognition of credit losses. On January 1, 2020, we adopted ASU No. 2016-13 using a modified-retrospective approach, as required by the ASU.

The adoption impacted our methodology of reserving for (i) Trade receivables, (ii) other receivable-related financial assets, specifically contract assets, and (iii) off-balance sheet credit exposures within the scope of this ASU. Specifically, we evaluated our historical reserve balances for Trade receivables and the related write-off activity and developed a forward-looking process for adoption. We also evaluated our loss-sharing guarantee obligation for certain mortgage loans we originate, sell and retain the servicing rights. The following sections discuss our updated reserve methodologies.

Trade Receivables

We estimate an allowance to provide for uncollectible accounts receivable, which is ~~effective~~applied upon recognition of the receivable. We base this estimate on historical experience combined with a review of the receivable aging, current and expected economic conditions, and client credit quality. The estimate also includes specifically identified amounts for ~~annual and interim periods beginning after December 15, 2019 and early adoption is~~which payment has become unlikely. For receivables with lives of less than one year, changes to economic conditions are not ~~permitted until years beginning after December 15, 2018. We are continuing~~expected to ~~evaluate the effect this guidance will~~ have a significant impact on our ~~financial statements~~estimate of expected credit losses. However, we will monitor economic conditions on a quarterly basis to determine if any adjustments are deemed necessary.

Notes and ~~related disclosures.~~Other Receivables and Long-Term Receivables

~~In August 2018,~~We make ongoing assessments of the ~~FASB issued ASU No. 2018-15,~~ ~~Customer's Accounting for Implementation Costs Incurred~~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 ~~a Cloud Computing Arrangement That~~our assessments of collectability include historical experience, current and expected economic conditions, and our broader business relationship with the obligor. We record an allowance against the outstanding balance when our assessments determine payment has become unlikely. After all collection efforts have been exhausted by management, the outstanding balance is ~~a Service Contract, which requires a customer~~written off against the reserve. Historically, credit quality deterioration to the point of impairment or non-performance in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 when determining which implementation costs to capitalize as intangible assets. This ASU is effective for annualour Notes and ~~interim periods beginning after December 15, 2019, with early adoption permitted. We do~~other receivables and Long-term receivables has been limited and has not ~~believe this guidance will have~~had a material impact on the Condensed Consolidated Financial Statements.

Reimbursable Receivables

We record an allowance based on specific identification of an uncollectible reimbursable receivable, considering current and future economic conditions as well as client credit quality. Historically, we have not experienced any material collection issues and, as such, have not applied a formulaic reserve to these receivables.

Contract Assets

Contract assets include amounts recognized as revenue for which we are not yet entitled to payment for reasons other than the passage of time, but that do not constrain revenue recognition. Historically, we have not recognized a provision for contract assets. Under ASC Topic 326, we include Contract assets in our reserving process and assess the risk of loss similar to our methodology for Trade receivables, since Contract assets are reclassified to Trade receivables when we become entitled to payment. Accordingly, a reserve is applied upon recognition of the contract asset.

Financial Guarantees

Certain loans we originate and sell under the Fannie Mae Delegated Underwriting and Servicing (“DUS”) program retain a percentage of the risk of loss. This loss-sharing aspect of the program represents an off-balance sheet credit exposure, and we have established a contingent reserve ("loan loss guarantee reserve") for this risk in accordance with ASC Topic 326. To estimate the reserve, we use a model that analyzes historical losses, current and expected economic conditions, and reasonable and supportable forecasts. The model also considers specific details of the underlying property used as collateral, such as occupancy and financial ~~statements~~performance. The loan loss guarantee reserve is calculated on an individual loan level. For the period ended March 31, 2020, the inputs to the model incorporated specific economic conditions related to the COVID-19

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pandemic that resulted in a notable increase to our loan loss guarantee reserve. As of March 31, 2020, the loan loss guarantee reserve was $45.7 million and ~~related disclosures.~~was included within Other liabilities on the Condensed Consolidated Balance Sheets.

The loss-sharing guarantee obligation (in accordance with ASC Topic 460, Guarantees) represents the non-contingent obligation incurred as a result of issuing a loss-sharing guarantee as part of our participation in the DUS program and is separate from the loan loss guarantee reserve discussed above. See Note 10, Commitments and Contingencies, for further information on the DUS program and the loss-sharing guarantee obligation.

The following table details the cumulative impact to retained earnings upon adoption of ASC Topic 326.



	Published			Adjustment due to		As Reported Under
	December 31, 2019			adoption of		ASC Topic 326 on January 1, 2020
(in millions)	(audited)			ASC Topic 326		(unaudited)
Assets
Allowance for trade receivables	$	(68.1	)	(3.6	)	$	(71.7	)
Deferred tax assets, net	245.4			5.5		250.9
Allowance for contract assets ⁽¹⁾	—			(1.7	)	(1.7		)
Liabilities and equity
Loan loss guarantee reserve ⁽²⁾	$	—		15.1		$	15.1
Retained earnings	3,588.3			(14.9	)	3,573.4

¹The portion of the allowance for long-term contract assets is included within Other assets on the Condensed Consolidated Balance Sheets.

²Included within Other liabilities on the Condensed Consolidated Balance Sheets


3.	REVENUE RECOGNITION

Revenue excluded from the scope of ASC Topic 606 - Our mortgage banking and servicing operations - such as Mortgage Servicing Rights ("MSR")-related activity, loan origination fees, and servicing income - are excluded from the scope of ASC Topic 606. For the three and six months ended June 30, 2019 such revenue was $32.3 million and $63.3 million, respectively. For the three and six months ended June 30, 2018 such revenue was $35.1 million and $66.3 million, respectively. Such revenue was included entirely within Americas Capital ~~Markets.~~Markets and is presented below.

Contract assets - As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had ~~$434.0~~$414.7 million and ~~$396.2~~$419.3 million of contract assets, net of allowance, respectively, which are included in Short-term contract assets and Other assets on the Condensed Consolidated Balance Sheets.

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Contract liabilities - As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had ~~$77.5~~$88.4 million and ~~$98.9~~$87.7 million of contract liabilities, respectively, which are included in Short-term contract liabilities and deferred income on our Condensed Consolidated Balance Sheets. The majority of contract liabilities are recognized as revenue within 90 days.

Remaining performance obligations - Remaining performance obligations represent the aggregate transaction price for contracts where our performance obligations have not yet been satisfied. As of ~~June 30, 2019,~~March 31, 2020, the aggregate amount of transaction price allocated to remaining performance obligations represented ~~approximately~~less than 5% of our total revenue. In accordance with ASC Topic 606, excluded from the aforementioned remaining performance obligations are (i) amounts attributable to contracts expected to be completed within 12 months and (ii) variable consideration for services performed as a series of daily performance obligations, such as facilities management, property management, and LaSalle contracts. Contracts within these businesses represent a significant portion of our contracts with customers not expected to be completed within 12 months.

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4.	BUSINESS SEGMENTS

We manage and report our operations as four business segments:

The three geographic regions of RES including:

(1) Americas,

(2) Europe, Middle East and Africa ("EMEA"), and

(3) Asia Pacific;

and

(4) ~~LaSalle, which offers investment management services on a global basis.~~LaSalle.

Each geographic region offers our full range of real estate services, including agency leasing and tenant representation, capital markets, property and facility management, project and development management, energy management and sustainability, construction management, and advisory, consulting and valuation services. LaSalle provides investment management services on a global basis to institutional investors and high-net-worth individuals.

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, which we allocate to the business segments based on the budgeted operating expenses of each segment.

For segment reporting, (a) gross contract costs and (b) net non-cash MSR and mortgage banking derivative activity are both excluded from revenue in determining "fee revenue". Gross contract costs are excluded from operating expenses in determining "fee-based operating ~~expenses."~~expenses". Excluding these costs from revenue and expenses results in a net presentation which we believe more accurately reflects how we manage our expense base, operating margins, and performance. Refer to Results of Operations, included in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, for a full description of gross contract costs. In addition, our measure of segment results excludes Restructuring and acquisition charges.

The Chief Operating Decision Maker of JLL measures and evaluates the segment results excluding (a) gross contract costs, (b) net non-cash MSR and mortgage banking derivative activity, and (c) Restructuring and acquisition charges. As of ~~June 30, 2019,~~March 31, 2020, we define the Chief Operating Decision Maker collectively as our Global Executive Board, which comprises the following:



• ~~Global~~ Chief Executive Officer and President	• Chief Executive Officers of each of our four business segments
• ~~Global~~ Chief Financial Officer	• ~~Global~~ Chief Executive Officer of Corporate Solutions
• ~~Global~~ Chief Administrative Officer	• ~~Global~~ Chief Executive Officer of Capital Markets
	• Co-Chief Executive Officers of JLL Technologies

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Summarized financial information by business segment is as follows.


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in millions)	2019			2018		2019			2018		2020			2019
Americas - Real Estate Services
Leasing	$	491.8		422.9		$	881.6		727.4		$	418.9		389.8
Capital Markets	129.8			117.8		229.9			228.8		247.4			100.1
Property & Facility Management	1,370.9			1,258.4		2,732.9			2,441.9		1,458.8			1,362.0
Project & Development Services	376.8			274.5		685.5			544.1		306.4			308.7
Advisory, Consulting and Other	94.3			78.9		183.8			151.3		91.6			89.5
Revenue	2,463.6			2,152.5		4,713.7			4,093.5		2,523.1			2,250.1
Reimbursements	(1,403.1		)	(1,226.4	)	(2,754.5		)	(2,408.1	)	(1,393.5		)	(1,351.4	)
Revenue before reimbursements	1,060.5			926.1		1,959.2			1,685.4		1,129.6			898.7
Gross contract costs	(191.8		)	(156.6	)	(379.5		)	(289.7	)	(212.8		)	(187.7	)
Net non-cash MSR and mortgage banking derivative activity	(4.8		)	(1.3	)	(4.7		)	(4.0	)	1.6			0.1
Fee revenue	863.9			768.2		1,575.0			1,391.7		918.4			711.1
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	913.7			796.9		1,724.5			1,485.6		1,010.3			810.8
Depreciation and amortization	26.3			28.3		53.6			52.6		37.4			27.3
Segment operating expenses, excluding reimbursed expenses	940.0			825.2		1,778.1			1,538.2		1,047.7			838.1
Gross contract costs	(191.8		)	(156.6	)	(379.5		)	(289.7	)	(212.8		)	(187.7	)
Fee-based segment operating expenses	748.2			668.6		1,398.6			1,248.5		834.9			650.4
Segment operating income	$	120.5		100.9		$	181.1		147.2		$	81.9		60.6
Equity earnings	0.4			0.4		0.1			0.5
Equity earnings (losses)											12.7			(0.3	)
Segment income	$	120.9		101.3		$	181.2		147.7		$	94.6		60.3

EMEA - Real Estate Services
Leasing	$	65.9		72.9		$	118.1		131.8		$	48.1		52.2
Capital Markets	78.5			89.9		142.5			179.2		73.2			64.0
Property & Facility Management	380.6			392.3		749.9			742.6		375.0			369.3
Project & Development Services	219.2			220.8		399.7			443.4		203.2			180.5
Advisory, Consulting and Other	74.1			70.7		131.5			133.2		56.4			57.4
Revenue	818.3			846.6		1,541.7			1,630.2		755.9			723.4
Reimbursements	(153.7		)	(153.0	)	(318.3		)	(309.0	)	(182.8		)	(164.6	)
Revenue before reimbursements	664.6			693.6		1,223.4			1,321.2		573.1			558.8
Gross contract costs	(284.7		)	(305.3	)	(527.4		)	(582.5	)	(262.6		)	(242.7	)
Fee revenue	379.9			388.3		696.0			738.7		310.5			316.1
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	654.6			683.5		1,231.5			1,319.7		584.4			576.9
Depreciation and amortization	11.3			11.5		22.6			22.9		9.2			11.3
Segment operating expenses, excluding reimbursed expenses	665.9			695.0		1,254.1			1,342.6		593.6			588.2
Gross contract costs	(284.7		)	(305.3	)	(527.4		)	(582.5	)	(262.6		)	(242.7	)
Fee-based segment operating expenses	381.2			389.7		726.7			760.1		331.0			345.5
Segment operating loss	$	(1.3	)	(1.4	)	$	(30.7	)	(21.4	)	$	(20.5	)	(29.4	)
Equity loss	(1.1		)	—		(1.0		)	—
Equity earnings											—			0.1
Segment loss	$	(2.4	)	(1.4	)	$	(31.7	)	(21.4	)	$	(20.5	)	(29.3	)

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Continued: Summarized financial information by business segment is as follows.


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in millions)	2019			2018		2019			2018		2020			2019
Asia Pacific - Real Estate Services
Leasing	$	66.2		58.1		$	102.1		95.9		$	25.4		35.9
Capital Markets	48.2			50.3		77.6			82.7		21.7			29.4
Property & Facility Management	553.4			541.6		1,091.2			1,061.4		532.0			537.8
Project & Development Services	137.3			114.1		248.2			201.1		94.8			110.9
Advisory, Consulting and Other	50.1			48.8		84.8			83.1		38.2			34.7
Revenue	855.2			812.9		1,603.9			1,524.2		712.1			748.7
Reimbursements	(359.6		)	(356.2	)	(700.7		)	(677.8	)	(284.9		)	(341.1	)
Revenue before reimbursements	495.6			456.7		903.2			846.4		427.2			407.6
Gross contract costs	(232.7		)	(205.4	)	(442.1		)	(400.7	)	(249.5		)	(209.4	)
Fee revenue	262.9			251.3		461.1			445.7		177.7			198.2
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	462.6			427.5		863.1			812.5		417.5			400.5
Depreciation and amortization	6.4			5.8		12.8			11.4		6.6			6.4
Segment operating expenses, excluding reimbursed expenses	469.0			433.3		875.9			823.9		424.1			406.9
Gross contract costs	(232.7		)	(205.4	)	(442.1		)	(400.7	)	(249.5		)	(209.4	)
Fee-based segment operating expenses	236.3			227.9		433.8			423.2		174.6			197.5
Segment operating income	$	26.6		23.4		$	27.3		22.5		$	3.1		0.7
Equity earnings	0.4			0.7		0.7			1.0
Equity (losses) earnings											(0.7		)	0.3
Segment income	$	27.0		24.1		$	28.0		23.5		$	2.4		1.0

LaSalle
Advisory fees	$	79.5		67.1		$	157.1		137.0		$	85.6		77.6
Transaction fees & other	16.3			6.7		29.5			23.4		13.6			13.2
Incentive fees	33.6			17.9		41.2			50.6		5.7			7.6
Revenue	129.4			91.7		227.8			211.0		104.9			98.4
Reimbursements	(1.9		)	(4.8	)	(3.8		)	(9.6	)	(1.8		)	(1.9	)
Revenue before reimbursements	127.5			86.9		224.0			201.4		103.1			96.5
Gross contract costs	(4.2		)	(1.2	)	(7.0		)	(2.5	)	(4.5		)	(2.8	)
Fee revenue	123.3			85.7		217.0			198.9		98.6			93.7
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	96.0			70.4		178.9			155.0		87.1			82.9
Depreciation and amortization	1.5			0.7		3.0			1.5		1.8			1.5
Segment operating expenses, excluding reimbursed expenses	97.5			71.1		181.9			156.5		88.9			84.4
Gross contract costs	(4.2		)	(1.2	)	(7.0		)	(2.5	)	(4.5		)	(2.8	)
Fee-based segment operating expenses	93.3			69.9		174.9			154.0		84.4			81.6
Segment operating income	$	30.0		15.8		$	42.1		44.9		$	14.2		12.1
Equity earnings	10.5			9.1		15.4			22.3
Segment income	$	40.5		24.9		$	57.5		67.2
Equity (losses) earnings											(40.3		)	4.9
Segment (loss) income											$	(26.1	)	17.0

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	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(in millions)	2019		2018		2019		2018		2020			2019
Segment Reconciling Items
Fee revenue	$	1,630.0	1,493.5		$	2,949.1	2,775.0		$	1,505.2		1,319.1
Gross contract costs	713.4		668.5		1,356.0		1,275.4		729.4			642.6
Net non-cash MSR and mortgage banking derivative activity	4.8		1.3		4.7		4.0		(1.6		)	(0.1	)
Revenue before reimbursements	2,348.2		2,163.3		4,309.8		4,054.4		2,233.0			1,961.6
Reimbursements	1,918.3		1,740.4		3,777.3		3,404.5		1,863.0			1,859.0
Revenue	$	4,266.5	3,903.7		$	8,087.1	7,458.9		$	4,096.0		3,820.6
Total segment operating expenses, excluding reimbursed expenses & before restructuring and acquisition charges	$	2,172.4	2,024.6		$	4,090.0	3,861.2		$	2,154.3		1,917.6
Reimbursed expenses	1,918.3		1,740.4		3,777.3		3,404.5		1,863.0			1,859.0
Total segment operating expenses before restructuring and acquisition charges	$	4,090.7	3,765.0		$	7,867.3	7,265.7		$	4,017.3		3,776.6
Operating income before restructuring and acquisition charges	$	175.8	138.7		$	219.8	193.2		$	78.7		44.0
Restructuring and acquisition charges (credits)	25.7		(11.1	)	44.3		(10.4	)
Less: Restructuring and acquisition charges									14.1			18.6
Operating income	$	150.1	149.8		$	175.5	203.6		$	64.6		25.4


5.	BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

~~2019~~2020 Business Combinations Activity

Aggregate terms of our acquisitions included: (1) cash paid at closing of $28.3 million (net of $3.8 million in cash acquired), (2) guaranteed deferred consideration of $6.5 million, and (3) contingent earn-out consideration of $1.5 million, which we will pay upon satisfaction of certain performance conditions and which we have initially recorded at their respective acquisition date fair value.

A preliminary allocation of purchase consideration resulted in goodwill of $39.2 million, identifiable intangibles of $10.2 million, other net liabilities (assumed liabilities less acquired assets) of $4.7 million, and redeemable noncontrolling interest of $8.4 million. As of ~~June 30, 2019~~, we have not completed our analysis to assign fair values to all of the identifiable intangible and tangible assets acquired and, therefore, we may further refine the purchase price allocations for our 2019 acquisitions during their open measurement periods.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we completed no new acquisitions and paid ~~$45.5~~$12.9 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

~~Within the~~ 2019 ~~acquisition activity, we completed two new strategic acquisitions, expanding our capabilities and increasing our presence in key regional markets. These strategic acquisitions are presented below.~~



~~Acquired Company~~	~~Quarter of Acquisition~~	~~Country~~	~~Primary Service Line~~
~~Latitude Real Estate Investors (Latitude)~~	Q1	~~United States~~	~~LaSalle~~
~~Corporate Concierge Services (CCS)~~	Q1	~~United States~~	~~Property & Facilities Management~~

~~2018~~ Business Combination Activity

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we made no adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed ~~during the second half of 2018. These adjustments resulted~~ in ~~a $1.0 million increase to goodwill, a $0.5 million increase to intangibles and a $1.5 million adjustment to other net liabilities.~~2019. As of ~~June 30, 2019~~,March 31, 2020, we have ~~not~~ completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired ~~and, therefore, we may refine the purchase price allocations~~ for our ~~2018~~2019 acquisitions, with ~~open measurement periods.~~

~~Table~~the exception of ~~Contents~~

tax-related accounts with respect to our acquisition of HFF, Inc.

Earn-Out Payments


($ in millions)	June 30, 2019		December 31, 2018	March 31, 2020		December 31, 2019
Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria	50		54	44		44
Maximum earn-out payments (undiscounted)	$	369.3	407.3	$	254.0	$	268.9
Short-term earn-out liabilities (fair value)¹	68.9		50.9	48.8		53.9
Long-term earn-out liabilities (fair value)¹	111.4		141.1	81.2		94.5

¹Included in Short-term and Long-term acquisition-related obligations on the Condensed Consolidated Balance ~~Sheets~~Sheets.

Assuming the achievement of the applicable performance criteria, we anticipate making these earn-out payments over the next ~~six~~five years. Refer to Note 8, Fair Value Measurements, and Note ~~12,~~11, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.

Goodwill and Other Intangible Assets

Goodwill and unamortized intangibles as of ~~June 30, 2019~~March 31, 2020 consisted of: (1) goodwill of ~~$2,730.7~~$4,104.3 million, (2) identifiable intangibles of ~~$286.1~~$608.7 million amortized over their remaining finite useful lives, and (3) $50.0 million of identifiable intangibles with indefinite useful lives that are not amortized. ~~Significant~~Notable portions of our goodwill and unamortized intangibles are denominated in currencies other than the U.S. dollar, which means a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates.

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The following tables detail, by reporting segment, movements in goodwill.

Real Estate Services
(in millions) Americas EMEA Asia Pacific LaSalle Consolidated
Balance as of December 31, 2018 $ 1,452.0
906.8
316.8
22.2
$ 2,697.8
Additions, net of adjustments 3.2
1.6
—
35.4
40.2
Impact of exchange rate movements 1.2
(8.0 ) 0.5
(1.0 ) (7.3 )
Balance as of June 30, 2019 $ 1,456.4
900.4
317.3
56.6
$ 2,730.7



	Real Estate Services
(in millions)	Americas			EMEA		Asia Pacific		LaSalle		Consolidated
Balance as of December 31, 2019	$	2,877.6		915.9		317.6		57.1		$	4,168.2
Impact of exchange rate movements	(2.9		)	(46.6	)	(13.4	)	(1.0	)	(63.9		)
Balance as of March 31, 2020	$	2,874.7		869.3		304.2		56.1		$	4,104.3


	Real Estate Services												Real Estate Services
(in millions)	Americas			EMEA		Asia Pacific		LaSalle		Consolidated			Americas		EMEA	Asia Pacific	LaSalle		Consolidated
Balance as of December 31, 2017	$	1,412.2		957.6		323.0		16.5		$	2,709.3
Balance as of December 31, 2018													$	1,452.0	906.8	316.8	22.2		$	2,697.8
Additions, net of adjustments	6.9			0.1		1.9		—		8.9			3.0		—	—	32.8		35.8
Impact of exchange rate movements	(0.8		)	(27.7	)	(6.5	)	(0.3	)	(35.3		)	0.6		3.9	0.7	(0.5	)	4.7
Balance as of June 30, 2018	$	1,418.3		930.0		318.4		16.2		$	2,682.9
Balance as of March 31, 2019													$	1,455.6	910.7	317.5	54.5		$	2,738.3

~~Table of Contents~~

The following tables detail, by reporting segment, movements in the gross carrying amount and accumulated amortization of our identifiable intangibles.



	MSRs			Other Intangibles
(in millions)	Americas			Americas		EMEA		Asia Pacific		LaSalle		Consolidated
Gross Carrying Amount
Balance as of December 31, 2019	$	480.4		285.7		55.9		21.4		54.0		$	897.4
Additions, net of adjustments ⁽¹⁾	16.9			—		—		0.5		—		17.4
Adjustment for fully amortized intangibles	(12.7		)	—		(0.2	)	—		—		(12.9		)
Impact of exchange rate movements	—			(0.5	)	(3.4	)	(2.1	)	(1.1	)	(7.1		)
Balance as of March 31, 2020	$	484.6		285.2		52.3		19.8		52.9		$	894.8

Accumulated Amortization
Balance as of December 31, 2019	$	(104.0	)	(68.3	)	(33.1	)	(6.7	)	(2.7	)	$	(214.8	)
Amortization, net ⁽²⁾	(22.6		)	(11.6	)	(1.8	)	(0.4	)	(0.7	)	(37.1		)
Adjustment for fully amortized intangibles	12.7			—		0.2		—		—		12.9
Impact of exchange rate movements	—			0.2		2.1		0.5		0.1		2.9
Balance as of March 31, 2020	$	(113.9	)	(79.7	)	(32.6	)	(6.6	)	(3.3	)	$	(236.1	)

Net book value as of March 31, 2020	$	370.7		205.5		19.7		13.2		49.6		$	658.7

MSRs Other Intangibles
(in millions) Americas Americas EMEA Asia Pacific LaSalle Consolidated
Gross Carrying Amount
Balance as of December 31, 2018 $ 266.2
90.0
83.1
23.5
43.9
$ 506.7
Additions, net of adjustments ⁽¹⁾
21.2
0.9
0.1
—
9.7
31.9
Adjustment for fully amortized intangibles (8.2 ) —
(14.0 ) —
—
(22.2 )
Impact of exchange rate movements —
0.1
(0.8 ) —
0.7
—
Balance as of June 30, 2019 $ 279.2
91.0
68.4
23.5
54.3
$ 516.4

Accumulated Amortization

Balance as of December 31, 2018 $ (72.4 ) (38.8 ) (51.8 ) (6.8 ) —
$ (169.8 )
Amortization, net ⁽²⁾
(18.6 ) (7.1 ) (5.4 ) (1.1 ) (1.4 ) (33.6 )
Adjustment for fully amortized intangibles 8.2
—
14.0
—
—
22.2
Impact of exchange rate movements —
0.2
0.7
—
—
0.9
Balance as of June 30, 2019 $ (82.8 ) (45.7 ) (42.5 ) (7.9 ) (1.4 ) $ (180.3 )

Net book value as of June 30, 2019 $ 196.4
45.3
25.9
15.6
52.9
$ 336.1

(1) Included in this amount for MSRs was ~~$3.0~~$5.9 million relating to prepayments/write-offs due to prepayments of ~~sold warehouse receivables~~the underlying obligation for which we assumed, acquired or retained the servicing rights.

(2) Amortization of MSRs is included in Revenue before reimbursements within the Condensed Consolidated Statements of Comprehensive Income.

MSRs Other Intangibles
(in millions) Americas Americas EMEA Asia Pacific LaSalle Consolidated
Gross Carrying Amount
Balance as of December 31, 2017 $ 241.8
117.0
88.8
23.3
—
$ 470.9
Additions, net of adjustments ⁽¹⁾
24.0
0.6
—
1.4
—
26.0
Adjustment for fully amortized intangibles (11.9 ) (0.4 ) (1.3 ) (0.7 ) —
(14.3 )
Impact of exchange rate movements —
(0.1 ) (1.9 ) (1.5 ) —
(3.5 )
Balance as of June 30, 2018 $ 253.9
117.1
85.6
22.5
—
$ 479.1

Accumulated Amortization

Balance as of December 31, 2017 $ (55.1 ) (61.3 ) (43.1 ) (6.4 ) —
$ (165.9 )
Amortization, net⁽²⁾
(22.2 ) (6.9 ) (6.4 ) (1.3 ) —
(36.8 )
Adjustment for fully amortized intangibles 11.9
0.4
1.3
0.7
—
14.3
Impact of exchange rate movements —
0.3
0.9
0.9
—
2.1
Balance as of June 30, 2018 $ (65.4 ) (67.5 ) (47.3 ) (6.1 ) —
$ (186.3 )

Net book value as of June 30, 2018 $ 188.5
49.6
38.3
16.4
—
$ 292.8
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	MSRs			Other Intangibles
(in millions)	Americas			Americas		EMEA		Asia Pacific		LaSalle		Consolidated
Gross Carrying Amount
Balance as of December 31, 2018	$	266.2		90.0		83.1		23.5		43.9		$	506.7
Additions, net of adjustments ⁽¹⁾	8.1			0.9		—		—		9.2		18.2
Adjustment for fully amortized intangibles	(4.4		)	—		—		—		—		(4.4		)
Impact of exchange rate movements	—			0.1		1.0		0.2		—		1.3
Balance as of March 31, 2019	$	269.9		91.0		84.1		23.7		53.1		$	521.8

Accumulated Amortization
Balance as of December 31, 2018	$	(72.4	)	(38.8	)	(51.8	)	(6.8	)	—		$	(169.8	)
Amortization, net⁽²⁾	(9.7		)	(3.6	)	(2.7	)	(0.6	)	(0.7	)	(17.3		)
Adjustment for fully amortized intangibles	4.4			—		—		—		—		4.4
Impact of exchange rate movements	—			—		(0.4	)	—		—		(0.4		)
Balance as of March 31, 2019	$	(77.7	)	(42.4	)	(54.9	)	(7.4	)	(0.7	)	$	(183.1	)

Net book value as of March 31, 2019	$	192.2		48.6		29.2		16.3		52.4		$	338.7

(1) Included in this amount for MSRs was ~~$6.5~~$1.9 million relating to prepayments/write-offs due to prepayments of ~~sold warehouse receivables~~the underlying obligation for which we assumed, acquired or retained the servicing rights.

(2) Amortization of MSRs is included in Revenue before reimbursements within the Condensed Consolidated Statements of Comprehensive Income.

~~Table of Contents~~

The remaining estimated future amortization expense of MSRs and other identifiable intangible assets, by year, as of ~~June 30, 2019~~,March 31, 2020, is presented in the following table.


(in millions)	MSRs		Other Intangibles	Total		MSRs		Other Intangibles	Total
2019 (remaining 6 months)	$	15.7	18.6	$	34.3
2020	30.5		22.6	53.1
2020 (remaining 9 months)						$	49.1	40.9	$	90.0
2021	27.9		15.5	43.4		62.1		48.6	110.7
2022	25.2		8.4	33.6		54.6		42.9	97.5
2023	21.9		5.9	27.8		47.6		40.5	88.1
2024	19.4		4.0	23.4		40.0		36.2	76.2
2025						32.5		18.9	51.4
Thereafter	55.8		14.7	70.5		84.8		10.0	94.8
Total	$	196.4	89.7	$	286.1	$	370.7	238.0	$	608.7

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6.	INVESTMENTS IN REAL ESTATE VENTURES

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had Investments in real estate ventures of ~~$375.5~~$390.8 million and ~~$356.9~~$404.2 million, respectively.

Approximately ~~80%~~85% of our investments, as of ~~June 30, 2019,~~March 31, 2020, are in 4746 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement. ~~Our investment ownership percentages~~These also include investments by JLL Spark in ~~these~~property-technology funds ~~generally range from less than 1% to 10%.~~and early-stage companies. The remaining ~~20%~~15% of our Investments in real estate ventures, as of ~~June 30, 2019,~~March 31, 2020, were attributable to investment vehicles that use our capital and outside capital primarily provided by institutional investors to invest, primarily, in certain real estate ventures that own and operate real estate. Of our investments attributable to investment vehicles, the majority was invested in LaSalle Investment Company II ("LIC II"), in which we held an effective ownership interest of 48.78%.

We have maximum potential unfunded commitments to direct investments or investment vehicles of ~~$263.0~~$309.0 million as of ~~June 30, 2019, of which~~March 31, 2020. Of this amount, $60.4 million relates to our ~~commitment to~~investment in LIC ~~II.~~II, whose fund life terminated in January 2020.

We evaluate our less-than-wholly-owned investments to determine whether the underlying entities are classified as variable interest entities ("VIEs"); we assess each identified VIE to determine whether we are the primary beneficiary. We have determined that we are the primary beneficiary of certain VIEs and accordingly, we have consolidated such entities. The assets of the consolidated VIEs are available only for the settlement of the obligations of the respective entities and the mortgage loans of the consolidated VIEs are non-recourse to JLL.

Summarized financial information for our consolidated VIEs is presented in the following tables.


(in millions)	June 30, 2019		December 31, 2018	March 31, 2020		December 31, 2019
Property and equipment, net	$	67.0	48.5	$	128.3	126.3
Investments in real estate ventures	13.3		14.0	8.8		13.2
Other assets	7.1		4.4	12.5		14.3
Total assets	$	87.4	66.9	$	149.6	153.8
Other current liabilities	$	1.3	0.9	$	3.5	3.2
Mortgage indebtedness (included in Other liabilities)	38.6		28.2	69.7		69.7
Total liabilities	39.9		29.1	73.2		72.9
Members' equity (included in Noncontrolling interest)	47.5		37.8	76.4		80.9
Total liabilities and members' equity	$	87.4	66.9	$	149.6	153.8

~~Table of Contents~~


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in millions)	2019			2018		2019			2018		2020			2019
Revenue	$	1.7		1.7		$	3.0		2.7		$	4.3		1.3
Operating and other expenses	(1.6		)	(1.6	)	(3.2		)	(2.4	)	(4.3		)	(1.6	)
Net gains on sale of investments	—			0.5		—			2.0
Net gains on sale of investments (included in Equity earnings)											12.2			—
Net income (loss)	$	0.1		0.6		$	(0.2	)	2.3		$	12.2		(0.3	)

We allocate the members' equity and net income of the consolidated VIEs to the noncontrolling interest holders as Noncontrolling interest on our Condensed Consolidated Balance Sheets and as Net income attributable to noncontrolling interest in our Condensed Consolidated Statements of Comprehensive Income, respectively.

Impairment

There were no significant other-than-temporary impairment charges on Investments in real estate ventures for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

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Fair Value

We report a majority of our investments in real estate ventures at fair value. For such investments, we increase or decrease our investment each reporting period by the change in the fair value and we report these fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity ~~earnings from real estate ventures.~~earnings. The table below shows the movement in our investments in real estate ventures reported at fair value.


(in millions)	2019			2018		2020			2019
Fair value investments as of January 1,	$	247.3		242.3		$	328.6		247.3
Investments	32.2			11.1		28.9			10.5
Distributions	(22.3		)	(29.0	)	(16.0		)	(2.8	)
Change in fair value	14.6			13.6		(35.2		)	4.3
Foreign currency translation adjustments, net	1.0			0.7		(4.3		)	0.3
Fair value investments as of June 30,	$	272.8		238.7
Fair value investments as of March 31,						$	302.0		259.6

See Note 8, Fair Value Measurements, for additional discussion of our investments in real estate ventures reported at fair value.

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7.	STOCK-BASED COMPENSATION

Stock Unit Awards

~~Along with cash-based salaries and performance-based annual cash incentive awards, stock unit awards represent an important element of compensation to our employees.~~ Restricted stock unit ("RSU") and performance stock unit ("PSU") awards activity is presented in the following tables.

Shares (thousands) Weighted Average
Grant Date
Fair Value Weighted Average
Remaining
Contractual Life
(in years)
Unvested as of March 31, 2019 527.0
$ 140.55
2.15
Granted 204.3
150.03

Vested (26.6 ) 118.02

Forfeited (8.4 ) 136.19

Unvested as of June 30, 2019 696.3
$ 144.17
2.25

Unvested as of March 31, 2018 658.0
$ 126.31
2.20
Granted 100.7
164.04

Vested (4.3 ) 172.95

Forfeited (4.1 ) 129.03

Unvested as of June 30, 2018 750.3
$ 131.09
2.36


						RSU Shares (in 000's)		PSU Shares (in 000's)		Total Shares (in 000's)		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in years)
Unvested as of December 31, 2019						1,532.3		286.8		1,819.1		$	141.51	2.39
Granted						9.7		—		9.7		160.03
Vested						(324.6	)	—		(324.6	)	136.91
Forfeited						(8.5	)	—		(8.5	)	137.68
Unvested as of March 31, 2020						1,208.9		286.8		1,495.7		$	144.71	1.78
	Shares (thousands)		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in years)
Unvested as of December 31, 2018	652.7		$	131.32	2.02	559.6		93.1		652.7		$	131.32	2.02
Granted	279.0		150.78			74.7		—		74.7		152.84
Vested	(222.1	)	115.17			(195.5	)	—		(195.5	)	114.79
Forfeited	(13.3	)	132.56			(4.5	)	(0.4	)	(4.9	)	126.70
Unvested as of June 30, 2019	696.3		$	144.17	2.25

Unvested as of December 31, 2017	727.7		$	118.96	1.24
Granted	220.0		162.33
Vested	(178.1	)	122.42
Forfeited	(19.3	)	125.56
Unvested as of June 30, 2018	750.3		$	131.09	2.36
Unvested as of March 31, 2019						434.3		92.7		527.0		$	140.55	2.15

~~We determine~~During the ~~fair value~~three months ended March 31, 2020, we recognized a $5.5 million expense reversal to reflect our revised estimate of ~~RSUs, subject only~~PSU achievement in response to ~~service requirements, based on~~ the ~~closing market price~~anticipated impact of ~~our common stock on~~ the grant date. PSUs are subject to service requirements and one or more performance measures, including (i) performance conditions (e.g. achievement against earnings per share targets) and (ii) for certain awards, a market condition (e.g. total shareholder return performance against a peer group). We determine the fair value of PSUs based on the closing market price of our common stock on the grant date taking into consideration the likelihood of achieving each performance condition and the market condition valuation, as applicable, based on the output of Monte Carlo simulations.COVID-19 pandemic.

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$57.5~~$107.2 million of unamortized deferred compensation related to unvested ~~restricted stock units,~~RSUs and PSUs, which we anticipate recognizing over varying periods into ~~2023.~~2024; $66.9 million relates to the awards issued in conjunction with the HFF acquisition.

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8.	FAIR VALUE MEASUREMENTS

We measure certain assets and liabilities in accordance with ASC 820, Fair Value Measurements and Disclosures, which defines fair value as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants on the measurement date. In addition, it establishes a framework for measuring fair value according to the following three-tier fair value hierarchy:

Level 1 - Quoted prices for identical assets or liabilities in active markets accessible as of the measurement date;

Level 2 - Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial Instruments

Our financial instruments include Cash and cash equivalents, Trade receivables, Notes and other receivables, Reimbursable receivables, Warehouse receivables, restricted cash, contract assets, Accounts payable, Reimbursable payables, Short-term borrowings, contract liabilities, Warehouse facilities, Credit facility, Long-term debt, and foreign currency forward contracts. The carrying amounts of Cash and cash equivalents, Trade receivables, Notes and other receivables, Reimbursable receivables, restricted cash, contract assets, Accounts payable, Reimbursable payables, contract liabilities, and the Warehouse facilities approximate their estimated fair values due to the short-term nature of these instruments. The carrying values of our Credit facility and Short-term borrowings approximate their estimated fair values given the variable interest rate terms and market spreads.

We estimated the fair value of our Long-term debt as ~~$680.8~~$595.5 million and ~~$671.4~~$685.9 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy. The carrying value of our Long-term debt was ~~$669.6~~$656.1 million and ~~$671.5~~$664.6 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, and included debt issuance costs of ~~$3.4~~$2.9 million and ~~$3.7~~$3.1 million, respectively.

Investments in Real Estate Ventures at Fair Value - Net Asset Value ("NAV")

We report a ~~majority~~significant portion of our investments in real estate ventures at fair value. For such investments, we increase or decrease our investment each reporting period by the change in the fair value and we report these fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity ~~earnings from real estate ventures.~~earnings.

For the majority of our investments reported at fair value, we estimate the fair value using the NAV per share (or its equivalent) our investees provide. 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. ~~We did not consider adjustments to NAV estimates provided~~As a result of the changes in market conditions from the COVID-19 pandemic, which occurred following the measurement dates used by investees ~~including adjustments for any restrictions~~to calculate NAV per share, we recognized a $36.3 million decrease in aggregate to the transferability of ownership interests embedded within investment agreements to which we are a party, to be necessary based upon (1) our understanding of the methodology utilized and inputs incorporated to estimatereported NAV ~~at the investee level derived through LaSalle's role as advisor or manager of these investments, (2) consideration of market demand~~per share for the ~~specific types of real estate assets held by each investment, and (3) contemplation of real estate and capital markets conditions in the localities in which these investments operate.~~three months ended March 31, 2020. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, investments in real estate ventures at fair value using NAV were ~~$204.1~~$197.4 million and ~~$191.2~~$224.8 million, respectively. As these investments are not required to be classified in the fair value hierarchy, they have been excluded from the following table.

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Recurring Fair Value Measurements

The following table categorizes by level in the fair value hierarchy the estimated fair value of our assets and liabilities measured at fair value on a recurring basis.


	June 30, 2019				December 31, 2018			March 31, 2020				December 31, 2019
(in millions)	Level 1		Level 2	Level 3	Level 1	Level 2	Level 3	Level 1		Level 2	Level 3	Level 1	Level 2	Level 3
Assets
Investments in real estate ventures - fair value	$	48.7	—	20.0	44.6	—	11.5	$	63.2	—	41.4	69.4	—	34.4
Foreign currency forward contracts receivable	—		8.0	—	—	6.5	—	—		6.1	—	—	10.5	—
Warehouse receivables	—		403.1	—	—	331.2	—	—		1,026.8	—	—	527.1	—
Deferred compensation plan assets	—		297.7	—	—	258.2	—	—		374.2	—	—	349.9	—
Mortgage banking derivative assets	—		—	43.8	—	—	32.4	—		—	118.2	—	—	36.1
Total assets at fair value	$	48.7	708.8	63.8	44.6	595.9	43.9	$	63.2	1,407.1	159.6	69.4	887.5	70.5
Liabilities
Foreign currency forward contracts payable	$	—	10.0	—	—	8.6	—	$	—	6.2	—	—	4.4	—
Deferred compensation plan liabilities	—		296.2	—	—	251.8	—	—		348.4	—	—	346.1	—
Earn-out liabilities	—		—	180.3	—	—	192.0	—		—	130.0	—	—	148.5
Mortgage banking derivative liabilities	—		—	45.1	—	—	26.1	—		—	182.2	—	—	25.9
Total liabilities at fair value	$	—	306.2	225.4	—	260.4	218.1	$	—	354.6	312.2	—	350.5	174.4

Investments in Real Estate Ventures

We classify one investment as Level 1 in the fair value hierarchy as a quoted price is readily available. We increase or decrease our investment each reporting period by the change in the fair value of the investment. We report these fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity ~~earnings from real estate ventures.~~earnings.

Investments classified as Level 3 in the fair value hierarchy represent investments in early-stage non-public entities where we elected the fair value option. Generally, the carrying value is deemed to approximate the fair value of these investments due to the proximity of the investment date to the balance sheet date as well as investee-level performance updates.

Foreign Currency Forward Contracts

We regularly use foreign currency forward contracts to manage our currency exchange rate risk related to intercompany lending and cash management practices. ~~These contracts are on our Condensed Consolidated Balance Sheets as current assets and current liabilities.~~ We determine the fair values of these contracts based on current market rates. The inputs for these valuations are Level 2 inputs in the fair value hierarchy. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, these contracts had a gross notional value of ~~$2.08~~$1.80 billion ($~~0.66~~0.84 billion on a net basis) and ~~$1.99~~$2.30 billion ($~~0.84~~1.05 billion on a net basis), respectively.

We recognize gains and losses from revaluation of these contracts as a component of Operating, administrative and other expense. They are offset by the gains and losses we recognize on the revaluation of intercompany loans and other foreign currency balances. The impact to net income was not significant for ~~either~~ the three ~~or six~~ months ended ~~June 30, 2019~~March 31, 2020 or ~~2018.~~2019.

We record the asset and liability positions for our foreign currency forward contracts based on the net payable or net receivable position with the financial institutions from which we purchase these contracts. The ~~$8.0~~$6.1 million asset as of ~~June 30, 2019,~~March 31, 2020, was composed of gross contracts with receivable positions of ~~$9.0~~$7.3 million and payable positions of ~~$1.0~~$1.2 million. The ~~$10.0~~$6.2 million liability as of ~~June 30, 2019,~~March 31, 2020, was composed of gross contracts with receivable positions of ~~$1.0~~$2.1 million and payable positions of ~~$11.0~~$8.3 million. As of December 31, ~~2018,~~2019, the ~~$6.5~~$10.5 million asset was composed of gross contracts with receivable positions of ~~$6.7~~$10.6 million and payable positions of ~~$0.2~~$0.1 million. The ~~$8.6~~$4.4 million liability as of December 31, ~~2018,~~2019, was composed of gross contracts with receivable positions of ~~$0.6~~$0.8 million and payable positions of ~~$9.2~~$5.2 million.

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Warehouse Receivables

~~The fair value of the Warehouse receivables is based on already locked-in security-buy prices.~~ As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, all of our Warehouse receivables ~~included in our Condensed Consolidated Balance Sheet~~ were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S. government or GSE mortgage-backed security program. ~~The Warehouse receivables are classified as Level 2 in the fair value hierarchy as all significant inputs are readily observable.~~

Deferred Compensation Plan

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 as of the balance sheet date, and we adjust the deferred compensation obligation 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. We recorded this plan on our Condensed Consolidated Balance Sheet as of ~~June 30, 2019,~~March 31, 2020, as Deferred compensation plan assets of ~~$297.7~~$374.2 million, long-term deferred compensation plan liabilities of ~~$296.2~~$348.4 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of ~~$5.9~~$5.6 million. We recorded this plan on our Condensed Consolidated Balance Sheet as of December 31, ~~2018,~~2019, as Deferred compensation plan assets of ~~$258.2~~$349.9 million, long-term deferred compensation plan liabilities of ~~$251.8~~$346.1 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of ~~$5.8~~$5.7 million.

Earn-Out Liabilities

We classify our earn-out liabilities within Level 3 in the fair value hierarchy because the inputs we use to develop the estimated fair value include unobservable inputs. We base the fair value of our earn-out liabilities on the present value of probability-weighted future cash flows related to the earn-out performance criteria on each reporting date. We determine the probability of achievement we assign to the performance criteria based on the due diligence we performed at the time of acquisition as well as actual performance achieved subsequent to acquisition. An increase to the probability of achievement would result in a higher fair value measurement. See Note 5, Business Combinations, Goodwill and Other Intangible Assets, for additional discussion of our earn-out liabilities.

Mortgage Banking Derivatives

~~The fair value of~~Both our interest rate lock commitments to prospective borrowers and the related inputs primarily include, as applicable, the expected net cash flows associated with closing and servicing the loan and the effects of interest rate movements between the date of the interest rate lock commitment ("IRLC") and the balance sheet date based on applicable published U.S. Treasury rates.

The fair value of our forward sales contracts with prospective investors considers the market price movement of a similar security between the trade date and the balance sheet date. The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

~~Both the rate lock commitments to prospective borrowers and the~~ forward sale contracts with prospective investors are undesignated derivatives and considered Level 3 valuations due to significant unobservable inputs related to counterparty credit risk. An increase in counterparty credit risk assumptions would result in a lower fair value measurement. The fair valuation is determined using discounted cash flow techniques, and the derivatives are marked to fair value through Revenue before reimbursements in the Condensed Consolidated Statements on Comprehensive Income.

~~Table of Contents~~

The tables below present a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

(in millions) Balance as of March 31, 2019 Net change in fair value
Foreign CTA¹
Purchases / Additions Settlements Balance as of June 30, 2019
Investments in real estate ventures $ 13.0
—
—
7.0
—
$ 20.0
Mortgage banking derivative assets and liabilities, net 0.6
(12.5 ) —
17.4
(6.8 ) (1.3 )
Earn-out liabilities 169.2
14.3
0.1
—
(3.3 ) 180.3


(in millions)	Balance as of March 31, 2018		Net change in fair value		Foreign CTA¹		Purchases / Additions		Settlements		Balance as of June 30, 2018		Balance as of December 31, 2019		Net change in fair value		Foreign CTA¹		Purchases / Additions	Settlements		Balance as of March 31, 2020
Investments in real estate ventures													$	34.4	—		—		7.0	—		$	41.4
Mortgage banking derivative assets and liabilities, net	$	5.8	(1.3	)	—		17.3		(13.7	)	$	8.1	10.2		(75.2	)	—		26.2	(25.2	)	(64.0		)
Earn-out liabilities	220.3		(13.6	)	(3.0	)	(0.1	)	(24.0	)	179.6		148.5		(8.2	)	(2.0	)	—	(8.3	)	130.0


(in millions)	Balance as of December 31, 2018		Net change in fair value		Foreign CTA¹		Purchases / Additions	Settlements		Balance as of June 30, 2019			Balance as of December 31, 2018		Net change in fair value		Foreign CTA¹		Purchases / Additions	Settlements		Balance as of March 31, 2019
Investments in real estate ventures	$	11.5	—		—		8.5	—		$	20.0		$	11.5	—		—		1.5	—		$	13.0
Mortgage banking derivative assets and liabilities, net	6.3		(21.7	)	—		32.5	(18.4	)	(1.3		)	6.3		(9.2	)	—		15.1	(11.6	)	0.6
Earn-out liabilities	192.0		20.0		(0.2	)	1.5	(33.0	)	180.3			192.0		5.7		(0.3	)	1.5	(29.7	)	169.2

(in millions) Balance as of December 31, 2017 Net change in fair value
Foreign CTA¹
Purchases / Additions Settlements Balance as of June 30, 2018
Mortgage banking derivative assets and liabilities, net $ 8.7
(3.4 ) —
34.7
(31.9 ) $ 8.1
Earn-out liabilities 227.1
(14.8 ) (2.5 ) 1.6
(31.8 ) 179.6

¹CTA: Currency translation adjustments

Net change in fair value, included in the tables above, is reported in Net income as follows.



Category of Assets/Liabilities using Unobservable Inputs	Condensed Consolidated Statements of Comprehensive Income Account Caption
Earn-out liabilities (Short-term and Long-term)	Restructuring and acquisition charges
Investments in real estate ventures	Equity (losses) earnings ~~from real estate ventures~~
Other current assets - Mortgage banking derivative assets	Revenue before reimbursements
Other current liabilities - Mortgage banking derivative liabilities	Revenue before reimbursements

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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 be unable 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 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 investment-level impairment losses during either of the three ~~or six~~ months ended ~~June 30, 2019~~March 31, 2020 or ~~2018.~~2019. See Note 6, Investments in Real Estate Ventures, for additional information, including information related to impairment charges recorded at the investee level.


9.	~~LEASES~~

Substantially all of our operating lease are related to office space we lease in various buildings for our own use. The terms of these non-cancelable operating leases typically require us to pay rent and a share of operating expenses and real estate taxes, generally with an inflation-based rent increase included. We also lease equipment under both operating and finance lease arrangements. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments (e.g. rent) over the lease term beginning at the commencement date. The Operating lease right-of-use assets are adjusted for lease incentives, deferred rent, and initial direct costs, if incurred. Our leases generally do not include an implicit rate; therefore, we use an incremental borrowing rate based on information available at the lease commencement date in determining the present value of future minimum lease payments. The related lease expense is recognized on a straight-line basis over the lease term. Operating lease expense for the three and six months ended June 30, 2019 was $40.7 million and $80.9 million, respectively. In addition, $80.6 million of operating right-of-use assets were obtained in exchange for lease obligations during the six months ended June 30, 2019.

Finance leases are included in Property and equipment, net of accumulated depreciation, Short-term borrowings, and Other liabilities on our Condensed Consolidated Balance Sheets. Our finance leases do not represent a significant portion of our leasing activity. As of June 30, 2019, our total commitments related to finance leases was $11.0 million. Leases in which we sublet also do not represent a significant portion of our leasing activity.

~~Minimum future lease payments due in each of the next five years and thereafter, as of June 30, 2019, in accordance with ASC Topic 842, are presented in the table below.~~

(in millions) ASC 842
2019 (remaining 6 months) $ 79.5
2020 152.6
2021 132.8
2022 100.9
2023 80.9
Thereafter 236.3
Total future minimum lease payments $ 783.0
Less imputed interest 97.0
Total $ 686.0

~~Other information related to operating leases was as follows.~~



	~~June 30, 2019~~
~~Weighted Average Remaining Lease Term~~	~~6.8 years~~
~~Weighted Average Discount Rate~~	~~3.9~~	%

~~Table of Contents~~

Minimum future lease payments due in each of the next five years and thereafter, as of December 31, 2018, in accordance with ASC Topic 840 included in our 2018 Annual Report on Form 10-K, are presented in the table below.

(in millions) ASC 840
2019 $ 167.8
2020 153.1
2021 132.3
2022 99.4
2023 81.0
Thereafter 257.3
Total future minimum lease payments $ 890.9


~~10.~~	DEBT

Short-term borrowings and long-term debt obligations are composed of the following.


(in millions)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Short-term borrowings:
Local overdraft facilities	$	34.8	17.0		$	35.8	44.8
Other short-term borrowings	83.9		15.7		89.4		75.3
Total short-term borrowings	$	118.7	32.7		$	125.2	120.1
Credit facility, net of debt issuance costs of $14.1 and $15.9	485.9		(15.9	)
Long-term senior notes, 4.4%, face amount of $275.0, due November 2022, net of debt issuance costs of $1.3 and $1.5	273.7		273.5
Long-term senior notes, 1.96%, face amount of €175.0, due June 2027, net of debt issuance costs of $1.0 and $1.1	198.0		199.0
Long-term senior notes, 2.21%, face amount of €175.0, due June 2029, net of debt issuance costs of $1.1 and $1.1	197.9		199.0
Credit facility, net of debt issuance costs of $11.4 and $12.3					1,438.6		512.7
Long-term senior notes, 4.4%, face amount of $275.0, due November 2022, net of debt issuance costs of $1.0 and $1.2					274.0		273.8
Long-term senior notes, 1.96%, face amount of €175.0, due June 2027, net of debt issuance costs of $0.9 and $0.9					191.1		195.4
Long-term senior notes, 2.21%, face amount of €175.0, due June 2029, net of debt issuance costs of $1.0 and $1.0					191.0		195.4
Total debt	$	1,274.2	688.3		$	2,219.9	1,297.4

Credit Facility

We have a $2.75 billion unsecured revolving credit facility (the "Facility") that matures on May 17, 2023. Pricing on the Facility ranges from LIBOR plus 0.875% to 1.35%, with pricing as of ~~June 30, 2019,~~March 31, 2020, at LIBOR plus 0.95%. In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of ~~$0.5~~$0.7 million and ~~$8.6~~$0.8 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

The following tables provides additional information on our Facility.


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
($ in millions)	2019			2018		2019			2018		2020			2019
Average outstanding borrowings under the Facility	$	661.1		523.0		$	436.3		363.5		$	935.2		209.0
Effective interest rate on the Facility	3.3		%	2.8	%	3.3		%	2.7	%	2.4		%	3.3	%

We will continue to use the Facility for, but not limited to, business acquisitions, working capital needs (including payment of accrued incentive compensation), co-investment activities, dividend payments, share repurchases and capital expenditures.

Short-Term Borrowings and Long-Term Debt

In addition to our Facility, we have the capacity to borrow up to an additional ~~$70.6~~$86.0 million under local overdraft facilities. Amounts outstanding are presented in the debt table above.

As of ~~June 30, 2019,~~March 31, 2020, our issuer and senior unsecured ratings are investment grade: Baa1 from Moody’s Investors Service, Inc. and BBB+ from Standard & Poor’s Ratings Services.

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Covenants

Our Facility and senior notes are subject to customary financial and other covenants, including cash interest coverage ratios and leverage ratios, as well as event of default conditions. We remained in compliance with all covenants as of ~~June 30, 2019.~~March 31, 2020.

Warehouse Facilities


	June 30, 2019				December 31, 2018			March 31, 2020				December 31, 2019
($ in millions)	Outstanding Balance			Maximum Capacity	Outstanding Balance		Maximum Capacity	Outstanding Balance			Maximum Capacity	Outstanding Balance		Maximum Capacity
Warehouse Facilities:
LIBOR plus 1.3%, expires September 23, 2019	$	197.9		375.0	217.3		375.0
LIBOR plus 1.25%, expires September 20, 2019	186.4			775.0	82.9		775.0
LIBOR plus 1.3%, expires August 31, 2019	—			100.0	—		100.0
Fannie Mae ASAP⁽¹⁾ program, LIBOR plus 1.30% to 1.45%	—			n/a	18.9		n/a
LIBOR plus 1.15%, expires September 21, 2020								$	94.1		375.0	104.4		375.0
LIBOR plus 1.15%, expires September 19, 2020								381.0			775.0	184.8		775.0
LIBOR plus 1.15%, expires August 31, 2020								—			100.0	11.4		100.0
Fannie Mae ASAP¹program, LIBOR plus 1.15%								89.0			n/a	53.6		n/a
LIBOR plus 1.25%								280.2			1,000.0	151.6		1,000.0
LIBOR plus 1.25%								92.9			175.0	11.0		175.0
Gross warehouse facilities	$	384.3		1,250.0	319.1		1,250.0	937.2			2,425.0	516.8		2,425.0
Debt issuance costs	(0.3		)	n/a	(1.2	)	n/a	(0.6		)	n/a	(0.9	)	n/a
Total warehouse facilities	$	384.0		1,250.0	317.9		1,250.0	$	936.6		2,425.0	515.9		2,425.0

¹As Soon As Pooled ("ASAP") funding program

We have lines of credit established for the sole purpose of funding our Warehouse receivables. These lines of credit exist with financial institutions and are secured by the related warehouse receivables. Pursuant to these warehouse facilities, we are required to comply with certain financial covenants regarding (1) minimum net worth, (2) minimum servicing-related loans, and (3) minimum adjusted leverage ratios. We remained in compliance with all covenants under our Warehouse facilities as of ~~June 30, 2019.~~March 31, 2020.

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~~11.~~10.	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. When a potential loss event occurs, we estimate the ultimate cost of the claim and accrue the amount in Other current and long-term liabilities on our Condensed Consolidated Balance Sheets when probable and estimable. In addition, we have established receivables from third-party insurance providers for claim amounts in excess of the risk retained by our captive insurance company. In total, these receivables were ~~$37.7~~$32.9 million and ~~$40.6~~$37.7 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, and are included in Notes and other receivables and Long-term receivables on our Condensed Consolidated Balance Sheets.

The following table shows the professional indemnity accrual activity and related payments.


(in millions)
December 31, 2019				$	38.1
New claims				0.3
Prior year claims adjustments (including foreign currency changes)				(4.8		)
Claims paid				—
March 31, 2020				$	33.6

December 31, 2018	$	43.1		$	43.1
New claims	—			—
Prior year claims adjustments	(2.8		)
Prior year claims adjustments (including foreign currency changes)				(2.4		)
Claims paid	(1.1		)	(1.1		)
June 30, 2019	$	39.2

December 31, 2017	$	26.7
New claims	2.3
Prior year claims adjustments	14.1
Claims paid	(7.3		)
June 30, 2018	$	35.8
March 31, 2019				$	39.6

~~Table of Contents~~

As a ~~lender~~participant in the ~~Fannie Mae Delegated Underwriting and Servicing ("DUS")~~DUS program, we retain a portion of the risk of loss for loans ~~we originate~~that are originated and ~~sell~~sold under the DUS program. ~~The net loss~~Net losses on defaulted loans are shared with Fannie Mae based upon established loss-sharing ratios. Generally, ~~our~~we share approximately one-third of incurred losses, ~~is capped at~~subject to a cap of 20% of the principal balance of the mortgage at origination. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had loans ~~funded and sold,~~ subject to such loss-sharing arrangements with an aggregate unpaid principal balance of ~~$8.8~~$9.9 billion and ~~$8.4~~$9.7 billion, respectively.

For all DUS program loans with loss-sharing obligations, we record a non-contingent liability equal to the estimated fair value of the guarantee obligations undertaken upon sale of the loan, which reduces our gain on sale of the loan. Subsequently, this liability is amortized over the estimated life of the loan and recognized as Revenue on the Condensed Consolidated Statements of Comprehensive Income. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018, loan loss accruals~~2019, the loss-sharing guarantee obligations were ~~$18.3~~$20.8 million and ~~$17.5~~$20.6 million, respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets. There were no loan losses incurred for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

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~~12.~~11.	RESTRUCTURING AND ACQUISITION CHARGES

~~For the three and six months ended June 30, 2019, we recognized~~ Restructuring and acquisition charges ~~of $25.7 million~~include cash and ~~$44.3 million, respectively. For the three and six months ended June 30, 2018, we recognized Restructuring and acquisition credits of $11.1 million and $10.4 million, respectively.~~

For the three and six months ended June 30, 2019, we recognized $14.3 million and $20.0 million, respectively, related to net increases to earn-out liabilities that arose from prior period acquisition activity. For the three and six months ended June 30, 2018, we recognized $13.6 million and $14.8 million related to net decreases to earn-out liabilities that arose from prior period acquisition activity, respectively, reflecting changes to our expectations of performance against contracted earn-out payment criteria.

~~In all periods, the remaining~~non-cash expenses. Cash-based charges primarily consist of (1) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership, or transformation of business processes, (2) ~~lease exit~~acquisition, transaction and integration-related charges, and (3) other restructuring including lease exit charges. Non-cash charges include (1) stock-based compensation expense for retention awards issued in conjunction with the HFF acquisition and ~~integration-related charges.~~ (2) fair value adjustments to earn-out liabilities relating to prior-period acquisition activity. Restructuring and acquisition charges are presented in table below.



	Three Months Ended March 31,
(in millions)	2020			2019
Severance and other employment-related charges	$	1.3		5.0
Restructuring, pre-acquisition and post-acquisition charges	9.8			7.9
Stock-based compensation expense for HFF retention awards	11.2			—
Fair value adjustments to earn-out liabilities	(8.2		)	5.7
Restructuring and acquisition charges	$	14.1		18.6

The following tables show the ~~restructuring and acquisition~~ accrual activity and ~~related~~ payments ~~which are exclusive of the adjustments individually noted above.~~relating to cash-based Restructuring and acquisition charges.


(in millions)	Severance & Employment-Related			Lease Exit		Other Restructuring and Acquisition Costs		Total			Severance & Employment-Related			Lease Exit		Restructuring, Acquisition and Integration Costs		Total
December 31, 2018	$	14.0		0.6		0.5		$	15.1
December 31, 2019											$	24.3		8.4		3.8		$	36.5
Accruals	10.4			1.0		12.9		24.3			1.3			2.4		7.4		11.1
Payments made	(14.8		)	(1.1	)	(8.9	)	(24.8		)	(14.3		)	(9.6	)	(6.9	)	(30.8		)
June 30, 2019	$	9.6		0.5		4.5		$	14.6
March 31, 2020											$	11.3		1.2		4.3		$	16.8


(in millions)	Severance & Employment-Related			Lease Exit		Other Restructuring and Acquisition Costs		Total			Severance & Employment-Related			Lease Exit		Other Restructuring, Acquisition and Integration Costs		Total
December 31, 2017	$	14.2		5.7		1.4		$	21.3
December 31, 2018											$	14.0		0.6		0.5		$	15.1
Accruals	3.7			0.2		0.5		4.4			5.0			—		7.9		12.9
Payments made	(10.0		)	(0.5	)	(1.9	)	(12.4		)	(7.8		)	(0.1	)	(6.5	)	(14.4		)
June 30, 2018	$	7.9		5.4		—		$	13.3
March 31, 2019											$	11.2		0.5		1.9		$	13.6

We expect the majority of accrued severance and other accrued acquisition costs as of ~~June 30, 2019~~March 31, 2020 will be paid during the next twelve months. Lease exit payments depend on the terms of various leases, which extend as far out as 2022.

HFF Acquisition

For the three months ended March 31, 2020 and 2019, amounts included in Restructuring and acquisition charges associated with the HFF acquisition and integration were $21.3 million and $6.5 million, respectively. These charges included transaction/deal costs, retention and severance expense, early lease termination costs, and other integration expenses.

~~Table~~During the integration of ~~Contents~~


~~13.~~	~~NONCONTROLLING INTEREST~~

~~We reflect changes~~HFF, we expect to incur significant charges over the two years following the acquisition in ~~amounts attributable~~an effort to ~~noncontrolling interests in~~maximize the ~~Condensed Consolidated Statement of Changes in Equity. We present changes in amounts attributable to redeemable noncontrolling interests in the following table.~~

(in millions)
Redeemable noncontrolling interests as of December 31, 2018 $ —
Acquisition of redeemable noncontrolling interest⁽¹⁾
8.4
Net income 0.1
Redeemable noncontrolling interests as of June 30, 2019 $ 8.5

~~(1) Reflects our acquisition of redeemable noncontrolling interest related to our 2019 acquisition of Latitude.~~

(in millions)
Redeemable noncontrolling interests as of December 31, 2017 $ 3.8
Acquisition of redeemable noncontrolling interest ⁽²⁾
(3.8 )
Redeemable noncontrolling interests as of June 30, 2018 $ —

(2) Reflects our redemption of the final portion of redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB and includes $2.3 million representing the difference between the redemption value and the carrying value of the ~~acquired interest.~~combined organization. We expect to recognize approximately $100 million of expense over this two-year window relating to retention awards which have already been paid or granted (in the case of RSUs). In addition, we may incur other costs in connection with the integration including, but not limited to, lease termination charges and other employee-related costs, but are unable to estimate these amounts. We anticipate that other than RSU retention awards granted, substantially all of these cumulative charges will result in cash expenditures.

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~~14.~~12.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

The tables below present the changes in Accumulated other comprehensive income (loss) ("AOCI") by component. For pension and postretirement benefits, we report amounts reclassified from AOCI relating to employer service cost in Compensation and benefits within the Condensed Consolidated Statements of Comprehensive Income. All other reclassifications relating to pension and postretirement benefits are reported within Other income.


(in millions)	Pension and postretirement benefit			Cumulative foreign currency translation adjustment		Total			Pension and postretirement benefit			Cumulative foreign currency translation adjustment		Total
Balance as of March 31, 2019	$	(58.4	)	(367.5	)	$	(425.9	)
Balance as of December 31, 2019									$	(72.0	)	(355.8	)	$	(427.8	)
Other comprehensive loss before reclassification	—			(23.3	)	(23.3		)	—			(143.4	)	(143.4		)
Amounts reclassified from AOCI after tax expense of $ - , $ - and $ -	(0.8		)	—		(0.8		)	—			—		—
Other comprehensive income (loss) after tax expense of $ - , $ - and $ -	(0.8		)	(23.3	)	(24.1		)	—			(143.4	)	(143.4		)
Balance as of June 30, 2019	$	(59.2	)	(390.8	)	$	(450.0	)

(in millions)	Pension and postretirement benefit			Cumulative foreign currency translation adjustment		Total
Balance as of March 31, 2018	$	(60.5	)	(228.5	)	$	(289.0	)
Other comprehensive loss before reclassification	—			(102.6	)	(102.6		)
Amounts reclassified from AOCI after tax expense of $ - , $ - and $ -	—			—		—
Other comprehensive loss after tax expense of $ - , $ - and $ -	—			(102.6	)	(102.6		)
Balance as of June 30, 2018	$	(60.5	)	(331.1	)	$	(391.6	)
Balance as of March 31, 2020									$	(72.0	)	(499.2	)	$	(571.2	)

(in millions)	Pension and postretirement benefit			Cumulative foreign currency translation adjustment		Total			Pension and postretirement benefit			Cumulative foreign currency translation adjustment		Total
Balance as of December 31, 2018	$	(57.4	)	(398.8	)	$	(456.2	)	$	(57.4	)	(398.8	)	$	(456.2	)
Other comprehensive income before reclassification	—			8.0		8.0			—			31.3		31.3
Amounts reclassified from AOCI after tax expense of $ - , $ - and $ -	(1.8		)	—		(1.8		)	(1.0		)	—		(1.0		)
Other comprehensive (loss) income after tax expense of $ - , $ - and $ -	(1.8		)	8.0		6.2			(1.0		)	31.3		30.3
Balance as of June 30, 2019	$	(59.2	)	(390.8	)	$	(450.0	)

(in millions)	Pension and postretirement benefit			Cumulative foreign currency translation adjustment		Total
Balance as of December 31, 2017	$	(60.5	)	(280.3	)	$	(340.8	)
Other comprehensive loss before reclassification	—			(50.8	)	(50.8		)
Amounts reclassified from AOCI after tax expense of $ - , $ - and $ -	—			—		—
Other comprehensive loss after tax expense of $ - , $ - and $ -	—			(50.8	)	(50.8		)
Balance as of June 30, 2018	$	(60.5	)	(331.1	)	$	(391.6	)
Balance as of March 31, 2019									$	(58.4	)	(367.5	)	$	(425.9	)

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~~15.~~	~~SUBSEQUENT EVENTS~~

On July 1, 2019, we closed our acquisition of HFF, Inc. (“HFF”), one of the largest commercial real estate capital markets intermediaries in the U.S., and acquired all outstanding shares of HFF Class A common stock. Pursuant to the Agreement and Plan of Merger ("Agreement"), dated as of March 18, 2019, each outstanding share of HFF, subject to certain exceptions described in the Agreement, was converted into 0.1505 of a share of JLL common stock plus $24.63 in cash. In aggregate, we issued 5.7 million shares of JLL common stock in addition to cash paid for a total value of $1.8 billion. We funded the cash portion using existing cash and our Facility.

The acquisition of HFF was considered a business combination under U.S. GAAP and will be accounted for using the acquisition method. As such, the total consideration will be allocated to HFF’s tangible and intangible assets acquired as well as liabilities assumed based on their respective fair values with any excess allocated to goodwill. This allocation is dependent on certain valuations and other fair value analyses that have not yet been completed.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements, including the notes thereto, for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, ~~2018,~~2019, which are included in our ~~2018~~2019 Annual Report on Form 10-K, filed with the SEC and also available on our website (www.jll.com). You should also refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our ~~2018~~2019 Annual Report on Form 10-K.

The following discussion and analysis contains certain forward-looking statements generally identified by the words anticipates, believes, estimates, expects, forecasts, 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 included within this section for further information.

We present our quarterly Management's Discussion and Analysis in the following sections:


(1)	A summary of our critical accounting policies and estimates;


(2)	Certain items affecting the comparability of results and certain market and other risks we face;


(3)	The results of our operations, first on a consolidated basis and then for each of our business segments; and


(4)	Liquidity and capital resources.

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. See Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our ~~2018~~2019 Annual Report on Form 10-K for a complete summary of our significant accounting policies.

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 amount 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.

A discussion of our critical accounting policies and estimates used in the preparation of our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. There have been no material changes to these critical accounting policies and estimates during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020.

The following are the critical accounting policies and estimates discussed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, ~~2018:~~2019:

Revenue Recognition;

Business Combinations, Goodwill and Other Intangible Assets;

Investments in Real Estate Ventures; and

Income Taxes.

In addition to the aforementioned critical accounting policies, we believe the calculation of our quarterly tax provision is critical to understanding the estimates and assumptions used in preparing the Condensed Consolidated Financial Statements in Item 1.

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Quarterly Income Tax Provision

We base our fiscal year estimated effective tax rate on estimates we update each quarter. Our effective tax rate for the ~~six~~three months ended ~~June 30, 2019 and our forecasted effective tax rate for 2019 is 24.5%, excluding a discrete tax benefit recorded during the first quarter.~~March 31, 2020 was 22.0%. 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, which we base on forecasted income by country and expected enacted tax rates; as required, we adjust for the impact of discrete items in the quarters in which they occur. We evaluate our estimated effective tax rate on a quarterly basis to reflect forecast changes in our geographic mix of income and legislative actions on statutory tax rates and other relevant matters effective in the quarter in which the legislation is enacted. Changes in the forecasted income impact of the COVID-19 pandemic may affect our forecasted full-year effective tax rate for the remaining interim quarters of 2020.

The geographic mix of our income can significantly impact our effective tax rate. Very low tax rate jurisdictions (those with effective national and local combined tax rates of 25% or lower) that provide the most significant contributions to our effective tax rate include: Hong Kong (16.5%), Singapore (17%), the United Kingdom ~~(19%~~(17.5%) and Saudi Arabia (20%). We do not project any other jurisdictions with effective rates of 25% or lower to materially impact our ~~2019~~2020 global effective tax rate. Effective January 1, 2018, the U.S. federal income tax rate was reduced to 21%. However, after factoring in the impact of state income taxes, we do not consider the U.S. to be a very low tax rate jurisdiction.

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 and other conditions have had, and we expect will continue to have, a significant impact on the variability of our results of operations. Specifically in 2020, we are beginning to experience the macroeconomic impact of the COVID-19 pandemic.

Acquisitions

The timing of acquisitions may impact the comparability of our results on a year-over-year basis. Our results include incremental revenues and expenses following the completion date of an acquisition. In addition, there is generally an initial adverse impact on net income from an acquisition as a result of pre-acquisition due diligence expenditures, transaction/deal costs and post-acquisition integration costs, such as fees from third-party advisors engaged to assist with onboarding and process ~~alignment.~~alignment, retention and severance expense, early lease termination costs, and other integration expenses.

LaSalle Revenue

Our investment management business is, in part, compensated through incentive fees where performance of underlying funds' investments exceeds agreed-to benchmark levels. Depending upon performance, disposition activity, 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) gains (losses) on investments reported at fair value, (2) gains (losses) on asset dispositions, and (3) impairment charges. 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 4, Business Segments, of the Notes to Condensed Consolidated Financial Statements and is discussed further in Segment Operating Results included herein.

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 rates 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.

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Transactional-Based Revenue

Transactional-based fees, that are impacted by the size and timing of our clients' transactions, from real estate investment banking, capital markets activities and other services within our RES businesses, and LaSalle, increase the variability of the revenue we earn. The timing and the magnitude of these fees can vary significantly from year to year and quarter to quarter, and from region to region.

Seasonality

Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses. This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar 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 realized and unrealized co-investment equity earnings and losses (each of which can be unpredictable). Generally, we recognize incentives fees when assets are sold, the timing of which is geared toward the benefit of our clients. In addition, co-investment equity gains and losses are primarily dependent on valuations of underlying ~~valuations,~~investments, the direction and magnitude of changes to such valuations are not predictable. Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis.

A significant portion of our Compensation and benefits expense is from incentive compensation plans, which we generally accrue throughout the year based on progress toward annual performance targets. This quarterly estimation can result in significant fluctuations in quarterly Compensation and benefits expense from period to period. Consequently, the results for the periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ are not fully indicative of the results we expect to realize for the full fiscal year.

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RESULTS OF OPERATIONS

Definitions

We define market volumes for Leasing as gross absorption of office real estate space in square feet for the U.S., Europe and selected markets in Asia Pacific. We define market volumes for Capital Markets as ~~the U.S. dollar equivalent value of~~ investment sales transactions globally.

Assets under management data for LaSalle is reported on a one-quarter lag.

"MENA: Middle East and North Africa. Greater China: China, Hong Kong, Macau and Taiwan.

•n.m.~~" is defined as~~: not meaningful, represented by a percentage change of greater than 100% favorable or unfavorable.

Consolidated Operating Results

Three Months Ended June 30, Change in % Change in Local Currency
($ in millions) 2019 2018 U.S. dollars
Leasing $ 623.9
553.9
70.0
13 % 14 %
Capital Markets 256.5
258.0
(1.5 ) (1 ) 2
Property & Facility Management 2,304.9
2,192.3
112.6
5
8
Project & Development Services 733.3
609.4
123.9
20
24
Advisory, Consulting and Other 218.5
198.4
20.1
10
13
Real Estate Services ("RES") revenue $ 4,137.1
3,812.0
325.1
9 % 11 %
LaSalle 129.4
91.7
37.7
41
44
Revenue $ 4,266.5
3,903.7
362.8
9 % 12 %
Reimbursements (1,918.3 ) (1,740.4 ) 177.9
10
12
Revenue before reimbursements $ 2,348.2
2,163.3
184.9
9 % 12 %
Gross contract costs (713.4 ) (668.5 ) (44.9 ) 7
11
Net non-cash MSR and mortgage banking derivative activity (4.8 ) (1.3 ) (3.5 ) n.m.
n.m.
Fee revenue $ 1,630.0
1,493.5
136.5
9 % 12 %
Leasing 605.8
537.8
68.0
13
14
Capital Markets 241.3
243.5
(2.2 ) (1 ) 2
Property & Facility Management 290.8
277.5
13.3
5
8
Project & Development Services 210.0
196.7
13.3
7
10
Advisory, Consulting and Other 158.8
152.3
6.5
4
8
RES fee revenue $ 1,506.7
1,407.8
98.9
7 % 10 %
LaSalle 123.3
85.7
37.6
44
47
Compensation and benefits excluding gross contract costs 1,137.7
1,053.3
84.4
8
11
Operating, administrative and other expenses excluding gross contract costs 275.8
256.5
19.3
8
11
Depreciation and amortization 45.5
46.3
(0.8 ) (2 ) 1
Total fee-based operating expenses 1,459.0
1,356.1
102.9
8
10
Restructuring and acquisition charges (credits) 25.7
(11.1 ) 36.8
n.m.
n.m.
Gross contract costs 713.4
668.5
44.9
7
11
Total operating expenses, excluding reimbursed expenses $ 2,198.1
2,013.5
184.6
9 % 12 %
Operating income $ 150.1
149.8
0.3
— % 1 %
Equity earnings $ 10.2
10.2
—
— % (1 )%
Adjusted EBITDA $ 226.7
193.6
33.1
17 % 18 %

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~~Consolidated Operating Results (continued)~~


	Six Months Ended June 30,					Change in				% Change in Local Currency		Three Months Ended March 31,					Change in				% Change in Local Currency
($ in millions)	2019			2018		U.S. dollars				% Change in Local Currency		2020			2019		U.S. dollars				% Change in Local Currency
Leasing	$	1,101.8		955.1		146.7		15	%	17	%	$	492.4		477.9		14.5		3	%	4	%
Capital Markets	450.0			490.7		(40.7	)	(8	)	(6	)	342.3			193.5		148.8		77		79
Property & Facility Management	4,574.0			4,245.9		328.1		8		11		2,365.8			2,269.1		96.7		4		6
Project & Development Services	1,333.4			1,188.6		144.8		12		16		604.4			600.1		4.3		1		2
Advisory, Consulting and Other	400.1			367.6		32.5		9		12		186.2			181.6		4.6		3		4
Real Estate Services ("RES") revenue	$	7,859.3		7,247.9		611.4		8	%	11	%	$	3,991.1		3,722.2		268.9		7	%	9	%
LaSalle	227.8			211.0		16.8		8		11		104.9			98.4		6.5		7		8
Revenue	$	8,087.1		7,458.9		628.2		8	%	11	%	$	4,096.0		3,820.6		275.4		7	%	9	%
Reimbursements	(3,777.3		)	(3,404.5	)	372.8		11		13		(1,863.0		)	(1,859.0	)	4.0		—		1
Revenue before reimbursements	$	4,309.8		4,054.4		255.4		6	%	10	%	$	2,233.0		1,961.6		271.4		14	%	15	%
Gross contract costs	(1,356.0		)	(1,275.4	)	(80.6	)	6		11		(729.4		)	(642.6	)	(86.8	)	14		16
Net non-cash MSR and mortgage banking derivative activity	(4.7		)	(4.0	)	(0.7	)	18		18		1.6			0.1		1.5		n.m.		n.m.
Fee revenue	$	2,949.1		2,775.0		174.1		6	%	9	%	$	1,505.2		1,319.1		186.1		14	%	15	%
Leasing	1,067.2			922.9		144.3		16		17		475.2			461.4		13.8		3		4
Capital Markets	426.1			464.7		(38.6	)	(8	)	(6	)	334.1			184.8		149.3		81		82
Property & Facility Management	571.5			542.7		28.8		5		9		279.9			280.7		(0.8	)	0		1
Project & Development Services	383.4			370.4		13.0		4		7		188.3			173.4		14.9		9		10
Advisory, Consulting and Other	283.9			275.4		8.5		3		7		129.1			125.1		4.0		3		6
RES fee revenue	2,732.1			2,576.1		156.0		6		9		$	1,406.6		1,225.4		181.2		15	%	16	%
LaSalle	217.0			198.9		18.1		9		12		98.6			93.7		4.9		5		6
Compensation and benefits excluding gross contract costs	2,095.7			1,986.0		109.7		6		8		1,064.3			958.0		106.3		11		12
Operating, administrative and other expenses excluding gross contract costs	546.3			511.4		34.9		7		11		305.6			270.5		35.1		13		15
Depreciation and amortization	92.0			88.4		3.6		4		7		55.0			46.5		8.5		18		19
Total fee-based operating expenses	2,734.0			2,585.8		148.2		6		9		1,424.9			1,275.0		149.9		12		13
Restructuring and acquisition charges (credits)	44.3			(10.4	)	54.7		n.m.		n.m.
Restructuring and acquisition charges												14.1			18.6		(4.5	)	(24	)	(24	)
Gross contract costs	1,356.0			1,275.4		80.6		6		11		729.4			642.6		86.8		14		16
Total operating expenses, excluding reimbursed expenses	$	4,134.3		3,850.8		283.5		7	%	11	%	$	2,168.4		1,936.2		232.2		12	%	14	%
Operating income	$	175.5		203.6		(28.1	)	(14	)%	(14	)%	$	64.6		25.4		39.2		n.m.		n.m.
Equity earnings	$	15.2		23.8		(8.6	)	(36	)%	(36	)%	$	(28.3	)	5.0		(33.3	)	n.m.		n.m.
Adjusted EBITDA	$	322.1		301.3		20.8		7	%	8	%	$	95.6		95.4		0.2		—	%	2	%

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Non-GAAP Financial Measures

Management uses certain non-GAAP financial measures to develop budgets and forecasts, measure and reward performance against those budgets and forecasts, and enhance comparability to prior periods. These measures are believed to be useful to investors and other external stakeholders as supplemental measures of core operating performance and include the following:

~~(1)~~(i)Fee revenue and Fee-based operating expenses;

~~(2)~~(ii)Adjusted EBITDA attributable to common shareholders ("Adjusted EBITDA") and Adjusted EBITDA margin; and

~~(3)~~(iii)Percentage changes against prior periods, presented on a local currency basis.

However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with U.S. generally accepted accounting principles (“GAAP”). Any measure that eliminates components of a company’s capital structure, cost of operations or investment, or other results has limitations as a performance measure. In light of these limitations, management also considers GAAP financial measures and does not rely solely on non-GAAP financial measures. Because our non-GAAP financial measures are not calculated in accordance with GAAP, they may not be comparable to similarly titled measures used by other companies.

Adjustments to GAAP Financial Measures Used to Calculate non-GAAP Financial Measures

Gross contract costs represent certain costs associated with client-dedicated employees and third-party vendors and subcontractors and are indirectly reimbursed through the ~~management~~ fees we receive. These costs are presented on a gross basis in Operating expenses with the corresponding ~~management~~ fees in Revenue before reimbursements. However, as we generally earn little to no margin on such costs, excluding gross contract costs from both Fee revenue and Fee-based operating expenses more accurately reflects how we manage our expense base and operating margins and also enables a more consistent performance assessment across a portfolio of contracts with varying payment terms and structures, including those with direct versus indirect reimbursement of such costs.

Net non-cash mortgage servicing rights ("MSR") and mortgage banking derivative activity consists of the balances presented within Revenue composed of (i) derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity and (ii) gains recognized from the retention of MSR upon origination and sale of mortgage loans, offset by (iii) amortization of MSR intangible assets over the period that net servicing income is projected to be received. Non-cash derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity are calculated as the estimated fair value of loan commitments and subsequent changes thereof, primarily represented by the estimated net cash flows associated with future servicing rights. MSR gains and corresponding MSR intangible assets are calculated as the present value of estimated net cash flows over the estimated mortgage servicing periods. The above activity is reported entirely within Revenue ~~before reimbursements~~ of the Capital Markets service line of the Americas segment. Excluding net non-cash MSR and mortgage banking derivative activity reflects how we manage and evaluate performance because the excluded activity is non-cash in nature.

Restructuring and acquisition charges primarily consist of: (i) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership or transformation of business processes; (ii) acquisition, transaction and integration-related charges, including fair value adjustments, which are generally non-cash in the periods such adjustments are made, to assets and liabilities recorded in purchase accounting such as earn-out liabilities and intangible assets; and (iii) other restructuring, including lease exit charges. Such activity is excluded as the amounts are generally either non-cash in nature or the anticipated benefits from the expenditures would not likely be fully realized until future periods. Restructuring and acquisition charges are excluded from segment operating results and therefore not a line item in the segments’ reconciliation to Adjusted EBITDA.

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Reconciliation of Non-GAAP Financial Measures

Below are reconciliations of (i) Revenue ~~before reimbursements~~ to fee revenue and (ii) Operating ~~expenses, excluding reimbursed~~ expenses to fee-based operating expenses.


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in millions)	2019			2018		2019			2018		2020			2019
Revenue	$	4,266.5		3,903.7		$	8,087.1		7,458.9		$	4,096.0		3,820.6
Reimbursements	(1,918.3		)	(1,740.4	)	(3,777.3		)	(3,404.5	)	(1,863.0		)	(1,859.0	)
Revenue before reimbursements	2,348.2			2,163.3		4,309.8			4,054.4		2,233.0			1,961.6
Adjustments:
Gross contract costs	(713.4		)	(668.5	)	(1,356.0		)	(1,275.4	)	(729.4		)	(642.6	)
Net non-cash MSR and mortgage banking derivative activity	(4.8		)	(1.3	)	(4.7		)	(4.0	)	1.6			0.1
Fee revenue	$	1,630.0		1,493.5		$	2,949.1		2,775.0		$	1,505.2		1,319.1

Operating expenses	$	4,116.4		3,753.9		$	7,911.6		7,255.3		$	4,031.4		3,795.2
Reimbursed expenses	(1,918.3		)	(1,740.4	)	(3,777.3		)	(3,404.5	)	(1,863.0		)	(1,859.0	)
Operating expenses, excluding reimbursed expenses	2,198.1			2,013.5		4,134.3			3,850.8		2,168.4			1,936.2
Less: Gross contract costs	(713.4		)	(668.5	)	(1,356.0		)	(1,275.4	)	(729.4		)	(642.6	)
Fee-based operating expenses	$	1,484.7		1,345.0		$	2,778.3		2,575.4		$	1,439.0		1,293.6

Operating income	$	150.1		149.8		$	175.5		203.6		$	64.6		25.4

Below is (i) a reconciliation of Net income attributable to common shareholders to EBITDA and Adjusted EBITDA, (ii) the Net income margin attributable to common shareholders (measured on Revenue before reimbursements), and ~~(ii)~~(iii) the Adjusted EBITDA margin ~~(on a~~(measured on fee-revenue ~~basis),~~and presented on a local currency ~~basis.~~basis).


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(in millions)	2019			2018		2019			2018		2020			2019
Net income attributable to common shareholders	$	110.5		107.8		$	131.8		148.1		$	5.3		21.3
Add:
Interest expense, net of interest income	13.6			14.3		23.2			28.1		14.6			9.6
Provision for income taxes	36.2			37.6		35.5			51.1		5.0			(0.7	)
Depreciation and amortization	45.5			46.3		92.0			88.4		55.0			46.5
EBITDA	$	205.8		206.0		$	282.5		315.7		$	79.9		76.7
Adjustments:
Restructuring and acquisition charges (credits)	25.7			(11.1	)	44.3			(10.4	)
Restructuring and acquisition charges											14.1			18.6
Net non-cash MSR and mortgage banking derivative activity	(4.8		)	(1.3	)	(4.7		)	(4.0	)	1.6			0.1
Adjusted EBITDA	$	226.7		193.6		$	322.1		301.3		$	95.6		95.4

Net income margin attributable to common shareholders¹	4.7		%	5.0	%	3.1		%	3.7	%
Net income margin attributable to common shareholders											0.2		%	1.1	%

Adjusted EBITDA margin	13.8		%	13.0	%	10.7		%	10.9	%	6.4		%	7.2	%

¹ ~~Measured against Revenue before reimbursements~~

Table of Contents

In discussing our operating results, we report Adjusted EBITDA margins and refer to percentage changes in local currency, unless otherwise noted. Amounts presented on a local currency basis are calculated by translating the current period results of our foreign operations to U.S. dollars using the foreign currency exchange rates from the comparative period. We believe this methodology provides a framework for assessing performance and operations excluding the effect of foreign currency fluctuations.

The following table reflects the reconciliation to local currency amounts for consolidated (i) Revenue, (ii) Fee revenue, (iii) Operating income, and (iv) Adjusted EBITDA.


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
($ in millions)	2019		% Change		2019			% Change		2020		% Change
Revenue:
At current period exchange rates	$	4,266.5	9	%	$	8,087.1		8	%	$	4,096.0	7	%
Impact of change in exchange rates	98.4		n/a		219.7			n/a		49.7		n/a
At comparative period exchange rates	$	4,364.9	12	%	$	8,306.8		11	%	$	4,145.7	9	%

Fee Revenue:
At current period exchange rates	$	1,630.0	9	%	$	2,949.1		6	%	$	1,505.2	14	%
Impact of change in exchange rates	38.0		n/a		80.1			n/a		18.0		n/a
At comparative period exchange rates	$	1,668.0	12	%	$	3,029.2		9	%	$	1,523.2	15	%

Operating Income:
At current period exchange rates	$	150.1	—	%	$	175.5		(14	)%	$	64.6	154	%
Impact of change in exchange rates	1.5		n/a		(0.4		)	n/a		1.5		n/a
At comparative period exchange rates	$	151.6	1	%	$	175.1		(14	)%	$	66.1	161	%

Adjusted EBITDA:
At current period exchange rates	$	226.7	17	%	$	322.1		7	%	$	95.6	—	%
Impact of change in exchange rates	2.7		n/a		2.2			n/a		1.6		n/a
At comparative period exchange rates	$	229.4	18	%	$	324.3		8	%	$	97.2	2	%

Table of Contents

COVID-19 Pandemic

Our operations were disrupted by the COVID-19 pandemic (the "pandemic") beginning this quarter. Offices in China began closing in January and by the end of the March, over 90% of our office-based corporate employees across the globe were working remotely. Geographies with the longest duration of the pandemic experienced the most significant financial impact, which was primarily to transactional-based service lines. Specifically, these locations include China, Japan, Korea and southern Europe. In response to the pandemic's developments, we have implemented cost mitigation plans on discretionary spend. In addition, the macroeconomic impact of the pandemic resulted in certain non-cash charges this quarter, including a $30.6 million increase to loan loss credit reserves in Americas and $40.3 million of equity losses largely from fair value declines in LaSalle. The continued impact of the pandemic on transactional-based service lines, possible additional non-cash charges, and potential delays in payments from clients are closely being monitored.

Revenue

For the ~~second~~first quarter of ~~2019~~2020 compared with ~~2018,~~2019, consolidated RES revenue ~~and fee revenue both~~ increased ~~12%~~9% to ~~$4.3~~$4.0 billion and ~~$1.6 billion, respectively. LaSalle's 44% revenue growth (47% fee revenue growth) was due to higher incentive and advisory fees. Consolidated~~consolidated RES ~~revenue and~~ fee revenue increased ~~11% and 10%, respectively.~~16% to $1.4 billion. The increase in consolidated RES revenue was ~~led~~highlighted by ~~Property & Facility Management and Project & Development Services,~~Capital Markets, which contributed ~~40% and 35%, respectively,~~48% of the RES increase on a local currency basis, ~~and primarily related to~~including $144.4 million of revenue from the July 1, 2019 acquisition of HFF, Inc. ("HFF"). Property & Facility Management, which contributed 39% of the RES revenue increase on a local currency basis, was driven by continued Corporate Solutions ~~growth in Americas.~~momentum across the globe. Consolidated fee revenue growth was achieved within all our RES service lines, ~~was driven~~led by ~~Leasing (over half~~Capital Markets (77% of ~~consolidated RES fee revenue~~the growth on a local currency basis)~~, with notable contributions from Property & Facility Management (17%) and Project & Development Services (15%)~~. Geographically across service lines, Americas ~~was~~contributed over 100% of the ~~primary driver of~~ RES fee revenue growth ~~contributing 73% on a local currency basis, followed by Asia Pacific contributing 18%.~~for the first quarter.

The following highlights the proportion of RES service line consolidated fee revenue growth, on a local currency basis, compared with the ~~second~~prior-year quarter, ~~of 2018,~~ by notable segment. Refer to segment operating results for further discussion.

•Leasing - Americas ~~(90%) and~~drove growth, partially offset by Asia Pacific ~~(13%), partially offset by~~and EMEA

•Capital Markets - Americas (96%) and EMEA (7%), offset by Asia Pacific ~~drove growth, mostly offset by EMEA~~

•Property & Facility Management - Americas ~~(35%), Asia Pacific (34%) and~~led growth, offset by EMEA ~~(31%)~~

•Project & Development Services - Americas ~~(50%), EMEA (43%~~(73%) and EMEA (46%), offset by Asia Pacific ~~(7%)~~

•Advisory, Consulting and Other - ~~EMEA (48%~~Asia Pacific (51%), Americas ~~(32%~~(38%) and ~~Asia Pacific (20%~~EMEA (11%)

~~For~~LaSalle had strong growth in advisory fees in the first ~~half~~quarter of ~~2019, consolidated revenue~~2020, slightly offset by declines in incentive and fee revenue increased 11% and 9%, respectively, over the prior-year periods. Property & Facility Management contributed over half of the growth in RES consolidated revenue on a local currency basis. The growth drivers of this service line were similartransaction fees. Refer to the ~~second quarter~~LaSalle segment results ~~discussed above. Leasing contributed nearly 70% of the growth in consolidated RES fee revenue, driven primarily by the Americas segment.~~discussion for further discussion.

Our consolidated fee revenue increased 9%14% in U.S. dollars (“USD”) and ~~12%~~15% in local currency for the ~~second~~first quarter of ~~2019,~~2020, compared with ~~2018. Year-to-date, consolidated fee revenue increased 6% in USD and 9% in local currency compared with last year.~~2019. The spread ~~for the quarter~~ was driven ~~primarily~~ by strengthening of the U.S. dollar against most major currencies, especially the euro, British pound sterling, ~~euro,~~ Australian dollar, Chinese yuan and Indian rupee.

Operating Expenses

In the ~~second~~first quarter of ~~2019,~~2020, consolidated operating expenses, excluding reimbursed expenses, were $2.2 billion, up 14% from 2019, and consolidated fee-based operating expenses, were ~~$2.2~~$1.4 billion, ~~and $1.5 billion, respectively, representing increases of 12% and~~up 13%~~, respectively,~~ from the prior-year quarter. For the ~~second~~first quarter, the increase in expense was primarily attributable to Americas, which represented ~~nearly 50%~~over 100% of the increase in fee-based operating expenses on a local currency basis, ~~(over 50%~~primarily due to incremental expenses from HFF operations as well as a $30.6 million increase to loan loss credit reserves in response to the expected economic impact of the ~~year-to-date increase); LaSalle represented nearly 20% (over 10% of the year-to-date increase).~~pandemic; Asia Pacific and EMEA offset this increase in expenses. In addition, Restructuring and acquisition charges ~~represented 26% and 27% of~~were down compared with the ~~increase in consolidated fee-based operating expenses for the second~~prior-year quarter, ~~and first half of 2019, respectively;~~ refer to following table for further detail.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(in millions)	2019		2018		2019		2018		2020			2019
Severance and other employment-related charges	$	5.4	2.4		$	10.4	3.7		$	1.3		5.0
Restructuring, pre-acquisition and post-acquisition charges	6.0		0.1		13.9		0.7		21.0			7.9
Fair value adjustments that resulted in a net increase (decrease) to earn-out liabilities from prior-period acquisition activity	14.3		(13.6	)	20.0		(14.8	)
Total restructuring & acquisition charges (credits)	$	25.7	(11.1	)	$	44.3	(10.4	)
Fair value adjustments that resulted in a net (decrease) increase to earn-out liabilities from prior-period acquisition activity									(8.2		)	5.7
Total restructuring & acquisition charges									$	14.1		18.6

Table of Contents

Included in the preceding table was $21.3 million and $6.5 million for the first quarter of 2020 and 2019, respectively, of charges relating to the acquisition and integration of HFF. Charges in 2020 include retention expense, early lease termination costs and other integration expenses, while charges in 2019 included transaction/deal costs.

Equity ~~Earnings from Real Estate Ventures~~Earnings/Losses

For the ~~three and six months ended June 30, 2019,~~first quarter of 2020, we recognized equity ~~earnings~~losses of ~~$10.2 million and $15.2~~$28.3 million, compared with ~~$10.2~~equity earnings of $5.0 million ~~and $23.8 million, respectively,~~ in the prior-year ~~periods. Substantially all~~quarter. LaSalle recognized $40.3 million of ~~the activity~~equity losses in ~~each year was attributable to LaSalle;~~2020, compared with $4.9 million of equity earnings in 2019; refer to the LaSalle segment results discussion for additional details. Substantially all of the $12.7 million of equity earnings in the Americas segment were attributable to gains by consolidated variable interest entities in which the company held no equity interest. These gains are also reflected in net income attributable to noncontrolling interest and, therefore, have no impact to Net income attributable to common shareholders.

Income Taxes

The provision for income taxes was ~~$36.2 million and $35.5~~$5.0 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, representing an effective tax ~~rates~~rate of ~~24.5% and 21.1%, respectively.~~22.0%. For the three ~~and six~~ months ended ~~June 30, 2018, the provision was $37.6 million and $51.1 million, respectively, representing effective tax rates of 25.5% and 25.1%. In the first quarter of~~March 31, 2019, the ~~provision for~~$0.7 million income ~~taxes~~tax benefit included a $5.7 million discrete benefit due to a reduction to our reserve for uncertain tax positions. Excluding the impact of this discrete item, the effective tax rate was 24.5% for the three months ended March 31, 2019.

Net Income and Adjusted EBITDA

Net income attributable to common shareholders for the ~~three and six months ended June 30, 2019~~first quarter of 2020 was ~~$110.5~~$5.3 million, ~~and $131.8 million, respectively,~~ compared with ~~$107.8 million and $148.1~~$21.3 million in ~~the respective prior-year periods.~~2019. Adjusted EBITDA was ~~$226.7 million and $322.1~~$95.6 million for the ~~second~~first quarter ~~and first half~~ of ~~2019, respectively, increases of 18% and 8% from the prior-year periods.~~2020, compared with $95.4 million in 2019. Net income margin attributable to common shareholders (against Revenue before reimbursements) was ~~4.7%~~0.2% in the ~~second~~first quarter of ~~2019,~~2020, compared with ~~5.0%~~1.1% in the prior-year quarter. Adjusted EBITDA margin, calculated on a fee-revenue basis, for the ~~second~~first quarter of ~~2019~~2020 was ~~13.9%~~6.4% in USD ~~(13.8% in~~and local ~~currency),~~currency, compared with ~~13.0% in 2018. Overall, second-quarter performance reflects a significant contribution~~7.2% last year. The 80 basis-point net contraction of consolidated margin was primarily due to the non-cash charges noted above (430 basis points of margin dilution), partially offset by contributions from ~~LaSalle~~recent RES acquisitions (+170 basis points), driven by HFF, and ~~continued progress on driving margin expansion in our~~organic RES ~~business.~~(+170 basis points).

Segment Operating Results

We manage and report our operations as four business ~~segments:~~

~~The~~segments. Our three geographic ~~regions of~~ RES ~~including:~~

~~(1)~~segments include Americas,

~~(2)~~ EMEA and

~~(3)~~ Asia ~~Pacific;~~

~~and~~

~~(4)~~Pacific. Our fourth segment is LaSalle, ~~which offers~~our investment management ~~services on a global basis.~~business.

Each geographic region offers our full range of real estate services, including tenant representation and agency leasing, capital markets, 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, (i) gross contract costs and (ii) net non-cash MSR and mortgage banking derivative activity are both excluded from revenue in determining "fee revenue". Gross contract costs are excluded from operating expenses in determining "fee-based operating expenses." In addition, our measure of segment results also excludes Restructuring and acquisition charges.

~~Table of Contents~~

~~Americas - Real Estate Services~~

% Change
Three Months Ended June 30, Change in in Local
($ in millions) 2019 2018 U.S. dollars Currency
Revenue $ 2,463.6
2,152.5
311.1
14 % 15 %
Reimbursements (1,403.1 ) (1,226.4 ) (176.7 ) 14
15
Revenue before reimbursements $ 1,060.5
926.1
134.4
15 % 15 %
Gross contract costs (191.8 ) (156.6 ) (35.2 ) 22
24
Net non-cash MSR and mortgage banking derivative activity (4.8 ) (1.3 ) (3.5 ) n.m.
n.m.
Fee Revenue $ 863.9
768.2
95.7
12 % 13 %
Leasing 479.5
412.8
66.7
16
16
Capital Markets 124.5
116.0
8.5
7
8
Property & Facility Management 115.8
108.1
7.7
7
8
Project & Development Services 99.7
90.8
8.9
10
11
Advisory, Consulting and Other 44.4
40.5
3.9
10
9
Compensation, operating and administrative expenses excluding gross contract costs 721.9
640.3
81.6
13
13
Depreciation and amortization 26.3
28.3
(2.0 ) (7 ) (7 )
Segment fee-based operating expenses (excluding restructuring and acquisition charges) 748.2
668.6
79.6
12
12
Gross contract costs 191.8
156.6
35.2
22
24
Segment operating expenses (excluding reimbursed expenses) $ 940.0
825.2
114.8
14 % 15 %
Segment operating income $ 120.5
100.9
19.6
19 % 20 %
Equity earnings $ 0.4
0.4
—
— % (9 )%
Adjusted EBITDA $ 142.1
128.1
14.0
11 % 11 %

Table of Contents

Americas - Real Estate Services ~~(continued)~~


										% Change											% Change
	Six Months Ended June 30,					Change in				in Local		Three Months Ended March 31,					Change in				in Local
($ in millions)	2019			2018		U.S. dollars				Currency		2020			2019		U.S. dollars				Currency
Revenue	$	4,713.7		4,093.5		620.2		15	%	16	%	$	2,523.1		2,250.1		273.0		12	%	13	%
Reimbursements	(2,754.5		)	(2,408.1	)	(346.4	)	14		15		(1,393.5		)	(1,351.4	)	(42.1	)	3		3
Revenue before reimbursements	$	1,959.2		1,685.4		273.8		16	%	17	%	$	1,129.6		898.7		230.9		26	%	26	%
Gross contract costs	(379.5		)	(289.7	)	(89.8	)	31		33		(212.8		)	(187.7	)	(25.1	)	13		15
Net non-cash MSR and mortgage banking derivative activity	(4.7		)	(4.0	)	(0.7	)	18		17		1.6			0.1		1.5		n.m.		n.m.
Fee Revenue	$	1,575.0		1,391.7		183.3		13	%	14	%	$	918.4		711.1		207.3		29	%	30	%
Leasing	857.1			706.1		151.0		21		22		405.6			377.6		28.0		7		8
Capital Markets	224.2			224.2		—		—		—		246.6			99.7		146.9		n.m.		n.m.
Property & Facility Management	227.2			218.3		8.9		4		5		128.7			111.4		17.3		16		16
Project & Development Services	180.4			169.7		10.7		6		7		93.4			80.7		12.7		16		16
Advisory, Consulting and Other	86.1			73.4		12.7		17		18		44.1			41.7		2.4		6		6
Compensation, operating and administrative expenses excluding gross contract costs	1,345.0			1,195.9		149.1		12		13		797.5			623.1		174.4		28		28
Depreciation and amortization	53.6			52.6		1.0		2		2		37.4			27.3		10.1		37		38
Segment fee-based operating expenses (excluding restructuring and acquisition charges)	1,398.6			1,248.5		150.1		12		13		834.9			650.4		184.5		28		29
Gross contract costs	379.5			289.7		89.8		31		33		212.8			187.7		25.1		13		15
Segment operating expenses (excluding reimbursed expenses)	$	1,778.1		1,538.2		239.9		16	%	16	%	$	1,047.7		838.1		209.6		25	%	26	%
Segment operating income	$	181.1		147.2		33.9		23	%	23	%	$	81.9		60.6		21.3		35	%	35	%
Equity earnings	$	0.1		0.5		(0.4	)	(80	)%	(85	)%
Equity earnings (loss)												$	12.7		(0.3	)	13.0		n.m.		n.m.
Adjusted EBITDA	$	230.1		195.8		34.3		18	%	18	%	$	121.3		88.0		33.3		38	%	38	%

Americas continued its strong momentum through the first quarter of 2020 with all service lines delivering increased revenue ~~growth for the second quarter~~ and ~~first half of 2019~~fee revenue. The growth was led by Capital Markets, reflecting $140.9 million of incremental revenue contributions from HFF ($143.4 million of fee revenue). Leasing performed exceptionally well in the U.S., outpacing a very strong prior-year quarter (Q1 2019 was up 29% over 2018). Corporate Solutions achieved double-digit fee revenue growth due to net new wins and existing client expansions, primarily reflected in Property & Facility Management ~~reflecting the ramp-up of prior-year wins~~ and expansion of existing facilities management relationships with Corporate Solutions clients. Exceptional Leasing performance drove the Americas double-digit fee revenue growth this quarter, led by markets in the southeast U.S., and across all major asset classes. Leasing also drove year-to-date fee revenue expansion, driven by markets in the northwest and southeast U.S., also across all major asset classes.Project & Development Services.

The increase in operating expenses and fee-based operating expenses for the ~~second~~first quarter of 2020 compared with ~~the prior-year quarter,~~2019 primarily reflected revenue-related expense ~~growth.~~growth, including incremental expenses associated with the first quarter of post-acquisition HFF operations. In addition, the current quarter included a non-cash $30.6 million increase to credit reserves for potential future losses on sold loans with loss-sharing provisions and was attributable to the pandemic.

Substantially all of the equity earnings were attributable to gains by consolidated variable interest entities in which the company held no equity interest. Therefore, there is no impact to Adjusted EBITDA.

Adjusted EBITDA margin, calculated on a fee-revenue basis, was ~~16.5%~~13.2% in USD and local currency for the quarter, ~~(16.4% in local currency),~~ compared with ~~16.7%~~12.4% in ~~2018. Profitability for~~2019. The margin expansion reflects strong revenue performance, largely split between organic and HFF, and the ~~second quarter reflected strong fee revenue growth~~implementation of cost mitigation plans. This was partially offset by ~~incremental investments in both platform and client-facing technology. For~~ the ~~first half of 2019, the significant increase in segment operating income reflected outstanding growth in Leasing revenue.~~

non-cash $30.6 million charge noted above.

Table of Contents

EMEA - Real Estate Services

% Change
Three Months Ended June 30, Change in in Local
($ in millions) 2019 2018 U.S. dollars Currency
Revenue $ 818.3
846.6
(28.3 ) (3 )% 2 %
Reimbursements (153.7 ) (153.0 ) (0.7 ) —
6
Revenue before reimbursements $ 664.6
693.6
(29.0 ) (4 %) 1 %
Gross contract costs (284.7 ) (305.3 ) 20.6
(7 ) (1 )
Fee Revenue $ 379.9
388.3
(8.4 ) (2 )% 3 %
Leasing 64.0
69.7
(5.7 ) (8 ) (3 )
Capital Markets 73.4
84.1
(10.7 ) (13 ) (8 )
Property & Facility Management 101.3
100.4
0.9
1
7
Project & Development Services 73.4
68.7
4.7
7
12
Advisory, Consulting and Other 67.8
65.4
2.4
4
9
Compensation, operating and administrative expenses excluding gross contract costs 369.9
378.2
(8.3 ) (2 ) 3
Depreciation and amortization 11.3
11.5
(0.2 ) (2 ) 4
Segment fee-based operating expenses (excluding restructuring and acquisition charges) 381.2
389.7
(8.5 ) (2 ) 3
Gross contract costs 284.7
305.3
(20.6 ) (7 ) (1 )
Segment operating expenses (excluding reimbursed expenses) $ 665.9
695.0
(29.1 ) (4 )% 1 %
Segment operating loss $ (1.3 ) (1.4 ) 0.1
7 % (59 )%
Equity losses $ (1.1 ) —
(1.1 ) n.m.
n.m.
Adjusted EBITDA $ 9.6
11.2
(1.6 ) (14 )% (15 )%

~~Table of Contents~~

~~EMEA - Real Estate Services (continued)~~


										% Change											% Change
	Six Months Ended June 30,					Change in				in Local		Three Months Ended March 31,					Change in				in Local
($ in millions)	2019			2018		U.S. dollars				Currency		2020			2019		U.S. dollars				Currency
Revenue	$	1,541.7		1,630.2		(88.5	)	(5	)%	1	%	$	755.9		723.4		32.5		4	%	7	%
Reimbursements	(318.3		)	(309.0	)	(9.3	)	3		10		(182.8		)	(164.6	)	(18.2	)	11		13
Revenue before reimbursements	$	1,223.4		1,321.2		(97.8	)	(7	)%	(1	)%	$	573.1		558.8		14.3		3	%	5	%
Gross contract costs	(527.4		)	(582.5	)	55.1		(9	)	(3	)	(262.6		)	(242.7	)	(19.9	)	8		11
Fee Revenue	$	696.0		738.7		(42.7	)	(6	)%	—	%	$	310.5		316.1		(5.6	)	(2	)%	1	%
Leasing	114.5			126.7		(12.2	)	(10	)	(4	)	47.0			50.5		(3.5	)	(7	)	(4	)
Capital Markets	133.0			168.1		(35.1	)	(21	)	(16	)	68.8			59.6		9.2		15		19
Property & Facility Management	196.3			187.6		8.7		5		12		77.9			95.0		(17.1	)	(18	)	(16	)
Project & Development Services	132.9			133.6		(0.7	)	(1	)	5		66.1			59.5		6.6		11		14
Advisory, Consulting and Other	119.3			122.7		(3.4	)	(3	)	3		50.7			51.5		(0.8	)	(2	)	2
Compensation, operating and administrative expenses excluding gross contract costs	704.1			737.2		(33.1	)	(4	)	2		321.8			334.2		(12.4	)	(4	)	(2	)
Depreciation and amortization	22.6			22.9		(0.3	)	(1	)	6		9.2			11.3		(2.1	)	(19	)	(17	)
Segment fee-based operating expenses (excluding restructuring and acquisition charges)	726.7			760.1		(33.4	)	(4	)	2		331.0			345.5		(14.5	)	(4	)	(2	)
Gross contract costs	527.4			582.5		(55.1	)	(9	)	(3	)	262.6			242.7		19.9		8		11
Segment operating expenses (excluding reimbursed expenses)	$	1,254.1		1,342.6		(88.5	)	(7	)%	—	%	$	593.6		588.2		5.4		1	%	3	%
Segment operating loss	$	(30.7	)	(21.4	)	(9.3	)	(43	)%	(62	)%	$	(20.5	)	(29.4	)	8.9		30	%	34	%
Equity losses	$	(1.0	)	—		(1.0	)	n.m.		n.m.
Equity earnings												$	—		0.1		(0.1	)	n.m.		n.m.
Adjusted EBITDA	$	(8.6	)	3.8		(12.4	)	n.m.		n.m.		$	(10.6	)	(18.2	)	7.6		42	%	49	%

EMEA’s first-quarter 2020 revenue and fee revenue was highlighted by strong performance in Capital Markets and Project & Development Services. The UK and Germany drove growth in Capital Markets; the prior-year quarter reflected ~~marginal increases for~~a sharp decline in volumes in the ~~current-year quarter and were largely flat for the first half~~UK impacted by Brexit uncertainty. Project & Development Services growth was led by continued strong project execution in MENA. A majority of the ~~year. Solid annuity growth~~decline in Property & Facility Management and Project & Development Services, especially from our Corporate Solutions clients, was offset by declines in Capital Markets and Leasing. The change in Capital Markets compared favorably to a 20% decline in regional capital markets volumes, from the prior-year quarter, as reported by JLL Research. Geographically across service lines, France had the most notable fee revenue ~~growth for~~reflects the ~~second quarter.~~sale of certain property management businesses in continental Europe in late 2019.

The ~~change~~increase in operating expenses, excluding reimbursed expenses, and fee-based operating expenses, excluding restructuring and acquisition charges, for the ~~second quarter and~~ first ~~half~~three months of ~~2019~~2020 compared with ~~the~~ prior-year, ~~periods, correlating~~correlated with the revenue growth but reflected the implementation of cost mitigation plans in ~~revenue.~~response to the pandemic.

Adjusted EBITDA margin, calculated on a fee-revenue basis, was ~~2.5%~~negative 3.4% in USD for the quarter ~~(2.4%~~(negative 2.9% in local currency), compared with ~~2.9%~~negative 5.8% last year. The ~~profitability decrease primarily~~margin improvement reflected an increase in higher-margin transactional revenues as well as the ~~revenue shift in business mix toward annuity revenues.~~implementation of cost mitigation plans.

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Asia Pacific - Real Estate Services

% Change
Three Months Ended June 30, Change in in Local
($ in millions) 2019 2018 U.S. dollars Currency
Revenue $ 855.2
812.9
42.3
5 % 10 %
Reimbursements (359.6 ) (356.2 ) (3.4 ) 1
6
Revenue before reimbursements $ 495.6
456.7
38.9
9 % 13 %
Gross contract costs (232.7 ) (205.4 ) (27.3 ) 13
17
Fee Revenue $ 262.9
251.3
11.6
5 % 9 %
Leasing 62.3
55.3
7.0
13
17
Capital Markets 43.4
43.4
—
—
5
Property & Facility Management 73.7
69.0
4.7
7
12
Project & Development Services 36.9
37.2
(0.3 ) (1 ) 4
Advisory, Consulting and Other 46.6
46.4
0.2
—
5
Compensation, operating and administrative expenses excluding gross contract costs 229.9
222.1
7.8
4
8
Depreciation and amortization 6.4
5.8
0.6
10
16
Segment fee-based operating expenses (excluding restructuring and acquisition charges) 236.3
227.9
8.4
4
8
Gross contract costs 232.7
205.4
27.3
13
17
Segment operating expenses (excluding reimbursed expenses) $ 469.0
433.3
35.7
8 % 12 %
Segment operating income $ 26.6
23.4
3.2
14 % 21 %
Equity earnings $ 0.4
0.7
(0.3 ) (43 )% (45 )%
Adjusted EBITDA $ 33.6
30.0
3.6
12 % 18 %

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										% Change
	Three Months Ended March 31,					Change in				in Local
($ in millions)	2020			2019		U.S. dollars				Currency
Revenue	$	712.1		748.7		(36.6	)	(5	)%	(2	)%
Reimbursements	(284.9		)	(341.1	)	56.2		(16	)	(13	)
Revenue before reimbursements	$	427.2		407.6		19.6		5	%	8	%
Gross contract costs	(249.5		)	(209.4	)	(40.1	)	19		22
Fee Revenue	$	177.7		198.2		(20.5	)	(10	)%	(7	)%
Leasing	22.6			33.3		(10.7	)	(32	)	(30	)
Capital Markets	18.7			25.5		(6.8	)	(27	)	(23	)
Property & Facility Management	73.3			74.3		(1.0	)	(1	)	2
Project & Development Services	28.8			33.2		(4.4	)	(13	)	(10	)
Advisory, Consulting and Other	34.3			31.9		2.4		8		11
Compensation, operating and administrative expenses excluding gross contract costs	168.0			191.1		(23.1	)	(12	)	(9	)
Depreciation and amortization	6.6			6.4		0.2		3		7
Segment fee-based operating expenses (excluding restructuring and acquisition charges)	174.6			197.5		(22.9	)	(12	)	(8	)
Gross contract costs	249.5			209.4		40.1		19		22
Segment operating expenses (excluding reimbursed expenses)	$	424.1		406.9		17.2		4	%	7	%
Segment operating income	$	3.1		0.7		2.4		n.m.		n.m.
Equity earnings	$	(0.7	)	0.3		(1.0	)	n.m.		n.m.
Adjusted EBITDA	$	9.4		7.3		2.1		29	%	29	%

Asia Pacific ~~- Real Estate Services (continued)~~

% Change
Six Months Ended June 30, Change in in Local
($ in millions) 2019 2018 U.S. dollars Currency
Revenue $ 1,603.9
1,524.2
79.7
5 % 11 %
Reimbursements (700.7 ) (677.8 ) (22.9 ) 3
10
Revenue before reimbursements $ 903.2
846.4
56.8
7 % 12 %
Gross contract costs (442.1 ) (400.7 ) (41.4 ) 10
15
Fee Revenue $ 461.1
445.7
15.4
3 % 9 %
Leasing 95.6
90.1
5.5
6
11
Capital Markets 68.9
72.4
(3.5 ) (5 ) —
Property & Facility Management 148.0
136.8
11.2
8
14
Project & Development Services 70.1
67.1
3.0
4
10
Advisory, Consulting and Other 78.5
79.3
(0.8 ) (1 ) 5
Compensation, operating and administrative expenses excluding gross contract costs 421.0
411.8
9.2
2
7
Depreciation and amortization 12.8
11.4
1.4
12
18
Segment fee-based operating expenses (excluding restructuring and acquisition charges) 433.8
423.2
10.6
3
8
Gross contract costs 442.1
400.7
41.4
10
15
Segment operating expenses (excluding reimbursed expenses) $ 875.9
823.9
52.0
6 % 11 %
Segment operating income $ 27.3
22.5
4.8
21 % 30 %
Equity earnings $ 0.7
1.0
(0.3 ) (30 )% (30 )%
Adjusted EBITDA $ 40.9
35.0
5.9
17 % 24 %

~~Asia Pacific~~realized the most notable impact this quarter from the pandemic. Office closures and work stoppages began in January in China and continued across the region in order to minimize the human impact of the pandemic. This is reflected in the revenue ~~growth for the second quarter~~ and ~~first half of 2019 was led by (i) Property & Facility Management,~~fee revenue declines, which were largely attributable to Greater China and to a lesser extent Japan, primarily ~~due to expansion of existing client mandates and new client wins~~ in transactions-based services lines. Despite this backdrop, Corporate Solutions was largely flat year-over-year as growth in integrated facilities management and ~~(ii)~~advisory services was largely offset by the impact of temporary work stoppages to Project & Development Services driven notably by additional project work in Hong Kong and India. Segment fee revenue growth for the second quarter and first six months of 2019 were highlighted by Leasing, primarily office and industrial sectors, and Property & Facility Management, with drivers consistent with the above revenue commentary. Geographically across service lines, Australia led fee revenue growth for the second quarter and first half of 2019.mandates.

~~The increases in segment~~Segment operating expenses, excluding reimbursed expenses, for the first quarter of 2020 included an offset of $5.4 million from grants and ~~fee-based operating expenses, excluding restructuring~~subsidies from certain government relief programs established in response to the pandemic. The subsidies have been used in the receiving countries to retain employees and ~~acquisition charges, over the prior-year periods generally correspond with revenue-related expense growth and reflect incremental investments in platform and client-facing technology.~~offset their compensation expense.

Adjusted EBITDA margin, calculated on a fee-revenue basis, was ~~12.8%~~5.3% in USD for the quarter ~~(12.9%~~(5.2% in local currency), compared with ~~12.0%~~3.7% last year. ~~Operating performance~~The net margin improvement reflected the government grants and ~~margin expansion reflect~~subsidies noted above as well as the ~~growth in transactional~~impact of cost mitigation plans. These items were partially offset by the revenue ~~together with continued cost discipline, which offset incremental investments~~drivers noted above.

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LaSalle

% Change
Three Months Ended June 30, Change in in Local
($ in millions) 2019 2018 U.S. dollars Currency
Revenue $ 129.4
91.7
37.7
41 % 44 %
Reimbursements (1.9 ) (4.8 ) 2.9
(60 ) (62 )
Revenue before reimbursements $ 127.5
86.9
40.6
47 % 50 %
Gross contract costs (4.2 ) (1.2 ) (3.0 ) n.m.
n.m.
Fee Revenue $ 123.3
85.7
37.6
44 % 47 %
Advisory fees 76.8
62.3
14.5
23
26
Transaction fees & other 12.8
5.5
7.3
n.m.
n.m.
Incentive fees 33.7
17.9
15.8
88
91
Compensation, operating and administrative expenses excluding gross contract costs 91.8
69.2
22.6
33
35
Depreciation and amortization 1.5
0.7
0.8
n.m.
n.m.
Segment fee-based operating expenses (excluding restructuring and acquisition charges) 93.3
69.9
23.4
33
36
Gross contract costs 4.2
1.2
3.0
n.m.
n.m.
Segment operating expenses (excluding reimbursed expenses) $ 97.5
71.1
26.4
37 % 40 %
Segment operating income $ 30.0
15.8
14.2
90 % 96 %
Equity earnings $ 10.5
9.1
1.4
15 % 15 %
Adjusted EBITDA $ 41.6
24.4
17.2
70 % 74 %

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~~LaSalle (continued)~~


										% Change											% Change
	Six Months Ended June 30,					Change in				in Local		Three Months Ended March 31,					Change in				in Local
($ in millions)	2019			2018		U.S. dollars				Currency		2020			2019		U.S. dollars				Currency
Revenue	$	227.8		211.0		16.8		8	%	11	%	$	104.9		98.4		6.5		7	%	8	%
Reimbursements	(3.8		)	(9.6	)	5.8		(60	)	(61	)	(1.8		)	(1.9	)	0.1		(5	)	(1	)
Revenue before reimbursements	$	224.0		201.4		22.6		11	%	14	%	$	103.1		96.5		6.6		7	%	8	%
Gross contract costs	(7.0		)	(2.5	)	(4.5	)	n.m.		n.m.		(4.5		)	(2.8	)	(1.7	)	61		58
Fee Revenue	$	217.0		198.9		18.1		9	%	12	%	$	98.6		93.7		4.9		5	%	6	%
Advisory fees	150.6			127.4		23.2		18		22		82.0			73.8		8.2		11		12
Transaction fees & other	25.2			20.9		4.3		21		24		10.9			12.4		(1.5	)	(12	)	(10	)
Incentive fees	41.2			50.6		(9.4	)	(19	)	(17	)	5.7			7.5		(1.8	)	(24	)	(24	)
Compensation, operating and administrative expenses excluding gross contract costs	171.9			152.5		19.4		13		15		82.6			80.1		2.5		3		4
Depreciation and amortization	3.0			1.5		1.5		100		99		1.8			1.5		0.3		20		20
Segment fee-based operating expenses (excluding restructuring and acquisition charges)	174.9			154.0		20.9		14		16		84.4			81.6		2.8		3		4
Gross contract costs	7.0			2.5		4.5		n.m.		n.m.		4.5			2.8		1.7		61		58
Segment operating expenses (excluding reimbursed expenses)	$	181.9		156.5		25.4		16	%	19	%	$	88.9		84.4		4.5		5	%	6	%
Segment operating income	$	42.1		44.9		(2.8	)	(6	)%	(1	)%	$	14.2		12.1		2.1		17	%	19	%
Equity earnings	$	15.4		22.3		(6.9	)	(31	)%	(31	)%
Equity (losses) earnings												$	(40.3	)	4.9		(45.2	)	n.m.		n.m.
Adjusted EBITDA	$	59.9		66.8		(6.9	)	(10	)%	(7	)%	$	(24.4	)	18.3		(42.7	)	n.m.		n.m.

LaSalle's ~~significant revenue~~strong advisory fee growth for the second quarter of 2019 was driven by (i) higher incentive fees, associated with real estate dispositions in Asia Pacific on behalf of clients, and (ii) a notable increase in advisory fees, achieving a record level. More than half of the advisory fees growth resulted from strongacross all geographies followed exceptional private equity capital raising ~~with~~over the balance attributable to incremental assets under management ("AUM") from recent acquisitions. For the first half of 2019, strong advisory fees growth was partially offset by lower incentive fees followingtrailing twelve months.

As a ~~record full-year 2018.~~

Equity earnings in the second quarter and first half of 2019 were primarily driven by net valuation increases in Asia Pacific, while the prior-year periods were driven by net valuation increases in Europe and Asia Pacific.

The increase in segment operating expenses, excluding reimbursed expenses, and Fee-based operating expenses, excluding restructuring and acquisition charges, compared with the prior-year quarter, was primarily due to higher variable compensation expense as adirect result of the ~~increase in incentive fees. While incentive fees were lower in~~pandemic's expected impact on real estate prices, we recognized Equity losses this quarter to reflect decreases to the ~~first half~~estimated fair value of ~~2019~~underlying real estate investments within LaSalle's co-investment portfolio.

Segment operating income was up 19% compared with ~~2018, expenses in 2019 reflect deferred compensation expense from the record full-year incentive fees earned in 2018.~~

2019. Adjusted EBITDA margin was ~~33.7%~~negative 24.8% in USD ~~and local currency~~ for the quarter (negative 24.3% local currency), compared with ~~28.5%~~19.5% last year. The change in ~~2018.~~equity (losses) earnings represented over 100% of the margin decline and decrease in Adjusted EBITDA. The ~~margin expansion reflects higher incentive fees and~~advisory fee growth partially offset these equity ~~earnings.~~losses.

AUM was ~~a record $68.4 billion as of June 30, 2019, an increase of 6% in USD and local currency from $64.3~~$69.5 billion as of March 31, 2020, an increase of 3% in USD (1% in local currency) from $67.6 billion as of December 31, 2019. The AUM increase resulted from (i) ~~$1.3 billion from the January 2019 Latitude transaction, (ii) $3.1~~$3.7 billion of acquisitions, ~~(iii) $1.9~~(ii) $1.2 billion of net valuation increases, and ~~(iv) $0.1~~(iii) $1.4 billion of foreign currency increases, partially offset by ~~$2.3~~(iv) $4.4 billion of dispositions and withdrawals.

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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 on our Facility, and through issuance of Long-term debt.

Cash Flows from Operating Activities

Operating activities used ~~$483.1~~$546.1 million of cash in the first ~~six~~three months of ~~2019,~~2020, compared with ~~$267.9~~$551.5 million of cash used during the same period in ~~2018.~~2019. The ~~change~~decrease in cash ~~flows from~~used by operating activities is driven by ~~(i) higher~~increased cash provided by earnings, offset by increased annual incentive compensation paid to employees, inreflecting our stronger full-year 2019 ~~primarily the first quarter, as~~performance compared with ~~2018, reflecting our performance in~~ the ~~previous annual periods, (ii) the timing of payments year-over-year and (iii) our first tax payment relating to the transition tax from the U.S. Tax Cuts and Jobs Act.~~full-year 2018.

Cash Flows from Investing Activities

We used ~~$141.7~~$90.5 million of cash for investing activities during the first ~~six~~three months of ~~2019, an increase of $58.0 million from the $83.7~~2020, as compared to $91.0 million used during the same period in ~~2018.~~2019. The ~~increase~~slight decrease in cash used was ~~primarily~~ driven by ~~(i) payments for~~an absence of business acquisitions ~~(ii) capital expenditures for property and equipment and (iii)~~this quarter, offset by an increase in net capital ~~contribution/distribution~~contribution activity related to co-investments in real estate ~~ventures.~~ventures and JLL Spark investments. We discuss these key drivers individually below in further detail.

Cash Flows from Financing Activities

Financing activities provided ~~$547.5~~$883.3 million of cash during the first ~~six~~three months of ~~2019,~~2020, as compared to ~~$383.2~~$592.8 million provided by financing activities during the same period in ~~2018.~~2019. The net ~~change~~increase of ~~$164.3~~$290.5 million in cash flows from financing activities is substantially driven by the ~~change~~increase in the outstanding borrowings on our Facility to fund seasonal liquidity, including annual incentive payments as discussed in the cash flows from operating ~~activities noted above.~~activities.

Debt

Our $2.75 billion Facility matures on May 17, 2023. As of ~~June 30, 2019,~~March 31, 2020, we had outstanding borrowings under the Facility of ~~$500.0~~$1,450.0 million and outstanding letters of credit of ~~$0.5~~$0.7 million. As of December 31, ~~2018,~~2019, we had no$525.0 million of outstanding borrowings under the Facility and outstanding letters of credit of ~~$8.6~~$0.8 million. The average outstanding borrowings under the Facility were ~~$661.1~~$935.2 million and ~~$523.0~~$209.0 million during the three months ended ~~June 30,~~March 31, 2020 and 2019, respectively.

In addition to our Facility, we had the capacity to borrow up to $86.0 million under local overdraft facilities as of March 31, 2020. We had Short-term borrowings (including capital lease obligations, overdrawn bank accounts and ~~2018, respectively, and $436.3~~local overdraft facilities) of $125.2 million and ~~$363.5~~$120.1 million ~~during the six months ended June 30,~~as of March 31, 2020 and December 31, 2019, respectively, of which $35.8 million and ~~2018.~~$44.8 million, respectively, were attributable to local overdraft facilities.

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 business acquisitions.

In addition to our Facility, we had the capacity to borrow up to an additional $70.6 million under local overdraft facilities as of June 30, 2019. We had Short-term borrowings (including capital lease obligations, overdrawn bank accounts and local overdraft facilities) of $118.7 million and $32.7 million as of June 30, 2019 and December 31, 2018, respectively, of which $34.8 million and $17.0 million as of June 30, 2019 and December 31, 2018, respectively, were attributable to local overdraft facilities.

See Note ~~10,~~9, Debt, in the Notes to Condensed Consolidated Financial Statements for additional information on our Facility, Long-term debt and Short-term borrowings.

~~Co-Investment~~Investment Activity

As of ~~June 30, 2019,~~March 31, 2020, we had total investments of ~~$375.5~~$390.8 million in ~~property or fund co-investments,~~investments, primarily related to ~~LaSalle.~~LaSalle co-investments. For the ~~six~~three months ended ~~June 30,~~March 31, 2020, and 2019, funding of ~~co-investments~~investments exceeded return of capital by ~~$15.8~~$40.6 million, ~~compared with the prior year when return of capital exceeded funding of co-investments by $6.9 million.~~and $3.4 million, respectively. We expect to continue to pursue strategic co-investment opportunities with our investment management clients globally as co-investment remains an important foundation to the continued growth of LaSalle's business. In addition, we expect continued investments by JLL Spark venture funds.

See Note 6, Investments in Real Estate Ventures, in the Notes to Condensed Consolidated Financial Statements for additional information on our ~~co-investment~~investment activity.

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Share Repurchase and Dividend Programs

~~Since~~On October ~~2002,~~31, 2019, our Board of Directors ~~has~~ approved five share repurchase programs. As of June 30, 2019, there were 1,563,100 shares we were authorized to repurchase under the current share repurchase program. We made no share repurchases in 2018 or in the first half of 2019 under this authorization. Our currenta new share repurchase program ~~allows JLL~~(the "Program") authorizing the repurchase of up to ~~purchase~~$200 million of our common stock in the open market and in privately negotiated ~~transactions from time to time.~~

~~On June 14, 2019,~~transactions. During the three months ended March 31, 2020 we ~~paid a semi-annual cash dividend~~repurchased nearly 188 thousand shares for $25.0 million. As of $0.43 per share of common stock to holders of record at the close of business on May 17, 2019. A dividend-equivalent in the same per share amount will also be paid simultaneously on outstanding but unvested shares of eligible restricted stock units grantedMarch 31, 2020, $175.0 million remained authorized for repurchases under the ~~Company's Stock Award and Incentive Plan.~~Program. There were no shares repurchased during the three months ended March 31, 2019.

Capital Expenditures

Net capital additions for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ were ~~$83.8~~$44.4 million and ~~$71.0~~$44.6 million, respectively. Our capital expenditures in ~~2019~~2020 were primarily for software, computer-related hardware, and improvements to leased office spaces.

In addition, net capital additions made by consolidated VIEs in which we held no equity interest for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ were ~~$19.2~~$3.2 million and ~~$10.6~~$15.6 million, respectively, primarily to acquire real estate (net of real estate sales).

Business Acquisitions

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we paid ~~$73.8 million for business acquisitions. This included $28.3 million of payments relating to acquisitions in 2019 and $45.5~~$12.9 million for deferred business acquisition and earn-out obligations related to acquisitions completed in prior years. Terms for our acquisitions have typically included cash paid at closing with provisions for additional deferred consideration and earn-out payments subject to certain contract requirements, including the passage of time and performance, respectively. Deferred business acquisition obligations totaled ~~$56.9~~$45.2 million as of ~~June 30, 2019.~~March 31, 2020. These obligations represent the current discounted values of payments due to sellers of businesses for which our acquisition had been completed as of the balance sheet date and for which the only remaining condition on those payments is the passage of time. As of ~~June 30, 2019,~~March 31, 2020, we had the potential to make earn-out payments for a maximum of ~~$369.3~~$254.0 million on 5044 completed acquisitions subject to the achievement of certain performance conditions. Refer to Note 5, Business Combinations, Goodwill and Other Intangible Assets, in the Notes to the Condensed Consolidated Financial Statements for further information on Business Acquisitions.

We will continue to consider acquisitions that we believe will strengthen our market position, increase our profitability, and supplement our organic growth.

Repatriation of Foreign Earnings

Based on our historical experience and future business plans, we do not expect to repatriate our foreign-sourced earnings to the United States. We believe our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had total cash and cash equivalents of ~~$411.2~~$720.7 million and ~~$480.9~~$451.9 million, respectively, of which approximately ~~$350.9~~$350.1 million and ~~$429.1~~$385.4 million, respectively, was held by 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. However, we generally face no such restrictions with regard to the use or application of funds for ordinary course business activities within such countries. The assets of these countries aggregated to approximately 6%4% and 5% of our total assets as of ~~both June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019, respectively.

Off-Balance Sheet Arrangements

We have unfunded capital commitments to investment vehicles and direct investments for future co-investments, totaling a maximum of ~~$263.0~~$309.0 million as of ~~June 30, 2019.~~March 31, 2020. See our discussion of unfunded commitments in Note 6, Investments in Real Estate Ventures, in the Notes to Condensed Consolidated Financial Statements.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

~~Certain~~This report, our Annual Report to Shareholders and our other filings with the Securities and Exchange Commission (“SEC”) contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in the future tense, and all statements accompanied by terms such as “believe,” “project, “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and variations thereof and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor protections of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

From time to time, we also include written or oral forward-looking statements in ~~this filing and elsewhere (such as in reports,~~other publicly disclosed materials (including, but not limited to other filings with the SEC, press releases, presentations and communications by JLL or its ~~management~~management). Such statements relate to our intent, belief and ~~written~~current expectations about our strategic direction prospects and ~~oral statements) regarding, among other things,~~ future ~~financial~~ results, and ~~performance, achievements, plans~~give our current expectations or forecasts of future events, including, but not limited to the Company's expectations regarding the potential impact of the COVID-19 outbreak and ~~objectives, and dividend payments may be considered~~global pandemic; they do not relate strictly to historical or current facts. Management believes that these forward-looking statements ~~within the meaning~~are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the ~~Private Securities Litigation Reform Act of 1995. Such forward-looking~~date when made.

Forward-looking statements ~~involve known~~are subject to certain risks and ~~unknown risks,~~ uncertainties ~~and other factors~~ that ~~may~~could cause ~~JLL's~~ actual results ~~performance, achievements, plans~~to differ materially from our historical experience and ~~objectives,~~our present expectations or anticipated results. These risks and ~~dividends to be materially different from any of the future results, performance, achievements, plans and objectives, and dividends expressed or implied by such forward-looking statements.~~

~~We discuss those risks,~~ uncertainties ~~and other factors~~are described in ~~(1)~~ our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 in Part I, Item 1A. Risk ~~Factors; Part II, Item 7. Management's Discussion~~Factors and Analysis of Financial Condition and Results of Operations; Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk; Part II, Item 8. Financial Statements and Supplementary Data – Notesmay also be described from time to ~~Consolidated Financial Statements; and elsewhere, (2) this Quarterly Report on Form 10-Q~~time in this section, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations; Item 3. Quantitative and Qualitative Disclosures About Market Risk; and elsewhere, and (3) the otherour future reports ~~we file~~filed with the ~~United States Securities~~SEC. You should consider the limitations on, and ~~Exchange Commission.~~

~~Important factors that could cause actual results to differ from those in our~~risks associated with, forward-looking statements ~~include (without limitation):~~



	●	~~The effect of political, economic and market conditions and geopolitical events;~~
	●	~~The logistical and other challenges inherent in operating in numerous different countries;~~
	●	~~The actions and initiatives of current and potential competitors;~~
	●	~~The level and volatility of real estate prices, interest rates, currency values and other market indices;~~
	●	~~The outcome of pending litigation; and~~
	●	~~The impact of current, pending and future legislation and regulation.~~

~~Moreover, there can be no assurance future dividends will be declared since~~and not unduly rely on the ~~actual declaration~~accuracy of ~~future dividends, and the establishment of record and payment dates, remains subject to final determination by JLL's Board of Directors.~~

~~Accordingly, we caution our readers~~predictions contained in such forward-looking statements. We do 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~~undertake any obligation ~~or undertaking~~ to ~~publicly~~ update ~~or revise any~~ forward-looking statements to reflect ~~any~~events, circumstances, changes in ~~events or circumstances or in its~~ expectations or ~~results.~~the occurrence of unanticipated events after the date of those statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

MARKET AND OTHER RISK FACTORS

~~Market Risk~~

~~The principal market risks we face due to the risk of loss arising from adverse changes in market rates and prices are:~~



●	~~Interest rates on the Facility; and~~
●	~~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 our Facility, which had a borrowing capacity of $2.75 billion as of June 30, 2019. The Facility consists of revolving credit available for working capital, investments, capital expenditures, and acquisitions. Our average outstanding borrowings under the Facility for the three and six months ended June 30, 2019 was $661.1 million and $436.3 million, respectively, with an effective interest rate of 3.3% for both the three and six months ended June 30, 2019. We had $500.0 million outstanding under the Facility and outstanding letters of credit of $0.5 million as of June 30, 2019. The Facility bears a variable rate of interest based on market rates.

Our $275.0 million of Long-term senior notes (the "Notes"), excluding debt issuance costs, due in November 2022 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). Our €350.0 million of senior unsecured notes ("Euro Notes"), including €175.0 million due in June 2027 and €175.0 million due in June 2029, bear interest at an annual rate of 1.96% and 2.21%, respectively. The issuance of the Notes and the Euro Notes at fixed interest rates has helped to limit our exposure to movements in interest rates.

Our overall interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to minimize our overall borrowing costs. To achieve these objectives, 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 2018 or the first six months of 2019, and we had no such agreements outstanding as of June 30, 2019.

We assess interest rate sensitivity to estimate the potential effect of rising short-term interest rates on our variable-rate debt. If short-term interest rates were 50 basis points higher during ~~2019~~2020 on our variable-rate debt, our results would reflect an increase of ~~$1.1~~$0.7 million to Interest expense, net of interest income, for the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020.

Foreign Exchange

~~Foreign exchange risk is~~The following outlines the ~~risk we will incur economic losses due to adverse changes in foreign currency exchange rates. Our revenue from outside of the United States totaled 44% and 48%~~significant functional currencies of our ~~Total~~ revenue, ~~for the six months ended June 30, 2019 and 2018, respectively. Operating in international markets means we are exposed~~highlighting where exposure to movements in foreign exchange rates, most significantly by the British pound (9% and 10% of Total revenue for the six months ended June 30, 2019 and 2018, respectively) and the euro (8% and 9% of Total revenue for the six months ended June 30, 2019 and 2018, respectively).

~~We mitigate~~impact 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 reduces 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 have historically acted as partial operational hedges against our translation exposures to those currencies.

international markets.

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	Three Months Ended March 31,
	2020		2019
British Pound	8	%	9	%
Euro	8		8
Other	25		27
Revenue exposed to foreign exchange rates	41	%	44	%
United States Dollar	59		56
Total Revenue	100	%	100	%

To show the impact foreign currencies have on our results of operations, we present the change in local currency for revenue and operating expenses on a consolidated basis and by operating segment in Management's Discussion and Analysis of Financial Condition and Results of Operations included herein. The change in local currency represents the change assuming no movement in foreign exchange rates from the prior year. On a year-over-year basis, for the three months ended June 30, 2019, our consolidated Revenue increased 9% in U.S. dollars and 12% in local currency, and our Operating income was flat in U.S. dollars and increased 1% in local currency. For additional detail of the impact of foreign exchange rates on our results of operations, see Management's Discussion and Analysis of Financial Condition and Results of Operations included herein.

We enter into forward foreign currency exchange contracts to manage currency risks associated with intercompany lending and cash management practices. AsSee Note 8, Fair Value Measurements, for further discussion of ~~June 30, 2019, we had~~our forward ~~exchange contracts in effect with a gross notional value of $2.08 billion ($0.66 billion on a net basis). Net gains or losses are generally offset by associated intercompany loans.~~contracts.

Disclosure of Limitations

As the information presented above includes only those exposures that exist as of ~~June 30, 2019,~~March 31, 2020, it does not consider those exposures or positions which could arise after that date. The information we present 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 applicable period, the hedging strategies at the time, and interest and foreign currency rates.

For other risk factors inherent in our business, see Item 1A. Risk Factors in our ~~2018~~2019 Annual Report on Form 10-K.

Item 4. Controls and Procedures

The Company has established disclosure controls and procedures to ensure 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 other members of senior management and the Board of Directors.

Under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of 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). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective as of the end of the period covered by this report. There were no changes in the Company's internal control over financial reporting during the quarter ended ~~June 30, 2019,~~March 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

We are a defendant or plaintiff 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 captive insurance company), although they may nevertheless be subject to large deductibles and the amounts being claimed may exceed the available insurance. Although we cannot determine the ultimate liability for these matters 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 1A. Risk Factors

~~Other than as discussed below, there~~There have been no material changes to our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

Following the acquisition of HFF, Inc., which closed on July 1, 2019, we updated the strategic risk factor RISKS INHERENT IN MAKING ACQUISITIONS AND ENTERING INTO JOINT VENTURES. The following is the full amended risk factor.

Historically, a significant component of our growth has been generated by acquisitions. Any future growth through acquisitions will depend in part on the continued availability of suitable acquisitions at favorable prices and with advantageous terms and conditions, which may not be available to us. Over the last ten years, we completed nearly 90 acquisitions as part of our global growth strategy, with 48 acquisitions completed in 2015 and 2016. In 2017 and 2018, we intentionally reduced the pace of acquisitions to focus on the continued integration of companies we previously acquired. On July 1, 2019, we completed the largest acquisition in our history, acquiring HFF, Inc.

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:

~~Diversion of management attention and financial resources from existing operations~~

Difficulties in integrating cultures, compensation structures, operations, existing contracts, accounting processes and methodologies, technology, and in realizing the anticipated synergies of the combined businesses

~~Unforeseen expenses or delays associated with the integration or acquisition~~

~~Failure to identify potential liabilities and improper accounting practices during the due diligence process~~

~~Reduction in employee morale and loss of management and other employees of JLL and/or the acquired business~~

~~Inability to retain clients of JLL and/or the acquired business~~

Exposure to legal, environmental, employment, professional standards, bribery, money-laundering, ethics, antitrust 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

~~Addition of business lines in which we have not previously engaged or geographical locations where we have not previously conducted business~~

~~Indebtedness incurred may decrease our business flexibility and adversely affect our business~~

~~Making any necessary modifications to internal financial controls to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder~~

~~Potential impairment of intangible assets, including goodwill, which could adversely affect our reported results~~

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Many of these factors will be outside of our control and our failure to meet any one of them could have a material adverse effect. For example, liabilities that we may either knowingly or inadvertently assume may not be fully insured. In addition, the price we pay or other resources that we devote to an acquisition may exceed the value we realize, or the value we could have realized if we had reallocated the consideration payable for the acquisition or other resources to another opportunity.

To a much lesser degree, we have occasionally entered into joint ventures 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 ongoing relationship with joint venture partners, 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’s it could harm our brand, business, results of operations and financial condition.2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the quarter ended March 31, 2020:



Period	Total number of shares purchased	Weighted average price paid per share			Total number of shares purchased as part of publicly announced plan	Approximate dollar value of shares that may yet be purchased under the plan
January 1, 2020 - January 31, 2020	—		$	—	—		$	200.0
February 1, 2020 - February 29, 2020	10,276		$	138.83	10,276		$	198.6
March 1, 2020 - March 31, 2020	177,477		$	132.79	177,477		$	175.0
Total	187,753				187,753

Item 5. Other Information

Other Information

Effective April 1, 2020, in conjunction with a series of measures we have taken in response to extraordinary business challenges brought on by the current COVID-19 global pandemic crisis, Christian Ulbrich, our Chief Executive Officer and President, and the entire Global Executive Board executed salary reduction agreements irrevocably waiving 50% of their annual base salary for the remainder of 2020. We are including this disclosure and related Exhibit 10.1 in this Form 10-Q rather than filing a Form 8-K under Item 5.02.

In addition, each member of the Board has agreed by irrevocable waiver to forego receipt of 50% of the cash retainer fees payable to her or him during the remainder of 2020, effective as of the quarterly payment made April 1, 2020.

Corporate Governance

Our policies and practices reflect corporate governance initiatives we believe comply with the listing requirements of the New York Stock Exchange, on which our common stock is traded, the corporate governance requirements of the Sarbanes-Oxley Act of 2002 as currently in effect, various regulations issued by the SEC and certain provisions of the General Corporation Law in the State of Maryland, where JLL is incorporated. We maintain a corporate governance section on our public website which includes key information about our corporate governance initiatives, such as our Corporate Governance Guidelines, Charters for the three Committees of our Board of Directors, a Statement of Qualifications of Members of the Board of Directors and our Code of Business Ethics. The Board of Directors regularly reviews corporate governance developments and modifies our Guidelines and Charters as warranted. The corporate governance section can be found on our website at www.us.jll.com by clicking "Investor Relations" and then ~~"Board of Directors and Corporate Governance.~~"Governance."

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Corporate Officers

The names and titles of our corporate executive officers, as of ~~June 30, 2019,~~March 31, 2020, were as follows:

Global Executive Board

Christian Ulbrich

Chief Executive Officer and President

Stephanie Plaines

Chief Financial Officer

Richard Bloxam

Chief Executive Officer, Global Capital Markets

Anthony Couse

Chief Executive Officer, Asia Pacific

Guy Grainger

Chief Executive Officer, Europe, Middle East and Africa

Jeff A. Jacobson

Chief Executive Officer, LaSalle Investment Management

Yishai Lerner

Co-Chief Executive Officer, JLL Technologies

Patricia Maxson

Chief Administrative Officer

Neil Murray¹

Chief Executive Officer, Global Corporate Solutions

Gregory P. O'Brien

Chief Executive Officer, Americas

¹~~Effective June 1, 2019, Mr. Murray succeeded John Forrest as Chief~~Mihir Shah

Co-Chief Executive Officer, ~~Global Corporate Solutions~~JLL Technologies

Additional Global Corporate Officers



Mary E. Bilbrey	James S. Jasionowski
Chief Human Resources Officer	Chief Tax Officer

Louis F. Bowers	~~Parikshat Suri~~
~~Controller~~	~~Chief Audit Executive~~

~~Bryan J. Duncan~~	Judith I. Tempelman
~~Treasurer~~Controller	Head of Corporate Development

~~Allan Frazier~~Bryan J. Duncan	Alan Tse
~~Chief Information Officer~~Treasurer	Chief Legal Officer and Corporate Secretary

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Item 6. Exhibits



Exhibit Number	Description
10.1*	Form of Global Executive Board Salary Reduction Agreement

31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	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

101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith

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Signature

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 ~~7th~~6th day of ~~August, 2019.~~May, 2020.



JONES LANG LASALLE INCORPORATED

By:		/s/ Stephanie Plaines
		Stephanie Plaines
		~~Executive Vice President and~~ Chief Financial Officer
		(Authorized Officer and Principal Financial Officer)

5746



(in millions)	ASC 842
2019 (remaining 6 months)	$	79.5
2020	152.6
2021	132.8
2022	100.9
2023	80.9
Thereafter	236.3
Total future minimum lease payments	$	783.0
Less imputed interest	97.0
Total	$	686.0



(in millions)	ASC 840
2019	$	167.8
2020	153.1
2021	132.3
2022	99.4
2023	81.0
Thereafter	257.3
Total future minimum lease payments	$	890.9



(in millions)
Redeemable noncontrolling interests as of December 31, 2018	$	—
Acquisition of redeemable noncontrolling interest⁽¹⁾	8.4
Net income	0.1
Redeemable noncontrolling interests as of June 30, 2019	$	8.5

Three months Ended March 31,

(in millions)

Revenue excluded from scope of ASC Topic 606