XML 20 R9.htm IDEA: XBRL DOCUMENT v3.7.0.1
Business Segments
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Business Segments
3.
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 define "property management" to mean services we provide to non-occupying property investors and "facilities management" to represent services we provide 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, (a) gross contract costs and (b) net non-cash mortgage servicing rights ("MSR") and mortgage banking derivative activity are both excluded from revenue in determining "fee revenue". Gross contract costs are excluded from operating expenses in determining "fee-based operating expenses." Excluding these costs from revenue and expenses results in a net presentation which we believe more accurately reflects how we manage our expense base, operating margins, and performance. In addition, our measure of segment results excludes Restructuring and acquisition charges.
We have reclassified certain prior year amounts to conform to the current presentation. Specifically during 2017, we revised our methodology for allocating overhead expenses and certain costs associated with our facilities management platform in EMEA to our reporting segments. Prior year amounts have been reclassified to conform to the current presentation. Reclassifications have not been material and have not affected reported net income or consolidated results.
The Chief Operating Decision Maker of JLL measures and evaluates the segment results excluding (a) gross contract costs, (b) Net non-cash MSR and mortgage banking derivative activity, and (c) Restructuring and acquisition charges. As of March 31, 2017, we define the Chief Operating Decision Maker collectively as our Global Executive Board, which is comprised of the following:
•
Global Chief Executive Officer
•
Global Chief Financial Officer
•
Chief Executive Officers of each of our four business segments
•
Global Chief Executive Officer of Corporate Solutions
•
Global Head of Capital Markets
•
Global Chief Human Resources Officer


Summarized financial information by business segment is as follows.
 
Three Months Ended March 31,
(in millions)
2017
2016
Real Estate Services
 
 
Americas
 
 
Revenue
$
722.8

603.5

Gross contract costs
(47.1
)
(48.8
)
Net non-cash MSR and mortgage banking derivative activity
2.7

3.3

Total fee revenue
678.4

558.0

Operating expenses:
 

 

Compensation, operating and administrative expenses
661.8

552.3

Depreciation and amortization
23.5

18.8

Total segment operating expenses
685.3

571.1

Gross contract costs
(47.1
)
(48.8
)
Total fee-based segment operating expenses
638.2

522.3

Segment operating income
$
37.5

32.4

Equity earnings
0.2

0.3

Total segment income
$
37.7

32.7

 
 
 
EMEA
 
 
Revenue
$
499.5

369.4

Gross contract costs
(139.8
)
(112.9
)
Total fee revenue
359.7

256.5

Operating expenses:
 

 

Compensation, operating and administrative expenses
518.6

377.5

Depreciation and amortization
10.3

7.7

Total segment operating expenses
528.9

385.2

Gross contract costs
(139.8
)
(112.9
)
Total fee-based segment operating expenses
389.1

272.3

Segment operating loss
$
(29.4
)
(15.8
)
Equity losses
—

(0.1
)
Total segment loss
$
(29.4
)
(15.9
)
Continued: Summarized financial information by business segment is as follows.
 
Three Months Ended March 31,
(in millions)
2017
2016
Real Estate Services
 
 
Asia Pacific
 
 
Revenue
$
304.7

263.4

Gross contract costs
(71.1
)
(57.6
)
Total fee revenue
233.6

205.8

Operating expenses:
 

 

Compensation, operating and administrative expenses
295.6

260.5

Depreciation and amortization
4.8

4.1

Total segment operating expenses
300.4

264.6

Gross contract costs
(71.1
)
(57.6
)
Total fee-based segment operating expenses
229.3

207.0

Segment operating income (loss)
$
4.3

(1.2
)
Equity earnings
0.8

0.1

Total segment income (loss)
$
5.1

(1.1
)
 
 
 
LaSalle
 

 

Revenue
$
88.2

100.5

Operating expenses:
 
 
Compensation, operating and administrative expenses
73.1

78.3

Depreciation and amortization
0.7

0.6

Total segment operating expenses
73.8

78.9

Segment operating income
$
14.4

21.6

Equity earnings
4.6

12.7

Total segment income
$
19.0

34.3

 
 
 
Segment Reconciling Items
 

 

Total fee revenue
$
1,359.9

1,120.8

Gross contract costs
258.0

219.3

Net non-cash MSR and mortgage banking derivative activity
(2.7
)
(3.3
)
Total revenue
$
1,615.2

1,336.8

Total segment operating expenses before restructuring and acquisition charges
1,588.4

1,299.8

Operating income before restructuring and acquisition charges
$
26.8

37.0

Restructuring and acquisition charges
4.5

7.6

Operating income
$
22.3

29.4