JONES LANG LASALLE INC - Quarter Report: 2015 June (Form 10-Q)

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 June 30, 2015

o 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

(State or other jurisdiction of incorporation or organization)

36-4150422

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



200 East Randolph Drive, Chicago, IL		60601
(Address of principal executive offices)		(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such period that the registrant was required to submit and post such files). Yes x No o

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



	Large accelerated filer x	Accelerated filer o

	Non-accelerated filer (Do not check if a smaller reporting company) o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares outstanding of the registrant's common stock (par value $0.01) as of the close of business on August 3, 2015 was 44,963,051.



Table of Contents

Part I	Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014	3

	Consolidated Statements of Comprehensive Income For the Three and Six Months Ended June 30, 2015 and 2014 (unaudited)	4

	Consolidated Statement of Changes in Equity For the Six Months Ended June 30, 2015 (unaudited)	5

	Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2015 and 2014 (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36

Item 4.	Controls and Procedures	37

Part II	Other Information

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 5.	Other Information	37

Item 6.	Exhibits	39

Signature		40

Exhibit Index		41

Part I. Financial Information

Item 1. Financial Statements

JONES LANG LASALLE INCORPORATED

Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014

(in thousands, except share data)



	June 30,			December 31,
Assets	2015 (unaudited)			2014
Current assets:
Cash and cash equivalents	$	191,034		250,413
Trade receivables, net of allowances of $24,895 and $17,861	1,305,467			1,375,035
Notes and other receivables	218,003			181,377
Warehouse receivables	32,200			83,312
Prepaid expenses	71,730			64,963
Deferred tax assets, net	131,881			135,251
Other	34,633			27,825
Total current assets	1,984,948			2,118,176
Property and equipment, net of accumulated depreciation of $446,595 and $418,332	362,988			368,361
Goodwill, with indefinite useful lives	1,933,280			1,907,924
Identified intangibles, net of accumulated amortization of $129,377 and $124,920	38,367			38,841
Investments in real estate ventures, including $138,960 and $113,602 at fair value	333,016			297,142
Long-term receivables	99,396			85,749
Deferred tax assets, net	102,718			90,897
Deferred compensation plan	126,627			111,234
Other	61,961			57,012
Total assets	$	5,043,301		5,075,336
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	575,807		630,037
Accrued compensation	662,865			990,678
Short-term borrowings	22,150			19,623
Deferred tax liabilities, net	16,554			16,554
Deferred income	127,332			104,565
Deferred business acquisition obligations	39,463			49,259
Warehouse facility	32,200			83,312
Minority shareholder redemption liability	—			11,158
Other	146,689			141,825
Total current liabilities	1,623,060			2,047,011
Credit facility	329,998			—
Long-term senior notes	275,000			275,000
Deferred tax liabilities, net	17,712			17,082
Deferred compensation	141,799			125,857
Deferred business acquisition obligations	46,360			68,848
Other	114,512			118,969
Total liabilities	2,548,441			2,652,767
Redeemable noncontrolling interest	9,905			13,449
Company shareholders' equity:
Common stock, $.01 par value per share, 100,000,000 shares authorized; 44,880,457 and 44,828,779 shares issued and outstanding	449			448
Additional paid-in capital	974,174			961,850
Retained earnings	1,751,018			1,631,145
Shares held in trust	(6,329		)	(6,407	)
Accumulated other comprehensive loss	(254,772		)	(200,239	)
Total Company shareholders’ equity	2,464,540			2,386,797
Noncontrolling interest	20,415			22,323
Total equity	2,484,955			2,409,120
Total liabilities and equity	$	5,043,301		5,075,336

See accompanying Notes to Consolidated Financial Statements.

JONES LANG LASALLE INCORPORATED

Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended June 30, 2015 and 2014

(in thousands, except share data) (unaudited)



	Three Months Ended			Three Months Ended		Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Revenue	$	1,373,475		1,277,204		$	2,576,986		2,314,646

Operating expenses:
Compensation and benefits	825,058			761,224		1,562,975			1,398,563
Operating, administrative and other	418,127			396,086		805,324			753,086
Depreciation and amortization	25,495			22,780		50,418			45,191
Restructuring and acquisition charges	1,832			5,458		2,648			41,416
Total operating expenses	1,270,512			1,185,548		2,421,365			2,238,256

Operating income	102,963			91,656		155,621			76,390

Interest expense, net of interest income	(7,558		)	(7,664	)	(13,596		)	(14,300	)
Equity earnings from real estate ventures	27,128			12,491		38,511			21,393
Income before income taxes and noncontrolling interest	122,533			96,483		180,536			83,483
Provision for (benefit from) income taxes	31,123			24,121		45,856			(5,024	)
Net income	91,410			72,362		134,680			88,507

Net income attributable to noncontrolling interest	1,099			420		2,475			663
Net income attributable to the Company	90,311			71,942		132,205			87,844
Dividends on unvested common stock, net of tax benefit	163			176		163			176

Net income attributable to common shareholders	$	90,148		71,766		$	132,042		87,668

Basic earnings per common share	$	2.01		1.61		$	2.94		1.97
Basic weighted average shares outstanding	44,868,979			44,586,095		44,856,374			44,550,154

Diluted earnings per common share	$	1.98		1.58		$	2.91		1.94
Diluted weighted average shares outstanding	45,434,585			45,278,494		45,393,438			45,220,082

Other comprehensive income (loss):
Net income attributable to the Company	$	90,311		71,942		$	132,205		87,844
Change in pension liabilities, net of tax	—			—		852			—
Foreign currency translation adjustments	53,688			25,134		(55,385		)	38,952
Comprehensive income attributable to the Company	$	143,999		97,076		$	77,672		126,796

See accompanying Notes to Consolidated Financial Statements.

JONES LANG LASALLE INCORPORATED

Consolidated Statement of Changes in Equity

For the Six Months Ended June 30, 2015

(in thousands, except share data) (unaudited)



	Company Shareholders' Equity
											Accumulated
					Additional				Shares		Other
	Common Stock				Paid-In		Retained		Held in		Comprehensive		Noncontrolling		Total
	Shares		Amount		Capital		Earnings		Trust		Loss		Interest		Equity
Balances at December 31, 2014	44,828,779		$	448	961,850		1,631,145		(6,407	)	(200,239	)	22,323		$	2,409,120
Net income ⁽¹⁾	—		—		—		132,205		—		—		2,241		134,446
Shares issued under stock compensation programs	64,649		1		455		—		—		—		—		456
Shares repurchased for payment of taxes on stock awards	(12,971	)	—		(2,112	)	—		—		—		—		(2,112		)
Tax adjustments due to vestings and exercises	—		—		1,703		—		—		—		—		1,703
Amortization of stock compensation	—		—		12,101		—		—		—		—		12,101
Dividends paid, $0.27 per share	—		—		—		(12,332	)	—		—		—		(12,332		)
Shares held in trust	—		—		—		—		78		—		—		78
Change in pension liabilities, net of tax	—		—		—		—		—		852		—		852
Foreign currency translation adjustments	—		—		—		—		—		(55,385	)	—		(55,385		)
Distributions to noncontrolling interest	—		—		—		—		—		—		(4,149	)	(4,149		)
Acquisition of redeemable noncontrolling interest	—		—		177		—		—		—		—		177
Balances at June 30, 2015	44,880,457		$	449	974,174		1,751,018		(6,329	)	(254,772	)	20,415		$	2,484,955

(1) Excludes net income of $234 attributable to redeemable noncontrolling interest for the six months ended June 30, 2015.

See accompanying Notes to Consolidated Financial Statements.

JONES LANG LASALLE INCORPORATED

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2015 and 2014

(in thousands) (unaudited)



	Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014
Cash flows used in operating activities:
Net income	$	134,680		88,507
Reconciliation of net income to net cash used in operating activities:
Depreciation and amortization	50,418			45,191
Equity earnings from real estate ventures	(38,511		)	(21,393	)
Gain on the sale of assets, net	(871		)	—
Distributions of earnings from real estate ventures	10,276			9,627
Provision for loss on receivables and other assets	10,813			6,379
Amortization of deferred compensation	12,101			11,175
Accretion of interest on deferred business acquisition obligations	1,710			2,695
Amortization of debt issuance costs	2,014			1,827
Change in:
Receivables	(23,839		)	29,984
Prepaid expenses and other assets	(28,065		)	(31,226	)
Deferred tax assets, net	(7,979		)	37,784
Excess tax benefit from share-based payment arrangements	(1,703		)	(3,559	)
Accounts payable, accrued liabilities and accrued compensation	(335,895		)	(323,999	)
Net cash used in operating activities	(214,851		)	(147,008	)

Cash flows used in investing activities:
Net capital additions – property and equipment	(45,350		)	(67,644	)
Proceeds from the sale of assets	6,813			—
Business acquisitions	(41,742		)	(20,164	)
Capital contributions to real estate ventures	(32,335		)	(18,585	)
Distributions of capital from real estate ventures	20,307			22,528
Net cash used in investing activities	(92,307		)	(83,865	)

Cash flows provided by financing activities:
Proceeds from borrowings under credit facility	955,000			1,007,000
Repayments of borrowings under credit facility	(625,167		)	(754,954	)
Payments of deferred business acquisition obligations	(41,462		)	(36,432	)
Acquisition of redeemable noncontrolling interest	(2,655		)	—
Acquisition of noncontrolling interest	(990		)	—
Debt issuance costs	(7,319		)	—
Shares repurchased for payment of employee taxes on stock awards	(2,112		)	(4,329	)
Excess tax benefit from share-based payment arrangements	1,703			3,559
Common stock issued under option and stock purchase programs	456			1,848
Payment of dividends	(12,332		)	(10,493	)
Principal payments on capital lease obligations	(2,019		)	(2,175	)
Other loan (payments) proceeds	(4,338		)	18,277
Noncontrolling interest distributions, net	(3,145		)	5,951
Net cash provided by financing activities	255,620			228,252

Effect of currency exchange rate changes on cash and cash equivalents	(7,841		)	603
Net decrease in cash and cash equivalents	(59,379		)	(2,018	)
Cash and cash equivalents, beginning of the period	250,413			152,726
Cash and cash equivalents, end of the period	$	191,034		150,708

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	9,980		9,780
Income taxes, net of refunds	70,724			48,471
Non-cash investing activities:
Business acquisitions, including contingent consideration	$	13,396		1,184
Capital leases	4,381			18,244
Non-cash financing activities:
Deferred business acquisition obligations	$	5,078		8,912
Redeemable noncontrolling interest	—			13,725

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 ("JLL," which may also be referred to as "the Company" or as "the Firm," "we," "us" or "our") for the year ended December 31, 2014, which are included in our 2014 Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission ("SEC") and also available on our website (www.jll.com), since we have omitted from this quarterly report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to the "Summary of Critical Accounting Policies and Estimates" section within Item 7 and to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in our 2014 Annual Report on Form 10-K for further discussion of our significant accounting policies and estimates.


(1)	Interim Information

Our Consolidated Financial Statements as of June 30, 2015, and for the three months and six months ended June 30, 2015 and 2014, are unaudited. 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. Certain prior year amounts have been reclassified to conform to the current year presentation.

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

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

We provide for the effects of income taxes on interim financial statements based on our estimate of the effective tax rate for the full year, which is based on forecasted income by country and expected enacted tax rates. Changes in the geographic mix of income can impact our estimated effective tax rate.

As a result of the items mentioned above, the results for the periods ended June 30, 2015 and 2014 are not indicative of what our results will be for the full fiscal year.


(2)	New Accounting Standards

On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. generally accepted accounting principles ("U.S. GAAP") when it becomes effective. The new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted for annual and interim periods in fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a date of adoption or a transition method. Similarly, the Company is currently evaluating the effect the standard will have on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis," which improves targeted areas of the consolidation guidance and reduces the number of consolidation models. The amendments in the ASU are effective for annual and interim periods in fiscal years beginning after December 15, 2015, with early adoption permitted. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest," which simplifies the presentation of debt issuance costs. The amendments in the ASU are effective for annual and interim periods in fiscal years beginning after December 15, 2015, with early adoption permitted. The Company does not believe implementation of the guidance will have a material effect on its consolidated financial statements.


(3)	Revenue Recognition

We earn revenue from the following principal sources:


•	Transaction commissions;


•	Advisory and management fees;


•	Incentive fees;


•	Project and development management fees; and


•	Construction management fees.

We recognize transaction commissions related to leasing services and capital markets services as revenue when we provide the related services unless future contingencies exist. Advisory and management fees related to property and facility management services, valuation services, corporate property services, consulting services and investment management are recognized in the period in which we perform the related services. We recognize incentive fees in the period earned, based on the performance of funds' investments, contractual benchmarks and other contractual formulas. If future contingencies exist, we defer recognition of the related revenue until the respective contingencies have been satisfied.

We recognize project and development management and construction management fees by applying the percentage of completion method of accounting. The efforts expended method is used to determine the extent of progress towards completion for project and development management fees, and the costs incurred to total estimated costs method is used for construction management fees.

Certain construction management fees, which are gross construction services revenue reported net of subcontract costs, were $1.3 million and $1.2 million for the three months ended June 30, 2015 and 2014, respectively, and $2.0 million and $2.4 million for the six months ended June 30, 2015 and 2014, respectively. Gross construction services revenue totaled $21.8 million and $23.7 million for the three months ended June 30, 2015 and 2014, respectively, and $39.0 million and $51.2 million for the six months ended June 30, 2015 and 2014, respectively. Subcontract costs totaled $20.5 million and $22.5 million for the three months ended June 30, 2015 and 2014, respectively, and $37.0 million and $48.8 million for the six months ended June 30, 2015 and 2014, respectively.

We included costs in excess of billings on uncompleted construction contracts of $3.3 million and $3.4 million in Trade receivables, and billings in excess of costs on uncompleted construction contracts of $5.1 million and $7.9 million, in Deferred income, as of June 30, 2015 and December 31, 2014, respectively.

Gross and Net Accounting: We follow the guidance of FASB Accounting Standards Codification ("ASC") 605-45, "Principal and Agent Considerations," when accounting for reimbursements received from clients. In certain of our businesses, primarily those involving management services, our clients reimburse us for expenses incurred on their behalf. We base the treatment of reimbursable expenses for financial reporting purposes upon the fee structure of the underlying contract. Accordingly, we report a contract that provides for fixed fees, fully inclusive of all personnel and other recoverable expenses, on a gross basis. When accounting on a gross basis, our reported revenue comprises the entire amount billed to our client and our reported expenses include all costs associated with the client. Certain contractual arrangements in our project and development services, including fit-out business activities and our facility management services, tend to have characteristics that result in accounting on a gross basis. In Note 4, Business Segments, for client assignments in property and facility management and in project and development services that are accounted for on a gross basis, we identify the gross contract costs, including vendor and subcontract costs ("gross contract costs"), and present separately their impact on both revenue and operating expenses in our RES segments. We exclude these gross contract costs from revenue and operating expenses in determining "fee revenue" and "fee-based operating expenses" in our segment presentation.

We account for a contract on a net basis when the fee structure is comprised of at least two distinct elements, namely (1) a fixed management fee and (2) a separate component that allows for scheduled reimbursable personnel costs or other expenses to be billed directly to the client. When accounting on a net basis, we include the fixed management fee in reported revenue and net the reimbursement against expenses. We base this accounting on the following factors, which define us as an agent rather than a principal:


•	The property owner or client, with ultimate approval rights relating to the employment and compensation of on-site personnel, and bearing all of the economic costs of such personnel, is determined to be the primary obligor in the arrangement;


•	Reimbursement to JLL is generally completed simultaneously with payment of payroll or soon thereafter;


•	The property owner is contractually obligated to fund all operating costs of the property from existing cash flow or direct funding from its building operating account and JLL bears little or no credit risk; and


•	JLL generally earns no margin on the reimbursement aspect of the arrangement, obtaining reimbursement only for actual costs incurred.

We account for the majority of our service contracts on a net basis. The reimbursable costs associated with these net contracts aggregated approximately $416.9 million and $425.6 million for the three months ended June 30, 2015 and 2014, respectively, and $965.6 million and $904.5 million for the six months ended June 30, 2015 and 2014, respectively. The presentation of expenses pursuant to these arrangements under either a gross or net basis has no impact on operating income, net income or cash flows.

Contracts accounted for on a gross basis resulted in certain costs reflected in revenue and operating expenses (gross contract costs) of $191.7 million and $191.2 million for the three months ended June 30, 2015 and 2014, respectively, and $366.1 million and $350.9 million for the six months ended June 30, 2015 and 2014, respectively.


(4)	Business Segments

We manage and report our operations as four business segments:

The three geographic regions of RES including:

(1) Americas,

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

(3) Asia Pacific;

and

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

Each geographic region offers our full range of Real Estate Services, including agency leasing and tenant representation, capital markets and hotels, property management, facilities management, project and development management, energy management and sustainability, construction management, and advisory, consulting and valuation services. We consider "property management" to represent services provided to non-occupying property investors and "facilities management" to represent services provided to owner-occupiers. LaSalle provides investment management services to institutional investors and high-net-worth individuals.

Operating income represents total revenue less direct and allocated indirect expenses. We allocate all indirect expenses to our segments, other than interest and income taxes, as nearly all expenses incurred benefit one or more of the segments. Allocated expenses primarily consist of corporate global overhead, which we allocate to the business segments based on the budgeted operating expenses of each segment.

For segment reporting, we present revenue net of gross contract costs in our RES segments. Excluding these costs from revenue and expenses results in a "net" presentation of "fee revenue" and "fee-based operating expenses" that we believe more accurately reflects how we manage our expense base and operating margins. See Note 3 for additional information on our gross and net accounting policies. For segment reporting, we present Equity earnings from real estate ventures within total segment revenue, since the related activity is an integral part of LaSalle. Finally, our measure of segment results excludes Restructuring and acquisition charges.

The Chief Operating Decision Maker of JLL measures the segment results net of gross contract costs, inclusive of Equity earnings from real estate ventures, and excluding Restructuring and acquisition charges. We define the Chief Operating Decision Maker collectively as our Global Executive Board, which is comprised of our Global Chief Executive Officer, Global Chief Financial Officer and the Chief Executive Officers of each of our four business segments.

Summarized unaudited financial information by business segment for the three and six months ended June 30, 2015 and 2014 is as follows ($ in thousands):



	Three Months Ended			Three Months Ended		Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Americas - Real Estate Services
Revenue	$	597,470		544,082		$	1,151,666		991,164
Equity earnings	570			967		916			1,202
Total segment revenue	598,040			545,049		1,152,582			992,366
Gross contract costs	(52,937		)	(51,479	)	(105,896		)	(92,262	)
Total segment fee revenue	545,103			493,570		1,046,686			900,104
Operating expenses:
Compensation, operating and administrative expenses	536,685			484,750		1,040,261			901,759
Depreciation and amortization	15,322			13,531		30,873			26,842
Total segment operating expenses	552,007			498,281		1,071,134			928,601
Gross contract costs	(52,937		)	(51,479	)	(105,896		)	(92,262	)
Total fee-based segment operating expenses	499,070			446,802		965,238			836,339
Operating income	$	46,033		46,768		$	81,448		63,765

EMEA - Real Estate Services
Revenue	$	416,259		395,643		$	742,033		707,525
Equity earnings	1,112			—		744			—
Total segment revenue	417,371			395,643		742,777			707,525
Gross contract costs	(90,060		)	(86,673	)	(161,922		)	(164,525	)
Total segment fee revenue	327,311			308,970		580,855			543,000
Operating expenses:
Compensation, operating and administrative expenses	379,106			365,360		702,192			676,706
Depreciation and amortization	6,073			5,504		11,299			10,948
Total segment operating expenses	385,179			370,864		713,491			687,654
Gross contract costs	(90,060		)	(86,673	)	(161,922		)	(164,525	)
Total fee-based segment operating expenses	295,119			284,191		551,569			523,129
Operating income	$	32,192		24,779		$	29,286		19,871

Continued: Summarized unaudited financial information by business segment for the three and six months ended June 30, 2015 and 2014 is as follows ($ in thousands):



	Three Months Ended			Three Months Ended		Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Asia Pacific - Real Estate Services
Revenue	$	279,573		267,477		$	517,322		482,182
Equity earnings (loss)	74			4		22			(79	)
Total segment revenue	279,647			267,481		517,344			482,103
Gross contract costs	(48,669		)	(53,096	)	(98,257		)	(94,063	)
Total segment fee revenue	230,978			214,385		419,087			388,040
Operating expenses:
Compensation, operating and administrative expenses	259,878			248,454		489,500			458,759
Depreciation and amortization	3,583			3,257		7,222			6,425
Total segment operating expenses	263,461			251,711		496,722			465,184
Gross contract costs	(48,669		)	(53,096	)	(98,257		)	(94,063	)
Total fee-based segment operating expenses	214,792			198,615		398,465			371,121
Operating income	$	16,186		15,770		$	20,622		16,919

LaSalle
Revenue	$	80,173		70,002		$	165,965		133,775
Equity earnings	25,372			11,520		36,829			20,270
Total segment revenue	105,545			81,522		202,794			154,045
Operating expenses:
Compensation, operating and administrative expenses	67,516			58,746		136,346			114,425
Depreciation and amortization	517			488		1,024			976
Total segment operating expenses	68,033			59,234		137,370			115,401
Operating income	$	37,512		22,288		$	65,424		38,644

Segment Reconciling Items
Total segment revenue	$	1,400,603		1,289,695		$	2,615,497		2,336,039
Reclassification of equity earnings	27,128			12,491		38,511			21,393
Total revenue	1,373,475			1,277,204		2,576,986			2,314,646
Total segment operating expenses before restructuring and acquisition charges	1,268,680			1,180,090		2,418,717			2,196,840
Operating income before restructuring and acquisition charges	104,795			97,114		158,269			117,806

Restructuring and acquisition charges	1,832			5,458		2,648			41,416
Operating income	$	102,963		91,656		$	155,621		76,390

(5) Business Combinations, Goodwill and Other Intangible Assets

2015 Business Combinations Activity

During the six months ended June 30, 2015, we completed six acquisitions, acquiring companies in Australia, Canada, Japan, Poland, Sweden, and the United States, and we made the final payments for acquisitions of businesses located in India and Turkey that were completed in previous years. Aggregate terms of these acquisitions included: (1) cash payments of $41.7 million, including the $16.4 million related to the Indian business acquisition further discussed below, (2) consideration subject only to the passage of time of $5.1 million, and (3) earn-out consideration subject to provisions that will be paid upon certain performance conditions being met which are recorded at their acquisition date fair value of $13.4 million.

Our 2007 acquisition of an Indian real estate services company included provisions for the purchase of the minority ownership retained at completion. This obligation was reflected on our Consolidated Balance Sheet at December 31, 2014 as an $11.2 million Minority shareholder redemption liability. During the six months ended June 30, 2015, this obligation was adjusted upwards by $5.2 million to the final settlement amount of $16.4 million for the remaining shares, which was paid during June 2015. A corresponding adjustment of $5.2 million was recorded to goodwill.

During the six months ended June 30, 2015, we paid $41.5 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years. We also paid $2.7 million to acquire a portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB, a Swedish real estate services provider.

Earn-Out Payments

At June 30, 2015, we had the potential to make future earn-out payments on 18 acquisitions that are subject to the achievement of certain performance conditions. The maximum amount of the potential future earn-out payments was $55.3 million at June 30, 2015, for which we have accrued $35.7 million on our Consolidated Balance Sheet within Other current and long-term liabilities. Assuming the achievement of the applicable performance conditions, we anticipate that the majority of these earn-out payments will be paid over the next four years.

Goodwill and Other Intangible Assets

We had $2.0 billion of goodwill and unamortized intangibles at June 30, 2015. Significant portions of our goodwill and unamortized intangibles are denominated in currencies other than the U.S. dollar, which means that a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates. The tables below detail the foreign exchange impact on our goodwill and intangible balances. The $2.0 billion of goodwill and unamortized intangibles consists of: (1) goodwill of $1.93 billion with an indefinite useful life that is not amortized, (2) identifiable intangibles of $31.8 million that will be amortized over their remaining finite useful lives, and (3) $6.6 million of identifiable intangibles with indefinite useful lives that are not amortized.

The following table details, by reporting segment, the current year movements in goodwill with indefinite useful lives ($ in millions):



	Real Estate Services
	Americas			EMEA		Asia Pacific		LaSalle	Consolidated
Balance as of January 1, 2015	$	1,008.3		650.4		230.8		18.4	1,907.9
Additions, net of adjustments	10.0			15.3		18.7		—	44.0
Impact of exchange rate movements	(0.6		)	(14.1	)	(4.0	)	0.1	(18.6	)
Balance as of June 30, 2015	$	1,017.7		651.6		245.5		18.5	1,933.3

The following table details, by reporting segment, the current year movements in the gross carrying amount and accumulated amortization of our identifiable intangibles ($ in millions):



	Real Estate Services
	Americas			EMEA		Asia Pacific		LaSalle		Consolidated
Gross Book Value
Balance as of January 1, 2015	$	103.4		43.8		9.5		7.0		163.7
Additions	2.3			0.7		1.9		—		4.9
Impact of exchange rate movements	—			(0.4	)	(0.2	)	(0.2	)	(0.8	)
Balance as of June 30, 2015	$	105.7		44.1		11.2		6.8		167.8

Accumulated Amortization
Balance as of January 1, 2015	$	(84.9	)	(31.0	)	(8.9	)	(0.1	)	(124.9	)
Amortization expense	(3.4		)	(1.3	)	(0.2	)	—		(4.9	)
Impact of exchange rate movements	—			0.3		0.1		—		0.4
Balance as of June 30, 2015	$	(88.3	)	(32.0	)	(9.0	)	(0.1	)	(129.4	)

Net book value as of June 30, 2015	$	17.4		12.1		2.2		6.7		38.4

We amortize our identifiable intangible assets with finite lives on a straight-line basis over their useful lives. The remaining estimated future amortization expense by year for our identifiable intangible assets with finite useful lives at June 30, 2015, is as follows ($ in millions):



2015 (6 months)	$	6.9
2016	7.7
2017	6.9
2018	4.6
2019	2.7
2020	2.4
Thereafter	0.6
Total	$	31.8


(6)	Investments in Real Estate Ventures

As of June 30, 2015 and December 31, 2014, we had Investments in real estate ventures of $333.0 million and $297.1 million, respectively. We account for the majority of our investments in real estate ventures under the equity method of accounting, however, we report certain of our direct investments at fair value. Our investments are primarily co-investments in approximately 50 separate property or commingled funds for which we also have an advisory agreement. Our investment ownership percentages in these funds generally range from less than 1% to 15%.

Approximately half of our $333.0 million balance in Investments in real estate ventures as of June 30, 2015 was attributable to investment vehicles which, utilizing our capital and outside capital primarily provided by institutional investors, invest in certain real estate ventures that own and operate real estate. Of this amount, the majority was placed with LaSalle Investment Company II ("LIC II"), in which we held an effective ownership interest of 48.78%.

At June 30, 2015, LIC II had unfunded capital commitments to underlying ventures of $129.0 million and a $20.0 million revolving credit facility (the "LIC II Facility"), principally for working capital needs. LIC II's exposure to the liabilities and losses of the underlying real estate ventures in which it has invested is limited to existing capital contributions and remaining unfunded capital commitments. Considering our proportionate share of LIC II's commitments to underlying funds and our exposure to fund our proportionate share of the then outstanding balance on the LIC II facility, our maximum potential unfunded commitments to LIC II were $95.2 million as of June 30, 2015. We expect LIC II to draw down on our commitments over the next three to five years to satisfy its existing commitments to underlying real estate ventures.

The following table summarizes the above discussion relative to LIC II as of June 30, 2015 ($ in millions):



Our effective ownership interest in co-investment vehicle	48.78		%
Our maximum potential unfunded commitments	$	95.2
Our share of unfunded capital commitments to underlying funds	62.9
Our share of exposure on outstanding borrowings	3.9
Our maximum exposure, assuming facility is fully drawn	9.8

Exclusive of our LIC II commitment structure, we have potential unfunded commitment obligations to other like investment vehicles or direct investments, the aggregate maximum of which is $82.6 million as of June 30, 2015.

Our investments in real estate ventures include investments in entities classified as variable interest entities ("VIEs") that we analyze for potential consolidation. We had equity method investments, either directly or indirectly, of $2.3 million and $4.3 million at June 30, 2015 and December 31, 2014, respectively, in entities classified as VIEs. We evaluate each of these VIEs to determine whether we have the power to direct the activities that most significantly impact the entity's economic performance. In certain circumstances, we have determined that we either did not have the power to direct the key activities, or shared power with other investors, lenders, or other actively-involved third parties. Additionally, our exposure to loss is limited to our investment in the VIEs. Therefore, we concluded that we do not have a controlling financial interest in or are not the primary beneficiary of these VIEs and therefore do not consolidate them in our Consolidated Financial Statements. In other circumstances, we have determined we are the primary beneficiary of certain other VIEs and accordingly, consolidate such entities. The assets of the consolidated VIEs are available only for the settlement of the obligations of the respective entities. The mortgage loans of the consolidated VIEs are non-recourse to JLL.

Summarized balance sheets for our consolidated VIEs as of June 30, 2015 and December 31, 2014 are as follows ($ in millions):



	June 30, 2015		December 31, 2014
Property and equipment, net	$	32.4	37.8
Investment in real estate venture	5.4		5.0
Other assets	3.3		3.5
Total assets	$	41.1	46.3

Mortgage loans payable, included in other long-term liabilities	$	25.1	29.3
Total liabilities	25.1		29.3
Members' equity	16.0		17.0
Total liabilities and members' equity	$	41.1	46.3

Summarized statements of operations for our consolidated VIEs for the three and six months ended June 30, 2015 and 2014 are as follows ($ in millions):



	Three Months Ended			Three Months Ended		Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Revenue	$	1.3		1.0		$	2.4		1.6
Gain on sale of investment	—			—		1.3			—
Operating and other expenses	(0.9		)	(0.9	)	(1.8		)	(1.4	)
Net income	$	0.4		0.1		$	1.9		0.2

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

Impairment

We review our investments in real estate ventures on a quarterly basis, or as otherwise deemed necessary, for indications that we may not be able to recover the carrying value of our investments and whether such investments are other than temporarily impaired. Our assessments consider the existence of impairment indicators at the underlying real estate assets that comprise the majority of our investments. Such assessments, in regards to both the investment levels and underlying asset levels, are based on evaluations of regular updates to future cash flow models and on factors such as operational performance, market conditions, major tenancy matters, legal and environmental concerns, and our ability and intent to hold each investment. When events or changes in circumstances indicate that the carrying amount of one of our investments in real estate ventures may be other than temporarily impaired, we consider the likelihood of recoverability of the carrying amount of our investment as well as the estimated fair value and record an impairment charge as applicable. Impairment charges to write down the carrying value of the real estate assets underlying our investments, our proportionate share of which is recognized within Equity earnings from real estate ventures, are generally the result of completing discounted cash flow models that primarily rely upon Level 3 inputs to determine fair value. Impairment charges recorded within Equity earnings from real estate ventures aggregated to $0.6 million for the three months ended June 30, 2015. There were no impairment charges included in Equity earnings from real estate ventures for the three months ended June 30, 2014. Impairment charges aggregated to $4.2 million and $0.8 million for the six months ended June 30, 2015 and 2014, respectively.

Fair Value

We report our investments in certain real estate ventures at fair value. For such investments, we increase or decrease our investment each reporting period by the estimated change in fair value, which activity is reflected as gains or losses in our Consolidated Statements of Comprehensive Income within Equity earnings from real estate ventures. At June 30, 2015 and December 31, 2014, we had $139.0 million and $113.6 million, respectively, of investments that were reported at fair value. Fair value was estimated utilizing net asset value (NAV) per share (or its equivalent), generally a Level 3 input in the fair value hierarchy, as provided by our investees. Critical inputs to NAV estimates included valuations of the underlying real estate assets and borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates, rental and expense growth rates and asset-specific market borrowing rates. No adjustments to NAV estimates provided by investees, including adjustments to contemplate any restrictions to the transferability of ownership interests embedded within investment agreements to which we are a party, were considered necessary based upon the following factors: (1) our understanding of the methodology utilized and inputs incorporated to estimate NAV at the investee level derived through LaSalle's role as advisor or manager of these ventures; (2) consideration of market demand for the specific types of real estate assets held by each venture; and (3) contemplation of real estate and capital markets conditions in the localities in which these ventures operate.

The following table shows the roll forward of our investments in real estate ventures that are accounted for at fair value ($ in millions):



	2015			2014
Fair value investments as of January 1,	$	113.6		78.9
Investments	22.7			7.0
Distributions	(2.7		)	(0.5	)
Net fair value gain	7.0			2.7
Foreign currency translation adjustments, net	(1.6		)	0.5
Fair value investments as of June 30,	$	139.0		88.6


(7)	Stock-Based Compensation

Restricted Stock Unit Awards

Along with cash-based salaries and performance-based annual cash incentive awards, restricted stock unit awards represent an important element of our compensation program.

Restricted stock unit activity for the three months ended June 30, 2015 and 2014 is as follows:



	Shares (thousands)		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life
Unvested at April 1, 2015	819.6		$	101.13
Granted	10.2		172.93
Vested	(14.3	)	85.82
Forfeited	(6.5	)	87.58
Unvested at June 30, 2015	809.0		$	102.41	2.15
Unvested shares expected to vest	785.9		$	102.62	2.16

Unvested at April 1, 2014	1,031.1		$	80.92
Granted	13.1		121.12
Vested	(10.7	)	34.13
Forfeited	(6.2	)	79.28
Unvested at June 30, 2014	1,027.3		$	81.93	2.15
Unvested shares expected to vest	993.6		$	82.10	2.16

Restricted stock unit activity for the six months ended June 30, 2015 and 2014 is as follows:



	Shares (thousands)		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life
Unvested at January 1, 2015	745.3		$	90.43
Granted	130.3		160.91
Vested	(56.1	)	81.94
Forfeited	(10.5	)	88.16
Unvested at June 30, 2015	809.0		$	102.41	2.15
Unvested shares expected to vest	785.9		$	102.62	2.16

Unvested at January 1, 2014	1,025.3		$	73.10
Granted	148.4		118.66
Vested	(140.2	)	56.36
Forfeited	(6.2	)	79.28
Unvested at June 30, 2014	1,027.3		$	81.93	2.15
Unvested shares expected to vest	993.6		$	82.10	2.16

We determine the fair value of restricted stock units based on the closing market price of the Company's common stock on the grant date. As of June 30, 2015, we had $32.1 million of unamortized deferred compensation related to unvested restricted stock units, which is anticipated to be recognized over varying periods into 2020.

Shares vested during the three months ended June 30, 2015 and 2014 had grant date fair values of $1.2 million and $0.4 million, respectively, and $4.6 million and $7.9 million for the six months ended June 30, 2015 and 2014, respectively. Shares granted during the three months ended June 30, 2015 and 2014, had grant date fair values of $1.8 million and $1.6 million, respectively, and $21.0 million and $17.6 million for the six months ended June 30, 2015 and 2014, respectively.

Other Stock Compensation Programs

We maintain a stock-based compensation plan for our United Kingdom and Ireland-based employees, the Jones Lang LaSalle Savings Related Share Option Plan ("Save as You Earn" or "SAYE"). Under this plan, employees make an annual election to contribute to the plan to purchase stock at a 15% discount from the market price at the beginning of the plan's three and five year vesting periods. No options were issued during the six months ended June 30, 2015 and 2014. The fair value of options granted under the SAYE plan are amortized over their respective vesting periods. There were approximately 162,700 and 176,400 options outstanding under the SAYE plan at June 30, 2015 and December 31, 2014, respectively.


(8)	Retirement Plans

We maintain four contributory defined benefit pension plans in the United Kingdom, Ireland and Holland to provide retirement benefits to eligible employees. It is our policy to fund the minimum annual contributions required by applicable regulations. We use a December 31 measurement date for our plans.

Net periodic pension cost (income) consisted of the following ($ in millions):



	Three Months Ended			Three Months Ended		Six Months Ended			Six Months Ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Employer service cost - benefits earned during the period	$	1.3		1.0		$	2.6		1.9
Interest cost on projected benefit obligation	3.7			4.1		7.3			8.2
Expected return on plan assets	(5.3		)	(6.2	)	(10.5		)	(12.4	)
Net amortization of deferrals	0.8			0.3		1.6			0.5
Recognized actuarial loss	0.4			—		0.8			0.1
Net periodic pension cost (income)	$	0.9		(0.8	)	$	1.8		(1.7	)

The expected return on plan assets, included in net periodic pension cost (income) during 2015 was based on forecasted long-term rates of return on the plan assets of each individual plan; expected returns range from 2.7% to 5.8%.

For the three months ended June 30, 2015 and 2014, we made payments of $2.6 million and $3.0 million, respectively, to these plans. For the six months ended June 30, 2015 and 2014, we made payments of $5.4 million and $6.6 million, respectively, to these plans. We expect to contribute an additional $7.6 million to these plans during the last six months of 2015, for a total of $13.0 million in 2015. We contributed $14.6 million to these plans during the year ended December 31, 2014.


(9)	Fair Value Measurements

ASC 820, "Fair Value Measurements and Disclosures," establishes a framework for measuring fair value highlighted by the following three-tier fair value hierarchy:


•	Level 1. Observable inputs such as quoted prices for identical assets or liabilities in active markets;


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


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

There were no transfers among levels of valuations during either the three and six months ended June 30, 2015 or 2014.

Financial Instruments

Our financial instruments include Cash and cash equivalents, Trade receivables, Notes and other receivables, Warehouse receivables, Accounts payable, Short-term borrowings, Warehouse facility, Credit facility, Long-term senior notes and foreign currency exchange contracts. The estimated fair value of Cash and cash equivalents, Trade receivables, Notes and other receivables, Warehouse receivables, Accounts payable, and the Warehouse facility approximates their carrying amounts due to the short maturity of these instruments. The estimated fair value of our Credit facility and Short-term borrowings approximates their carrying value given the variable interest rate terms and market spreads.

We estimated the fair value of our Long-term senior notes as $281.7 million and $285.3 million at June 30, 2015 and December 31, 2014, respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy. The carrying value of our Long-term senior notes was $275.0 million at June 30, 2015 and December 31, 2014.

We record Warehouse receivables at the lower of cost or fair value based on the committed purchase price. When applicable, we determine the fair value of Warehouse receivables based on readily observable Level 2 inputs.

Recurring Fair Value Measurements

The following table categorizes by level in the fair value hierarchy the estimated fair value at June 30, 2015 and December 31, 2014 of our assets and liabilities that are measured at fair value on a recurring basis ($ in millions):



		June 30, 2015			December 31, 2014
		Level 2		Level 3	Level 2		Level 3
Assets
	Foreign currency forward contracts receivable	$	14.4	—	$	10.5	—
	Deferred compensation plan assets	126.6		—	111.2		—
	Investments in real estate ventures - fair value	—		139.0	—		113.6
Total assets at fair value		$	141.0	139.0	$	121.7	113.6

Liabilities
	Foreign currency forward contracts payable	$	10.8	—	$	18.2	—
	Deferred compensation plan liabilities	126.1		—	107.9		—
Total liabilities at fair value		$	136.9	—	$	126.1	—

Foreign Currency Forward Contracts

We regularly use foreign currency forward contracts to manage our currency exchange rate risk related to intercompany lending and cash management practices. We estimate the fair value of these contracts based on current market rates. The inputs for these valuations are Level 2 inputs in the fair value hierarchy. At June 30, 2015, these forward exchange contracts had a gross notional value of $1.90 billion ($976.0 million on a net basis) and were recorded on our Consolidated Balance Sheet as Other current assets of $14.4 million and Other current liabilities of $10.8 million. At December 31, 2014, these forward exchange contracts had a gross notional value of $2.03 billion ($1.19 billion on a net basis) and were recorded on our Consolidated Balance Sheet as Other current assets of $10.5 million and Other current liabilities of $18.2 million.

The revaluations of our foreign currency forward contracts resulted in net gains of $3.6 million and $3.5 million for the three months ended June 30, 2015 and 2014, respectively. Gains and losses from the revaluation of these contracts are recognized as a component of Operating, administrative and other expense and are offset by the gains and losses recognized on the revaluation of intercompany loans and other foreign currency balances such that the impact to net income was not significant for either of the three or six months ended June 30, 2015 or 2014.

The asset and liability positions recorded for our foreign currency forward contracts are based on the net payable or net receivable position with the financial institutions from which we purchase these contracts. The $14.4 million asset at June 30, 2015 was comprised of gross contracts with receivable positions of $14.7 million and payable positions of $0.3 million. The $10.8 million liability at June 30, 2015 was comprised of gross contracts with receivable positions of $0.9 million and payable positions of $11.7 million. At December 31, 2014, the $10.5 million asset was comprised of gross contracts with receivable positions of $12.5 million and payable positions of $2.0 million. The $18.2 million liability at December 31, 2014, was comprised of gross contracts with receivable positions of $1.1 million and payable positions of $19.3 million.

Deferred Compensation Plan

We maintain a deferred compensation plan for certain of our U.S. employees that allows them to defer portions of their compensation. We invest directly in insurance contracts which yield returns to fund these deferred compensation obligations. We recognize an asset for the amount that could be realized under these insurance contracts at the balance sheet date, and the deferred compensation obligation is adjusted to reflect the changes in the fair value of the amount owed to the employees. The inputs for this valuation are Level 2 inputs in the fair value hierarchy. This plan was recorded on our Consolidated Balance Sheet at June 30, 2015, as Deferred compensation plan assets of $126.6 million within current assets, long-term Deferred

compensation liabilities of $126.1 million, and as a reduction of equity, Shares held in trust, of $6.3 million. This plan was recorded on our Consolidated Balance Sheet at December 31, 2014 as Deferred compensation plan assets of $111.2 million, long-term Deferred compensation liabilities of $107.9 million, and as a reduction of equity, Shares held in trust, of $6.4 million.

Investments in Real Estate Ventures

We report certain direct investments in real estate ventures at fair value. We had $139.0 million and $113.6 million at June 30, 2015 and December 31, 2014, respectively, of direct investments in real estate ventures that were reported at fair value. For these investments in real estate ventures, we increase or decrease our investment each reporting period by the change in the fair value of these investments. These fair value adjustments are reported in our Consolidated Statements of Comprehensive Income within Equity earnings from real estate ventures. As discussed in Note 6, Investments in Real Estate Ventures, we estimate the fair value of these investments using NAV per share (or its equivalent), generally a Level 3 input in the fair value hierarchy, provided by investees.

Non-Recurring Fair Value Measurements

We review our investments in real estate ventures, except those investments otherwise reported at fair value, on a quarterly basis, or as otherwise deemed necessary, for indications of whether we may not be able to recover the carrying value of our investments and whether such investments are other than temporarily impaired. When the carrying amount of the investment is in excess of the estimated future undiscounted cash flows, we use a discounted cash flow approach or other acceptable method to determine the fair value of the investment in computing the amount of the impairment. Our determination of fair value primarily relies on Level 3 inputs. We did not recognize any investment-level impairment losses during either of the three or six months ended June 30, 2015 or 2014. See Note 6, Investments in Real Estate Ventures, for additional information, including information related to impairment charges recorded at the investee level.


(10)	Debt

Credit Facility

On February 25, 2015, we amended and expanded our credit facility (the "Facility"), which resulted in: (1) an increase in our borrowing capacity from $1.2 billion to $2.0 billion; (2) an extension of the maturity date from October 4, 2018 to February 25, 2020; (3) increases in certain add-backs to Adjusted EBITDA (as defined in the Facility) for the calculation of the leverage ratio to provide additional operating flexibility; and (4) a range of pricing from LIBOR plus 1.00% to 2.05%, with pricing as of June 30, 2015 at LIBOR plus 1.00%. Under this new agreement, our leverage ratio cannot exceed 3.50 to 1, except immediately following a material acquisition, in which case, the leverage ratio maximum is 4.00 to 1 for up to four consecutive quarters. Other key terms and conditions of the Facility were unchanged as part of the current amendment and expansion.

At June 30, 2015, we had outstanding borrowings under the Facility of $330.0 million and outstanding letters of credit of $23.0 million. At December 31, 2014, we had no outstanding borrowings under the Facility and outstanding letters of credit of $22.0 million. The average outstanding borrowings under the Facility were $397.4 million and $491.8 million during the three months ended June 30, 2015 and 2014, respectively, and $277.7 million and $383.3 million during the six months ended June 30, 2015 and 2014, respectively.

The effective interest rates on our Facility were 1.1% and 1.0% for the three months ended June 30, 2015 and 2014, respectively, and 1.1% during both the six months ended June 30, 2015 and 2014.

We remained in compliance with all covenants under our Facility as of June 30, 2015, including a minimum cash interest coverage ratio of 3.00 to 1 and the maximum leverage ratio discussed above.

Included in debt for the calculation of the leverage ratio is the present value of deferred business acquisition obligations and included in Adjusted EBITDA (as defined in the Facility) are, among other things, (1) an add-back for stock-based compensation expense, (2) the addition of the EBITDA of acquired companies earned prior to acquisition, and (3) add-backs for certain impairment and non-recurring charges. In addition, we are restricted from, among other things, incurring certain levels of indebtedness to lenders outside of the Facility and disposing of a significant portion of our assets. Lender approval or waiver is required for certain levels of cash acquisitions and co-investment.

We will continue to use the Facility for business acquisitions, working capital needs (including payment of accrued incentive compensation), co-investment activities, dividend payments, share repurchases, and capital expenditures.

Short-Term Borrowings

In addition to our Facility, we have the capacity to borrow up to an additional $42.1 million under local overdraft facilities. We had short-term borrowings (including capital lease obligations and local overdraft facilities) of $22.2 million and $19.6 million at June 30, 2015 and December 31, 2014, respectively, of which $16.4 million and $14.6 million at June 30, 2015 and December 31, 2014, respectively, was attributable to local overdraft facilities.

Long-Term Senior Notes

In November 2012, in an underwritten public offering, we issued $275.0 million of Long-term senior notes due November 2022 (the "Notes"). The Notes bear interest at an annual rate of 4.4%, subject to adjustment if a credit rating assigned to the Notes is downgraded below an investment grade rating (or subsequently upgraded). Interest is payable semi-annually on May 15 and November 15.


(11)	Commitments and Contingencies

We are a defendant in various litigation matters arising in the ordinary course of business, some of which involve claims for damages that are substantial in amount. Many of these litigation matters are covered by insurance (including insurance provided through a consolidated captive insurance company as further discussed below), but they may nevertheless be subject to large deductibles and the amounts being claimed may exceed the available 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.

In order to better manage our global insurance program and support our risk management efforts, we supplement our traditional insurance coverage for certain types of claims by using a wholly-owned captive insurance company. The level of risk retained by our captive insurance company, with respect to professional indemnity claims, is up to $2.5 million per claim, inclusive of the deductible. When a potential loss event occurs, management estimates the ultimate cost of the claim and accrues the related cost in Other current and long-term liabilities on our Consolidated Balance Sheets when probable and estimable. The following table shows the professional indemnity accrual activity and the related payments made during the six months ended June 30, 2015 and 2014 ($ in millions):



	Accrual Activity
January 1, 2015	$	9.2
New claims	2.5
Prior year claims adjustments	0.2
Claims paid	—
June 30, 2015	$	11.9

January 1, 2014	$	6.2
New claims	3.1
Prior year claims adjustments	(0.2		)
Claims paid	(0.6		)
June 30, 2014	$	8.5


(12)	Restructuring and Acquisition Charges

There were $1.8 million and $2.6 million of Restructuring and acquisition charges included in Net income during the three and six months ended June 30, 2015 primarily consisting of (1) acquisition-related costs and (2) lease exit charges. For the three and six months ended June 30, 2014, we recognized $5.5 million and $41.4 million, respectively, of Restructuring and acquisition charges, of which $34.5 million of the $41.4 million total was related to the write-off of an indemnification asset that arose from prior period acquisition activity. This write-off was offset by the recognition of a related previously unrecognized tax benefit of an equal amount in the provision for income taxes, and therefore had no impact on net income. The remaining $6.9 million of expense recognized during the six months ended June 30, 2014 consisted of (1) severance, (2) lease exit fair value reserve adjustments, and (3) other acquisition and information technology integration costs.

The following table shows the restructuring and acquisition accrual activity, exclusive of the $34.5 million indemnification asset write-off in 2014, and the related payments made during the six months ended June 30, 2015 and 2014 ($ in millions):



	Severance			Retention Bonuses	Lease Exit		Other Acquisition Costs		Total
January 1, 2015	$	3.0		—	4.2		0.4		$	7.6
Accruals	—			—	0.2		2.4		2.6
Payments made	(1.4		)	—	(1.9	)	(2.6	)	(5.9		)
June 30, 2015	$	1.6		—	2.5		0.2		$	4.3



	Severance			Retention Bonuses	Lease Exit		Other Acquisition Costs		Total
January 1, 2014	$	3.8		0.4	5.9		0.4		$	10.5
Accruals	2.4			—	3.2		1.3		6.9
Payments made	(2.4		)	—	(2.4	)	(1.6	)	(6.4		)
June 30, 2014	$	3.8		0.4	6.7		0.1		$	11.0

We expect that the majority of accrued severance and other accrued acquisition costs will be paid during the second half of 2015. Lease exit payments are dependent on the terms of various leases, which extend as far out as 2017.

(13) Noncontrolling Interest

Changes in amounts attributable to noncontrolling interests are reflected in the Consolidated Statement of Changes in Equity, whereas changes in amounts attributable to redeemable noncontrolling interests are presented in the following table ($ in millions):



Redeemable noncontrolling interests as of January 1, 2015	$	13.4
Acquisition of redeemable noncontrolling interest (1)	(2.8		)
Net income	0.2
Impact of exchange rate movements	(0.9		)
Redeemable noncontrolling interests as of June 30, 2015	$	9.9
(1) Reflects our redemption of a portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB and includes $0.2 million representing the difference between the redemption value and the carrying value of the acquired interest.

(14) Subsequent Events

Subsequent to June 30, 2015, JLL announced the completion of the following business acquisitions:


•	AVM Partners - a Turkey-based retail management and leasing business;


•	LodgeTax - a U.S.-based leader in hotel real estate tax services and consulting;


•	Shelter Bay Retail Group - a California-based retail property management firm;


•	CMM Projekt & Office Solutions GmbH - a German fit-out business to be integrated into our Tetris platform; and


•	Bluu - a United Kingdom-based fit out company also intended for integration into our Tetris platform.

Total consideration, including maximum potential earn-out payments, of the above business acquisitions aggregated to $80.3 million.

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

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, for the three and six months ended June 30, 2015, and Jones Lang LaSalle's ("JLL," which may also be referred to as "the Company" or as "the Firm," "we," "us" or "our") audited Consolidated Financial Statements and notes thereto for the fiscal year ended December 31, 2014, which are included in our 2014 Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission ("SEC") and also available on our website (www.jll.com).You should also refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2014 Annual Report on Form 10-K.

The following discussion and analysis contains certain forward-looking statements generally identified by the words anticipates, believes, estimates, expects, plans, intends and other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause JLL's actual results, performance, achievements, plans and objectives to be materially different from any future results, performance, achievements, plans and objectives expressed or implied by such forward-looking statements. See the Cautionary Note Regarding Forward-Looking Statements included within this section for further information.

We present our quarterly Management's Discussion and Analysis in five sections, as follows:


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


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


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


(4)	Consolidated cash flows; and


(5)	Liquidity and capital resources.

Summary of Critical Accounting Policies and Estimates

An understanding of our accounting policies is necessary for a complete analysis of our results, financial position, liquidity and trends. See Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our 2014 Annual Report on Form 10-K for a complete summary of our significant accounting policies.

The preparation of our financial statements requires management to make certain critical accounting estimates and judgments that impact (1) the stated amount of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the financial statements, and (3) the reported amount of revenue and expenses during the reporting periods. These accounting estimates are based on management's judgment. We consider them to be critical because of their significance to the financial statements and the possibility that future events may differ from current judgments, or that the use of different assumptions could result in materially different estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts likely differ from such estimated amounts, we believe such differences are not likely to be material.

A discussion of our critical accounting policies and estimates used in the preparation of our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no material changes to these critical accounting policies and estimates during the six months ended June 30, 2015.

The following are the critical accounting policies and estimates discussed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2014:


•	Revenue Recognition;


•	Allowance for Uncollectible Accounts Receivable;


•	Asset Impairments;


•	Income Taxes; and


•	Self-Insurance Programs.

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

Quarterly Income Tax Provision

Our fiscal year estimated effective tax rate is based on estimates that are updated each quarter. Our effective tax rate for the six months ended June 30, 2015 and our forecasted tax rate for 2015 is approximately 25.4%. We provide for the effects of income taxes on interim financial statements based on our estimate of the effective tax rate for the full year, which is based on

forecasted income by country and expected enacted tax rates. We evaluate our estimated effective tax rate on a quarterly basis to reflect forecast changes in our geographic mix of income and legislative actions on statutory tax rates and other relevant matters effective in the quarter in which the legislation is enacted.

The geographic mix of our income can significantly impact our effective tax rate. Tax rate jurisdictions with effective national and local combined tax rates of 25% or lower with the most significant impact on our effective tax rate include: Hong Kong (16.5%), Singapore (17%), the United Kingdom (20.25%), The People's Republic of China (25%) and the Netherlands (25%). Other tax rate jurisdictions with effective rates of 25% or lower making meaningful contributions to our global effective tax rate include: Cyprus (12.5%), Ireland (12.5%), Poland (19%), Russia (20%), Saudi Arabia (20%), Turkey (20%) and Sweden (22%).

Items Affecting Comparability

Macroeconomic Conditions

Our results of operations and the variability of these results are significantly influenced by (1) macroeconomic trends, (2) the geopolitical environment, (3) the global and regional real estate markets, and (4) the financial and credit markets. These macroeconomic and other conditions have had, and we expect will continue to have, a significant impact on the variability of our results of operations.

LaSalle Investment Management Revenue

Our investment management business is in part compensated through the receipt of incentive fees where performance of underlying funds' investments exceeds agreed-to benchmark levels. Depending upon performance and the contractual timing of measurement periods with clients, these fees can be significant and vary substantially from period to period.

Equity earnings from real estate ventures also may vary substantially from period to period for a variety of reasons, including as a result of: (1) impairment charges, (2) gains (losses) on investments reported at fair value, (3) gains (losses) on asset dispositions, and (4) incentive fees recorded as Equity earnings. The timing of recognition of these items may impact comparability between quarters, in any one year, or compared to a prior year.

The comparability of these items can be seen in Note 4, Business Segments, of the Notes to Consolidated Financial Statements and is discussed further in Segment Operating Results included herein.

Transactional-Based Revenue

Transactional-based fees for real estate investment banking, capital markets activities and other services within our Real Estate Services ("RES") businesses increase the variability of the revenue we receive that relates to the size and timing of our clients' transactions. The timing and the magnitude of these fees can vary significantly from year to year and quarter to quarter, and from region to region.

Foreign Currency

We conduct business using a variety of currencies but we report our results in U.S. dollars. As a result, the volatility of currencies against the U.S. dollar may positively or negatively impact our results. This volatility can make it more difficult to perform period-to-period comparisons of the reported U.S. dollar results of operations, because such results may indicate a growth or decline rate that might not have been consistent with the real underlying growth or decline rates in the local operations. Consequently, we provide information about the impact of foreign currencies in the period-to-period comparisons of the reported results of operations in our discussion and analysis of financial condition in the Results of Operations section below.

Seasonality

Our quarterly revenue and profits tend to grow progressively by quarter throughout the year. This is the result of a general focus in the real estate industry on completing or documenting transactions by fiscal year-end and the fact that certain expenses are constant through the year. Historically, we have reported a relatively smaller profit in the first quarter and then increasingly larger profits during each of the following three quarters, excluding the recognition of investment-generated performance fees and co-investment equity gains and losses (each of which can be unpredictable). We generally recognize such performance fees and realized co-investment equity gains or losses when assets are sold, the timing of which is geared toward the benefit of our clients. Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis.

A significant portion of our Compensation and benefits expense is from incentive compensation plans, which we generally accrue throughout the year based on progress toward annual performance targets. This quarterly estimation can result in

significant fluctuations in quarterly Compensation and benefit expense from period to period. Consequently, the results for the periods ended June 30, 2015 and 2014 are not indicative of the results expected to be obtained for the full fiscal year.

Results of Operations

Reclassifications

We report Equity earnings from real estate ventures in our Consolidated Statements of Comprehensive Income after Operating income. However, for segment reporting we reflect Equity earnings from real estate ventures within Total segment revenue. See Note 4, Business Segments, of the Notes to Consolidated Financial Statements for Equity earnings reflected within Total segment revenue, as well as discussion of how the Chief Operating Decision Maker (as defined in Note 4) measures segment results with Equity earnings included in Total segment revenue. Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications have not been material and have not affected reported net income.

Three and Six Months Ended June 30, 2015 Compared to Three and Six Months Ended June 30, 2014

In order to provide more meaningful year-over-year comparisons of our reported results, we have included in the table below both the U.S. dollar and local currency movements in the Consolidated Statements of Comprehensive Income.



	Three Months		Three Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Revenue
Real Estate Services:
Leasing	$	379.0	366.8	12.2		3	%	8	%
Capital Markets & Hotels	222.8		182.2	40.6		22	%	33	%
Property & Facility Management (1)	258.6		260.6	(2.0	)	(1	%)	7	%
Project & Development Services (1)	121.4		102.8	18.6		18	%	29	%
Advisory, Consulting and Other	119.9		103.6	16.3		16	%	27	%
LaSalle	80.1		70.0	10.1		14	%	24	%
Total firm fee revenue	$	1,181.8	1,086.0	95.8		9	%	17	%
Gross contract costs	191.7		191.2	0.5		—	%	15	%
Total firm revenue	$	1,373.5	1,277.2	96.3		8	%	16	%
Compensation, operating and administrative expenses excluding gross contract costs	$	1,051.5	966.1	85.4		9	%	17	%
Gross contract costs	191.7		191.2	0.5		—	%	15	%
Depreciation and amortization	25.5		22.7	2.8		12	%	18	%
Restructuring and acquisition charges	1.8		5.5	(3.7	)	(67	%)	(68	%)
Total operating expenses	$	1,270.5	1,185.5	85.0		7	%	16	%
Operating income	$	103.0	91.7	11.3		12	%	22	%
Adjusted EBITDA (2)	$	157.4	132.4	25.0		19	%	27	%
(1) Amounts have been adjusted to remove gross contract costs. See Note 3, Revenue Recognition, of the Notes to Consolidated Financial Statements for additional information on gross contract costs.
(2) Adjusted EBITDA represents earnings before interest expense net of interest income, income taxes, depreciation and amortization, adjusted for restructuring and acquisition charges. Although adjusted EBITDA and EBITDA are non-GAAP financial measures, they are used extensively by management and are useful to investors and lenders as metrics for evaluating operating performance and liquidity. EBITDA is also used in the calculations of certain covenants related to the Firm’s revolving credit facility. However, adjusted EBITDA and EBITDA should not be considered as alternatives to net income determined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Because adjusted EBITDA and EBITDA are not calculated under U.S. GAAP, the Firm’s adjusted EBITDA and EBITDA may not be comparable to similarly titled measures used by other companies.



	Six Months		Six Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Revenue
Real Estate Services:
Leasing	$	685.1	636.0	49.1		8	%	12	%
Capital Markets & Hotels	400.1		299.5	100.6		34	%	45	%
Property & Facility Management (1)	518.4		507.7	10.7		2	%	9	%
Project & Development Services (1)	222.6		190.2	32.4		17	%	27	%
Advisory, Consulting and Other	218.7		196.6	22.1		11	%	22	%
LaSalle	166.0		133.7	32.3		24	%	34	%
Total firm fee revenue	$	2,210.9	1,963.7	247.2		13	%	20	%
Gross contract costs	366.1		350.9	15.2		4	%	18	%
Total firm revenue	$	2,577.0	2,314.6	262.4		11	%	20	%
Compensation, operating and administrative expenses excluding gross contract costs	$	2,002.3	1,800.8	201.5		11	%	19	%
Gross contract costs	366.1		350.9	15.2		4	%	18	%
Depreciation and amortization	50.4		45.1	5.3		12	%	17	%
Restructuring and acquisition charges	2.6		41.4	(38.8	)	(94	%)	(94	%)
Total operating expenses	$	2,421.4	2,238.2	183.2		8	%	16	%
Operating income	$	155.6	76.4	79.2		n.m.		n.m.
Adjusted EBITDA (2)	$	247.2	184.4	62.8		34	%	43	%
n.m. - not meaningful
(1) Amounts have been adjusted to remove gross contract costs. See Note 3, Revenue Recognition, of the Notes to Consolidated Financial Statements for additional information on gross contract costs.
(2) Adjusted EBITDA represents earnings before interest expense net of interest income, income taxes, depreciation and amortization, adjusted for restructuring and acquisition charges. Although adjusted EBITDA and EBITDA are non-GAAP financial measures, they are used extensively by management and are useful to investors and lenders as metrics for evaluating operating performance and liquidity. EBITDA is also used in the calculations of certain covenants related to the Firm’s revolving credit facility. However, adjusted EBITDA and EBITDA should not be considered as alternatives to net income determined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Because adjusted EBITDA and EBITDA are not calculated under U.S. GAAP, the Firm’s adjusted EBITDA and EBITDA may not be comparable to similarly titled measures used by other companies.

Below is a reconciliation of net income (calculated pursuant to U.S. GAAP) to EBITDA and adjusted EBITDA:



	Three Months		Three Months		Six Months		Six Months
	Ended		Ended		Ended		Ended
($ in millions)	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Net income	$	91.4	$	72.4	$	134.7	$	88.5
Add:
Interest expense, net of interest income	7.6		7.6		13.6		14.3
Provision for (benefit from) income taxes	31.1		24.1		45.9		(5.0		)
Depreciation and amortization	25.5		22.8		50.4		45.2
EBITDA	$	155.6	$	126.9	$	244.6	$	143.0
Add:
Restructuring and acquisition charges	1.8		5.5		2.6		41.4
Adjusted EBITDA	$	157.4	$	132.4	$	247.2	$	184.4

In the second quarter of 2015, fee revenue was $1.2 billion, a 17% increase in local currency from 2014. Growth was broad-based across geographic and services segments. Capital Markets & Hotels revenue increased $40.6 million, or 33% in local currency, to $222.8 million, led by EMEA up 38% to $113.2 million, but with increases of over 20% from prior year in each geographic segment. These increases in transactional revenues reflect our services to both investors and occupiers in markets supported by increasing cross-border capital allocations to real estate, low interest rates and corporate occupier demand. Project & Development Services fee revenue increased $18.6 million, or 29% in local currency, to $121.4 million, also from increases of over 20% from prior year in each geographic segment. Our Property & Facility Management fee revenue, most of which comes from multi-year contracts and customer relationships, grew 7% in local currency to $258.6 million, led by Asia Pacific up 13% and Americas up 8%. LaSalle Investment Management ("LaSalle") advisory fees grew 8% in local currency to $59.8 million, which along with incentive fees of $11.9 million and transaction fees of $8.4 million contributed to a total revenue increase for LaSalle of 24% in local currency, not including equity earnings which more than doubled to $25.4 million from legacy investment dispositions as described in the segment results. LaSalle continued to successfully raise and deploy capital, with $3.0 billion in equity raised in the first half of the year and increasing assets under management to $56.0 billion from $53.6 billion in the first half of the year.

Consolidated fee-based operating expenses, excluding restructuring and acquisition charges, were $1.1 billion for the second quarter of 2015, compared with $988.8 million, an increase of 17% in local currency. Operating income, adjusted for restructuring and acquisition charges ("adjusted operating income"), was $104.8 million for the second quarter of 2015, compared with $97.2 million for the second quarter of 2014. Adjusted EBITDA includes equity earnings, in addition to adding depreciation and amortization to adjusted operating income, and totaled $157.4 million for the three months ended June 30, 2015, compared with $132.4 million last year. Adjusted operating income margins calculated on a fee revenue basis were 8.9% for the three months ended June 30, 2015, and 9.0% for the comparable period last year; current period margins were impacted as a result of platform investments in technology and timing of transactions more than prior period margins were impacted. Adjusted EBITDA margins calculated on a fee revenue basis were 13.3% for the second quarter of 2015 and 12.2% last year.

For the six months ended June 30, 2015, fee revenue was $2.2 billion, a 20% increase in local currency from 2014. Capital Markets & Hotels revenue increased $100.6 million, or 45% in local currency, to $400.1 million, led by Americas up 52% and EMEA up 46%. Project & Development Services fee revenue increased $32.4 million, or 27% in local currency, to $222.6 million, from increases of over 20% from prior year in each geographic segment. Property & Facility Management fee revenue grew 9% in local currency to $518.4 million, led by Asia Pacific up 13% and Americas up 9%. LaSalle advisory fees grew 12% in local currency to $120.6 million, which along with incentive fees of $30.9 million and transaction fees of $14.5 million contributed to a total revenue increase for LaSalle of 34% in local currency, not including equity earnings which increased to $36.8 million from $20.3 million.

Consolidated fee-based operating expenses, excluding restructuring and acquisition charges, were $2.1 billion for the first six months of 2015, compared with $1.8 billion, an increase of 19% in local currency. Adjusted operating income was $158.2 million for the first six months of 2015, compared with $117.8 million for the comparable period in 2014. Adjusted EBITDA totaled $247.2 million for the six months ended June 30, 2015, compared with $184.4 million last year. Adjusted operating income margins calculated on a fee revenue basis were 7.2% for the six months ended June 30, 2015, and 6.0% for the comparable period last year. Adjusted EBITDA margins calculated on a fee revenue basis were 11.2% for the first six months of 2015 and 9.4% last year.

Net interest expense for the three months ended June 30, 2015 decreased slightly compared to the second quarter of 2014, and for the six months ended June 30, 2015 was $13.6 million, down from $14.3 million for the comparable prior year period, as slightly higher borrowing costs partially offset lower average borrowings compared with last year. The effective tax rate for the three and six months ended June 30, 2015 was 25.4%, which represents our estimated effective tax rate for full-year 2015 and is consistent with our effective tax rate for the year ended December 31, 2014.

Segment Operating Results

We manage and report our operations as four business segments:

The three geographic regions of RES including:


(i)	Americas,


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


(iii)	Asia Pacific;

and


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

Each geographic region offers our full range of Real Estate Services including tenant representation and agency leasing, capital markets and hotels, property management, facilities management, project and development services, and advisory, consulting and valuation services. We consider "property management" to represent services provided to non-occupying property investors and "facilities management" to be services provided to owner-occupiers. LaSalle provides investment management services to institutional investors and high-net-worth individuals.

For segment reporting, we show revenue net of gross contract costs in our RES segments. Excluding these costs from revenue and expenses results in a "net" presentation of "fee revenue" and "fee-based operating expense" that we believe more accurately reflects how we manage our expense base and operating margins. See Note 3, Revenue Recognition, of the Notes to Consolidated Financial Statements for additional information regarding our gross and net accounting. For segment reporting, we also show Equity earnings from real estate ventures within our revenue line, since the related activity is an integral part of LaSalle. Finally, our measure of segment results excludes Restructuring and acquisition charges.

Americas - Real Estate Services



	Three Months		Three Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Leasing	$	263.7	250.5	13.2		5	%	6	%
Capital Markets & Hotels	76.5		59.2	17.3		29	%	30	%
Property & Facility Management (1)	111.9		107.6	4.3		4	%	8	%
Project & Development Services (1)	60.4		51.3	9.1		18	%	22	%
Advisory, Consulting and Other	32.1		24.0	8.1		34	%	36	%
Equity earnings	0.5		1.0	(0.5	)	(50	%)	(41	%)
Total segment fee revenue	$	545.1	493.6	51.5		10	%	12	%
Gross contract costs	52.9		51.5	1.4		3	%	14	%
Total segment revenue	$	598.0	545.1	52.9		10	%	12	%
Compensation, operating and administrative expenses excluding gross contract costs	$	483.8	433.3	50.5		12	%	14	%
Gross contract costs	52.9		51.5	1.4		3	%	14	%
Depreciation and amortization	15.3		13.5	1.8		13	%	14	%
Total operating expenses	$	552.0	498.3	53.7		11	%	14	%
Operating income	$	46.0	46.8	(0.8	)	(2	%)	(4	%)
Adjusted EBITDA	$	61.3	60.3	1.0		2	%	—	%
(1) Amounts have been adjusted to remove gross contract costs.



	Six Months		Six Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Leasing	$	492.9	438.2	54.7		12	%	13	%
Capital Markets & Hotels	151.3		100.3	51.0		51	%	52	%
Property & Facility Management (1)	226.1		213.7	12.4		6	%	9	%
Project & Development Services (1)	113.1		96.0	17.1		18	%	21	%
Advisory, Consulting and Other	62.4		50.7	11.7		23	%	25	%
Equity earnings	0.9		1.2	(0.3	)	(25	%)	(24	%)
Total segment fee revenue	$	1,046.7	900.1	146.6		16	%	18	%
Gross contract costs	105.9		92.3	13.6		15	%	25	%
Total segment revenue	$	1,152.6	992.4	160.2		16	%	18	%
Compensation, operating and administrative expenses excluding gross contract costs	$	934.4	809.5	124.9		15	%	17	%
Gross contract costs	105.9		92.3	13.6		15	%	25	%
Depreciation and amortization	30.9		26.8	4.1		15	%	16	%
Total operating expenses	$	1,071.2	928.6	142.6		15	%	18	%
Operating income	$	81.4	63.8	17.6		28	%	25	%
Adjusted EBITDA	$	112.3	90.6	21.7		24	%	22	%
(1) Amounts have been adjusted to remove gross contract costs.

In our Americas business, fee revenue for the quarter ended June 30, 2015 was $545.1 million, an increase of $51.5 million, or 12% in local currency, from 2014. For the year-to-date period, fee revenue was $1.0 billion, up $146.6 million or 18% in local currency. Revenue growth was broad-based, with Capital Markets & Hotels up 30% in the quarter and 52% year to date, Project & Development Services up 22% in the quarter and 21% year to date, Advisory, Consulting and Other up 36% in the quarter and 25% year to date, and Leasing up 6% in the quarter and 13% year to date. Capital Markets revenue growth outpaced investment market volumes in both periods, and Leasing revenue growth outpaced gross absorption in the U.S. market, due in part to continued investment in the business through the hiring of additional brokers.

Fee-based operating expenses, excluding restructuring and acquisition charges, were $499.1 million for the quarter, up 14% in local currency from last year, and $965.3 million year to date, up 17% in local currency, largely supporting higher current period revenue activity but also reflecting investments in technology to support our clients and in platform to support the growing business. Operating income was $46.0 million for the quarter compared with $46.8 million in 2014, and was $81.4 million for the year-to-date compared with $63.8 million in 2014. Adjusted EBITDA was $61.3 million for the quarter compared with $60.3 million last year, and was $112.3 million for the year to date compared with $90.6 million in 2014. Operating income margins calculated on a fee revenue basis were 8.4% for the three months ended June 30, 2015, and 9.5% for the comparable period last year, but were 7.8% for the year to date compared with 7.1% in 2014. Adjusted EBITDA margins calculated on a fee revenue basis were 11.3% for the three months ended June 30, 2015 compared with 12.2% for the comparable period in 2014, but were 10.7% for the year to date compared with 10.1% in 2014.

EMEA - Real Estate Services



	Three Months		Three Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Leasing	$	65.1	67.6	(2.5	)	(4	%)	12	%
Capital Markets & Hotels	113.2		93.4	19.8		21	%	38	%
Property & Facility Management (1)	50.9		60.3	(9.4	)	(16	%)	(3	%)
Project & Development Services (1)	39.4		34.1	5.3		16	%	36	%
Advisory, Consulting and Other	57.6		53.6	4.0		7	%	24	%
Equity earnings	1.1		—	1.1		n.m.		n.m.
Total segment fee revenue	$	327.3	309.0	18.3		6	%	22	%
Gross contract costs	90.1		86.6	3.5		4	%	26	%
Total segment revenue	$	417.4	395.6	21.8		6	%	23	%
Compensation, operating and administrative expenses excluding gross contract costs	$	289.0	278.7	10.3		4	%	19	%
Gross contract costs	90.1		86.6	3.5		4	%	26	%
Depreciation and amortization	6.1		5.5	0.6		11	%	25	%
Total operating expenses	$	385.2	370.8	14.4		4	%	21	%
Operating income	$	32.2	24.8	7.4		30	%	48	%
Adjusted EBITDA	$	38.3	30.3	8.0		26	%	44	%
n.m. - not meaningful
(1) Amounts have been adjusted to remove gross contract costs.



	Six Months		Six Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Leasing	$	113.5	121.7	(8.2	)	(7	%)	9	%
Capital Markets & Hotels	188.3		147.8	40.5		27	%	46	%
Property & Facility Management (1)	102.6		112.4	(9.8	)	(9	%)	4	%
Project & Development Services (1)	70.6		62.7	7.9		13	%	32	%
Advisory, Consulting and Other	105.1		98.4	6.7		7	%	22	%
Equity earnings	0.8		—	0.8		n.m.		n.m.
Total segment fee revenue	$	580.9	543.0	37.9		7	%	23	%
Gross contract costs	161.9		164.5	(2.6	)	(2	%)	18	%
Total segment revenue	$	742.8	707.5	35.3		5	%	22	%
Compensation, operating and administrative expenses excluding gross contract costs	$	540.3	512.2	28.1		5	%	21	%
Gross contract costs	161.9		164.5	(2.6	)	(2	%)	18	%
Depreciation and amortization	11.3		10.9	0.4		4	%	18	%
Total operating expenses	$	713.5	687.6	25.9		4	%	20	%
Operating income	$	29.3	19.9	9.4		47	%	81	%
Adjusted EBITDA	$	40.6	30.8	9.8		32	%	59	%
n.m. - not meaningful
(1) Amounts have been adjusted to remove gross contract costs.

EMEA's fee revenue performance during the second quarter and first half of the year was significantly higher in local currencies than in U.S. dollars due to the strength of the U.S. dollar against European currencies in 2015 compared with 2014.

Since revenue and expenses are generally incurred in the same currencies, the operating income and EBITDA impacts are more modest relative to the revenue impact.

EMEA's fee revenue was $327.3 million for the second quarter, $580.9 million year to date, up 22% and 23%, respectively, in local currency from 2014. Revenue growth was driven by Capital Markets & Hotels, up 38% in the quarter and 46% year to date, outperforming market volumes in each period; Project & Development Services, up 36% in the quarter and 32% year to date, the result of continued growth and expansion of our Tetris fit-out business; and Advisory, Consulting and Other, up 24% in the quarter and 22% year to date. Growth in the region was broad-based, led by the UK, Germany, Sweden and Central and Eastern Europe in the quarter, with additional contributions from France, Spain and MENA on a year-to-date basis.

Fee-based operating expenses, excluding restructuring and acquisition charges, were $295.1 million for the quarter, $551.6 million year to date, up 19% and 21%, respectively, in local currency from last year, largely supporting higher current period revenue activity. Operating income was $32.2 million for the quarter compared with $24.8 million in 2014, and was $29.3 million for the year-to-date compared with $19.9 million in 2014. Adjusted EBITDA was $38.3 million for the quarter compared with $30.3 million last year, and was $40.6 million for the year to date compared with $30.8 million in 2014. Operating income margins calculated on a fee revenue basis were 9.8% for the three months ended June 30, 2015, and 8.0% for the comparable period last year, and 5.0% for the year to date compared with 3.7% in 2014. Adjusted EBITDA margins calculated on a fee revenue basis were 11.7% for the three months ended June 30, 2015 compared with 9.8% for the comparable period in 2014, and were 7.0% for the year to date compared with 5.7% in 2014.

Asia Pacific - Real Estate Services



	Three Months		Three Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Leasing	$	50.2	48.7	1.5		3	%	11	%
Capital Markets & Hotels	33.1		29.6	3.5		12	%	25	%
Property & Facility Management (1)	95.8		92.7	3.1		3	%	13	%
Project & Development Services (1)	21.6		17.4	4.2		24	%	38	%
Advisory, Consulting and Other	30.2		26.0	4.2		16	%	27	%
Equity earnings	0.1		—	0.1		n.m.		n.m.
Total segment fee revenue	$	231.0	214.4	16.6		8	%	18	%
Gross contract costs	48.7		53.1	(4.4	)	(8	%)	(1	%)
Total segment revenue	$	279.7	267.5	12.2		5	%	14	%
Compensation, operating and administrative expenses excluding gross contract costs	$	211.2	195.4	15.8		8	%	18	%
Gross contract costs	48.7		53.1	(4.4	)	(8	%)	(1	%)
Depreciation and amortization	3.6		3.2	0.4		13	%	22	%
Total operating expenses	$	263.5	251.7	11.8		5	%	14	%
Operating income	$	16.2	15.8	0.4		3	%	24	%
Adjusted EBITDA	$	19.8	19.0	0.8		4	%	24	%
n.m. - not meaningful
(1) Amounts have been adjusted to remove gross contract costs.



	Six Months		Six Months					% Change
	Ended		Ended		Change in			in Local
($ in millions)	June 30, 2015		June 30, 2014		U.S. dollars			Currency
Leasing	$	78.7	76.1		2.6	3	%	11	%
Capital Markets & Hotels	60.5		51.4		9.1	18	%	31	%
Property & Facility Management (1)	189.7		181.6		8.1	4	%	13	%
Project & Development Services (1)	38.9		31.5		7.4	23	%	35	%
Advisory, Consulting and Other	51.2		47.5		3.7	8	%	17	%
Equity losses	—		(0.1	)	0.1	n.m.		n.m.
Total segment fee revenue	$	419.0	388.0		31.0	8	%	17	%
Gross contract costs	98.3		94.1		4.2	4	%	10	%
Total segment revenue	$	517.3	482.1		35.2	7	%	16	%
Compensation, operating and administrative expenses excluding gross contract costs	$	391.2	364.7		26.5	7	%	16	%
Gross contract costs	98.3		94.1		4.2	4	%	10	%
Depreciation and amortization	7.2		6.4		0.8	13	%	22	%
Total operating expenses	$	496.7	465.2		31.5	7	%	15	%
Operating income	$	20.6	16.9		3.7	22	%	49	%
Adjusted EBITDA	$	27.8	23.3		4.5	19	%	41	%
n.m. - not meaningful
(1) Amounts have been adjusted to remove gross contract costs.

Asia Pacific's fee revenue performance during the second quarter and first half of the year was significantly higher in local currencies than in U.S. dollars due to the strength of the U.S. dollar, particularly against the Australian dollar and Japanese yen in 2015 compared with 2014. Since revenue and expenses are generally incurred in the same currencies, the operating income and EBITDA impacts are more modest relative to the revenue impact.

Asia Pacific's fee revenue was $231.0 million for the second quarter, $419.0 million year to date, up 18% and 17%, respectively, in local currency from 2014. Revenue growth was driven by Capital Markets & Hotels, up 25% in the quarter and 31% year to date, outperforming market volumes in each period; Project & Development Services, up 38% in the quarter and 35% year to date; and Property & Facility Management, up 13% in the quarter and year to date, most of which comes from multi-year contracts and customer relationships. Growth in the region was broad-based, led by Japan, Australia, India and Singapore.

Fee-based operating expenses, excluding restructuring and acquisition charges, were $214.8 million for the quarter, $398.4 million year to date, up 18% and 16%, respectively, in local currency from last year, largely supporting higher current period revenue activity. Operating income was $16.2 million for the quarter compared with $15.8 million in 2014, and was $20.6 million for the year-to-date compared with $16.9 million in 2014. Adjusted EBITDA was $19.8 million for the quarter compared with $19.0 million last year, and was $27.8 million for the year to date compared with $23.3 million in 2014. Operating income margins calculated on a fee revenue basis were 7.0% for the three months ended June 30, 2015, and 7.4% for the comparable period last year, but 4.9% for the year to date compared with 4.4% in 2014. Adjusted EBITDA margins calculated on a fee revenue basis were 8.6% for the three months ended June 30, 2015 compared with 8.9% for the comparable period in 2014, but were 6.6% for the year to date compared with 6.0% in 2014.

LaSalle



	Three Months		Three Months					% Change
	Ended		Ended	Change in				in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars				Currency
Advisory fees	$	59.8	60.0	(0.2	)	—	%	8	%
Transaction fees & other	8.4		4.4	4.0		91	%	108	%
Incentive fees	11.9		5.6	6.3		113	%	133	%
Equity earnings	25.4		11.5	13.9		121	%	121	%
Total segment revenue	$	105.5	81.5	24.0		29	%	38	%
Compensation, operating and administrative expenses	$	67.5	58.7	8.8		15	%	24	%
Depreciation and amortization	0.5		0.5	—		—	%	17	%
Total operating expenses	$	68.0	59.2	8.8		15	%	24	%
Operating income	$	37.5	22.3	15.2		68	%	76	%
Adjusted EBITDA	$	38.0	22.8	15.2		67	%	75	%



	Six Months		Six Months				% Change
	Ended		Ended	Change in			in Local
($ in millions)	June 30, 2015		June 30, 2014	U.S. dollars			Currency
Advisory fees	$	120.6	115.8	4.8	4	%	12	%
Transaction fees & other	14.5		9.0	5.5	61	%	76	%
Incentive fees	30.9		8.9	22.0	n.m.		n.m.
Equity earnings	36.8		20.3	16.5	81	%	83	%
Total segment revenue	$	202.8	154.0	48.8	32	%	41	%
Compensation, operating and administrative expenses	$	136.4	114.4	22.0	19	%	28	%
Depreciation and amortization	1.0		1.0	—	—	%	15	%
Total operating expenses	$	137.4	115.4	22.0	19	%	28	%
Operating income	$	65.4	38.6	26.8	69	%	78	%
Adjusted EBITDA	$	66.4	39.6	26.8	68	%	77	%
n.m. - not meaningful

LaSalle's total segment revenue for the three and six months ended June 30, 2015 was $105.5 million and $202.8 million, respectively, up 38% and 41% in local currency compared with the same periods in 2014. Advisory fees for the three and six months ended June 30, 2015 were $59.8 million and $120.6 million, respectively, increases of 8% and 12% in local currency from comparable periods in 2014. Also included in LaSalle's segment revenues were $8.4 million of transaction fees and other income in the quarter, $14.5 million year to date; $11.9 million of incentive fees in the quarter, $30.9 million year to date, driven by funds in Europe and Asia Pacific that took advantage of the capital markets environment; and $25.4 million of equity earnings in the quarter, $36.8 million year to date, driven by the sale of assets as LaSalle realizes gains from legacy investments. Across segment revenue categories, LaSalle’s results reflected investment performance realized across all geographies for clients on the part of the Firm, positive market conditions for executing property dispositions at gains, and increases in asset values within funds reported at fair value, all of which outpaced the same periods in 2014, though the current period results were tempered by reductions from translation of local currencies to U.S. dollars.

Operating expenses were $68.0 million for the quarter, $137.4 million year to date, increases of 24% and 28% in local currency, respectively, from comparable periods in 2014. Increases in operating expenses were driven by increased compensation associated with the increases in year-over-year revenue. LaSalle's operating income was $37.5 million for the quarter, compared with $22.3 million in the second quarter of 2014, and $65.4 million year to date, compared with $38.6 million last year, increases of 76% and 78%, respectively, in local currency. Adjusted EBITDA was $38.0 million for the quarter, compared with $22.8 million last year, and $66.4 million year to date, up from $39.6 million in 2014. Operating income margin on segment revenue was 35.5% in the quarter compared with 27.4% in 2014, and 32.2% year to date compared with 25.1% last year. Adjusted EBITDA margin on segment revenue was 36.0% in the quarter compared with 28.0% in 2014, and 32.7% year to date compared with 25.7% last year.

LaSalle's capital raising momentum continued with $948 million of equity commitments raised during the second quarter of 2015 and $3.0 billion for the year to date. Assets under management were $56.0 billion as of June 30, 2015, compared with $55.3 billion as of March 31, 2015, $53.6 billion at December 31, 2014 and $50.0 billion as of June 30, 2014. The net increase in assets under management in the quarter resulted from $3.5 billion of acquisitions and takeovers, $2.5 billion of dispositions and withdrawals, $1.3 billion of net valuation increases and $1.6 billion of net foreign currency decreases.

Consolidated Cash Flows

Cash Flows from Operating Activities

During the six months ended June 30, 2015, we used $214.9 million of cash for operating activities, compared with $147.0 million used for operating activities in the first six months of 2014. The majority of annual incentive compensation accrued at year-end is paid in the first quarter of the following year, and was the primary driver of the cash used for operating activities for the first six months of both years. In addition to the impact from a year-over-year increase in payments of incentive compensation reflecting improved operating performance, the year-over-year increase in cash used for operating activities was also due to an increase in working capital required to support the 11% year-over-year increase in revenue. Partially offsetting the aforementioned drivers of the year-over-year increase in cash used for operating activities was the impact of growth and increased profitability in our business, as evidenced by a $46.2 million year-over-year increase in net income.

Cash Flows from Investing Activities

We used $92.3 million of cash for investing activities in the first six months of 2015, an $8.4 million year-over-year increase from the $83.9 million used for investing activities in the first six months of 2014. We spent $41.7 million on business acquisitions in the first six months of 2015, a $21.6 million year-over-year increase over 2014. Also contributing to the year-over-year increase in cash used in investing activities was a net $16.0 million year-over-year increase in our investment in real estate ventures, representing capital contributions, net of capital distributions received. Partially offsetting the aforementioned increases was a $22.3 million year-over-year decrease in net capital additions due mainly to a $23.1 million decrease in property acquisitions and capital expenditures completed by a consolidated variable interest entity ("VIE"). The same consolidated VIE sold a property in 2015, realizing $6.8 million of proceeds, with no comparable activity in 2014.

Cash Flows from Financing Activities

Financing activities provided $255.6 million of cash in the first six months of 2015, a $27.3 million year-over-year increase from the $228.3 million provided by financing activities in the first six months of 2014. This increase was primarily due to a year-over-year increase in net borrowings under our credit facility (the "Facility") of $77.8 million. Partially offsetting this increase was (1) a $22.6 million decrease in cash flows, from net proceeds of $18.3 million in 2014 to net payments of $4.3 million in 2015, related to mortgage loans of a consolidated VIE, (2) a $9.1 million decrease in cash flows, from net contributions of $6.0 million in 2014 to net distributions of $3.1 million in 2015, attributable to noncontrolling interests, (3) payments of debt issuance costs of $7.3 million in 2015 with no corresponding activity in 2014, and (4) a $5.1 million increase in payments of deferred business acquisition obligations, which were $41.5 million in 2015 compared to $36.4 million in 2014.

Liquidity and Capital Resources

We finance our operations, co-investment activity, share repurchases and dividend payments, capital expenditures and business acquisitions with internally generated funds, borrowings on our Facility, and through issuance of our Long-term senior notes.

Credit Facility

On February 25, 2015, we amended and expanded our Facility to increase our borrowing capacity from $1.2 billion to $2.0 billion. The Facility is scheduled to mature on February 25, 2020. At June 30, 2015, we had outstanding borrowings under the Facility of $330.0 million and outstanding letters of credit of $23.0 million. At December 31, 2014, we had no outstanding borrowings under the Facility and outstanding letters of credit of $22.0 million. The average outstanding borrowings under the Facility were $397.4 million and $491.8 million during the three months ended June 30, 2015 and 2014, respectively, and $277.7 million and $383.3 million during the six months ended June 30, 2015 and 2014, respectively.

We will continue to use the Facility for working capital needs (including payment of accrued incentive compensation), co-investment activities, dividend payments, share repurchases, capital expenditures and business acquisitions.

Short-Term Borrowings

at June 30, 2015 and December 31, 2014, respectively, of which $16.4 million and $14.6 million at June 30, 2015 and December 31, 2014, respectively, were attributable to local overdraft facilities.

Long-Term Senior Notes

See Note 10, Debt, of the Notes to Consolidated Financial Statements for additional information on our Facility, short-term borrowings and long-term senior notes.

Co-Investment Activity

As of June 30, 2015, we had total investments of $333.0 million in approximately 50 separate property or fund co-investments. Fundings of co-investments exceeded return of capital by $12.0 million for the six months ended June 30, 2015, while returns of capital exceeded fundings by $3.9 million for the six months ended June 30, 2014. We expect to continue to pursue co-investment opportunities with our investment management clients in the Americas, EMEA and Asia Pacific. Co-investment remains important to the continued growth of LaSalle's business.

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

Share Repurchase and Dividend Programs

Since October 2002, our Board of Directors has approved five share repurchase programs. At June 30, 2015, we had 1,563,100 shares that we were authorized to repurchase under the current share repurchase program. We made no share repurchases in 2014 or in the first six months of 2015 under this authorization. Our current share repurchase program allows JLL to purchase our common stock in the open market and in privately negotiated transactions.

On June 15, 2015 we paid a semi-annual cash dividend of $0.27 per share of common stock to holders of record at the close of business on May 15, 2015. A dividend-equivalent in the same per share amount was also paid simultaneously on outstanding but unvested shares of restricted stock units granted under the Company's Stock Award and Incentive Plan.

Capital Expenditures

Capital expenditures for the six months ended June 30, 2015 and 2014 were $45.4 million and $67.6 million, respectively. Our capital expenditures are primarily for information systems, computer hardware and improvements to leased office space. Included in capital expenditures for the six months ended June 30, 2015 and 2014 are $0.6 million and $23.7 million, respectively, of property acquisitions and capital expenditures made by a consolidated VIE (see Note 6, Investment in Real Estate Ventures, of the Notes to the Consolidated Financial Statements for further information on our consolidated VIE investments).

Business Acquisitions

During the six months ended June 30, 2015, we paid (1) $41.7 million for business acquisitions that included six new acquisitions and (2) $41.5 million for deferred acquisition obligations and contingent earn-out consideration related to acquisitions completed in prior years. Terms for our acquisitions have typically included cash paid at closing with provisions for additional consideration and earn-out payments subject to certain contract provisions and performance. Deferred business acquisition obligations totaled $85.8 million on our Consolidated Balance Sheets at June 30, 2015. These obligations represent the current discounted values of payments to sellers of businesses for which our acquisition had been completed as of the balance sheet date and for which the only remaining condition on those payments is the passage of time. At June 30, 2015, we had the potential to make earn-out payments for a maximum of $55.3 million on 18 acquisitions that are subject to the achievement of certain performance conditions. We anticipate that the majority of these earn-out payments will come due at various times over the next four years, assuming the achievement of the applicable performance conditions.

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

Repatriation of Foreign Earnings

Based on our historical experience and future business plans, we do not expect to repatriate our foreign-sourced earnings to the United States. We believe that our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity. As of June 30, 2015 and December 31, 2014, we had total cash and cash equivalents of $191.0 million and

$250.4 million, respectively, of which approximately $160.4 million and $222.0 million, respectively, was held by foreign subsidiaries.

Restricted Net Assets

We face regulatory restrictions in certain countries that limit or prevent the transfer of funds to other countries or the exchange of the local currency to other currencies. The assets of these countries aggregated to approximately 5% of our total assets at June 30, 2015 and December 31, 2014, respectively.

Off-Balance Sheet Arrangements

We have unfunded capital commitments to LIC II, an unconsolidated joint venture that serves as a vehicle for our co-investment activity, and to other like-investment vehicles and direct investments for future fundings of co-investments, totaling a maximum of $177.8 million as of June 30, 2015. See our discussion of unfunded commitments in Note 6, Investments in Real Estate Ventures, of the Notes to Consolidated Financial Statements.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this filing and elsewhere (such as in reports, other filings with the SEC, press releases, presentations and communications by JLL or its management and written and oral statements) regarding, among other things, future financial results and performance, achievements, plans and objectives, dividend payments and share repurchases 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 that may cause JLL's actual results, performance, achievements, plans and objectives to be materially different from any of the future results, performance, achievements, plans and objectives expressed or implied by such forward-looking statements.

We discuss those risks, uncertainties and other factors in (1) our Annual Report on Form 10-K for the year ended December 31, 2014 in Item 1A. Risk Factors; Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; Item 7A. Quantitative and Qualitative Disclosures About Market Risk; Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements; and elsewhere, (2) this Quarterly Report on Form 10-Q in this section, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations; Item 3. Quantitative and Qualitative Disclosures About Market Risk; and elsewhere, and (3) the other reports we file with the SEC. Important factors that could cause actual results to differ from those in our forward-looking statements include (without limitation):



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

Moreover, there can be no assurance that future dividends will be declared since the actual declaration of future dividends, and the establishment of record and payment dates, remains subject to final determination by the Company's Board of Directors.

Accordingly, we caution our readers not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except to the extent required by applicable securities law, JLL expressly disclaims any obligation or undertaking to publicly update or revise any forward-looking statements to reflect any changes in events or circumstances or in its expectations or results.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market and Other Risk Factors

Market Risk

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



●	Interest rates on the Facility; and
●	Foreign exchange risks.

In the normal course of business, we manage these risks through a variety of strategies, including hedging transactions using various derivative financial instruments such as foreign currency forward contracts. We enter into derivative instruments with high credit-quality counterparties and diversify our positions across such counterparties in order to reduce our exposure to credit losses. We do not enter into derivative transactions for trading or speculative purposes.

Interest Rates

We centrally manage our debt, considering investment opportunities and risks, tax consequences and overall financing strategies. We are primarily exposed to interest rate risk on the Facility, which we amended and expanded on February 25, 2015 to increase our borrowing capacity from $1.2 billion to $2.0 billion. The Facility consists of revolving credit that is available for working capital, investments, capital expenditures and acquisitions. Our average outstanding borrowings under the Facility were $397.4 million and $277.7 million for the three and six months ended June 30, 2015 with an effective interest rate of 1.1% for both the three and six months ended June 30, 2015. We had $330.0 million outstanding under the Facility and outstanding letters of credit of $23.0 million at June 30, 2015. The Facility bears a variable rate of interest based on market rates.

In November 2012, in an underwritten public offering, we issued $275.0 million of Long-term senior notes due November 2022 (the "Notes"). The Notes bear interest at an annual rate of 4.4%, subject to adjustment if a credit rating assigned to the Notes is downgraded below an investment grade rating (or subsequently upgraded). The issuance of these Notes at a fixed interest rate has helped to limit the Company's exposure to future movements in interest rates.

Our overall interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our 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 we may do so in the future. We did not enter into any such agreements in 2014 or the first six months of 2015, and we had no such agreements outstanding at June 30, 2015.

Foreign Exchange

Foreign exchange risk is the risk that we will incur economic losses due to adverse changes in foreign currency exchange rates. Our revenue from outside of the United States totaled 57% and 59% of our total revenue for the six months ended June 30, 2015 and 2014, respectively. Operating in international markets means that we are exposed to movements in foreign exchange rates, most significantly by the British pound (15% and 16% of revenue for the six months ended June 30, 2015 and 2014, respectively) and the euro (13% of revenue for both the six months ended June 30, 2015 and 2014).

We mitigate our foreign currency exchange risk principally by (1) establishing local operations in the markets we serve and (2) invoicing customers in the same currency as the source of the costs. The impact of translating expenses incurred in foreign currencies back into U.S. dollars helps offset the impact of translating revenue earned in foreign currencies back into U.S. dollars. In addition, British pound and Singapore dollar expenses incurred as a result of our regional headquarters being located in London and Singapore, respectively, have historically acted as partial operational hedges against our translation exposures to British pounds and Singapore dollars.

To show the impact that foreign currencies have on our results of operations, we present the change in local currency for revenue and operating expenses on a consolidated basis and by operating segment in Management's Discussion and Analysis of Financial Condition and Results of Operations included herein. The change in local currency represents the change assuming no movement in foreign exchange rates from the prior year. On a quarter-over-quarter basis, for the three months ended June 30, 2015, our total firm revenue increased 8% in U.S. dollars and 16% in local currency and our operating income increased 12% in U.S. dollars and 22% in local currency. On a year-over-year basis, for the six months ended June 30, 2015, our total revenue increased 11% in U.S. dollars and 20% in local currency and our operating income increased over 100% both in U.S. dollars and in local currency. For additional detail of the impact of foreign exchange rates on our results of operations please see Management's Discussion and Analysis of Financial Condition and Results of Operations included herein.

We enter into forward foreign currency exchange contracts to manage currency risks associated with intercompany loan balances. At June 30, 2015, we had forward exchange contracts in effect with a gross notional value of $1.90 billion ($976.0 million on a net basis) and a net fair value gain of $3.6 million. This net carrying gain is offset by a carrying loss associated with intercompany loans.

Disclosure of Limitations

As the information presented above includes only those exposures that exist as of June 30, 2015, it does not consider those exposures or positions which could arise after that date. The information we present has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate and foreign currency fluctuations will depend on the exposures that arise during the applicable period, the hedging strategies at the time and interest and foreign currency rates.

For other risk factors inherent in our business, see Item 1A. Risk Factors in our 2014 Annual Report on Form 10-K.

Item 4. Controls and Procedures

The Company has established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company's financial reports and to the other members of senior management and the Board of Directors.

Under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. There were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We are a defendant or plaintiff in various litigation matters arising in the ordinary course of business, some of which involve claims for damages that are substantial in amount. Many of these litigation matters are covered by insurance (including insurance provided through a captive insurance company), although they may nevertheless be subject to large deductibles and the amounts being claimed may exceed the available insurance. Although 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.

Item 1A. Risk Factors

There have been no material changes to our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 5. Other Information

Corporate Governance

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

Corporate Officers

The names and titles of our corporate executive officers are as follows:

Global Executive Board

Colin Dyer

Chief Executive Officer and President

Christie B. Kelly

Executive Vice President and Chief Financial Officer

Alastair Hughes

Chief Executive Officer, Asia Pacific

Jeff A. Jacobson

Chief Executive Officer, LaSalle Investment Management

Gregory P. O'Brien

Chief Executive Officer, Americas

Christian Ulbrich

Chief Executive Officer, Europe, Middle East and Africa

Additional Global Corporate Officers

Charles J. Doyle

Chief Marketing and Communications Officer

Mark K. Engel

Controller

Allan Frazier

Chief Data Officer and Global Head of Data

and Information Management

James S. Jasionowski

Chief Tax Officer

David A. Johnson

Chief Information Officer

Patricia Maxson

Chief Human Resources Officer

Mark J. Ohringer

General Counsel and Corporate Secretary

Joseph J. Romenesko

Treasurer

Parikshat Suri

Director of Internal Audit

Departure of Certain Officers

Mark K. Engel, Executive Vice President and Global Controller of the Company and its principal accounting officer, has notified the Company of his decision to resign from his position with the Company, effective on the close of business on August 14, 2015, in order to become the Chief Financial Officer of Green Courte Partners, LLC, a private equity real estate investment firm based in Chicago. The Company is grateful for Mr. Engel’s many and significant contributions over a ten-year period and extends its best wishes to him for success in his new role. We intend to announce Mr. Engel’s successor as principal

accounting officer on or prior to the date of Mr. Engel’s resignation in August. Mr. Engel will remain in his role until that time in order to assure continuity and a smooth transition.

Item 6. Exhibits

See the Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.

Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 6th day of August, 2015.



	JONES LANG LASALLE INCORPORATED

	/s/ Christie B. Kelly


	By: Christie B. Kelly
	Executive Vice President and Chief Financial Officer
	(Authorized Officer and Principal Financial Officer)

Exhibit Index



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

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

32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*	The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (1) Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014 (2) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014 (Unaudited), (3) Consolidated Statement of Changes in Equity for the six months ended June 30, 2015 (Unaudited), (4) Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (Unaudited), and (5) Notes to Consolidated Financial Statements (Unaudited).

*Filed herewith