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News release

Chicago

Jones Lang LaSalle Reports Fourth-Quarter and Full-Year 2009 Results

Fourth-quarter net income of $52 million, a 26 percent year-over-year increase


Jones Lang LaSalle Incorporated (NYSE: JLL), the leading integrated financial and professional services firm specializing in real estate, today reported net income of $52 million on a U.S. GAAP basis, or $1.19 per share, for the fourth quarter ended December 31, 2009, compared with $41 million, or $1.17 per share, for the fourth quarter ended December 31, 2008.   Adjusting for Restructuring and certain non-cash co-investment charges in the quarter, fourth-quarter 2009 net income would have been $63 million, or $1.44 per share.  Revenue for the fourth quarter of 2009 was $815 million, a 2 percent increase from $797 million in 2008 although down 3 percent in local currency.  The firm’s adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) in the fourth quarter of 2009 were $112 million.

The net loss for the year ended December 31, 2009, was $4 million, or $0.11 per share, compared with net income of $84 million, or $2.44 per share, for the year ended December 31, 2008.  Adjusting for Restructuring and co-investment charges, full-year 2009 net income would have been $70 million, or $1.75 per share. Full-year revenue was $2.5 billion in 2009, an 8 percent decrease in U.S. dollars, 5 percent in local currency, compared with 2008.  Adjusted EBITDA was $239 million for the year.  
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2009 Highlights:
1.Fourth-quarter net income of $52 million, a 26 percent increase from fourth-quarter 2008
2.Solid performance in the Americas driven by corporate outsourcing and successful Staubach integration
3.Asia Pacific generated strong full-year results with improved fourth-quarter transaction performance and annuity revenue growth
4.Balance sheet strengthened with net debt repayment of $334 million for the year

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Results for full-year 2009 included $47 million of Restructuring charges as well as $51 million of non-cash co-investment charges.  Restructuring charges are primarily severance related and also include integration costs from the 2008 acquisitions of The Staubach Company and Kemper’s.  Restructuring charges are excluded from segment operating results although they are included for consolidated reporting.  The non-cash charges relate primarily to impairments of the firm’s investments in real estate ventures and are included in Equity losses at the consolidated and segment reporting levels.  Results for the fourth quarter of 2009 included $11 million of Restructuring charges, taken principally in EMEA for additional staff reductions, and $4 million of non-cash co-investment charges. 

“We are very pleased with our strong finish to a difficult year,” said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. “Although markets face a slow and uneven recovery, the actions we’ve taken to protect our businesses and win market share make us confident about our prospects for 2010.”
 
The firm benefited from aggressive cost actions taken across all its businesses for staff reductions and discretionary expenses.  Excluding Restructuring charges, operating expenses for the fourth quarter were $722 million, compared with $705 million for the fourth quarter of 2008, up 2 percent but down 2 percent in local currency. 

For the full year, operating expenses, excluding Restructuring charges, were $2.3 billion in 2009, compared with $2.5 billion in 2008, down 8 percent for the year, 5 percent in local currency.

Income tax expense exceeded pre-tax net income for full-year 2009, resulting in a net loss.  The effective tax rate of 23 percent for the fourth quarter of 2009 is more representative of an annual effective tax rate the firm would expect over the long term.
 
Balance Sheet

At the end of 2009, the outstanding balance on the firm’s long-term credit facilities was $175 million.  The firm reduced its net bank debt position by $334 million during the year driven by proceeds from its common stock offering in June 2009, strong cash generation and reduced acquisition and capital spending.   During the fourth quarter, the firm reduced its net bank debt by $164 million compared to September 30, 2009. The firm was well within the covenant requirements under its bank agreements.    
 
Business Segment Performance Highlights

Investor and Occupier Services

• Revenue for the fourth quarter of 2009 in the Americas region was $345 million, an increase of 9 percent over the fourth quarter of 2008.  Full-year 2009 revenue was $1.0 billion, an increase of 11 percent from the prior year, primarily as a result of the Staubach acquisition contributing to six months of results in 2008 but 12 months in 2009.
Fourth-quarter Leasing revenue increased 20 percent, to $176 million.  Leasing revenue increased 34 percent in the year, to $500 million, up from $373 million in 2008.    Property and Facility Management revenue increased 25 percent for the quarter, to $80 million, and 15 percent for the year, to $227 million.  Though Project & Development Services revenue was down 24 percent in the fourth quarter, to $44 million, early actions were taken to right-size the business and ensure it maintained profit performance.  Full-year Project & Development Services revenue was $159 million, down 21 percent from 2008.

Operating expenses were $302 million in the fourth quarter and $945 million for the year, increases of 9 percent in each period compared with 2008.  The fourth-quarter increases were primarily the result of increased business activity over the prior-year period while the full-year increases were primarily the result of additional cost structure from the Staubach acquisition. 

The region’s fourth-quarter EBITDA was $52 million compared with $56 million in the fourth quarter of 2008.  Full-year EBITDA was $134 million compared with $115 million in 2008. 

• EMEA’s fourth-quarter revenue was $226 million, compared with $243 million for the fourth quarter of 2008, a reduction of 7 percent, 14 percent in local currency.  Full-year revenue was $644 million compared with $871 million in 2008, a decrease of 26 percent, 20 percent in local currency.  The decreases were driven by continued reductions in transaction volumes across the region.

Capital Markets revenue was $39 million in the fourth quarter and $107 million for the full year of 2009, down 38 percent and 41 percent in local currency, respectively.  Leasing revenue was $70 million for the fourth quarter and $173 million for full-year 2009, down 12 percent and 25 percent in local currency, respectively.  EMEA results varied across the region, reflecting significant market declines in Russia, MENA and Germany and stable-to-improving markets in France and the United Kingdom.  Property & Facility Management revenue was $44 million in the fourth quarter, an increase of 8 percent in local currency, and $136 million for the full year, up 7 percent in local currency, as the firm continued to drive annuity-like revenue growth. 

Operating expenses were $210 million in the fourth quarter, a decrease of 5 percent, 12 percent in local currency.  Operating expenses were $653 million for the year, a decrease of 23 percent, 15 percent in local currency.  Cost reductions were the result of the aggressive, targeted cost management actions taken across the region. 

The region’s fourth-quarter EBITDA was $22 million compared with $28 million in the prior year.  Full-year EBITDA was $11 million compared with $50 million in 2008. 

• Revenue for the Asia Pacific region was $178 million in the fourth quarter of 2009 compared with $144 million in 2008.  Full-year revenue was $539 million, compared with $536 million for the same period in 2008.  In local currency, revenue was up 10 percent for the quarter and 2 percent in the year compared with 2008. 

Fourth-quarter Property & Facility Management revenue in the region increased to $74 million, or 31 percent, 16 percent in local currency.  Property & Facility Management revenue was $266 million for the year, a 28 percent increase from 2008, 30 percent in local currency.  Capital Markets revenue was $28 million for the fourth quarter, up 6 percent in local currency compared with the same period in 2008, and $58 million for the year, down 4 percent in local currency. Leasing revenue was $42 million in the fourth quarter, up 1 percent in local currency, and $109 million for the year, down 18 percent in local currency. 

The firm leveraged its large China presence to capitalize on the government’s economic stimulus package, which drove 20 percent year-over-year revenue growth across its business in the country.  The firm’s Australia business reported the highest U.S. dollar revenue improvement in the region resulting from its strong Property & Facility Management business, favorable foreign currency exchange rates and generally better economic conditions relative to the rest of the region. 

Fourth-quarter operating expenses were $153 million, compared with $137 million in 2008, a decrease of 1 percent in local currency.  Operating expenses for the region were $507 million for the year, a decrease of 5 percent, 3 percent in local currency.   

The region’s fourth-quarter EBITDA was $29 million compared with $11 million in the prior year.  Full-year EBITDA was $44 million compared with $18 million in 2008. 
 
LaSalle Investment Management

LaSalle Investment Management’s fourth-quarter revenue, including equity losses, was $64 million compared with $90 million in the fourth quarter of 2008.  There were $1 million of equity losses in the fourth quarter of 2009 compared with $3 million in the fourth quarter of 2008, primarily from non-cash charges related to co-investments.  Full-year revenue, including equity losses, was $208 million, compared with $352 million in the prior year.  Equity losses were $53 million in 2009, $4 million in 2008. Advisory fees were $242 million for the year, down $36 million from 2008 or 13 percent, 9 percent in local currency.  Advisory fees were approximately $60 million in each quarter of 2009.

The business recognized $1 million of Incentive fees in the fourth quarter of 2009, $13 million for the full year.  Asset purchases, a key driver of Transaction fees, continued to be limited by the group’s cautious view of the market.
Despite the difficult global real estate environment, LaSalle Investment Management raised over $4.0 billion of net equity in 2009 for separate accounts, funds and public securities.  Assets under management were $39.9 billion. 
 
Summary

In the midst of a very challenging environment, the firm continued to perform for clients while protecting its businesses, market positions and top talent.  Aggressive but targeted cost actions taken throughout the year contributed to strong fourth-quarter performance.  The common stock offering and the firm’s ability to generate cash resulted in a strong balance sheet at year end.  With the pace of recovery differing across global markets, the firm will capture emerging opportunities by leveraging its leading market positions and maintaining its focus on containing costs.