
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, property and facility management, project and development management, energy management and sustainability, construction management, and advisory, consulting and valuation services. 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. Refer to Results of Operations, included in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, for a full description of gross contract costs. In addition, our measure of segment results excludes Restructuring and acquisition charges.

Effective January 1, 2018, management expanded the types of costs we include within gross contract costs. Most notably, this refinement includes the compensation and benefits associated with client-dedicated employees. Comparative periods were recast for consistency. This change in gross contract costs resulted in a decrease to fee revenue and was prompted by (i) the increase in compensation and benefits associated with client-dedicated personnel presented on a gross basis as a result of the adoption of ASC Topic 606 and (ii) the continued changes in our business mix, reflecting expansion of businesses that most commonly incorporate client-dedicated employees in the delivery of services. This most significant impacts are within the Property & Facility Management and Project & Development Services.

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, 2018, 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 Chief Executive Officer of Capital Markets


•	Global Chief Human Resources Officer

Summarized financial information by business segment is as follows.



	Three Months Ended March 31,
(in millions)	2018			2017
Americas - Real Estate Services
Leasing	$	304.5		299.0
Capital Markets	111.0			99.1
Property & Facility Management	1,183.5			1,049.1
Project & Development Services	269.6			290.5
Advisory, Consulting and Other	72.4			62.2
Revenue	1,941.0			1,799.9
Reimbursements	(1,181.7		)	(1,078.5	)
Revenue before reimbursements	759.3			721.4
Gross contract costs	(133.1		)	(131.8	)
Net non-cash MSR and mortgage banking derivative activity	(2.7		)	2.7
Fee revenue	623.5			592.3
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	688.7			665.6
Depreciation and amortization	24.3			23.5
Segment operating expenses, excluding reimbursed expenses	713.0			689.1
Gross contract costs	(133.1		)	(131.8	)
Fee-based segment operating expenses	579.9			557.3
Segment operating income	$	46.3		32.3
Equity earnings	0.1			0.2
Segment income	$	46.4		32.5

EMEA - Real Estate Services
Leasing	$	58.9		48.8
Capital Markets	89.3			60.0
Property & Facility Management	350.3			303.9
Project & Development Services	222.6			141.7
Advisory, Consulting and Other	62.5			48.8
Revenue	783.6			603.2
Reimbursements	(156.0		)	(101.9	)
Revenue before reimbursements	627.6			501.3
Gross contract costs	(277.2		)	(231.4	)
Fee revenue	350.4			269.9
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	636.2			523.0
Depreciation and amortization	11.4			10.3
Segment operating expenses, excluding reimbursed expenses	647.6			533.3
Gross contract costs	(277.2		)	(231.4	)
Fee-based segment operating expenses	370.4			301.9
Segment operating loss	$	(20.0	)	(32.0	)
Equity earnings	—			—
Segment loss	$	(20.0	)	(32.0	)

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



	Three Months Ended March 31,
(in millions)	2018			2017
Asia Pacific - Real Estate Services
Leasing	$	37.8		30.6
Capital Markets	32.4			29.6
Property & Facility Management	519.8			454.0
Project & Development Services	87.0			77.7
Advisory, Consulting and Other	34.3			34.4
Revenue	711.3			626.3
Reimbursements	(321.6		)	(316.5	)
Revenue before reimbursements	389.7			309.8
Gross contract costs	(195.3		)	(130.4	)
Fee revenue	194.4			179.4
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	385.0			300.0
Depreciation and amortization	5.6			4.8
Segment operating expenses, excluding reimbursed expenses	390.6			304.8
Gross contract costs	(195.3		)	(130.4	)
Fee-based segment operating expenses	195.3			174.4
Segment operating (loss) income	$	(0.9	)	5.0
Equity earnings	0.3			0.8
Segment (loss) income	$	(0.6	)	5.8

LaSalle
Advisory fees	$	69.9		62.2
Transaction fees & other	16.7			14.2
Incentive fees	32.7			11.9
Revenue	119.3			88.3
Reimbursements	(4.8		)	(4.5	)
Revenue before reimbursements	114.5			83.8
Gross Contract Costs	(1.3		)	(1.4	)
Fee revenue	113.2			82.4
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	84.6			68.5
Depreciation and amortization	0.8			0.7
Segment operating expenses, excluding reimbursed expenses	85.4			69.2
Gross contract costs	(1.3		)	(1.4	)
Fee-based segment operating expenses	84.1			67.8
Segment operating income	$	29.1		14.6
Equity earnings	13.2			4.6
Segment income	$	42.3		19.2



	Three Months Ended March 31,
(in millions)	2018		2017
Segment Reconciling Items
Fee revenue	$	1,281.5	1,124.0
Gross contract costs	606.9		495.0
Net non-cash MSR and mortgage banking derivative activity	2.7		(2.7	)
Revenue before reimbursements	1,891.1		1,616.3
Reimbursements	1,664.1		1,501.4
Revenue	$	3,555.2	3,117.7
Total segment operating expenses, excluding reimbursed expenses and before restructuring and acquisition charges	$	1,836.6	1,596.4
Reimbursed expenses	1,664.1		1,501.4
Total segment operating expenses before restructuring and acquisition charges	$	3,500.7	3,097.8
Operating income before restructuring and acquisition charges	$	54.5	19.9
Restructuring and acquisition charges	0.7		4.5
Operating income	$	53.8	15.4

The following table reconciles segment identifiable assets consolidated amounts.



(in millions)	March 31, 2018		December 31, 2017
Real Estate Services:
Americas	$	4,796.7	4,745.4
EMEA	2,290.1		2,367.5
Asia Pacific	1,255.0		1,305.0
LaSalle	549.5		548.6
Corporate	312.9		287.9
Consolidated	$	9,204.2	9,254.4