UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

[ ] 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 jurisdic- (IRS Employer Identification No.)
tion of incorporation or
organization)

200 East Randolph Drive, Chicago, IL 60601
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code 312/782-5800

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 [ X ] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Outstanding at
Class May 5, 2003
----- --------------

Common Stock ($0.01 par value) 31,020,645

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements . . . . . . . . . . . . . . . 3

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . 34

Item 3. Quantitative and Qualitative Disclosures
about Market Risk. . . . . . . . . . . . . . . . . 48

Item 4. Controls and Procedures. . . . . . . . . . . . . . 49

PART II OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 49

Item 5. Other Information. . . . . . . . . . . . . . . . . 50

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 50

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS

MARCH 31, 2003 AND DECEMBER 31, 2002
($ in thousands, except share data)

MARCH 31,
2003 DECEMBER 31,
(Unaudited) 2002
---------- -----------
ASSETS
- ------

Current assets:
Cash and cash equivalents . . . . . . . $ 13,485 13,654
Trade receivables, net of allowances
of $4,972 and $4,992 in 2003
and 2002, respectively. . . . . . . . 194,755 227,579
Notes receivable. . . . . . . . . . . . 3,608 4,165
Other receivables . . . . . . . . . . . 6,531 7,623
Prepaid expenses. . . . . . . . . . . . 13,785 15,142
Deferred tax assets . . . . . . . . . . 27,601 27,382
Other assets. . . . . . . . . . . . . . 11,381 10,760
---------- ---------
Total current assets. . . . . . 271,146 306,305

Property and equipment, at cost, less
accumulated depreciation of $123,433
and $116,214 in 2003 and 2002,
respectively. . . . . . . . . . . . . . 78,173 81,652
Goodwill, with indefinite useful lives,
at cost, less accumulated amortization
of $36,052 and $36,398 in 2003
and 2002, respectively. . . . . . . . . 316,727 315,477
Identified intangibles, with definite
useful lives, at cost, less accumulated
amortization of $30,241 and $28,928
in 2003 and 2002, respectively. . . . . 17,115 18,344
Investments in and loans to real estate
ventures. . . . . . . . . . . . . . . . 73,239 74,994
Long-term receivables, net. . . . . . . . 14,760 15,248
Prepaid pension asset . . . . . . . . . . 1,230 9,646
Deferred tax assets . . . . . . . . . . . 24,963 18,839
Debt issuance costs, net. . . . . . . . . 3,988 4,343
Other assets, net . . . . . . . . . . . . 7,597 7,668
--------- ----------

$ 808,938 852,516
========= ==========

JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS - CONTINUED

MARCH 31, 2003 AND DECEMBER 31, 2002
($ in thousands, except share data)

MARCH 31,
2003 DECEMBER 31,
(Unaudited) 2002
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------

Current liabilities:
Accounts payable and accrued
liabilities . . . . . . . . . . . . . $ 89,046 92,389
Accrued compensation. . . . . . . . . . 69,867 139,513
Short-term borrowings . . . . . . . . . 14,573 15,863
Deferred tax liabilities. . . . . . . . 478 20
Other liabilities . . . . . . . . . . . 26,629 21,411
--------- ----------
Total current liabilities . . . 200,593 269,196

Long-term liabilities:
Credit facilities . . . . . . . . . . . 54,000 26,077
9% Senior Euro Notes, due 2007. . . . . 180,263 173,068
Deferred tax liabilities. . . . . . . . 3,263 146
Minimum pension liability . . . . . . . 4,734 --
Other . . . . . . . . . . . . . . . . . 16,840 17,071
--------- ----------
Total liabilities . . . . . . . 459,693 485,558

Commitments and contingencies

Stockholders' equity:
Common stock, $.01 par value per share,
100,000,000 shares authorized;
31,017,810 and 30,896,333 shares
issued and outstanding as of
March 31, 2003 and December 31,
2002, respectively. . . . . . . . . . 310 309
Additional paid-in capital. . . . . . . 497,955 494,283
Deferred stock compensation . . . . . . (19,326) (17,321)
Retained deficit. . . . . . . . . . . . (102,658) (95,411)
Stock held by subsidiary. . . . . . . . (4,659) (4,659)
Stock held in trust . . . . . . . . . . (460) (460)
Accumulated other comprehensive loss. . (21,917) (9,783)
--------- ----------
Total stockholders' equity. . . 349,245 366,958
--------- ----------
$ 808,938 852,516
========= ==========

See accompanying notes to consolidated financial statements.

JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

THREE MONTHS ENDED MARCH 31, 2003 AND 2002
($ in thousands, except share data)
(UNAUDITED)

2003 2002
---------- ----------
Revenue:
Fee based services. . . . . . . . . . . $ 182,046 165,303
Equity in earnings (losses) from
unconsolidated ventures . . . . . . . 80 (78)
Other income. . . . . . . . . . . . . . 2,971 2,605
---------- ----------
Total revenue . . . . . . . . . . 185,097 167,830

Operating expenses:
Compensation and benefits, excluding
non-recurring and restructuring
charges . . . . . . . . . . . . . . . 128,021 111,623
Operating, administrative and other,
excluding non-recurring and
restructuring charges . . . . . . . . 54,227 50,748
Depreciation and amortization . . . . . 9,690 9,471
Non-recurring and restructuring charges:
Compensation and benefits . . . . . . (444) 20
Operating, administrative and other . 500 80
---------- ----------
Total operating expenses. . . . . 191,994 171,942

Operating loss. . . . . . . . . . (6,897) (4,112)

Interest expense, net of interest income. 4,083 3,918
---------- ----------
Loss before benefit for income
taxes and minority interest . . (10,980) (8,030)

Net benefit for income taxes. . . . . . . (3,733) (3,212)

Minority interest in earnings of
subsidiaries. . . . . . . . . . . . . . -- 63
---------- ----------
Net loss before cumulative
effect of change in accounting
principle . . . . . . . . . . . (7,247) (4,881)

Cumulative effect of change in
accounting principle. . . . . . . . . . -- 846
---------- ----------
Net loss. . . . . . . . . . . . . . . . . $ (7,247) (4,035)
========== ==========

Other comprehensive income (loss),
net of tax:
Foreign currency translation
adjustments . . . . . . . . . . . . . $ (3,077) 682
Minimum pension liability . . . . . . . (9,057) --
---------- ----------
Comprehensive loss. . . . . . . . . . . . $ (19,381) (3,353)
========== ==========

JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME - CONTINUED

THREE MONTHS ENDED MARCH 31, 2003 AND 2002
($ in thousands, except share data)
(UNAUDITED)

2003 2002
---------- ----------
Basic loss per common share
before cumulative effect of change
in accounting principle . . . . . . . . $ (0.24) (0.16)
Cumulative effect of change in
accounting principle. . . . . . . . . . -- 0.03
---------- ----------
Basic loss per common share . . . . . . . $ (0.24) (0.13)
========== ==========
Basic weighted average
shares outstanding. . . . . . . . . . . 30,715,364 30,207,897
========== ==========

Diluted loss per common share before
cumulative effect of change in
accounting principle. . . . . . . . . . $ (0.24) (0.16)
Cumulative effect of change in accounting
principle . . . . . . . . . . . . . . . -- 0.03
---------- ----------
Diluted loss per common share . . . . . . $ (0.24) (0.13)
========== ==========
Diluted weighted average
shares outstanding. . . . . . . . . . . 30,715,364 30,207,897
========== ==========

See accompanying notes to consolidated financial statements.

<table> JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

THREE MONTHS ENDED MARCH 31, 2003
($ in thousands, except share data)
(UNAUDITED)

<caption>
Accumulated
Other
Comprehensive
Loss
----------------
Shares Foreign
Additi- Deferred Stock Held in Cur-
Common Stock tional Stock Retained Held by Trust Minimum rency
------------------- Paid-In Compen- Earnings Subsi- and Pension Trans-
Shares Amount Capital sation (Deficit) diary Other Liability lation Total
---------- ------ ------- -------- ---------------- ---------------- --------------
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>

Balances at
December 31,
2002 . . . . . . 30,896,333 $309 494,283 (17,321) (95,411) (4,659) (460) -- (9,783)366,958

Net loss. . . . . -- -- -- (7,247) -- -- -- -- (7,247)
Shares issued in
connection with
stock option
plan . . . . . . 3,334 -- (6) -- -- -- -- -- -- (6)
Restricted stock:
Shares granted. -- -- 4,806 (4,806) -- -- -- -- -- --
Amortization
of granted
shares . . . . -- -- -- 1,108 -- -- -- -- -- 1,108
Shares issued . 167,813 2 (2) -- -- -- -- -- -- --
Shares repur-
chased for
payment of
taxes. . . . . (50,973) (1) (766) -- -- -- -- -- -- (767)

JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED

THREE MONTHS ENDED MARCH 31, 2003
($ in thousands, except share data)
(UNAUDITED)

Accumulated
Other
Comprehensive
Loss
----------------
Shares Foreign
Additi- Deferred Stock Held in Cur-
Common Stock tional Stock Retained Held by Trust Minimum rency
------------------- Paid-In Compen- Earnings Subsi- and Pension Trans-
Shares Amount Capital sation (Deficit) diary Other Liability lation Total
---------- ------ ------- -------- ---------------- ---------------- --------------
Stock compensation
programs:
Shares issued . 1,303 -- 8 -- -- -- -- -- -- 8
Amortization
of granted
shares . . . . -- -- -- 1,325 -- -- -- -- -- 1,325
Reduction in
stock compen-
sation grants
outstanding. . -- -- (368) 368 -- -- -- -- -- --
Minimum pension
liability . . . -- -- -- -- -- -- -- (9,057) -- (9,057)
Cumulative effect
of foreign
currency trans-
lation adjust-
ments . . . . . -- -- -- -- -- -- -- -- (3,077) (3,077)
---------- ---- ------- ------- -------- ------- ------- ------ ------- -------
Balances at
March 31,
2003. . . . . . 31,017,810 $310 497,955 (19,326) (102,658) (4,659) (460) (9,057)(12,860)349,245
========== ==== ======= ======= ======== ======= ======= ====== ======= =======

<fn>
See accompanying notes to consolidated financial statements.
</table>

JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2003 AND 2002
($ in thousands)
(UNAUDITED)

2003 2002
---------- ----------
Cash flows from operating activities:
Cash flows from earnings:
Net loss. . . . . . . . . . . . . . . . $ (7,247) (4,035)
Reconciliation of net loss to net
cash provided by earnings:
Cumulative effect of change in
accounting principle. . . . . . . . -- (846)
Minority interest . . . . . . . . . . -- 63
Depreciation and amortization . . . . 9,690 9,471
Equity in earnings and gain on sale
from unconsolidated ventures. . . . (80) 78
Operating distributions from real
estate ventures . . . . . . . . . . 689 787
Provision for loss on receivables and
other assets. . . . . . . . . . . . 839 2,787
Stock compensation expense. . . . . . -- 139
Amortization of deferred compensation 2,955 2,106
Amortization of debt issuance costs . 332 321
---------- ----------
Net cash provided by earnings . . . 7,178 10,871

Cash flows from changes in
working capital:
Receivables . . . . . . . . . . . . . 34,122 49,441
Prepaid expenses and other assets . . 781 (3,178)
Deferred tax assets . . . . . . . . . 1,049 67
Accounts payable, accrued liabilities
and accrued compensation. . . . . . (66,936) (73,932)
---------- ----------
Net cash flows from changes in
working capital . . . . . . . . . (30,984) (27,602)
---------- ----------
Net cash used in operating
activities. . . . . . . . . . . . (23,806) (16,731)

Cash flows used in investing activities:
Net capital additions - property and
equipment . . . . . . . . . . . . . . (3,805) (2,082)
Other acquisitions and investments,
net of cash balances assumed. . . . . (1,100) (224)
Investments in real estate ventures:
Capital contributions and advances to
real estate ventures. . . . . . . . (550) (7,966)
Distributions, repayments of advances
and sale of investments . . . . . . 3,239 2,887
---------- ----------
Net cash used in
investing activities. . . . . . (2,216) (7,385)

JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

THREE MONTHS ENDED MARCH 31, 2003 AND 2002
($ in thousands)
(UNAUDITED)

2003 2002
---------- ----------
Cash flows provided by financing activities:
Proceeds from borrowings under credit
facilities. . . . . . . . . . . . . . . 116,623 129,717
Repayments of borrowings under credit
facilities. . . . . . . . . . . . . . . (89,990) (104,563)
Shares repurchased for payment of
taxes on stock awards . . . . . . . . . (780) --
Common stock issued under stock option
plan and stock purchase programs. . . . -- 409
---------- ----------
Net cash provided by
financing activities. . . . . . . 25,853 25,563
---------- ----------
Net (decrease) increase in cash
and cash equivalents. . . . . . . (169) 1,447

Cash and cash equivalents,
beginning of period . . . . . . . . . . . 13,654 10,446
---------- ----------
Cash and cash equivalents, end of period. . $ 13,485 11,893
========== ==========

Supplemental disclosure of cash flow
information:

Cash paid (received) during the period for:
Interest. . . . . . . . . . . . . . . . $ 315 276
Taxes, net of refunds . . . . . . . . . 1,525 (506)

See accompanying notes to consolidated financial statements.

JONES LANG LASALLE INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Readers of this quarterly report should refer to the audited financial
statements of Jones Lang LaSalle Incorporated ("Jones Lang LaSalle", which
may also be referred to as the "Company" or as "we," "us" or "our") for the
year ended December 31, 2002, which are included in Jones Lang LaSalle's
2002 Form 10-K, filed with the United States of America Securities and
Exchange Commission and also available on our website, since certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report. You
should also refer to the "Summary of Critical Accounting Policies and
Estimates" section within Item 2., "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained herein for further
discussion of our accounting policies and estimates.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM INFORMATION

Our consolidated financial statements as of March 31, 2003 and for
the three months ended March 31, 2003 and 2002 are unaudited;
however, in the opinion of management, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation of the consolidated financial statements for these
interim periods have been included. The results for the periods
ended March 31, 2003 and 2002 are not necessarily indicative of the
results to be obtained for the full fiscal year.

RECLASSIFICATIONS

We have reclassified certain prior year amounts to conform with the
current presentation.

Beginning in December 2002, pursuant to the Financial Accounting
Standards Board's ("FASB") Emerging Issues Task Force ("EITF") No.
01-14, "Income Statement Characterization of Reimbursements Received
for 'Out-of-Pocket' Expenses Incurred", we have reclassified
reimbursements received for out-of-pocket expenses to revenues in the
income statement, as opposed to being shown as a reduction of
expenses. Out-of-pocket expenses include, but are not limited to,
expenses related to airfare, mileage, hotel stays, out-of-town meals,
photocopies and telecommunications and facsimile charges. These out-
of-pocket expenses amounted to $1.4 million and $920,000 for the
three months ended March 31, 2003 and 2002, respectively. This
reclassification has no impact on reported operating loss, net loss
or cash flows for either period.

Beginning in December 2002, we reclassified as revenue our recovery
of indirect costs related to our management services business, as
opposed to being classified as a reduction of expenses in the income
statement. This recovery of indirect costs amounted to $5.3 million
and $5.0 million for the three months ended March 31, 2003 and 2002,
respectively. This reclassification has no impact on reported
operating loss, net loss or cash flows for either period.

The three months ended March 31, 2002 reflect a reclassification made
to separately identify the non-recurring and restructuring charges
relating to this period. This reclassification has no impact on
reported operating loss, net loss or cash flows for the period.

EARNINGS PER SHARE

For the three months ended March 31, 2003 and 2002, we calculated
basic and diluted losses per common share based on basic weighted
average shares outstanding of 30.7 million and 30.2 million,
respectively. As a result of the net losses incurred for these
periods, diluted weighted average shares outstanding do not give
effect to common stock equivalents, since to do so would be anti-
dilutive. These common stock equivalents consist principally of
shares to be issued under employee stock compensation programs and
outstanding stock options whose exercise price was less than the
average market price of our stock during these periods. In addition,
we did not include in the weighted average shares outstanding for the
three months ended March 31, 2003 the 300,000 shares that we
repurchased in the fourth quarter of 2002 and which are held by one
of our subsidiaries.

STATEMENT OF CASH FLOWS

The effects of foreign currency translation on cash balances are
reflected in cash flows from operating activities on the Consolidated
Statements of Cash Flows.

INCOME TAX PROVISION

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. Based on our 2003 forecasted results we have estimated an
effective tax rate of 34% for 2003. While there can be no assurance
that we will achieve an effective tax rate of 34% in 2003, we believe
that this is an achievable rate due to the impact of tax planning,
particularly planning to reduce the impact of losses in jurisdictions
where we cannot recognize tax benefits and planning to reduce the
incidence of double taxation of earnings and other tax
inefficiencies. For the three months ended March 31, 2002, we used an
estimated effective tax rate of 40% on recurring operations. Due to
the impact of tax planning undertaken later in the year, we
ultimately achieved an effective tax rate of 34% on recurring
operations for the full year of 2002. We continuously seek to develop
and implement potential strategies and/or actions that would reduce
our overall effective tax rate. We reflect the benefit from tax
planning actions when we believe it is probable that they will be
successful, which usually requires that certain actions have been
initiated.

STOCK-BASED COMPENSATION

The amended and restated Stock Award and Incentive Plan ("SAIP"),
adopted in 1997 and amended and restated in 2002 provides for the
granting of options to purchase a specified number of shares of
common stock and other stock awards to eligible participants of Jones
Lang LaSalle. We account for our stock option and stock compensation
plans under the provisions of FASB Statement No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), as amended by FASB Statement
No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure" ("SFAS 148"), which allows entities to continue to apply
the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), using the
intrinsic value based method, and provide pro forma net income and
net income per share as if the fair value based method, defined in
SFAS 123, as amended, had been applied. We have elected to apply the
provisions of APB 25 in accounting for stock options and other stock
awards. Therefore, pursuant to APB 25, no compensation expense has
been recognized with respect to options granted at the market value
of our common stock on the date of grant. Other stock awards, which
were granted at prices below the market value of our common stock on
the date of grant, have been recognized as compensation expense over
the vesting period of those awards pursuant to APB 25. The following
table provides pro forma net loss and net loss per common share as if
the fair value based method had been applied to all awards ($ in
thousands, except share data):

March 31, March 31,
2003 2002
---------- ----------

Net loss, as reported. . . . . . . $ (7,247) (4,035)

Add: Stock-based employee
compensation expense included
in reported net loss,
net of related tax effects . . . 1,795 1,347

Deduct: Total stock-based employee
compensation expense determined
under fair value based method
for all awards, net of related
tax effects. . . . . . . . . . . (2,174) (1,621)
-------- --------
Pro forma net loss . . . . . . . . $ (7,626) (4,309)
======== =========
Loss per share:
Basic - as reported . . . . . $ (0.24) (0.13)
======== =========
Basic - pro forma . . . . . . $ (0.25) (0.14)
======== =========

Diluted - as reported . . . . $ (0.24) (0.13)
======== =========
Diluted - pro forma . . . . . $ (0.25) (0.14)
======== =========

As a result of a change in compensation strategy, other than as an
inducement to certain new employees, we do not generally utilize
stock option grants as part of our employee compensation strategy.

DERIVATIVES AND HEDGING ACTIVITIES

We apply FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), as amended by FASB
Statement No. 138, "Accounting For Certain Derivative Instruments and
Certain Hedging Activities", when accounting for derivatives and
hedging activities.

In the normal course of business, we use derivative financial
instruments in the form forward foreign currency exchange contracts
to manage foreign currency risk. At March 31, 2003, we had forward
exchange contracts in effect with a gross notional value of $140.0
million ($85.8 million on a net basis) and a market and carrying gain
of approximately $700,000. In the past we have used interest rate
swap agreements to limit the impact of changes in interest rates on
earnings and cash flows. We did not use any interest rate swap
agreements in 2002 or in the first quarter of 2003 and there were no
such agreements outstanding as of March 31, 2003.

We require that hedging derivative instruments be effective in
reducing the exposure that they are designated to hedge. This
effectiveness is essential to qualify for hedge accounting treatment.
Any derivative instrument used for risk management that does not meet
the hedging criteria is marked-to-market each period with changes in
unrealized gains or losses recognized currently in earnings.

As a firm, we do not enter into derivative financial instruments for
trading or speculative purposes. We hedge any foreign currency
exchange risk resulting from intercompany loans through the use of
foreign currency forward contracts. SFAS 133 requires that
unrealized gains and losses on these derivatives be recognized
currently in earnings. The gain or loss on the re-measurement of the
foreign currency transactions being hedged is also recognized in
earnings. The net impact on our earnings during the three months
ended March 31, 2003 of the unrealized gain on foreign currency
contracts, offset by the loss resulting from re-measurement of
foreign currency transactions, was not significant.

REVENUE RECOGNITION

In certain of our businesses, primarily those involving management
services, our clients reimburse us for expenses we incur on their
behalf. We base the treatment of reimbursable expenses for financial
reporting purposes upon the fee structure of the underlying contract.
A contract that provides a fixed fee/billing, fully inclusive of all
personnel or other recoverable expenses that we incur, and not
separately scheduled as such, is reported on a gross basis. This
means that our reported revenues include the full billing to our
client and our reported expenses include all costs associated with
the client. When the fee structure is comprised of at least two
distinct elements, namely (i) the fixed management fee and (ii) a
separate component which allows for scheduled reimbursable personnel
or other expenses to be billed directly to the client, we will
account for the contract on a net basis. This means we include the
fixed management fee in reported revenues and we net the
reimbursement against expenses. This characterization is based on the
following factors: (i) the property owner generally has the authority
over hiring practices and the approval of payroll prior to payment by
Jones Lang LaSalle; (ii) Jones Lang LaSalle is the primary obligor
with respect to the property personnel, but bears little or no credit
risk under the terms of the management contract; (iii) reimbursement
to Jones Lang LaSalle is generally completed simultaneously with
payment of payroll or soon thereafter; and (iv) Jones Lang LaSalle
generally earns no margin in the arrangement, obtaining reimbursement
only for actual costs incurred. The majority of our service contracts
utilize the latter structure and are accounted for on a net basis. We
have always presented the above reimbursable contract costs on a net
basis in accordance with accounting principles generally accepted in
the United States of America. Such costs aggregated $97.9 million and
$93.6 million for the three months ended March 31, 2003 and 2002,
respectively. This treatment has no impact on operating loss, net
loss or cash flows.

LEGAL PROCEEDINGS

The Company has contingent liabilities from various pending claims
and litigation matters arising in the ordinary course of business,
some of which involve claims from damages that are substantial in
amount. Many of these matters are covered by insurance. Although the
ultimate liability for these matters cannot be determined, 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.

On November 8, 2002, Bank One N.A. ("Bank One") filed suit against
the Company and certain of its subsidiaries in the Circuit Court of
Cook County, Illinois with regard to three different agreements
relating to facility management, project development and broker
services. The suit alleges negligence, breach of contract and breach
of fiduciary duty on the part of Jones Lang LaSalle and seeks damages
to recover a total of $40 million in compensatory damages and $80
million in punitive damages. The Company is aggressively defending
the suit and on December 16, 2002 filed a counterclaim for breach of
contract seeking payment of approximately $1.2 million for fees due
for services provided under the agreements. While there can be no
assurance as to the outcome, the Company believes that the complaint
is without merit and, as such, will not have a material adverse
effect on our financial position, results of operations or liquidity.
The suits are in their early stages. As of the date of this report,
we are in the process of discovery and no trial date has been set. As

such, the outcome of Bank One's suit cannot be predicted with any
certainty and management is unable to estimate an amount or range of
potential loss that could result if an improbable unfavorable outcome
did occur.

(2) BUSINESS SEGMENTS

We manage our business along a combination of geographic and
functional lines. We report operations as four business segments:
the three geographic regions of Owner and Occupier Services ("OOS"),
(i) Americas, (ii) Europe and (iii) Asia Pacific, each of which offer
our full range of Corporate Solutions, Investor Services and Capital
Markets Services; and (iv) Investment Management, which offers
investment management services on a global basis. The OOS business
consists primarily of tenant representation and agency leasing,
capital markets and valuation services (collectively, "implementation
services") and property management, corporate property services and
project and development management services (collectively,
"management services"). The Investment Management segment provides
real estate investment management services to institutional
investors, corporations, and high-net-worth individuals.

Total revenue by industry segment includes revenue derived from
services provided to other segments. Operating income represents
total revenue less direct and indirect allocable expenses. We
allocate all expenses, 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,
including certain globally managed stock programs. We allocate these
corporate global overhead expenses to the business segments based on
the relative revenue of each segment.

Our measure of segment operating results excludes non-recurring and
restructuring charges. See Note 3 for a detailed discussion of these
non-recurring and restructuring charges. We have determined that it
is not meaningful to investors to allocate these non-recurring and
restructuring charges to our segments. In addition, the Chief
Operating Decision Maker of Jones Lang LaSalle measures the segment
results without these charges allocated and performance for incentive
compensation purposes is assessed before the impact of these charges.

The following table summarizes unaudited financial information by
business segment for the three months ended March 31, 2003 and 2002
($ in thousands):

SEGMENT
OPERATING RESULTS
----------------------
MARCH 31,
2003 2002
-------- --------
OWNER AND OCCUPIER SERVICES -
AMERICAS
Revenue:
Implementation services . . . . . . . $ 21,601 20,581
Management services . . . . . . . . . 36,968 34,263
Equity losses . . . . . . . . . . . . -- (10)
Other services. . . . . . . . . . . . 886 877
Intersegment revenue. . . . . . . . . 69 117
-------- --------
59,524 55,828
Operating expenses:
Compensation, operating and
administrative expenses . . . . . . 56,416 53,051
Depreciation and amortization . . . . 4,659 4,893
-------- --------
Operating loss. . . . . . . . . $ (1,551) (2,116)
======== ========

SEGMENT
OPERATING RESULTS
----------------------
MARCH 31,
2003 2002
-------- --------
EUROPE
Revenue:
Implementation services . . . . . . . $ 48,789 45,146
Management services . . . . . . . . . 20,920 18,344
Other services. . . . . . . . . . . . 1,593 1,247
-------- --------
71,302 64,737
Operating expenses:
Compensation, operating and
administrative expenses . . . . . . 69,981 61,903
Depreciation and amortization . . . . 2,765 2,556
-------- --------
Operating income (loss) . . . . $ (1,444) 278
======== ========
ASIA PACIFIC
Revenue:
Implementation services . . . . . . . $ 15,005 14,892
Management services . . . . . . . . . 14,280 12,927
Other services. . . . . . . . . . . . 463 405
-------- --------
29,748 28,224
Operating expenses:
Compensation, operating and
administrative expenses . . . . . . 33,042 29,531
Depreciation and amortization . . . . 1,944 1,719
-------- --------
Operating loss. . . . . . . . . $ (5,238) (3,026)
======== ========
INVESTMENT MANAGEMENT -
Revenue:
Implementation services . . . . . . . $ 1,768 584
Advisory fees . . . . . . . . . . . . 22,715 18,560
Equity earnings (losses). . . . . . . 80 (68)
Other services. . . . . . . . . . . . 29 82
-------- --------
24,592 19,158
Operating expenses:
Compensation, operating and
administrative expenses . . . . . . 22,878 18,003
Depreciation and amortization . . . . 322 303
-------- --------
Operating income. . . . . . . . $ 1,392 852
======== ========

Total segment revenue . . . . . . . . . . $185,166 167,947
Intersegment revenue eliminations . . . . (69) (117)
-------- --------
Total revenue . . . . . . . . . $185,097 167,830
======== ========

Total segment operating expenses. . . . . $192,007 171,959
Intersegment operating expense
eliminations. . . . . . . . . . . . . . (69) (117)
-------- --------
Total operating expenses before
non-recurring and
restructuring charges . . . . $191,938 171,842
======== ========
Non-recurring and restruc-
turing charges. . . . . . . . $ 56 100
======== ========
Operating loss. . . . . . . . . $ (6,897) (4,112)
======== ========

(3) NON-RECURRING AND RESTRUCTURING CHARGES

For the three months ended March 31, 2003 and 2002, non-recurring and
restructuring charges totaled $56,000 and $100,000, respectively. The
charges consist of the following elements ($ in thousands):

March 31, March 31,
2003 2002
--------- ---------
Non-Recurring & Restructuring
- -----------------------------

Land Investment and Development
Group Impairment. . . . . . . . . . . . . . $ -- 80

2001 Global Restructuring Program:
Compensation & Benefits . . . . . . . . . . -- 20
Operating, Administrative & Other . . . . . -- --

2002 Global Restructuring Program:
Compensation & Benefits . . . . . . . . . . (444) --
Operating, Administrative & Other . . . . . 500 --
-------- --------
Total Non-Recurring & Restructuring . . . . . $ 56 100
======== ========

LAND INVESTMENT AND DEVELOPMENT GROUP IMPAIRMENT

As part of our broad based business restructuring in the second half
of 2001, we closed the non-strategic residential land investment
business in the Americas region of our Investment Management segment.
We include in investment in and loans to real estate ventures the
book value of the five remaining investments of $2.1 million, net of
impairment charges of $6.3 million recorded in prior years. We
included in non-recurring expense for the three months ended
March 31, 2002 equity losses of $72,000. There were no similar
charges for the three months ended March 31, 2003. We have provided
guarantees associated with this investment portfolio of $1.2 million,
which we currently do not expect to fund. We currently expect to have
liquidated the Land Investment Group investments by the end of 2006.

Additionally, as part of the 2001 restructuring program, we disposed
of our Americas Development Group, although we retained an interest
in certain investments the group had originated. We included in non
recurring expense for the three months ended March 31, 2002 equity
losses of $8,000. There were no similar charges for the three months
ended March 31, 2003. We include in investments in and loans to real
estate ventures the book value of the one remaining Development Group
investment of $658,000. We currently expect to have liquidated this
investment by the end of 2003.

BUSINESS RESTRUCTURING

Business restructuring charges include severance, professional fees
and costs related to excess lease space associated with the
realignment of our business. The actual costs incurred with respect
to our 2002 restructuring have varied from our original estimates for
a variety of reasons, including the identification of additional
facts and circumstances, the complexity of international labor law
and developments in the underlying business resulting in the
unforeseen reallocation of resources and better or worse than
expected settlement discussions with employees and/or landlords.
These events resulted in the recording of a credit to non-recurring
compensation and benefits expense of $444,000 and the recording of
approximately $500,000 to non-recurring operating, administrative and
other expense for additional lease costs of excess space reflecting a
lease modification signed in the first quarter of 2003.

The following table displays the net charges for the three months
ended March 31, 2003 and 2002 (in thousands):

March 31, March 31,
2003 2002
--------- ---------
NON-RECURRING & RESTRUCTURING
- -----------------------------
Owner and Occupier Services:
Americas. . . . . . . . . . . . . . . . . . $ -- 8
Europe. . . . . . . . . . . . . . . . . . . 56 --
Asia Pacific. . . . . . . . . . . . . . . . -- --

Investment Management . . . . . . . . . . . . -- 72
Corporate . . . . . . . . . . . . . . . . . . -- 20
-------- --------
Total Non-Recurring & Restructuring . . . . . $ 56 100
======== ========

(4) ACCOUNTING FOR BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE
ASSETS

We apply FASB Statement No. 141, "Business Combinations" ("SFAS
141"), when accounting for business combinations. SFAS 141 requires
that we use purchase method of accounting for all business
combinations completed after June 30, 2001. SFAS 141 also specifies
that intangible assets acquired in a purchase method business
combination must meet certain criteria to be recognized and reported
apart from goodwill. The acquisition of the minority interest in our
Skandia joint venture was at a discount to the fair value of the net
assets acquired. As a result, we recorded an after-tax gain of
$341,000 as an extraordinary item in the fourth quarter of 2002.

We apply FASB Statement No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"), when accounting for goodwill and other
intangible assets. SFAS 142 requires an annual impairment evaluation
of intangibles with indefinite useful lives. To accomplish this
annual evaluation we determine the carrying value of each reporting
unit by assigning assets and liabilities, including the existing
goodwill and intangible assets, to those reporting units as of the
date of evaluation. For purposes of evaluating SFAS 142, we define
reporting units as Investment Management, Americas OOS, Australia
OOS, Asia OOS, and by country groups in Europe OOS. The result of the
2002 evaluation was that the fair value of each reporting unit
exceeded its carrying amount, and therefore no impairment loss was
recognized on goodwill. The 2003 evaluation is planned to take place
later this year. There were no triggering events in the first
quarter that would have required an impairment evaluation.

We have $333.8 million of unamortized intangibles and goodwill as of
March 31, 2003, that are subject to the provisions of SFAS 142. A
significant portion of these unamortized intangibles and goodwill are
denominated in currencies other than US dollars, which means that a
portion of the movements in the reported book value of these balances
are attributable to movements in foreign currency exchange rates.
The tables below set forth further details on the foreign exchange
impact on intangible and goodwill balances. Of the $333.8 million of
unamortized intangibles and goodwill, $316.7 million represents
goodwill with indefinite useful life, which we ceased amortizing
January 1, 2002. As a result of adopting SFAS 142 on January 1,
2002, we credited to the income statement, as the cumulative effect
of a change in accounting principle, $846,000, which represented our

negative goodwill balance at January 1, 2002. The gross carrying
amount of this negative goodwill (which related to the Americas OOS
reporting segment) at January 1, 2002 was $1.4 million with
accumulated amortization of $565,000. The remaining $17.1 million of
identified intangibles (principally representing management contracts
acquired) will be amortized over their remaining definite useful
lives (with a maximum of four years remaining). Other than the
prospective non-amortization of goodwill, which results in a non-cash
improvement in our operating results, the adoption of SFAS 142 did
not have a material effect on our revenue, operating results or
liquidity.

In accordance with SFAS 142, the effect of this accounting change is
applied prospectively. Supplemental comparative disclosure as if the
change had been retroactively applied to the prior period is as
follows ($ in thousands, except share data):
For the
Three Months Ended
March 31,
------------------
2003 2002
-------- --------
Reported net loss. . . . . . . . . . . . . . $ (7,247) (4,035)
Add back: Cumulative effect of change in
accounting principle . . . . . . . . . . . -- (846)
-------- --------
Adjusted net loss. . . . . . . . . . . . . . $ (7,247) (4,881)
======== ========

Basic loss per common share. . . . . . . . . $ (0.24) (0.13)
Cumulative effect of change in accounting
principle. . . . . . . . . . . . . . . . . -- (0.03)
-------- --------
Adjusted basic loss per common share . . . . $ (0.24) (0.16)
======== ========

Diluted loss per common share. . . . . . . . $ (0.24) (0.13)
Cumulative effect of change in accounting
principle. . . . . . . . . . . . . . . . . -- (0.03)
-------- --------
Adjusted diluted loss per common share . . . $ (0.24) (0.16)
======== ========

The following table sets forth, by reporting segment, the current
year movements in the gross carrying amount and accumulated
amortization of our goodwill with indefinite useful lives ($ in
thousands):

Owner and Occupier Services Invest-
----------------------------- ment
Asia Manage- Consol-
Americas Europe Pacific ment idated
-------- -------- -------- -------- --------
Gross Carrying
Amount
- --------------
Balance as of
January 1, 2003 . .$179,335 58,145 82,755 31,640 351,875

Impact of exchange
rate movements. . . 28 (1,096) 2,245 (273) 904
-------- -------- -------- -------- --------
Balance as of
March 31, 2003. . .$179,363 57,049 85,000 31,367 352,779

Owner and Occupier Services Invest-
----------------------------- ment
Asia Manage- Consol-
Americas Europe Pacific ment idated
-------- -------- -------- -------- --------
Accumulated
Amortization
- ------------
Balance as of
January 1, 2003 . .$(15,531) (4,704) (5,835) (10,328) (36,398)

Impact of exchange
rate movements. . . 4 471 (162) 33 346
-------- -------- -------- -------- --------
Balance as of
March 31, 2003. . .$(15,527) (4,233) (5,997) (10,295) (36,052)

Net book value. . . .$163,836 52,816 79,003 21,072 316,727
======== ======== ======== ======== ========

The following table sets forth, by reporting segment, the current
year movements in the gross carrying amount and accumulated
amortization of our intangibles with definite useful lives as well as
estimated future amortization expense ($ in thousands, unless
otherwise noted).

Impact of exchange
rate movements. . . -- (12) 162 (66) 84
-------- -------- -------- -------- --------
Balance as of
March 31, 2003. . .$ 39,377 807 2,458 4,714 47,356

Accumulated
Amortization
- ------------
Balance as of
January 1, 2003 . .$(22,494) (435) (1,219) (4,780) (28,928)

Amortization expense
- Q1. . . . . . . . (1,192) (26) (75) -- (1,293)
Impact of exchange
rate movements. . . (5) 7 (88) 66 (20)
-------- -------- -------- -------- --------
Balance as of
March 31, 2003. . .$(23,691) (454) (1,382) (4,714) (30,241)

Net book value. . . .$ 15,686 353 1,076 -- 17,115
======== ======== ======== ======== ========

ESTIMATED ANNUAL AMORTIZATION EXPENSE
Remaining 2003 Amortization $3.9 million
For Year Ended 12/31/04 $5.2 million
For Year Ended 12/31/05 $4.7 million
For Year Ended 12/31/06 $3.2 million
For Year Ended 12/31/07 None

(5) NEW ACCOUNTING STANDARDS

ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

We adopted the provisions of FASB Statement No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS 143"), as of January 1, 2003.
SFAS 143 addresses financial accounting and reporting obligations
associated with the retirement of tangible long-lived assets and the
associated retirement costs. The standard applies to legal
obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and/or normal
use of the asset.

SFAS 143 requires that the fair value of the liability for an asset
retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The fair
value of the liability is added to the carrying amount of the
associated asset and this additional carrying amount is depreciated
over the life of the asset. The liability is accreted at the end of
each period through charges to operating expense. If the obligation
is settled for other than the carrying amount of the liability, the
Company will recognize a gain or loss on settlement. Operating
leases for space we occupy in certain of our Asian markets contain
obligations that would require us, on termination of the lease, to
reinstate the space to its original condition. We have assessed our
liability under such obligations as required by the adoption of SFAS
143. This has not had a material impact on our financial statements.

ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

As of January 1, 2003, we adopted FASB Statement No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities" ("SFAS 146").
SFAS 146 requires that a liability for costs associated with an exit
or disposal activity be recognized when the liability is incurred
rather than when a company commits to such an activity and also
establishes fair value as the objective for initial measurement of
the liability. SFAS 146 is effective for exit or disposal activities
that are initiated after December 31, 2002. The adoption has not had
a material impact on our financial statements.

ACCOUNTING AND DISCLOSURE BY GUARANTORS

We apply FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others" ("FIN 45"), which addresses the disclosure
to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees. The Company has
not entered into, or modified guarantees pursuant to the recognition
provisions of FIN 45 during the three months ended March 31, 2003.
Guarantees covered by the disclosure provisions of FIN 45 are
discussed in the "Liquidity and Capital Resources" section within
Item 2., "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained herein.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In January 2003, the FASB issued Interpretation No. 46, "Consolida
tion of Variable Interest Entities, an Interpretation of ARB No. 51"
("FIN 46"). FIN 46 addresses the consolidation by business
enterprises of variable interest entities as defined. FIN 46 applies
immediately to variable interests in variable interest entities
created after January 31, 2003. We have not invested in any variable
interest entities created after January 31, 2003. For public
enterprises with a variable interest entity created before
February 1, 2003, FIN 46 applies to that enterprise no later than the
beginning of the first interim or annual period beginning after
June 15, 2003. We are still analyzing the requirements of FIN 46 and
do not anticipate that its adoption will have a material impact on
our financial statements.

(6) UNITED KINGDOM RETIREMENT PLAN

We maintain a contributory defined benefit pension plan in the United
Kingdom to provide retirement benefits to eligible employees. On
January 1, 2003 we curtailed the United Kingdom defined benefit plan
and implemented a defined contribution plan. No gain or loss was
required to be recognized as a result of the curtailment. The table
below shows how the curtailment impacted the accumulated benefit
obligation, the projected benefit obligation and the fair value of
the plan assets (amounts in millions):

At At
December 31, January 1,
2002 2003
------------ ----------

Projected benefit obligation . . . $ 104.2 $ 92.7
------- -------
Accumulated benefit obligation . . $ 82.2 $ 90.1
Fair value of plan assets. . . . . $ 85.3 $ 85.3
Surplus/(Shortfall) of
Plan Assets to accumulated
benefit obligation . . . . . . . $ 3.1 $ (4.8)

Given that after the curtailment the accumulated benefit obligation
exceeds the fair value of plan assets, we are required under
accounting principles generally accepted in the United States of
America to record a minimum pension liability through other
comprehensive income in stockholders' equity. The minimum pension
liability is equal to the excess accumulated benefit obligation of
$4.8 million plus the value of the prepaid pension asset relating to
the United Kingdom defined benefit plan which was $8.1 million at
January 1, 2003. The adjustment to reflect the required minimum
pension liability of $12.9 million, net of associated tax benefit of
$3.9 million, was recorded through other comprehensive income in the
three months ended March 31, 2003.

(7) SHARE REPURCHASE

On October 30, 2002, we announced that our Board of Directors had
approved a share repurchase program. Under the program, we may
repurchase up to one million shares of our outstanding common stock
in the open market and in privately negotiated transactions from time
to time, depending upon market prices and other conditions. In the
fourth quarter of 2002, we repurchased 300,000 shares at an average
price of $15.56 per share. We did not repurchase any shares in the
first quarter of 2003. Given that shares repurchased under this
program are not cancelled, but are held by one of our subsidiaries,
we include them in our equity account. However, these shares are
excluded from our share count for the purposes of calculating
earnings per share.

(8) SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

On July 26, 2000, Jones Lang LaSalle Finance B.V. ("JLL Finance"), a
wholly-owned subsidiary of Jones Lang LaSalle, issued 9% Senior Euro
Notes with an aggregate principal amount of euro 165 million, due
2007 (the "Euro Notes"). The payment obligations under the Euro
Notes are fully and unconditionally guaranteed by Jones Lang LaSalle
Incorporated and certain of its wholly-owned subsidiaries: Jones
Lang LaSalle Americas, Inc.; LaSalle Investment Management, Inc.;

Jones Lang LaSalle International, Inc.; Jones Lang LaSalle Co-
Investment, Inc.; and Jones Lang LaSalle Ltd. (the "Guarantor
Subsidiaries"). All of Jones Lang LaSalle Incorporated's remaining
subsidiaries (the "Non-Guarantor Subsidiaries") are owned by the
Guarantor Subsidiaries. The following supplemental Condensed
Consolidating Balance Sheets as of March 31, 2003 and December 31,
2002, Condensed Consolidating Statement of Earnings for the three
months ended March 31, 2003 and 2002, and Condensed Consolidating
Statement of Cash Flows for the three months ended March 31, 2003 and
2002 present financial information for (i) Jones Lang LaSalle
Incorporated (carrying any investment in subsidiaries under the
equity method), (ii) Jones Lang LaSalle Finance B.V. (the issuer of
the Euro Notes), (iii) on a combined basis the Guarantor Subsidiaries
(carrying any investment in Non-Guarantor subsidiaries under the
equity method) and (iv) on a combined basis the Non-Guarantor
Subsidiaries (carrying their investment in JLL Finance under the
equity method). Separate financial statements of the Guarantor
Subsidiaries are not presented because the guarantors are jointly,
severally, and unconditionally liable under the guarantees, and Jones
Lang LaSalle Incorporated believes that separate financial statements
and other disclosures regarding the Guarantor Subsidiaries are not
material to investors. In general, historically, Jones Lang LaSalle
Incorporated has entered into third party borrowings, financing its
subsidiaries via intercompany accounts that are then converted into
equity, or long-term notes, on a periodic basis. Certain Guarantor
and Non-Guarantor Subsidiaries also enter into third party borrowings
on a limited basis. All intercompany activity has been included as
subsidiary activity in investing activities in the Condensed
Consolidating Statements of Cash Flows. We manage cash on a
consolidated basis and there is a right of offset between bank
accounts in the different groupings of legal entities in the
condensed consolidating financial information. Therefore, in certain
cases, negative cash balances have not been reallocated to payables
as they legally offset positive cash balances elsewhere in Jones Lang
LaSalle Incorporated. In certain cases, we have calculated taxes on
the basis of a group position that includes both Guarantor and Non
Guarantor Subsidiaries. In such cases, the taxes have been allocated
to individual legal entities on the basis of that legal entity's pre
tax income. For periodic reporting purposes, the adjustment for the
global effective tax rate is made in the parent organization. In
addition to the reclassifications listed in Note 1, in the first
quarter of 2003, $17 million of goodwill related to the JLW merger
was reclassified from the guarantor subsidiary Jones Lang LaSalle,
Ltd. to various non-guarantor subsidiaries. We have reclassified the
December 31, 2002 comparative balance sheet to reflect this movement.

<table>
JONES LANG LASALLE INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

CONDENSED CONSOLIDATING BALANCE SHEET

As of March 31, 2003
($ in thousands)

<caption>
Jones Lang
LaSalle Consolidated
Incorporated Jones Lang Jones Lang
(Parent and LaSalle Guarantor Non-Guarantor LaSalle
Guarantor) Finance B.V. Subsidiaries Subsidiaries Eliminations Incorporated
------------ ----------- ------------ ------------- ------------ ------------
<s> <c> <c> <c> <c> <c> <c>

ASSETS
- ------
Cash and
cash equivalents. . $ 2,933 76 (2,472) 12,948 -- 13,485
Trade receivables,
net of allowances . -- -- 64,381 130,374 -- 194,755
Other current assets. 12,106 -- 24,766 26,034 -- 62,906
---------- ---------- ---------- ---------- ---------- ----------
Total current
assets. . . . . 15,039 76 86,675 169,356 -- 271,146

Property and equipment,
at cost, less accumu-
lated depreciation . 4,616 -- 36,758 36,799 -- 78,173
Intangibles resulting
from business acquisi-
tions and JLW merger,
net of accumulated
amortization . . . . -- -- 212,840 121,002 -- 333,842
Other assets, net . . 18,747 -- 68,745 38,285 -- 125,777
Investments in
subsidiaries . . . . 270,246 -- 287,096 905 (558,247) --
---------- ---------- ---------- ---------- ---------- ----------
$ 308,648 76 692,114 366,347 (558,247) 808,938
========== ========== ========== ========== ========== ==========

JONES LANG LASALLE INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

CONDENSED CONSOLIDATING BALANCE SHEET

As of March 31, 2003
($ in thousands)

Jones Lang
LaSalle Consolidated
Incorporated Jones Lang Jones Lang
(Parent and LaSalle Guarantor Non-Guarantor LaSalle
Guarantor) Finance B.V. Subsidiaries Subsidiaries Eliminations Incorporated
------------ ----------- ------------ ------------- ------------ ------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
- --------------------

Accounts payable and
accrued liabilities $ 15,359 5,499 21,870 46,318 -- 89,046
Short-term borrowings -- 33 6,012 8,528 -- 14,573
Other current
liabilities . . . . (65,627) (240,624) 381,259 21,966 -- 96,974
---------- ---------- ---------- ---------- ---------- ----------
Total current
liabilities . . (50,268) (235,092) 409,141 76,812 -- 200,593

Long-term liabilities:
Credit facilities . -- 54,000 -- -- -- 54,000
9% Senior Euro
Notes, due 2007 . -- 180,263 -- -- -- 180,263
Other . . . . . . . 5,012 -- 12,727 7,098 -- 24,837
---------- ---------- ---------- ---------- ---------- ----------

Total liabilities (45,256) (829) 421,868 83,910 -- 459,693

Commitments and
contingencies

Stockholders' equity. 353,904 905 270,246 282,437 (558,247) 349,245
---------- ---------- ---------- ---------- ---------- ----------
$ 308,648 76 692,114 366,347 (558,247) 808,938
========== ========== ========== ========== ========== ==========

</table>

<table>

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2002
($ in thousands)

<caption>
Jones Lang Consoli-
LaSalle Jones Lang dated
Incorporated LaSalle Jones Lang
(Parent and Finance Guarantor Non-Guarantor LaSalle
Guarantor) B.V. Subsidiaries Subsidiaries Eliminations Incorporated
------------ ---------- ------------ ------------- ------------ ------------
<s> <c> <c> <c> <c> <c> <c>
ASSETS
- ------
Cash and cash
equivalents . . . . $ 8,657 65 (3,849) 8,781 -- 13,654
Trade receivables,
net of allowances . -- -- 84,033 143,546 -- 227,579
Other current assets. 21,303 -- 29,006 14,763 -- 65,072
---------- ---------- ---------- ---------- ---------- ----------
Total current
assets. . . . . 29,960 65 109,190 167,090 -- 306,305

Property and equipment,
at cost, less accumu-
lated depreciation. 5,088 -- 38,913 37,651 -- 81,652
Intangibles resulting
from business acquisi-
tions and JLW merger,
net of accumulated
amortization. . . . -- -- 214,524 119,297 -- 333,821
Other assets, net . . 16,399 -- 77,047 37,292 -- 130,738
Investment in
subsidiaries. . . . 280,330 -- 283,585 774 (564,689) --
---------- ---------- ---------- ---------- ---------- ----------
$ 331,777 65 723,259 362,104 (564,689) 852,516
========== ========== ========== ========== ========== ==========

CONDENSED CONSOLIDATING BALANCE SHEET - CONTINUED
As of December 31, 2002
($ in thousands)

Jones Lang Consoli-
LaSalle Jones Lang dated
Incorporated LaSalle Jones Lang
(Parent and Finance Guarantor Non-Guarantor LaSalle
Guarantor) B.V. Subsidiaries Subsidiaries Eliminations Incorporated
------------ ---------- ------------ ------------- ------------ ------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
- --------------------
Accounts payable and
accrued liabilities $ 22,622 1,215 24,184 44,368 -- 92,389
Short-term borrowings -- 205 4,210 11,448 -- 15,863
Other current
liabilities . . . . (64,630) (201,274) 404,201 22,647 -- 160,944
---------- ---------- ---------- ---------- ---------- ----------
Total current
liabilities . . (42,008) (199,854) 432,595 78,463 -- 269,196

Long-term liabilities:
Credit facilities . -- 26,077 -- -- -- 26,077
9% Senior Notes,
due 2007. . . . . -- 173,068 -- -- -- 173,068
Other . . . . . . . 2,168 -- 10,334 4,715 -- 17,217
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities (39,840) (709) 442,929 83,178 -- 485,558

Stockholders' equity. 371,617 774 280,330 278,926 (564,689) 366,958
---------- ---------- ---------- ---------- ---------- ----------
$ 331,777 65 723,259 362,104 (564,689) 852,516
========== ========== ========== ========== ========== ==========

</table>

<table>
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

For the Three Months Ended March 31, 2003
($ in thousands)

<caption>
Jones Lang
LaSalle Consolidated
Incorporated Jones Lang Jones Lang
(Parent and LaSalle Guarantor Non-Guarantor LaSalle
Guarantor) Finance B.V. Subsidiaries Subsidiaries Eliminations Incorporated
------------ ------------ ------------ ------------- ------------ ------------
<s> <c> <c> <c> <c> <c> <c>

Revenue . . . . . . . . .$ -- -- 85,355 99,742 -- 185,097
Equity earnings (loss)
from subsidiaries. . . . (8,263) -- (1,976) 96 10,143 --
---------- ---------- ---------- ---------- ---------- ----------
Total revenue . . . . (8,263) -- 83,379 99,838 10,143 185,097

Operating expenses
before non-recurring
and restructuring
charges. . . . . . . . . 2,330 (54) 87,435 102,227 -- 191,938
Non-recurring and
restructuring charges . -- -- (444) 500 -- 56
---------- ---------- ---------- ---------- ---------- ----------
Operating income
(loss) . . . . . . . (10,593) 54 (3,612) (2,889) 10,143 (6,897)

Interest expense, net
of interest income . . . (1,841) (187) 3,231 2,880 -- 4,083
---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss)
before provision
(benefit) for
income taxes . . . . (8,752) 241 (6,843) (5,769) 10,143 (10,980)

Net provision (benefit)
for income taxes . . . . (1,505) 145 1,420 (3,793) -- (3,733)
---------- ---------- ---------- ---------- ---------- ----------

Net earnings (loss) . . .$ (7,247) 96 (8,263) (1,976) 10,143 (7,247)
========== ========== ========== ========== ========== ==========

</table>

<table> JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

For the Three Months Ended March 31, 2002
($ in thousands)

Revenue . . . . . . . . .$ -- -- 75,623 92,207 -- 167,830
Equity earnings (loss)
from subsidiaries. . . . (3,228) -- (1,444) 58 4,614 --
---------- ---------- ---------- ---------- ---------- ----------
Total revenue . . . . (3,228) -- 74,179 92,265 4,614 167,830

Operating expenses
before non-recurring
and restructuring
charges. . . . . . . . . 3,386 16 75,601 92,839 -- 171,842
Non-recurring and
restructuring charges. . 20 -- 80 -- -- 100
---------- ---------- ---------- ---------- ---------- ----------
Operating income
(loss) . . . . . . . (6,634) (16) (1,502) (574) 4,614 (4,112)

Interest expense, net
of interest income . . . (2,387) (230) 3,584 2,951 -- 3,918
---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss)
before provision
(benefit) for
income taxes and
minority interest. . (4,247) 214 (5,086) (3,525) 4,614 (8,030)

Net provision (benefit)
for income taxes . . . . (212) 156 (1,858) (1,298) -- (3,212)
Minority interests
in earnings of
subsidiaries . . . . . . -- -- -- 63 -- 63
---------- ---------- ---------- ---------- ---------- ----------

JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED

For the Three Months Ended March 31, 2002
($ in thousands)

Net earnings (loss)
before cumulative
effect of change in
accounting principle . . (4,035) 58 (3,228) (2,290) 4,614 (4,881)

Cumulative effect of
change in accounting
principle. . . . . . . . -- -- -- 846 -- 846
---------- ---------- ---------- ---------- ---------- ----------

Net earnings (loss) . . .$ (4,035) 58 (3,228) (1,444) 4,614 (4,035)
========== ========== ========== ========== ========== ==========

</table>

<table> JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2003
($ in thousands)
<caption>
Jones Lang
LaSalle Consolidated
Incorporated Jones Lang Jones Lang
(Parent and LaSalle Guarantor Non-Guarantor LaSalle
Guarantor) Finance B.V. Subsidiaries Subsidiaries Incorporated
------------ ------------ ------------ ------------- ------------
<s> <c> <c> <c> <c> <c>
Cash flows provided by (used in)
operating activities. . . . . $ 3,957 11,575 (28,382) (10,956) (23,806)
Cash flows provided by (used in)
investing activities:
Net capital additions -
property and equipment. . . (25) -- (2,441) (1,339) (3,805)
Other acquisitions and
investments, net of cash
balances assumed. . . . . . -- -- (1,100) -- (1,100)
Subsidiary activity . . . . . (8,876) (39,315) 27,728 20,463 --
Investments in real estate
ventures. . . . . . . . . . -- -- 3,770 (1,081) 2,689
---------- ---------- ---------- ---------- ----------
Net cash provided by
(used in) investing
activities. . . . . . . (8,901) (39,315) 27,957 18,043 (2,216)
Cash flows provided by (used in)
financing activities:
Net borrowings under credit
facility. . . . . . . . . . -- 27,751 1,802 (2,920) 26,633
Shares repurchased. . . . . . (780) -- -- -- (780)
Common stock issued under
stock option plan . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net cash provided by
(used in) financing
activities. . . . . . . (780) 27,751 1,802 (2,920) 25,853
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents. . . . . (5,724) 11 1,377 4,167 (169)
Cash and cash equivalents,
beginning of period . . . . . 8,657 65 (3,849) 8,781 13,654
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period . . . . . . . . $ 2,933 76 (2,472) 12,948 13,485
========== ========== ========== ========== ==========

</table>

<table>
JONES LANG LASALLE INCORPORATED
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2002
($ in thousands)
<caption>
Jones Lang
LaSalle Consolidated
Incorporated Jones Lang Jones Lang
(Parent and LaSalle Guarantor Non-Guarantor LaSalle
Guarantor) Finance B.V. Subsidiaries Subsidiaries Incorporated
------------ ------------ ------------ ------------- ------------
<s> <c> <c> <c> <c> <c>
Cash flows provided by (used in)
operating activities. . . . . $ (311) 3,791 (13,027) (7,184) (16,731)
Cash flows provided by (used in)
investing activities:
Net capital additions -
property and equipment. . . (397) -- (174) (1,511) (2,082)
Investments in e-commerce
ventures. . . . . . . . . . -- -- (224) -- (224)
Subsidiary activity . . . . . 1,131 (33,817) 25,234 7,452 --
Investments in real estate
ventures. . . . . . . . . . -- -- (4,351) (728) (5,079)
---------- ---------- ---------- ---------- ----------
Net cash provided by
(used in) investing
activities. . . . . . . 734 (33,817) 20,485 5,213 (7,385)
Cash flows provided by (used in)
financing activities:
Net borrowings under credit
facility. . . . . . . . . . -- 30,057 (6,440) 1,537 25,154
Common stock issued under
stock option plan . . . . . 409 -- -- -- 409
---------- ---------- ---------- ---------- ----------
Net cash provided by
(used in) financing
activities. . . . . . . 409 30,057 (6,440) 1,537 25,563
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents. . . . . 832 31 1,018 (434) 1,447
Cash and cash equivalents,
beginning of period . . . . . 3,142 52 (2,843) 10,095 10,446
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period . . . . . . . . $ 3,974 83 (1,825) 9,661 11,893
========== ========== ========== ========== ==========
</table>

(9) SUBSEQUENT EVENTS

In April 2003, we completed a feasibility analysis of a property
management and trust accounting system that was in the process of
being implemented in Australia. As a result of the review, we have
concluded that the potential benefits from successfully correcting
deficiencies in the system that would allow it to be implemented
throughout Australia are not justified by the costs that would have
to be incurred to do so. We are currently developing a transition
plan to an existing alternative system which is expected to take up
to six months. The balance sheet value of the abandoned system at
March 31, 2003 was Australian $7.4 million (US $4.5 million). As a
result of this decision, in the second quarter we will estimate the
fair value of the abandoned system and record an impairment charge
for the difference between this fair value and the Australian $7.4
million (US $4.5 million) balance sheet value. Given the short
transition period and limited functionality of the existing system we
do not expect that the fair value will be significant and as a result
expect the impairment charge to be at least Australian $7.0 million
(US $4.3 million).

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto for the three months
ended March 31, 2003, included herein, and Jones Lang LaSalle's audited
consolidated financial statements and notes thereto for the fiscal year
ended December 31, 2002, which have been filed with the United States of
America Securities and Exchange Commission as part of our 2002 Annual
Report on Form 10-K and is also available on our website.

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.
The preparation of our financial statements requires management to make
certain critical accounting estimates that impact the stated amount of
assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues
and expenses during the reporting periods. These accounting estimates are
based on management's judgment and are considered 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.
However, the amounts we may ultimately realize could differ from such
estimated amounts.

REVENUE RECOGNITION - We recognize advisory and management fees in the
period in which we perform the service. Transaction commissions are
recognized as income when we provide the service unless future contin-
gencies exist. If future contingencies exist, we defer recognition of this
revenue until the respective contingencies are satisfied. Development
management fees are generally recognized as billed, which we believe
approximates the percentage of completion method of accounting. Incentive
fees are generally tied to some form of contractual milestone and are
recorded in accordance with the specific terms of the underlying
compensation agreement. The Securities and Exchange Commission's Staff
Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101"), provides
guidance on the application of accounting principles generally accepted in
the United States of America to selected revenue recognition issues. We
believe that our revenue recognition policy is appropriate and in
accordance with accounting principles generally accepted in the United
States of America and SAB 101.

In certain of our businesses, primarily those involving management
services, our clients reimburse us for expenses we incur on their behalf.
We base the treatment of reimbursable expenses for financial reporting
purposes upon the fee structure of the underlying contract. A contract
that provides a fixed fee/billing, fully inclusive of all personnel or
other recoverable expenses that we incur, and not separately scheduled as
such, is reported on a gross basis. This means that our reported revenues
include the full billing to our client and our reported expenses include
all costs associated with the client. When the fee structure is comprised
of at least two distinct elements, namely (i) the fixed management fee and
(ii) a separate component which allows for scheduled reimbursable personnel
or other expenses to be billed directly to the client, we will account for
the contract on a net basis. This means we include the fixed management
fee in reported revenues and we net the reimbursement against expenses.
This characterization is based on the following factors: (i) the property
owner generally has the authority over hiring practices and the approval of
payroll prior to payment by Jones Lang LaSalle; (ii) Jones Lang LaSalle is
the primary obligor with respect to the property personnel, but bears
little or no credit risk under the terms of the management contract; (iii)
reimbursement to Jones Lang LaSalle is generally completed simultaneously
with payment of payroll or soon thereafter; and (iv) Jones Lang LaSalle
generally earns no margin in the arrangement, obtaining reimbursement only

for actual costs incurred. The majority of our service contracts utilize
the latter structure and are accounted for on a net basis. We have always
presented the above reimbursable contract costs on a net basis in
accordance with accounting principles generally accepted in the United
States of America. Such costs aggregated $97.9 million and $93.6 million
for the three months ended March 31, 2003 and 2002, respectively. This
treatment has no impact on operating loss, net loss or cash flows.

Beginning in December 2002, pursuant to the Financial Accounting and
Standards Board's ("FASB") Emerging Issues Task Force ("EITF") No. 01-14,
"Income Statement Characterization of Reimbursements Received for 'Out-of-
Pocket' Expenses Incurred", we have reclassified reimbursements received
for out-of-pocket expenses to revenues in the income statement, as opposed
to being shown as a reduction of expenses. Out-of-pocket expenses include,
but are not limited to, expenses related to airfare, mileage, hotel stays,
out-of-town meals, photocopies and telecommunications and facsimile
charges. These out-of-pocket expenses amounted to $1.4 million and
$920,000 for the three months ended March 31, 2003 and 2002, respectively.
This reclassification has no impact on reported operating loss, net loss or
cash flows for either period.

Beginning in December 2002, we reclassified as revenue our recovery of
indirect costs related to our management services business, as opposed to
being classified as a reduction of expenses in the income statement. This
recovery of indirect costs amounted to $5.3 million and $5.0 million for
the three months ended March 31, 2003 and 2002, respectively. This
reclassification has no impact on reported operating loss, net loss or cash
flows for either period.

ACCOUNTS RECEIVABLE - We estimate the allowance necessary to provide
for uncollectible accounts receivable. This estimate includes specific
accounts for which payment has become unlikely. We also base this estimate
on historical experience, combined with a careful review of current
developments and with a strong focus on credit quality. The process by
which we calculate the allowance begins in the individual business units
where specific problem accounts are identified and reserved as part of an
overall reserve that is formulaic and driven by the age profile of the
receivables. These reserves are then reviewed on a quarterly basis by
regional and global management to ensure that they are appropriate. As part
of this review, we develop a range of potential reserves on a consistent
formulaic basis. Over the last two years we have placed considerable focus
on working capital management and in particular, collecting our receivables
on a more timely basis. As we are successful in doing this, the range of
potential reserves is narrowing. We would normally expect that the
allowance would fall within this range. The table below sets out certain
information regarding our accounts receivable, allowance for uncollectible
accounts receivable, range of possible allowance and the bad debt expense
we incurred for the three months ended March 31, 2003 and 2002 ($ in
millions).
Allowance
Accounts for
Receivable Uncollec-
Gross More Than tible Bad
Accounts 90 Days Accounts Maximum Minimum Debt
Receivable Past Due Receivable Allowance Allowance Expense
-------------------- ---------- --------- --------- -------
March 31,
2003. . $ 199.8 7.2 5.0 6.3 3.2 0.8

March 31,
2002. . $ 176.1 10.7 8.3 9.2 4.6 2.5

PERIODIC ACCOUNTING FOR INCENTIVE COMPENSATION - An important part of
our overall compensation package is incentive compensation, which we
typically pay out to employees in the first quarter of the year after it is
earned. In our interim financial statements we accrue for incentive
compensation based on the percentage of revenue and compensation costs
recorded to date relative to forecasted revenue and compensation costs for
the full year, as substantially all incentive compensation pools are based
upon revenues and profits. The impact of this incentive compensation
accrual methodology is that we accrue very little incentive compensation in
the first six months of the year, with the majority of our incentive
compensation accrued in the second half of the year, particularly in the
fourth quarter. We adjust the incentive compensation accrual in those
unusual cases where earned incentive compensation has been paid to
employees. In addition, we exclude from the standard accrual methodology
incentive compensation pools that are not subject to the normal performance
criteria. These pools are accrued for on a straight-line basis. Incentive
compensation for the three months ended March 31, 2003 increased $4.1
million ($3.6 million excluding the impact of movements in foreign currency
exchange rates) when compared to the same period in 2002. This increase is
due to the timing of incentive compensation since a greater portion of our
forecasted annual revenues was achieved in the first quarter of 2003 when
compared to the same period last year. In addition, in 2003, we have an
increased dollar value of incentive compensation that is not subject to
normal performance criteria and is therefore accounted for on a straight-
line basis.

We have a stock ownership program for certain of our senior employees
pursuant to which they receive a portion of their annual incentive
compensation in the form of restricted stock units of our common stock.
These restricted shares vest 50% at 18 months from the date of grant
(January of the following year to which the restricted stock units relate)
and 50% vest at 30 months from the date of grant. The related compensation
cost is amortized to expense over the service period. The service period
consists of the 12 months of the year to which payment of the restricted
stock units relate, plus the periods over which the shares vest. Given that
individual incentive compensation awards are not finalized until after
year-end, we must estimate the portion of the overall incentive
compensation pool that will qualify for this program. This estimation
factors in the performance of the Company and individual business units,
together with the target bonuses for qualified individuals. We do not
estimate and account for the current year impact of this program until the
fourth quarter (namely, the enhancement, the deferral and the related
amortization) because the majority of our incentive compensation is accrued
in the fourth quarter. In March 2003, we decreased the deferred
compensation by approximately $383,000 because the population eligible for
the stock ownership program was awarded less incentive compensation related
to 2002 than we had originally estimated. This change in estimate resulted
in additional cash bonus related to 2002 being paid in the first quarter of
2003. The additional cash bonus was expensed in the first quarter 2003
financial statements. In March of 2002, we increased the deferred
compensation by approximately $181,000 since the population eligible for
the stock ownership program was awarded more incentive compensation related
to 2001 than we had originally estimated. This change in estimate resulted
in less cash bonus related to 2001 being paid in the first quarter of 2002.

This was credited to the income statement in the first quarter 2002
financial statements.

The table below sets out the amortization expense related to the stock
ownership program for the three months ended March 31, 2003 and 2002 (in
thousands):
March 31, March 31,
2003 2002
--------- ---------
Compensation expense amortization . . . . . $ 1,568 1,699

ASSET IMPAIRMENT - We apply FASB Statement No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), to recognize
and measure impairment of long-lived assets. We review long-lived assets,
including investments in real estate ventures, intangibles and property and
equipment for impairment on an annual basis, or whenever events or
circumstances indicate that the carrying value of an asset group may not be
recoverable. The review of recoverability is based on an estimate of the
future undiscounted cash flows expected to be generated by the asset group.

If impairment exists due to the inability to recover the carrying value of
an asset group, we record an impairment loss to the extent that the
carrying value exceeds estimated fair value.

We apply FASB Statement No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"), when we account for goodwill and other intangible
assets. SFAS 142 requires an annual impairment evaluation of intangibles
with indefinite useful lives. To accomplish this annual evaluation, we
determine the carrying value of each reporting unit by assigning assets and
liabilities, including the existing goodwill and intangible assets, to
those reporting units as of the date of evaluation. For purposes of
evaluating SFAS 142, we define reporting units as Investment Management,
Americas OOS, Australia OOS, Asia OOS, and by country groups in Europe OOS.
We determine the fair value of each reporting unit on the basis of a
discounted cash flow methodology and compare it to the reporting unit's
carrying value. The result of the 2002 evaluation was that the fair value
of each reporting unit exceeded its carrying amount, and therefore no
impairment loss was recognized on goodwill. The 2003 evaluation is planned
to take place later this year. There were no triggering events in the
first quarter that would have required an impairment evaluation.

Although the Land Investment Group was closed down in 2001, we have
retained certain investments originated by this group. Included in
investments in and loans to real estate ventures is the book value of the
five remaining Land Investment Group investments of $2.1 million, net of
impairment charges of $6.3 million recorded in prior years. We continue to
monitor this portfolio very carefully and have not recorded an impairment
charge for the three months ended March 31, 2003. We have provided
guarantees associated with this investment portfolio of $1.2 million, which
we currently do not expect to be required to fund. We expect to have
liquidated the Land Investment Group investments by the end of 2006.

Although we sold the Development Group in 2001, we have retained
certain investments originated by this group. Included in investments in
and loans to real estate ventures is the book value of the one remaining
Development Group investment of $658,000. We continue to monitor this
investment very carefully and have not recorded an impairment charge for
the three months ended March 31, 2003. We expect to have liquidated the
remaining Development Group investment by the end of 2003.

INCOME TAXES - We account for income taxes under the asset and
liability method. Because of the global and cross border nature of our
business, our corporate tax position is complex. We generally provide
taxes in each tax jurisdiction in which we operate based on local tax
regulations and rules. Such taxes are provided on net earnings and include
the provision for taxes on substantively all differences between accounting
principles generally accepted in the United States of America and tax
accounting, excluding certain non-deductible items and permanent
differences.

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. Based on our 2003 forecasted results, we have estimated an effective
tax rate of 34% for 2003. While there can be no assurance that we will
achieve an effective tax rate of 34% in 2003, we believe that this is an
achievable tax rate due to the impact of tax planning, particularly
planning to reduce the impact of losses in jurisdictions where we cannot
recognize tax benefits and planning to reduce the incidence of double
taxation of earnings and other tax inefficiencies. For the three months
ended March 31, 2002, we used an estimated effective tax rate of 40% for

recurring operations. If we had used an estimated effective tax rate of
40% in the first quarter of 2003, the tax benefit would have been $4.3
million as compared to the $3.7 million tax benefit that we actually
recorded. Due to the impact of tax planning undertaken later in 2002, an
effective tax rate of 34% on recurring operations was achieved for the full
year of 2002. Our global effective tax rate is also sensitive to changes in
the mix of our geographic profitability as local statutory tax rates range
from 10% to 43% in the countries in which we have significant operations.
We continuously seek to develop and implement strategies and/or actions
that would reduce our overall effective tax rate. We reflect the benefit
from tax planning actions when we believe it is probable that they will be
successful, which usually requires that certain actions have been
initiated.

ACCOUNTING FOR SELF-INSURANCE PROGRAMS - In our Americas business, in
common with many other American companies, we have chosen to retain certain
risks regarding workers' compensation and health insurance rather than
purchase third-party insurance. Estimating our exposure to such risks
involves subjective judgments about future developments. We engage the
services of an independent actuary on an annual basis to assist us in
quantifying our potential exposure.

. HEALTH INSURANCE - Beginning in January 2002, we chose to self-
insure our health benefits for all employees based in the
United States of America, although we did purchase stop loss
coverage to limit our exposure. We engage an actuary who
specializes in health insurance to estimate our likely full
year cost at the beginning of the year and expense this cost on
a straight-line basis throughout the year. In the fourth
quarter, we employ the same actuary to estimate the required
reserve for unpaid health costs we would need at year-end. With
regard to the year-end reserve, the actuary provides us with a
point estimate, which we accrue; additionally we accrue a
provision for adverse deviation. Given the nature of medical
claims, it may take up to 12 months for claims to be processed
and recorded. The reserve balance at March 31, 2003, which
relates to both 2002 and 2003 is $3.1 million. The reserve
balance at December 31, 2002 was $2.4 million. Our external
service provider is currently working to analyze the
development of the reserve estimate from year-end. The table
below sets out certain information related to the cost of this
program for the three months ended March 31, 2003 and 2002 ($
in millions):

March 31, March 31,
2003 2002
-------- ----------
Expense to Company . . . . $ 3.0 3.1
Employee contributions . . 0.7 0.6
------ ------
Total program cost . . . . $ 3.7 3.7
====== ======

. WORKERS' COMPENSATION INSURANCE - We have been self-insured for
workers' compensation insurance for a number of years. We have
stop loss insurance in place which limits our exposure in
certain cases. On a periodic basis we accrue using the various
state rates based on job classifications, engaging on an annual
basis in the third quarter, an independent actuary who
specializes in workers' compensation to estimate our exposure
based on actual experience. In prior years, we have recorded
an adjustment to revenues for the difference between the
actuarial estimate and our reserve after the receipt of the
actuary's report (usually in the third quarter). Given our
considerable experience in this area, in the first quarter of
2003 we determined that we would accrue for the estimated
adjustment to revenues on a periodic basis. The credit taken to
revenue for this was $433,000 in the first quarter of 2003.
There were no similar credits in the first quarter of 2002.

. CAPTIVE INSURANCE COMPANY - In order to better manage our
global insurance program, we use a captive insurance company to
provide professional indemnity insurance coverage on a "claims
made" basis to certain of our international operations in
addition to our traditional insurance coverage. The maximum
risk retained by this captive insurance company in any one year
is pound sterling 1 million (approximately $1.6 million). Given
the nature of these types of claims, it may take several years
for there to be a resolution of the underlying claims and to
finalize the expense. We are required to estimate the ultimate
cost of these claims. This estimate includes specific claim
reserves that are developed on the basis of a review of the
circumstances of the individual claim. Given that the timeframe
for these reviews may be lengthy, we also provide a reserve
against the current year exposures on the basis of our historic
loss ratio. The table below provides the reserve balance which
can relate to multiple years, that we have established as of ($
in millions):

March 31, 2003 . . . . $1.7
March 31, 2002 . . . . $1.7

COMMITMENTS AND CONTINGENCIES - We are subject to various claims and
contingencies related to lawsuits, taxes and environmental matters as well
as commitments under contractual obligations. We recognize the liability
associated with commitments and contingencies when a loss is probable and
estimable. Our contractual obligations relate to the provision of services
by us in the normal course of our business. Please see Part II "Other
Information" Item 1., "Legal Proceedings" for a discussion of certain legal
proceedings.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED
MARCH 31, 2002

ITEMS AFFECTING COMPARABILITY

LASALLE INVESTMENT MANAGEMENT REVENUES

Our Investment Management business is in part compensated through the
receipt of incentive fees when investment performance exceeds agreed
benchmark levels. Depending upon performance, these fees can be significant
and will generally be recognized when agreed events or milestones are
reached. The timing of recognition may impact comparability between
quarters, in any one year, or compared to a prior year.

ACQUISITION

In December 2002, Jones Lang LaSalle acquired the 45% minority
interest in the joint venture company Jones Lang LaSalle Asset Management
Services, which since 2000 has exclusively provided asset management
services for all Skandia Life properties in Sweden. The purchase price of
the minority interest was approximately $1 million, a discount to the fair
value of the net assets acquired. Because the acquisition occurred in
December of 2002, this joint venture was accounted for as a minority
interest in the first quarter of 2002.

FOREIGN CURRENCY

We operate in a variety of currencies in 34 countries, but report our
results in U.S. dollars. This means that our reported results may be
positively or negatively impacted by the volatility of currencies against
the U.S. dollar. This volatility makes it more difficult to perform
period-to-period comparisons of the reported results of operations. As an
example, the euro, the pound sterling and the Australian dollar, each a
currency used in a significant portion of our operations, strengthened in
the last nine months of 2002, and remained strong in the first quarter of
2003. This means that for those businesses located in jurisdictions that
utilize these currencies, the U.S. dollar reported revenues and expenses in
the first quarter of 2003 demonstrate an apparent growth rate that is not
consistent with the real underlying growth rate in the local operations.
In order to provide more meaningful period-to-period comparisons of the
reported results of operations in our discussion and analysis of financial
condition and results of operations, we have provided information about the
impact of foreign currencies where we believe that it is necessary. In
addition, set out below is guidance as to the key currencies that the
Company does business in and their significance to reported revenues and
operating results. The operating results sourced in pound sterling and US
dollars understates the profitability of the businesses in the United
Kingdom and America because they include 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 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 operating income. The following table sets
forth revenues derived from our most significant currencies ($ in millions,
except for exchange rates).

Austra-
Pound lian US
Sterling Euro Dollar Dollar Other Total
-------- ------- ------- ------- ------- -------

REVENUES
Q1, 2003 . . $ 37.7 37.2 11.9 70.0 28.3 185.1
Q1, 2002 . . $ 34.9 32.7 11.2 63.3 25.7 167.8

OPERATING
INCOME
(LOSS)
Q1, 2003 . . $ (2.6) 2.9 (1.4) (2.4) (3.4) (6.9)
Q1, 2002 . . $ (2.5) 3.8 (2.5) (1.0) (1.9) (4.1)

AVERAGE
EXCHANGE
RATES
Q1, 2003 . . 1.600 1.075 0.595 N/A N/A N/A
Q1, 2002 . . 1.426 0.877 0.520 N/A N/A N/A

REVENUE

Total revenue, after elimination of intersegment revenue, increased
$17.3 million, or 10.3%, to $185.1 million for the three months ended
March 31, 2003 from $167.8 million for the three months ended March 31,
2002, which reflects the general strengthening of the euro, pound sterling
and Australian dollar against the US dollar when compared to the first
quarter of last year. Excluding the impact of these movements in foreign
currency exchange rates, reported US dollar revenues increased 1.5% for the
three months ended March 31, 2003. Revenues in the management services and
implementation services business were flat quarter-over-quarter with growth
in advisory fees in our Investment Management business.

OPERATING EXPENSES

Total operating expenses, after the elimination of intersegment
expense, increased $20.1 million, or 11.7%, to $192.0 million for the three
months ended March 31, 2003 from $171.9 million for the three months ended
March 31, 2002, which reflects the general strengthening of the euro, pound
sterling and Australian dollar against the US dollar when compared to the
first quarter of last year. Excluding the impact of these movements in
foreign currency exchange rates, reported US dollar expenses increased 3.3%
for the three months ended March 31, 2003.

Compensation and benefits expense increased $16.4 million for the
three months ended March 31, 2003 when compared to the same period last
year. The impact of movements in foreign currency exchange rates, primarily
the euro, pound sterling and Australian dollar, is attributable for $9.3
million of the increase in reported US dollar compensation and benefits
expense for the three months ended March 31, 2003. The balance of the
increase in compensation and benefit expense for first quarter of 2003 is
primarily attributable to the timing of incentive compensation expense, as
a higher portion of our forecasted full year revenues were achieved in the
first quarter of 2003 compared to the first quarter of 2002. In addition,
we had an increased dollar value of incentive compensation that is not
subject to normal performance criteria and therefore is accounted for on a
straight-line basis. A discussion of our periodic accounting for incentive
compensation can be found in Critical Accounting Policies and Estimates,
included herein.

Operating, administrative and other expenses increased $3.5 million
for the three months ended March 31, 2003 when compared to the same period
last year. The impact of movements in foreign currency exchange rates,
primarily the euro, pound sterling and Australian dollar, is attributable
to all of the increase in reported US dollar operating, administrative and
other expense for the three months ended March 31, 2003. Excluding this
impact, operating, administrative and other expenses for the first quarter
of 2003 are essentially flat when compared to the first quarter of 2002,
reflecting our emphasis on cost control. Our continued focus on working
capital management resulted in an improvement of $1.6 million in bad debt
expense. This was partially offset by an increase of $1.2 million in
insurance cost reflecting the market tightening in insurance cost and
availability.

The non-recurring and restructuring charges recorded primarily in the
fourth quarter of 2002 of $14.9 million included $12.7 million of severance
costs associated with the most recent global restructuring program and
approximately $500,000 for the lease costs of excess space as a result of
this restructuring. The actual costs incurred related to our 2002
restructuring have varied from our original estimates for a variety of
reasons, including the identification of additional facts and
circumstances, the complexity of international labor law and developments
in the underlying business, resulting in the unforeseen reallocation of
resources and better or worse settlement discussions with employees and/or

landlords. These events have resulted in the recording of a credit to non-
recurring compensation and benefits expense of $444,000 in the first
quarter of 2003. Also in the first quarter of 2003, we have recorded
$500,000 to the non-recurring operating, administrative and other expense
for additional lease costs of excess lease space in Europe reflecting a
lease modification that was signed in the first quarter of 2003. See Note
3 to Notes to Consolidated Financial Statements for a more detailed
discussion of these non-recurring and restructuring items.

OPERATING LOSS

We reported an operating loss for the three months ended March 31,
2003 of $6.9 million, as compared to $4.1 million for the three months
ended March 31, 2002. Please see "Seasonality" below.

INTEREST

Interest expense, net of interest income, for the three months ended
March 31, 2003 was relatively in-line with the same period last year at
$4.1 million compared to $3.9 million for the three months ended March 31,
2002. The interest expense benefit of substantially repaying our facilities
year-over-year was masked by the impact of the strengthening euro which
increased the reported US dollar value of the interest expense on the Euro
Notes by approximately $730,000.

BENEFIT FOR INCOME TAXES

The income tax benefit for the three months ended March 31, 2003 was
$3.7 million, as compared to $3.2 million for the three months ended
March 31, 2002. Our estimated effective tax rate for the first quarter of
2003 was 34%, as compared to 40% for 2002. If we had used an estimated
effective tax rate of 40% in the first quarter of 2003, our tax benefit
would have been $4.3 million as compared to the $3.7 million tax benefit
that we actually recorded. See the Income Tax Provision section of Note 1
to Notes to Consolidated Financial Statements for a further discussion of
our estimated effective tax rate.

NET LOSS

We reported a net loss of $7.2 million for the three months ended
March 31, 2003 as compared to a net loss before cumulative effect of a
change in accounting principle of $4.9 million for the three months ended
March 31, 2002. Including the cumulative effect of a change in accounting
principle (a net benefit of $846,000) related to the adoption of SFAS 142
in 2002, which is discussed in detail in Note 5 to Notes to Consolidated
Financial Statements, our net loss for the three months ended March 31,
2002 was $4.0 million.

SEGMENT OPERATING RESULTS

See Note 2 to Notes to Consolidated Financial Statements for a
discussion of our segment reporting. Our measure of segment operating
results excludes non-recurring and restructuring charges. We have
determined that it is not meaningful to investors to allocate these non-
recurring and restructuring charges to our segments. In addition, the Chief
Operating Decision Maker of Jones Lang LaSalle measures the segment results
without these charges allocated and performance for incentive compensation
purposes is assessed before the impact of these charges. As such, these
costs are not included in the discussions below. See Note 3 to Notes to
Consolidated Financial Statements for a detailed discussion of the non-
recurring and restructuring charges.

OWNER AND OCCUPIER SERVICES

AMERICAS

Revenue for the Americas region increased $3.7 million, or 6.6%, to
$59.5 million for the three months ended March 31, 2003, as compared to
$55.8 million for the three months ended March 31, 2002. The increase year-
over-year can be attributed to improved transaction flow in the Tenant
Representation business and new business wins in the Project and
Development unit, partially offset by a decrease in Capital Markets
revenues as 2002 included two significant transactions.

Operating expenses for the Americas region increased $3.2 million, or
5.5%, to $61.1 million for the three months ended March 31, 2003, as
compared to $57.9 million for the three months ended March 31, 2002. The
increase in operating expenses is primarily attributable to the timing of
recognition of incentive compensation which was $2.6 million higher in the
first quarter of 2003 when compared to the same period of 2002, which is
because a greater percentage of forecasted annual revenue was recorded in
the first quarter of 2003. In addition, in 2003 there is a greater dollar
value of incentive compensation that is not subject to normal performance
criteria and is therefore accounted for on a straight-line basis. The
increase in incentive compensation is a timing difference that may reverse
over the balance of the year dependent upon performance. See the Periodic
Accounting for Incentive Compensation section of Critical Accounting
Policies and Estimates, included herein, for a further discussion of the
timing of incentive compensation recognition. Operating, administrative
and other expenses were flat year over year, reflecting a strong focus on
cost controls.

EUROPE

Revenues for the Europe region increased $6.6 million, or 10.2%, to
$71.3 million for the three months ended March 31, 2003, as compared to
$64.7 million for the three months ended March 31, 2002, which reflects the
general strengthening of the euro and pound sterling against the US dollar
when compared to last year. Excluding the impact of movements in foreign
currency exchange rates, reported US dollar revenues for the first quarter
of 2003 decreased 7.4% when compared to the same period in 2002. A positive
performance for the quarter in Southern Europe, where a significant Capital
Markets transaction was closed in Spain, was offset by continued revenue
pressures in Belgium, France, England and Germany.

Operating expenses for the Europe region increased $8.2 million, or
12.7%, to $72.7 million for the three months ended March 31, 2003, as
compared to $64.5 million for the three months ended March 31, 2002.
Excluding the impact of movements in foreign currency exchange rates,
operating expenses decreased 3.1% for the first quarter of 2003 when
compared to the same period last year. The decrease in operating expense
is primarily attributable to lower bad debt expense year-over-year as well
as an emphasis on cost control.

ASIA PACIFIC

Revenue for the Asia Pacific region increased $1.5 million, or 5.3%,
to $29.7 million for the three months ended March 31, 2003, as compared to
$28.2 million for the three months ended March 31, 2002. Excluding the
impact of movements in foreign currency exchange rates, revenues decreased
1.8% for the three months ended March 31, 2003 when compared to the same
period last year. The decrease in revenue is primarily attributable to
continued difficult market conditions in the core markets of Hong Kong and
Singapore, partially offset by improvement in our North Asia businesses in
Japan and China.

Operating expenses for the Asia Pacific region increased $3.7 million,
or 11.8%, to $35.0 million for the three months ended March 31, 2003,
compared to $31.3 million for the three months ended March 31, 2002.
Excluding the impact of movements in foreign exchange rates, operating
expenses increased 4.2% for the first quarter of 2003 when compared to the

same period last year. The increase in expenses is primarily attributable
to compensation and benefits, together with an investment in training and
marketing expense as this region implements its strategic growth plan.

INVESTMENT MANAGEMENT

Investment Management revenue increased $5.4 million, or 28.1%, to
$24.6 million for the three months ended March 31, 2003, as compared to
$19.2 million for the three months ended March 31, 2002. Excluding the
impact of movements in foreign currency exchange rates, Investment
Management revenue increased 20.8% for the first quarter of 2003 when
compared to the same period last year. Positive performance was seen across
all regions, as advisory fees increased year-over-year due to the
successful renegotiation of several fee arrangements, as well as the
introduction of additional investments and products in 2003. The fee
renegotiations were the result of a review of the profitability of the
European investment management business. This review also identified a
$2.5 billion portfolio where the client's need for "transactions with
advice" for non-discretionary assets was not consistent with the full range
of investment management services typically offered. The Investment
Management business worked collaboratively with the Europe OOS business to
transfer the account to where "transactions with advice" services could be
provided most efficiently and effectively. Management responsibility for
this portfolio was transferred from the Investment Management business to
our Europe OOS business effective January 1, 2003.

Operating expenses for Investment Management increased $4.9 million,
or 26.8%, to $23.2 million for the three months ended March 31, 2003, as
compared to $18.3 million for the three months ended March 31, 2002.
Excluding the impact of movements in foreign currency exchange rates,
operating expenses increased 19.1%. The increase in expenses is primarily
attributable to the timing of recognition of incentive compensation as a
greater percentage of forecasted annual revenue was recorded in the first
quarter of 2003, as well as the costs attributable to the introduction of
additional investments and products. See the Periodic Accounting for
Incentive Compensation section of Critical Accounting Policies and
Estimates, included herein, for a further discussion of the timing of
incentive compensation.

PERFORMANCE OUTLOOK

The firm anticipates taking a one-time impairment charge of up to $4.5
million pre-tax relating to its decision to abandon the further development
of a property management accounting system in Australia. After completing
a feasibility analysis in April 2003, we have concluded that the potential
benefits from successfully correcting deficiencies in the system that would
allow it to be implemented throughout Australia are not justified by the
costs that would have to be incurred to do so.

The seasonality of the firm's business leads revenue and profits to be
generated primarily during the second half of the year. The firm has
previously communicated that it will not issue full-year guidance until the
impact on its businesses of uncertain economic and operating environments
becomes clearer. On an operating basis, the firm currently expects to be
modestly profitable for the second quarter, excluding the one-time
impairment charge.

CONSOLIDATED CASH FLOWS

CASH FLOWS USED IN OPERATING ACTIVITIES

During the three months ended March 31, 2003 cash flows used in
operating activities totaled $23.8 million, as compared to $16.7 million
during the three months ended March 31, 2002. The cash flows used in
operating activities for the three months ended March 31, 2003 can be
further divided into cash generated from operations of $7.2 million
(compared to $10.9 million generated in 2002) and cash used in balance
sheet movements (primarily working capital management) of $31.0 million
(compared to a use of $27.6 million in 2002). Given the seasonality of our

business together with our practice of paying bonuses in the first quarter,
we expect to see negative operating cash flows in the first quarter.

CASH FLOWS USED IN INVESTING ACTIVITIES

We used $2.2 million for investing activities during the three months
ended March 31, 2003, as compared to $7.4 million used during the three
months ended March 31, 2002. This is a result of the timing of our co-
investment cash flows, which are dependent upon the underlying fund's
investment decisions.

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES

Cash flows provided by financing activities were $25.9 million during
the three months ended March 31, 2003, as compared to $25.6 million during
the three months ended March 31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have financed our operations, acquisitions and co-
investment activities with internally generated funds, our common stock and
borrowings under our credit facilities. As of March 31, 2003, we have a
$275 million revolving credit facility for working capital needs,
investments and acquisitions. Under the terms of the revolving credit
facility, we have the authorization to borrow up to an additional $50.0
million under local facilities. We also have outstanding euro 165 million
in aggregate principal amount of 9% Senior Euro Notes (the "Euro Notes"),
all of which mature on June 15, 2007. Beginning June 15, 2004, the Euro
Notes can be redeemed, at our option, at the following redemption prices:
during the twelve-month period commencing June 15, 2004 at 104.50% of
principal; during the twelve-month period commencing June 15, 2005 at
102.25% of principal; and commencing June 15, 2006 and thereafter at
100.00% of principal.

As of March 31, 2003, there was $54.0 million outstanding under the
revolving credit facility, euro 165 million ($180.3 million) of borrowings
outstanding under the Euro Notes and short-term borrowings (including
capital lease obligations) of $14.6 million. The short-term borrowings are
primarily borrowings by subsidiaries on various interest-bearing overdraft
facilities. As of March 31, 2003, $12.4 million of the total short-term
borrowings were attributable to local overdraft facilities. The increase
in the reported US dollar book value of the Euro Notes of $7.2 million in
the first three months of 2003 was solely as a result of the strengthening
euro. No additional Euro Notes have been issued.

Jones Lang LaSalle and certain of our subsidiaries guarantee the
revolving credit facility and the Euro Notes (the "Facilities"). In
addition, we guarantee the local overdraft facilities of certain
subsidiaries. Third-party lenders request these guarantees to ensure
payment by the Company in the event that one of our subsidiaries fails to
repay its borrowing on an overdraft facility. The guarantees typically have
one-year or two-year maturities. We apply Financial Accounting Standards
Board Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others" ("FIN 45"), to recognize and measure the provisions of future
guarantees. The guarantees of the revolving credit facility, Euro Notes and
local overdraft facilities do not meet the recognition provisions, but do
meet the disclosure requirements of FIN 45. We have local overdraft
facilities totaling $37.2 million, of which $12.4 million was outstanding
as of March 31, 2003. We have provided guarantees of $26.0 million related
to the local overdraft facilities, as well as guarantees related to the
$275 million revolving credit facility and the euro 165 million Euro Notes,
which in total represent the maximum future payments that Jones Lang
LaSalle could be required to make under the guarantees provided for
subsidiaries' third-party debt.

With respect to the revolving credit facility, we must maintain a
certain level of consolidated net worth and a ratio of funded debt to
EBITDA. We must also meet a minimum interest coverage ratio and a minimum
liquidity ratio. We were in compliance with all covenants as of March 31,
2003. Additionally, we are restricted from, among other things, incurring
certain levels of indebtedness to lenders outside of the Facilities and
disposing of a significant portion of our assets. Lender approval is
required for certain levels of co-investment. The revolving credit facility
bears variable rates of interest based on market rates. We are authorized
to use interest rate swaps to convert a portion of the floating rate
indebtedness to a fixed rate, however, none were used in 2002 or in the
first quarter of 2003 and none were outstanding as of March 31, 2003. The
effective interest rate on the Facilities was 8.3% for the three months
ended March 31, 2003 (versus an effective rate of 7.8% for the same period
in 2002). The increase in the effective interest rate is due to the mix of
our borrowings being more heavily weighted toward the higher coupon Euro
Notes.

We believe that the revolving credit facility, together with the Euro
Notes, local borrowing facilities and cash flow generated from operations,
will provide adequate liquidity and financial flexibility to meet our needs
to fund working capital, capital expenditures, co-investment activity and
share repurchases.

We expect to continue to pursue co-investment opportunities with our
investment management clients in the Americas, Europe and Asia Pacific. Co-
investment remains very important to the continued growth of Investment
Management, which would likely be negatively impacted if a substantial
decrease in co-investment activity were to occur. As of March 31, 2003, we
had total investments and loans of $73.2 million in 19 separate property or
fund co-investments, with additional capital commitments of $136.4 million
for future fundings of co-investments. With respect to certain co-
investment indebtedness, we also had repayment guarantees outstanding at
March 31, 2003 of $4.9 million. The $136.4 million capital commitment is a
commitment to LaSalle Investment Limited Partnership, referred to as
LaSalle Investment Company ("LIC"). We expect that LIC will draw down on
our commitment over the next five to seven years as it enters into new
commitments. LIC is a series of four parallel limited partnerships and is
intended to be our co-investment vehicle for substantially all new co-
investments. We have an effective 47.85% ownership interest in LIC.
Primarily institutional investors, including a significant shareholder in
Jones Lang LaSalle, hold the remaining 52.15% interest in LIC. Our
investment in LIC is accounted for under the equity method of accounting in
the accompanying Consolidated Financial Statements. In addition, our
Chairman and another Director of Jones Lang LaSalle are investors in LIC on
equivalent terms to other investors. At March 31, 2003, LIC has unfunded
capital commitments of $68.7 million for future fundings of co-investments.
LIC currently has no external debt, but may enter into a revolving credit
facility for its working capital purposes.

Our net co-investment funding for 2003 is anticipated to be
approximately $15 million (planned co-investment less return of capital
from liquidated co-investments). For the three months ended March 31, 2003,
we have received a net $2.7 million as the return of capital from
liquidated co-investments exceeded funded co-investments for the period.

Capital expenditures are anticipated to be approximately $25 million
for 2003, primarily for ongoing improvements to computer hardware and
information systems.

On October 30, 2002, we announced that our Board of Directors had
approved a share repurchase program. Under the program, Jones Lang LaSalle
may repurchase up to one million shares in the open market and in privately
negotiated transactions from time to time, depending upon market prices and
other conditions. In the fourth quarter of 2002, we repurchased 300,000
shares at an average price of $15.56 per share. No shares have been
repurchased in the first quarter of 2003. Given that shares repurchased

under this program are not cancelled, but are held by one of our
subsidiaries, we include them in our equity account. However, these shares
are excluded from our share count for the purposes of calculating earnings
per share.

SEASONALITY

Historically, our revenue, operating income and net earnings in the
first three calendar quarters are substantially lower than in the fourth
quarter. Other than for the Investment Management segment, this
seasonality is due to a calendar-year-end focus on the completion of real
estate transactions, which is consistent with the real estate industry
generally. The Investment Management segment earns performance fees on
clients' returns on their real estate investments. Such performance fees
are generally earned when assets are sold, the timing of which we do not
have complete discretion over. Non-variable operating expenses, which are
treated as expenses when they are incurred during the year, are relatively
constant on a quarterly basis.

OTHER MATTERS

NEW ACCOUNTING STANDARDS

In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46").
FIN 46 addresses the consolidation by business enterprises of variable
interest entities as defined. FIN 46 applies immediately to variable
interest entities created after January 31, 2003. For public enterprises
with a variable interest entity created before February 1, 2003, FIN 46
applies to that enterprise no later than the beginning of the first interim
or annual reporting period beginning after June 15, 2003. We are still
analyzing the requirements of FIN 46 and do not anticipate that its
adoption will have a material impact on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET AND OTHER RISK FACTORS

MARKET RISK

The principal market risks (namely, the risk of loss arising from
adverse changes in market rates and prices) to which we are exposed are:

. Interest rates on borrowings; and

. Foreign exchange risks.

In the normal course of business we manage these risks through a
variety of strategies, including the use of hedging transactions using
various derivative financial instruments such as interest rate swap
agreements and forward exchange contracts. We do not enter into derivative
financial instruments for trading or speculative purposes.

INTEREST RATES

We centrally manage our debt, taking into account investment
opportunities and risks, tax consequences and overall financing strategies.
We are primarily exposed to interest rate risk on the $275.0 million
revolving multi-currency credit facility, due in September 2004, that is
available for working capital, investments, capital expenditures and
acquisitions. This facility bears a variable rate of interest based on
market rates. The interest rate risk management objective is to limit the
impact of interest rate changes on earnings and cash flows and to lower the
overall borrowing costs. To achieve this objective, in the past we have
entered into derivative financial instruments such as interest rate swap
agreements when appropriate and may do so in the future. We entered into
no such agreements in 2002 or the first quarter of 2003, and none were
outstanding as of March 31, 2003.

The effective interest rate on our debt for the three months ended
March 31, 2003 was 8.3% as compared to a rate of 7.8% for the same period
of 2002. The increase in the effective interest rate is due to the mix of
our borrowings being more heavily weighted toward the higher coupon Euro
Notes.

FOREIGN EXCHANGE

Revenues outside of the United States were 62% of our total revenues
for the three months ended March 31, 2003. Operating in international
markets means that we are exposed to movements in foreign exchange rates,
primarily the British pound (20% of revenues for the three months ended
March 31, 2003), the euro (20% of revenues for the three months ended
March 31, 2003) and the Australian dollar (6% of revenues for the three
months ended March 31, 2003). Changes in these foreign exchange rates
would have the largest impact on translating the operating profit of our
international operations into US dollars.

The British pound expenses incurred as a result of both the worldwide
operational headquarters and the Europe regional headquarters being located
in London act as a partial operational hedge against our translation
exposure to the British pound.

The interest on the euro 165 million of notes acts as a partial hedge
against our translation exposure on our euro denominated earnings. We
enter into forward foreign currency exchange contracts to manage currency
risks associated with intercompany loans. At March 31, 2003, we had
forward exchange contracts in effect with a gross notional value of $140.0
million ($85.8 million on a net basis) and a market and carrying gain of
approximately $700,000. The net impact on our earnings during the three
months ended March 31, 2003 of the unrealized gain on foreign currency
contracts, offset by the loss resulting from re-measurement of foreign
currency transactions, was not significant.

DISCLOSURE OF LIMITATIONS

Since the information presented above includes only those exposures
that exist as of March 31, 2003, it does not consider those exposures or
positions which could arise after that date. The information represented
herein 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 period, the
hedging strategies at the time, and interest and foreign currency rates.

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, Jones Lang
LaSalle carried out an evaluation, under the supervision and with the
participation of the Company's management, including Christopher A.
Peacock, the company's Chief Executive Officer and Lauralee E. Martin, the
Company's Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, Mr. Peacock and Ms.
Martin concluded that Jones Lang LaSalle's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required
to be included in Jones Lang LaSalle's periodic SEC filings.

There were no significant changes made in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company has contingent liabilities from various pending claims and
litigation matters arising in the ordinary course of business, some of
which involve claims for damages that are substantial in amount. Many of
these matters are covered by insurance. Although the ultimate liability for
these matters cannot be determined, 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.

On November 8, 2002, Bank One N.A. ("Bank One") filed suit against the
Company and certain of its subsidiaries in the Circuit Court of Cook
County, Illinois with regard to services provided in 1999 and 2000 pursuant
to three different agreements relating to facility management, project
development and broker services. The suit alleges negligence, breach of
contract and breach of fiduciary duty on the part of Jones Lang LaSalle and
seeks damages to recover a total of $40 million in compensatory damages and
$80 million in punitive damages. The Company is aggressively defending the
suit and on December 16, 2002 filed a counterclaim for breach of contract
seeking payment of approximately $1.2 million for fees due for services
provided under the agreements. While there can be no assurance as to the
outcome, the Company believes that the complaint is without merit and, as
such, will not have a material adverse effect on our financial position,
results of operations or liquidity. The suits are in their early stages. As
of the date of this report, we are in the process of discovery and no trial
date has been set. As such, the outcome of Bank One's suit cannot be
predicted with any certainty and management is unable to estimate an amount
or range of potential loss that could result if an improbable unfavorable
outcome did occur.

In the third quarter of 2001 we established a reserve of $1.6 million
which we believe is adequate to cover our exposures resulting from the
insolvency of HIH Insurance Ltd. ("HIH"), one of our former insurance
providers. HIH provided public liability coverage to the Australian
operations of the Company for the years from 1994 to 1997, which coverage
would typically provide protection against, among other things, personal
injury claims arising out of accidents occurring at properties for which we
had property management responsibilities. As of March 31, 2003, $1.2
million of the reserve established remained to cover claims which would
have been covered by the insurance provided by HIH. Due to the
strengthening of the Australian dollar, the US dollar reported reserve
balance has increased whereas the local currency reserve balance has
decreased. Although there can be no assurance, we believe this reserve is
adequate to cover any remaining claims and expenses resulting from the HIH
insolvency. Due to the nature of the claims covered by this insurance, it
is possible that future claims may be made.

ITEM 5. OTHER INFORMATION

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this filing and elsewhere (such as in reports,
other filings with the Securities and Exchange Commission, press releases,
presentations and communications by Jones Lang LaSalle or its management
and written and oral statements) may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause Jones Lang LaSalle'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. Such factors are discussed in our Annual Report on Form 10-K
for the year ended December 31, 2002 in Item 1. "Business," Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," Item 7A. "Quantitative and Qualitative Disclosures About
Market Risk," and elsewhere, in this Quarterly Report on Form 10-Q in
Item 2 "Management's Discussion and Analysis of Financial Condition and
Results of Operations", Item 3 "Quantitative and Qualitative Disclosure
about Market Risk" and elsewhere, and in other reports filed with the
Securities and Exchange Commission. Jones Lang LaSalle expressly disclaims
any obligation or undertaking to update or revise any forward-looking
statements to reflect any changes in events or circumstances or in its
expectations or results.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) A list of exhibits is set forth in the Exhibit Index which
immediately precedes the exhibits and which is incorporated by reference
herein.

(b) Reports on Form 8-K

On May 7, 2003, Jones Lang LaSalle filed a report on Form 8-K
incorporating a press release announcing earnings for the quarterly
period ended March 31, 2003.

SIGNATURE

Pursuant to the requirements 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.

JONES LANG LASALLE INCORPORATED

Dated: May 6, 2003 BY: /S/ LAURALEE E. MARTIN
------------------------------
Lauralee E. Martin
Executive Vice President and
Chief Financial Officer
(Authorized Officer and
Principal Financial Officer)

CERTIFICATIONS
--------------

I, Christopher A. Peacock, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Jones Lang
LaSalle Incorporated;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date:May 6, 2003

/s/ Christopher A. Peacock
-------------------------------------
Christopher A. Peacock,
President and Chief Executive Officer

CERTIFICATIONS
--------------

I, Lauralee E. Martin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Jones Lang
LaSalle Incorporated;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

Date:May 6, 2003

/s/ Lauralee E. Martin
----------------------------
Lauralee E. Martin,
Executive Vice President and
Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number Description
- ------- -----------

99.1 Certification of Chief Executive Officer dated
May 6, 2003, attached hereto as Exhibit 99.1.

99.2 Certification of Chief Financial Officer dated
May 6, 2003, attached hereto as Exhibit 99.2.