EXHIBIT 99.3
- ------------
JONES LANG LASALLE NEWS RELEASE
FOR IMMEDIATE RELEASE 200 East Randolph Drive
Chicago Illinois 60601
22 Hanover Square
London W1A 2BN
Contact: Lauralee Martin
Chief Financial Officer
Phone: +1 312 228 2073
Email: Lauralee.martin@am.joneslanglasalle.com
JONES LANG LASALLE REPORTS THIRD QUARTER RESULTS
AT THE LOW END OF GUIDANCE RANGE
CHICAGO AND LONDON, OCTOBER 30, 2002 - Jones Lang LaSalle Incorporated
(NYSE: JLL), the leading global real estate services and investment
management firm, today reported GAAP net income for the third quarter of
$10.2 million, or $0.32 per share. Excluding after tax expenses of $1.1
million associated with the expansion of its New York business announced in
August, the earnings of $0.35 were at the low end of the firm's previously
stated expectations. The First Call consensus estimate of $0.40 per share
excluded the impact of our New York expansion. Results compare favorably
with the prior year's third quarter GAAP net loss of $6.2 million, or $0.21
per share.
Revenues in the quarter of $207.1 million were down 5 percent in U.S.
dollars, 9 percent in local currency over the prior year period. This
decline reflects the adverse impact of the difficult and uncertain global
economic conditions on general business confidence and our clients'
decision making. Year-to-date revenues were down 9 percent in U.S.
dollars, 11 percent in local currency. A focus on tight expense controls
together with the continuing benefits of last year's management actions to
bring the organization in line with the expected 2002 business environment
helped to offset these revenue declines. Operating expenses for the
quarter, excluding non-recurring and restructuring charges were $188.8
million, a 2 percent reduction on the prior year period in U.S. dollars,
6 percent in local currency. For the year-to-date, operating expenses,
excluding non-recurring and restructuring charges were $533.0 million, a
9 percent reduction on the prior year period in U.S. dollars, 10 percent in
local currency.
- ----------------------------------------------------------------------
THIRD QUARTER RESULTS HIGHLIGHTS
. Third quarter net income of $10.2 million versus
prior year loss of $6.2 million
. On target to deliver in excess of committed $50 million
cost reductions
. Debt reduction of $35 million from prior year
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JONES LANG LASALLE REPORTS THIRD QUARTER RESULTS - ADD ONE
"We are disappointed that the challenging climate for our clients has
resulted in lower revenues and results for our shareholders. However,
successful cost reductions and careful management of our cash in a very
difficult business environment have kept us profitable and strengthened the
firm's financial fundamentals," said Chris Peacock, President and Chief
Executive Officer of Jones Lang LaSalle.
The third quarter operating income, on a GAAP basis, was $17.8 million, as
compared to $1.4 million in the same period in 2001. Included in the
current year third quarter operating income were non-recurring and
restructuring charges of $472,000. These were primarily related to the
impairment of a residential land co-investment made by a business closed in
2001, offset by a credit associated with the finalization of expenses
associated with the business restructuring initiated in 2001. The
operating income for the third quarter of 2001 included non-recurring and
restructuring charges of $24.5 million related to the impairment of e-
commerce investments and certain residential land co-investments, together
with severance and professional fees associated with the business
restructuring initiated in 2001.
The third quarter tax expense reflects the lowered effective tax rate for
2002 of 36 percent as compared to the prior year of 42 percent. Also
included in the third quarter of 2002 tax expense of $2.9 million is a
credit of $1.8 million associated with certain 2001 restructuring expenses
which previously were not considered tax deductible.
The net income for the third quarter on a GAAP basis was $10.2 million,
compared with a net loss for the same period in 2001 of $6.2 million. The
adjusted net income excluding non-recurring and restructuring charges for
the three months ending September 30, 2002 was $8.7 million, as compared
with adjusted net income of $12.6 million for the same period in 2001.
The firm's balance sheet continues to strengthen as debt was reduced from
the prior year period by more than $35 million, despite a $13 million
increase in the U.S. dollar reported book value of the firm's Eurobonds due
to the weakening U.S. dollar. This debt reduction was a reflection of the
continued strong business cash flows, an aggressive focus on receivables
management and reducing capital expenditures.
Year-to-date, the firm reported GAAP net income of $9.6 million, or $0.31
per share, which compared favorably with the GAAP net loss of $12.5
million, or $0.42 per share, in the first nine months of 2001. Revenues
year-to-date of $560.5 million and expenses (excluding non-recurring and
restructuring charges) of $533.0 million were both down 9 percent. Year-to-
date expense reductions of $53.0 million include $7.2 million related to
incentive compensation accrual timing that is forecast to reverse over the
balance of the year dependent upon the underlying business performance.
The results for the third quarter and first nine months of 2002 reflect
reduced amortization expense of $2.4 million and $7.2 million,
respectively, from adoption of the SFAS 142 accounting standard. No
impairment charges were necessary with the adoption of this standard.
--more--
JONES LANG LASALLE REPORTS THIRD QUARTER RESULTS - ADD TWO
OUTLOOK FOR REMAINDER OF 2002
The firm's previous earnings per share guidance, including the impact of
our expansion in New York, of $1.50 to $1.55 assumed a slow worldwide
economy through the third quarter of this year with a modest economic
recovery in the fourth quarter. Now, given the continued weakness in the
world economic environment and the low levels of business confidence, the
fourth quarter, which is the highest revenue and highest margin quarter,
will not perform at previously expected levels. Therefore, the firm is
lowering its earnings guidance including New York, to $1.00 to $1.20, with
the broad range reflecting the uncertain decision-making behaviors of
clients as they respond to the challenges of the environment. "Our
expectations for the balance of the year reflect concern around the impact
of the continued slow world economics on our clients and the consequent
adverse impact on the firm's revenues. We will continue to support our
existing clients as well as win new clients in this challenging environment
by providing solutions and services to their real estate decisions. We are
committed to earnings growth in 2003 and will again be addressing our cost
structure, in an anticipation of continuing soft revenues," said Chris
Peacock.
BUSINESS SEGMENT PERFORMANCE HIGHLIGHTS
OWNER AND OCCUPIER SERVICES
.. AMERICAS
Operating income in the third quarter was $6.3 million versus $8.0
million for the prior year period. Year-to-date operating income of
$7.7 million compared strongly to income in the prior year of
$888,000. Results were driven by cost savings, with expenses down
$6.1 million or 9 percent for the quarter and $40.2 million or 19
percent year-to-date. Included in the expense reductions are lower
incentive compensation accruals of $2.6 million for the year-to-date,
that are booked relative to performance and are forecast to be
recaptured later in the year. Revenues in the third quarter of $67.9
million were down 10 percent, principally due to a decline in
transaction activity in the Tenant Representation, Project and
Development Services and Leasing and Management units together with
the impact of the disposition of the Development Services business in
the third quarter of 2001.
.. EUROPE
Operating income in the third quarter was $863,000 versus $4.3
million for the prior year period. Year-to-date operating income was
down 63 percent. Revenues in the quarter were flat to last year, but
down 8 percent in local currency. Strong performance in France,
Spain, and the English capital markets business were not sufficient
to offset continued weakness in Germany, Belgium and the English
leasing business. In addition, in September, Continental Europe
experienced a significant slowdown in transaction activity and
business confidence. The strengthening European currencies increased
reported U.S. dollar revenues in the quarter by $6.1 million when
compared to the prior year period. Underlying cost savings were
masked by the impact of the strengthening European currencies, which
increased the U.S. dollar reported expenses by $5.7 million. Year-
to-date expenses were down $8.7 million or 4 percent, including a
lower bonus accrual of $7.8 million.
--more--
JONES LANG LASALLE REPORTS THIRD QUARTER RESULTS - ADD THREE
.. ASIA PACIFIC
Operating income in the quarter declined to $58,000 versus $604,000
in the third quarter of 2001, reducing the year-to-date improvement
in operating income to $2.7 million versus last year. Revenues of
$30.5 million, down 7 percent, reversed the second quarter positive
trend, led by declines in the core markets of Hong Kong, Singapore
and Australia, partially offset by growth in Japan and Korea.
Operating expenses year-to-date were down 3 percent.
INVESTMENT MANAGEMENT
LaSalle Investment Management's third quarter operating income of $11.1
million declined $1.8 million from the prior period operating income of
$12.9 million. Revenues of $35.0 million, which included strong incentive
fee performance as well as fee recoveries from two Fund closings, resulted
in revenues being down only 2 percent as compared to the prior year which
included incentive fees and equity earning of $14.4 million generated from
the disposition of a hotel investment. Expenses were relatively flat as
expenses for continued investment in people required for new fund growth
were offset by a reduction of $2.0 million in a reserve made against
certain accounts receivable.
SHARE BUYBACK
The firm expects to implement a share repurchase program recently approved
by the Board of Directors. Under the program, the firm may repurchase up
to 1 million shares in the open market and in privately negotiated
transactions, depending upon market prices and other conditions. The
repurchase of shares is primarily intended to offset dilution resulting
from both stock and stock option grants made under the firm's existing
stock plans.
ABOUT JONES LANG LASALLE
Jones Lang LaSalle is the world's leading real estate services and
investment management firm, operating across more than 100 markets on five
continents. The company provides comprehensive integrated expertise,
including management services, implementation services and investment
management services on a local, regional and global level to owners,
occupiers and investors. Jones Lang LaSalle is also the industry leader in
property and corporate facility management services, with a portfolio of
approximately 725 million square feet (67 million square meters) under
management worldwide. LaSalle Investment Management, the company's
investment management business, is one of the world's largest and most
diverse real estate investment management firms, with in excess of $23
billion of assets under management. For more information, visit
www.joneslanglasalle.com.
--more--
JONES LANG LASALLE REPORTS THIRD QUARTER RESULTS - ADD FOUR
Statements in this press release regarding, among other things,
future financial results and performance, achievements, plans and
objectives may be considered forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors which may
cause actual results, performance, achievements, plans and objectives of
Jones Lang LaSalle to be materially different from those expressed or
implied by such forward-looking statements. Factors that could cause
actual results to differ materially include those discussed under
"Business," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Quantitative and Qualitative Disclosures about
Market Risk," and elsewhere in Jones Lang LaSalle's Annual Report on Form
10-K for the year ended December 31, 2001, under "Management's Discussion
and Analysis of Financial Condition and Results of Operations,"
"Quantitative and Qualitative Disclosures about Market Risk," and elsewhere
in Jones Lang LaSalle's Quarterly Report on Form 10-Q for the quarters
ended March 31 and June 30, 2002, in Jones Lang LaSalle's Proxy Statement
dated April 4, 2002, and in other reports filed with the Securities and
Exchange Commission. Statements speak only as of the date of this
release. Jones Lang LaSalle expressly disclaims any obligation or
undertaking to update or revise any forward-looking statements contained
herein to reflect any change in Jones Lang LaSalle's expectations or
results, or any change in events.
# # #
NOTE TO EDITORS:
.. Media contacts may listen only to the Jones Lang LaSalle third
quarter results discussion at 9 a.m. EST on October 31 with
investors and market analysts by dialing +1 719 457 2646.
.. A web cast of the conference call is available at
http://www.firstcallevents.com/service/ajwz367471392gf12.html
.. A replay of the call may be accessed by dialing +1 719 457 0820
outside the United States and +1 888 203 1112 in the United States
from noon EST on October 31, 2002, through Midnight EST on
November 14, 2002. The replay passcode is 543956.
<table>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands, except share data)
(Unaudited)
<caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Revenue:
Fee based services. . . . . . . . . . . . $ 203,477 214,442 553,301 608,527
Equity in earnings from unconsolidated
ventures. . . . . . . . . . . . . . . . 987 2,820 2,405 6,677
Other income. . . . . . . . . . . . . . . 2,662 1,262 4,765 3,145
---------- ---------- ---------- ----------
Total revenue . . . . . . . . . . . . 207,126 218,524 560,471 618,349
Operating expenses:
Compensation and benefits . . . . . . . . 133,977 130,922 364,645 393,311
Operating, administrative and other . . . 45,451 49,677 140,117 157,177
Depreciation and amortization . . . . . . 9,418 12,044 28,239 35,466
Non-recurring and restructuring charges:
Compensation and benefits . . . . . . . (615) 2,857 (481) 4,164
Operating, administrative and other . . 1,087 21,633 2,004 23,976
---------- ---------- ---------- ----------
Total operating expenses. . . . . . . 189,318 217,133 534,524 614,094
---------- ---------- ---------- ----------
Operating income. . . . . . . . . . . 17,808 1,391 25,947 4,255
Interest expense, net of interest income. . 4,688 4,957 12,967 15,784
---------- ---------- ---------- ----------
Income (loss) before provision for
income taxes and minority interest. 13,120 (3,566) 12,980 (11,529)
Net provision for income taxes. . . . . . . 2,930 2,933 2,873 800
Minority interests in earnings (losses)
of subsidiaries . . . . . . . . . . . . . 21 (318) 1,313 213
---------- ---------- ---------- ----------
Net income (loss) before
cumulative effect of change
in accounting principle . . . . . . 10,169 (6,181) 8,794 (12,542)
6
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS - CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands, except share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Cumulative effect of change in
accounting principle. . . . . . . . . . . -- -- 846 --
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . $ 10,169 (6,181) 9,640 (12,542)
========== ========== ========== ==========
EBITDA. . . . . . . . . . . . . . . . . . . $ 27,152 13,781 52,278 39,144
========== ========== ========== ==========
Basic earnings (loss) per common share
before cumulative effect of change in
accounting principle. . . . . . . . . . . $ 0.33 (0.21) 0.29 (0.42)
Cumulative effect of change in
accounting principle. . . . . . . . . . . -- -- 0.03 --
---------- ---------- ---------- ----------
Basic earnings (loss) per common share. . . $ 0.33 (0.21) 0.32 (0.42)
========== ========== ========== ==========
Basic weighted average shares outstanding . 30,776,775 30,077,867 30,423,660 29,991,041
========== ========== ========== ==========
Diluted earnings (loss) per common share
before cumulative effect of change in
accounting principle. . . . . . . . . . . $ 0.32 (0.21) 0.28 (0.42)
Cumulative effect of change in
accounting principle. . . . . . . . . . . -- -- 0.03 --
---------- ---------- ---------- ----------
Diluted earnings (loss) per common share. . $ 0.32 (0.21) 0.31 (0.42)
========== ========== ========== ==========
Diluted weighted average shares outstanding 32,004,389 30,077,867 31,897,311 29,991,041
========== ========== ========== ==========
<fn>
Please reference attached financial statement notes.
7
</table>
<table>
JONES LANG LASALLE INCORPORATED
SEGMENT OPERATING RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands)
(Unaudited)
<caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 (1) 2002 (2) 2001 (1)
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
OWNER & OCCUPIER SERVICES -
AMERICAS
Revenue:
Implementation services . . . . . . . . $ 31,594 35,538 78,657 99,335
Management services . . . . . . . . . . 35,921 39,959 99,003 110,889
Equity earnings (losses). . . . . . . . -- (249) (10) 86
Other services. . . . . . . . . . . . . 232 315 899 1,038
Intersegment revenue. . . . . . . . . . 173 189 375 899
---------- ---------- ---------- ----------
67,920 75,752 178,924 212,247
Operating expenses:
Compensation, operating and
administrative. . . . . . . . . . . . 57,035 61,602 156,969 193,265
Depreciation and amortization . . . . . 4,591 6,104 14,223 18,094
---------- ---------- ---------- ----------
Operating income (3). . . . . . . . $ 6,294 8,046 7,732 888
========== ========== ========== ==========
EUROPE
Revenue:
Implementation services . . . . . . . . $ 52,080 54,638 155,419 175,919
Management services . . . . . . . . . . 19,826 19,114 58,973 60,684
Other services. . . . . . . . . . . . . 1,984 579 2,678 1,015
---------- ---------- ---------- ----------
73,890 74,331 217,070 237,618
Operating expenses:
Compensation, operating and
administrative. . . . . . . . . . . . 70,161 66,848 202,090 209,634
Depreciation and amortization . . . . . 2,866 3,153 8,134 9,338
---------- ---------- ---------- ----------
Operating income (3). . . . . . . . $ 863 4,330 6,846 18,646
========== ========== ========== ==========
8
JONES LANG LASALLE INCORPORATED
SEGMENT OPERATING RESULTS - CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 (1) 2002 (2) 2001 (1)
---------- ---------- ---------- ----------
ASIA PACIFIC
Revenue:
Implementation services . . . . . . . . $ 18,363 20,909 52,940 54,063
Management services . . . . . . . . . . 11,735 11,523 34,692 34,217
Other services. . . . . . . . . . . . . 386 316 1,044 1,013
---------- ---------- ---------- ----------
30,484 32,748 88,676 89,293
Operating expenses:
Compensation, operating and
administrative. . . . . . . . . . . . 28,787 30,320 85,406 88,524
Depreciation and amortization . . . . . . 1,639 1,824 4,945 5,099
---------- ---------- ---------- ----------
Operating income (loss) (3) . . . . $ 58 604 (1,675) (4,330)
========== ========== ========== ==========
INVESTMENT MANAGEMENT -
Revenue:
Implementation services . . . . . . . . $ 1,083 316 2,209 2,155
Advisory fees . . . . . . . . . . . . . 32,874 32,446 71,409 71,214
Equity earnings . . . . . . . . . . . . 987 3,069 2,415 6,591
Other services. . . . . . . . . . . . . 61 51 143 130
---------- ---------- ---------- ----------
35,005 35,882 76,176 80,090
Operating expenses:
Compensation, operating and
administrative. . . . . . . . . . . . 23,618 22,018 60,672 59,964
Depreciation and amortization . . . . . 322 963 937 2,935
---------- ---------- ---------- ----------
Operating income (3). . . . . . . . $ 11,065 12,901 14,567 17,191
========== ========== ========== ==========
9
JONES LANG LASALLE INCORPORATED
SEGMENT OPERATING RESULTS - CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 (1) 2002 (2) 2001 (1)
---------- ---------- ---------- ----------
- --------------------------------------------------------------------------------------------------------------
Total segment revenue . . . . . . . . . . . $ 207,299 218,713 560,846 619,248
Intersegment revenue eliminations . . . . . (173) (189) (375) (899)
---------- ---------- ---------- ----------
Total revenue . . . . . . . . . . . . . $ 207,126 218,524 560,471 618,349
========== ========== ========== ==========
Total segment operating expenses. . . . . . $ 189,019 192,832 533,376 586,853
Intersegment operating expense eliminations (173) (189) (375) (899)
---------- ---------- ---------- ----------
Total operating expenses before
non-recurring and restructuring
charges . . . . . . . . . . . . . . . $ 188,846 192,643 533,001 585,954
========== ========== ========== ==========
Operating income before non-recurring
and restructuring charges . . . . . . $ 18,280 25,881 27,470 32,395
========== ========== ========== ==========
<fn>
Please reference attached financial statement notes.
10
</table>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(in thousands)
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
2002 2001 (1)
------------- -----------
ASSETS
- ------
Current assets:
Cash and cash equivalents . . . . . . . $ 9,333 10,446
Trade receivables, net of
allowances. . . . . . . . . . . . . . 174,241 222,590
Notes receivable. . . . . . . . . . . . 3,014 3,847
Other receivables . . . . . . . . . . . 7,136 8,872
Prepaid expenses. . . . . . . . . . . . 13,749 11,802
Deferred tax assets . . . . . . . . . . 16,239 16,935
Other assets. . . . . . . . . . . . . . 12,151 11,340
---------- ----------
Total current assets. . . . . . . . 235,863 285,832
Property and equipment, at cost,
less accumulated depreciation . . . . . 81,209 92,503
Intangibles resulting from business
acquisitions and JLW merger,
net of accumulated amortization . . . . 332,203 328,169
Investments in and loans to real
estate ventures . . . . . . . . . . . . 76,556 64,528
Long-term receivables, net. . . . . . . . 16,354 10,427
Prepaid pension asset . . . . . . . . . . 10,791 14,384
Deferred tax assets . . . . . . . . . . . 23,561 25,770
Debt issuance costs . . . . . . . . . . . 4,633 5,407
Other assets, net . . . . . . . . . . . . 8,030 8,707
---------- ----------
$ 789,200 835,727
========== ==========
11
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS - CONTINUED
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(in thousands)
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
2002 2001 (1)
------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued
liabilities . . . . . . . . . . . . . $ 73,638 116,968
Accrued compensation. . . . . . . . . . 80,943 131,680
Short-term borrowings . . . . . . . . . 15,867 15,497
Deferred tax liabilities. . . . . . . . 203 23
Other liabilities . . . . . . . . . . . 23,600 23,467
---------- ----------
Total current liabilities . . . . . 194,251 287,635
Long-term liabilities:
Credit facilities . . . . . . . . . . . 60,834 60,621
Senior Euro Notes . . . . . . . . . . . 162,953 146,768
Deferred tax liabilities. . . . . . . . 4,930 6,567
Other . . . . . . . . . . . . . . . . . 17,935 18,966
---------- ----------
Total liabilities . . . . . . . . . 440,903 520,557
Commitments and contingencies
Minority interest in consolidated
subsidiaries. . . . . . . . . . . . . . 2,918 789
Stockholders' equity:
Common stock, $.01 par value per
share, 100,000,000 shares
authorized; 30,796,147 and
30,183,450 shares issued and
outstanding as of September 30,
2002 and December 31, 2001,
respectively. . . . . . . . . . . . . 308 302
Additional paid-in capital. . . . . . . 480,990 463,926
Deferred stock compensation . . . . . . (11,625) (6,038)
Retained deficit. . . . . . . . . . . . (112,881) (122,521)
Stock held in trust . . . . . . . . . . (460) (1,658)
Accumulated other comprehensive
income. . . . . . . . . . . . . . . . (10,953) (19,630)
---------- ----------
Total stockholders' equity. . . . . 345,379 314,381
---------- ----------
$ 789,200 835,727
========== ==========
Please reference attached financial statement notes.
12
JONES LANG LASALLE INCORPORATED
SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands)
(Unaudited)
2002 (4) 2001 (4)
---------- ----------
Cash provided by earnings . . . . . . . . $ 50,261 57,427
Cash used in working capital. . . . . . . (30,038) (71,130)
Cash used in investing activities . . . . (20,724) (12,744)
Cash provided by financing activities . . (612) 18,475
---------- ----------
Net decrease in cash. . . . . . . . (1,113) (7,972)
Cash and cash equivalents,
beginning of period . . . . . . . . . . 10,446 18,843
---------- ----------
Cash and cash equivalents,
end of period . . . . . . . . . . . . . $ 9,333 10,871
========== ==========
Please reference attached financial statement notes.
13
<table>
JONES LANG LASALLE INCORPORATED
ADJUSTED CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands, except share data)
(Unaudited)
<caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 2002 2001
Adjusted Adjusted Adjusted Adjusted
(5) (1)(5) (5) (1)(5)
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Revenue:
Fee based services. . . . . . . . . . . . $ 203,477 214,442 553,301 608,527
Equity in earnings from unconsolidated
ventures. . . . . . . . . . . . . . . . 987 2,820 2,405 6,677
Other income. . . . . . . . . . . . . . . 2,662 1,262 4,765 3,145
---------- ---------- ---------- ----------
Total revenue . . . . . . . . . . . . 207,126 218,524 560,471 618,349
Operating expenses:
Compensation and benefits . . . . . . . . 133,977 130,922 364,645 393,311
Operating, administrative and other . . . 45,451 49,677 140,117 157,177
Depreciation and amortization . . . . . . 9,418 12,044 28,239 35,466
---------- ---------- ---------- ----------
Total operating expenses excluding
non-recurring and restructuring
charges . . . . . . . . . . . . . . 188,846 192,643 533,001 585,954
---------- ---------- ---------- ----------
Adjusted operating income excluding
non-recurring and restructuring
charges . . . . . . . . . . . . . . 18,280 25,881 27,470 32,395
Interest expense, net of interest income. . 4,688 4,957 12,967 15,784
---------- ---------- ---------- ----------
Adjusted income before provision
for income taxes and minority
interest. . . . . . . . . . . . . . 13,592 20,924 14,503 16,611
Net provision for income taxes. . . . . . . 4,858 8,615 5,221 6,976
14
JONES LANG LASALLE INCORPORATED
ADJUSTED CONSOLIDATED STATEMENTS OF EARNINGS - CONTINUED
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands, except share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 2002 2001
Adjusted Adjusted Adjusted Adjusted
(5) (1)(5) (5) (1)(5)
---------- ---------- ---------- ----------
Minority interests in earnings (losses)
of subsidiaries . . . . . . . . . . . . . 21 (318) 1,313 213
---------- ---------- ---------- ----------
Adjusted net income excluding
non-recurring and restructuring
charges . . . . . . . . . . . . . . $ 8,713 12,627 7,969 9,422
========== ========== ========== ==========
Adjusted income per common share. . . . . . $ 0.27 0.41 0.25 0.30
========== ========== ========== ==========
Adjusted weighted average shares
outstanding . . . . . . . . . . . . . . . 32,004,389 31,005,514 31,897,311 30,929,379
========== ========== ========== ==========
Adjusted EBITDA Calculation (6)
Adjusted operating income . . . . . . . . 18,280 25,881 27,470 32,395
Depreciation and amortization . . . . . . 9,418 12,044 28,239 35,466
Minority interests in EBITDA. . . . . . . (74) 346 (1,908) (577)
---------- ---------- ---------- ----------
Adjusted EBITDA . . . . . . . . . . . $ 27,624 38,271 53,801 67,284
========== ========== ========== ==========
<fn>
Please reference attached financial statement notes.
15
</table>
<table>
JONES LANG LASALLE INCORPORATED
CURRENCY ANALYSIS OF REVENUES AND ADJUSTED OPERATING INCOME
(in millions)
(Unaudited)
<caption>
Pound US
Sterling Australian Dollar
(7) Euro Dollar (6) Other Total
-------- -------- ---------- -------- -------- --------
$ $ $ $ $ $
<s> <c> <c> <c> <c> <c> <c>
REVENUES (1)
2002
Q1, 2002 34.5 32.7 9.2 59.7 25.7 161.8
Q2, 2002 46.8 31.9 12.5 67.5 32.8 191.5
Q3, 2002 42.7 35.7 11.9 86.4 30.4 207.1
------ ------ ------ ------ ------ ------
Total 124.0 100.3 33.6 213.6 88.9 560.4
====== ====== ====== ====== ====== ======
2001
Q1, 2001 46.3 43.1 11.2 73.9 24.3 198.8
Q2, 2001 42.6 35.0 10.6 82.8 30.0 201.0
Q3, 2001 38.9 39.1 12.5 98.2 29.8 218.5
------ ------ ------ ------ ------ ------
Total 127.8 117.2 34.3 254.9 84.1 618.3
====== ====== ====== ====== ====== ======
ADJUSTED OPERATING INCOME (5)(7)
2002
Q1, 2002 -2.5 3.8 -2.5 -1.0 -1.9 -4.1
Q2, 2002 7.2 -0.2 -0.3 4.0 2.6 13.3
Q3, 2002 1.8 2.6 -0.1 14.8 -0.8 18.3
------ ------ ------ ------ ------ ------
Total 6.5 6.2 -2.9 17.8 -0.1 27.5
====== ====== ====== ====== ====== ======
2001
Q1, 2001 -0.4 8.7 -0.5 -4.2 -3.5 0.1
Q2, 2001 1.8 3.9 -0.8 3.9 -2.4 6.4
Q3, 2001 -2.3 9.0 -0.7 23.4 -3.5 25.9
------ ------ ------ ------ ------ ------
Total -0.9 21.6 -2.0 23.1 -9.4 32.4
====== ====== ====== ====== ====== ======
<fn>
Please reference attached financial statement notes.
16
</table>
JONES LANG LASALLE INCORPORATED
Financial Statement Notes
(1) Certain prior year amounts have been reclassified to conform with the
current presentation. In particular, in 2002, we began accounting for the
revenues of our Global Consulting unit on a gross basis, as opposed to
netting these revenues into expenses. These revenues amounted to $2.0
million and $6.1 million in the three and nine months ended September 30,
2001, respectively. In addition, beginning in September of 2002, we
aggregated our loans to co-investments with our investments in
co-investments. The co-investment loans in the December 31, 2001 balance
sheet have been reclassified to conform with this new presentation.
(2) The nine months ended September 30, 2002 reflect the adjustment made
to the first six months of 2002, which separately identified the
non-recurring and restructuring charges relating to this period.
(3) For purposes of this analysis we have determined that the allocation
of the non-recurring charges to our segments is not meaningful to
investors. Additionally, we evaluate the performance of our segment
results without these charges being allocated.
(4) The consolidated statements of cash flows are presented in summarized
form. Please reference our third quarter Form 10-Q for detailed
consolidated statements of cash flows.
(5) Adjusted results for the nine months ended September 30, 2002 exclude
the cumulative effect of change in accounting principle relating to the
adoption of SFAS 142. Adjusted results for all periods shown also exclude
the effects of non-recurring and restructuring charges. The nine months
ended September 30, 2002 reflect the adjustment made to the first six
months of 2002, which separately identified the non-recurring and
restructuring charges relating to this period. This analysis is not
intended to be a presentation in accordance with generally accepted
accounting principles (GAAP).
(6) Adjusted EBITDA represents earnings before interest expense, income
taxes, depreciation and amortization, and excludes Minority Interests in
EBITDA. For the nine months ended September 30, 2002, Adjusted EBITDA
excludes the cumulative effect of change in accounting principle resulting
from the adoption of SFAS 142. For all periods shown Adjusted EBITDA also
excludes non-recurring and restructuring charges. Management believes that
Adjusted EBITDA is useful to investors as a measure of operating
performance, cash generation and ability to service debt. However,
Adjusted EBITDA should not be considered an alternative to (i) net earnings
(determined in accordance with GAAP), (ii) operating cash flows (determined
in accordance with GAAP), or (iii) liquidity.
(7) The objective of this presentation is to provide guidance as to the
key currencies that the Company does business in and their significance to
reported revenues and adjusted operating income. The adjusted operating
income sourced in pound sterling and US dollars understates the
profitability of the businesses in the United Kingdom and America because
it includes the locally incurred expenses of our global offices in London
and Chicago, respectively, as well as the European regional office in
London. The revenues and adjusted operating income of the global
investment management business are allocated to their underlying currency,
which means that this analysis may not be consistent with the performance
of the geographic OOS segments. In particular, as incentive fees are
earned by this business, there may be significant shifts in the geographic
mix of revenues and adjusted operating income.
17