
3.	BUSINESS SEGMENTS

We manage and report our operations as four business segments:

The three geographic regions of RES including:

(1) Americas,

(2) 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, property management, facility management, project and development services, energy management and sustainability, construction management, and advisory, consulting and valuation services, including technology solutions. We define "property management" to mean services we provide to non-occupying property investors and "facility management" to mean 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 platform overhead, which we allocate to the business segments based on the budgeted operating expenses of each segment.

For segment reporting, (i) gross contract costs and (ii) 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 margin, and performance. See Note 2 for additional information on our gross and net accounting policies. In addition, our measure of segment results excludes Restructuring and acquisition charges.

We have reclassified amounts in prior years to conform to the current presentation. Specifically during 2017, we revised our methodology for allocating overhead expenses and certain costs associated with our facility management platform in EMEA to our reporting segments. 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 (i) gross contract costs, (ii) net non-cash MSR and mortgage banking derivative activity, and (iii) Restructuring and acquisition charges. As of December 31, 2017, we define the Chief Operating Decision Maker collectively as our Global Executive Board, which is composed of the following:



• Global Chief Executive Officer	• Global Chief Executive Officer of Corporate Solutions
• Global Chief Financial Officer	• Global Head of Capital Markets
• Chief Executive Officers of each of our four business segments	• Global Chief Human Resources Officer

Summarized financial information by business segment is as follows.



	Year Ended December 31,
($ in millions)	2017			2016		2015
Real Estate Services
Americas
Revenue	$	3,354.5		2,965.9		2,605.5
Gross contract costs	(177.1		)	(192.0	)	(212.1	)
Net non-cash MSR and mortgage banking derivative activity	(15.7		)	(23.5	)	0.8
Total fee revenue	3,161.7			2,750.4		2,394.2
Operating expenses:
Compensation, operating and administrative expenses	2,915.7			2,611.7		2,283.5
Depreciation and amortization	97.5			84.3		62.9
Total segment operating expenses	3,013.2			2,696.0		2,346.4
Gross contract costs	(177.1		)	(192.0	)	(212.1	)
Total fee-based segment operating expenses	2,836.1			2,504.0		2,134.3
Segment operating income	$	341.3		269.9		259.1
Equity (losses) earnings	(0.2		)	1.3		5.8
Total segment income	$	341.1		271.2		264.9

EMEA
Revenue	$	2,586.0		2,077.5		1,803.1
Gross contract costs	(654.0		)	(563.3	)	(397.4	)
Total fee revenue	1,932.0			1,514.2		1,405.7
Operating expenses:
Compensation, operating and administrative expenses	2,487.4			1,972.7		1,648.1
Depreciation and amortization	44.6			37.4		27.5
Total segment operating expenses	2,532.0			2,010.1		1,675.6
Gross contract costs	(654.0		)	(563.3	)	(397.4	)
Total fee-based segment operating expenses	1,878.0			1,446.8		1,278.2
Segment operating income	$	54.0		67.4		127.5
Equity earnings (losses)	0.3			(0.1	)	0.8
Total segment income	$	54.3		67.3		128.3

Continued: Summarized financial information by business segment is as follows.



	Year Ended December 31,
($ in millions)	2017			2016		2015
Real Estate Services
Asia Pacific
Revenue	$	1,636.6		1,352.6		1,160.1
Gross contract costs	(389.5		)	(268.2	)	(191.8	)
Total fee revenue	1,247.1			1,084.4		968.3
Operating expenses:
Compensation, operating and administrative expenses	1,499.9			1,247.2		1,055.8
Depreciation and amortization	22.1			17.3		15.5
Total segment operating expenses	1,522.0			1,264.5		1,071.3
Gross contract costs	(389.5		)	(268.2	)	(191.8	)
Total fee-based segment operating expenses	1,132.5			996.3		879.5
Segment operating income	$	114.6		88.1		88.8
Equity earnings	3.2			1.1		0.7
Total segment income	$	117.8		89.2		89.5

LaSalle
Revenue	$	355.3		407.8		397.0
Operating expenses:
Compensation, operating and administrative expenses	294.6			321.3		306.3
Depreciation and amortization	3.0			2.8		2.2
Total segment operating expenses	297.6			324.1		308.5
Segment operating income	$	57.7		83.7		88.5
Equity earnings	41.1			31.5		70.1
Total segment income	$	98.8		115.2		158.6

Segment Reconciling Items
Total fee revenue	$	6,696.1		5,756.8		5,165.2
Gross contract costs	1,220.6			1,023.5		801.3
Net non-cash MSR and mortgage banking derivative activity	15.7			23.5		(0.8	)
Total revenue	$	7,932.4		6,803.8		5,965.7
Total segment operating expenses before restructuring and acquisition charges	7,364.8			6,294.7		5,401.8
Operating income before restructuring and acquisition charges	$	567.6		509.1		563.9
Restructuring and acquisition charges	30.7			68.5		34.1
Operating income	$	536.9		440.6		529.8

Identifiable assets by segment are those assets used by, or result from, each segment's business. Corporate assets are principally cash and cash equivalents, software, and computer hardware. The following table reconciles segment identifiable assets and investments in real estate ventures to consolidated amounts.



	December 31, 2017			December 31, 2016
($ in millions)	IDENTIFIABLE ASSETS		INVESTMENTS IN REAL ESTATE VENTURES	IDENTIFIABLE ASSETS		INVESTMENTS IN REAL ESTATE VENTURES
Real Estate Services:
Americas	$	3,774.3	14.5	$	4,001.0	10.7
EMEA	2,264.3		3.5	1,864.7		2.8
Asia Pacific	1,139.4		9.6	1,065.3		7.5
LaSalle	548.6		346.9	558.6		334.4
Corporate	287.9		1.7	139.8		—
Consolidated	$	8,014.5	376.2	$	7,629.4	355.4

The table below reconciles segment property and equipment expenditures to consolidated expenditures.



	Year Ended December 31,
($ in millions)	2017		2016	2015
Real Estate Services:
Americas	$	62.6	141.6	55.5
EMEA	44.5		54.2	42.9
Asia Pacific	20.3		16.1	14.4
LaSalle	1.2		67.9	8.4
Corporate	25.1		36.2	27.9
Total capital expenditures⁽¹⁾	$	153.7	316.0	149.1

(1) Included in total capital expenditures for the years ended December 31, 2017, 2016 and 2015, were $2.3 million, $99.8 million, and $1.3 million, respectively, related to acquisition of investment properties by less than wholly-owned consolidated VIEs.

The following table sets forth the revenue and assets from our most significant currencies.



	TOTAL REVENUE				TOTAL ASSETS
	Year Ended December 31,				December 31,
($ in millions)	2017		2016	2015	2017		2016
United States dollar	$	3,251.8	2,948.5	2,536.4	$	4,357.3	4,615.3
British pound	1,302.7		1,007.3	915.5	1,209.5		1,005.3
Euro	1,084.5		880.7	748.7	784.4		581.0
Australian dollar	412.4		345.9	303.0	264.1		215.5
Hong Kong dollar	268.8		246.9	186.7	184.0		161.1
Chinese yuan	261.2		196.2	178.6	158.2		147.2
Indian rupee	259.4		216.2	189.4	231.0		182.0
Japanese yen	200.3		199.1	170.0	85.4		89.5
Singapore dollar	147.0		104.0	123.2	160.3		131.8
Other currencies	744.3		659.0	614.2	580.3		500.7
	$	7,932.4	6,803.8	5,965.7	$	8,014.5	7,629.4

We face 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, however, we generally face no such restrictions with regard to the use or application of funds for ordinary course business activities within such countries. The assets of these countries represented approximately 6% of our total assets as of both December 31, 2017, and 2016.