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Business Segments
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Business Segments
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 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.
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 June 30, 2019, we define the Chief Operating Decision Maker collectively as our Global Executive Board, which comprises the following:
• Global Chief Executive Officer
• Chief Executive Officers of each of our four business segments
• Global Chief Financial Officer
• Global Chief Executive Officer of Corporate Solutions
• Global Chief Administrative Officer
• Global Chief Executive Officer of Capital Markets
Summarized financial information by business segment is as follows.
 
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)
2019
2018
2019
2018
Americas - Real Estate Services
 
 
 
 
Leasing
$
491.8

422.9

$
881.6

727.4

Capital Markets
129.8

117.8

229.9

228.8

Property & Facility Management
1,370.9

1,258.4

2,732.9

2,441.9

Project & Development Services
376.8

274.5

685.5

544.1

Advisory, Consulting and Other
94.3

78.9

183.8

151.3

Revenue
2,463.6

2,152.5

4,713.7

4,093.5

Reimbursements
(1,403.1
)
(1,226.4
)
(2,754.5
)
(2,408.1
)
Revenue before reimbursements
1,060.5

926.1

1,959.2

1,685.4

Gross contract costs
(191.8
)
(156.6
)
(379.5
)
(289.7
)
Net non-cash MSR and mortgage banking derivative activity
(4.8
)
(1.3
)
(4.7
)
(4.0
)
Fee revenue
863.9

768.2

1,575.0

1,391.7

Operating expenses, excluding reimbursed expenses:
 

 



 
Compensation, operating and administrative expenses
913.7

796.9

1,724.5

1,485.6

Depreciation and amortization
26.3

28.3

53.6

52.6

Segment operating expenses, excluding reimbursed expenses
940.0

825.2

1,778.1

1,538.2

Gross contract costs
(191.8
)
(156.6
)
(379.5
)
(289.7
)
Fee-based segment operating expenses
748.2

668.6

1,398.6

1,248.5

Segment operating income
$
120.5

100.9

$
181.1

147.2

Equity earnings
0.4

0.4

0.1

0.5

Segment income
$
120.9

101.3

$
181.2

147.7

 
 
 
 
 
EMEA - Real Estate Services
 
 
 
 
Leasing
$
65.9

72.9

$
118.1

131.8

Capital Markets
78.5

89.9

142.5

179.2

Property & Facility Management
380.6

392.3

749.9

742.6

Project & Development Services
219.2

220.8

399.7

443.4

Advisory, Consulting and Other
74.1

70.7

131.5

133.2

Revenue
818.3

846.6

1,541.7

1,630.2

Reimbursements
(153.7
)
(153.0
)
(318.3
)
(309.0
)
Revenue before reimbursements
664.6

693.6

1,223.4

1,321.2

Gross contract costs
(284.7
)
(305.3
)
(527.4
)
(582.5
)
Fee revenue
379.9

388.3

696.0

738.7

Operating expenses, excluding reimbursed expenses:
 

 

 
 
Compensation, operating and administrative expenses
654.6

683.5

1,231.5

1,319.7

Depreciation and amortization
11.3

11.5

22.6

22.9

Segment operating expenses, excluding reimbursed expenses
665.9

695.0

1,254.1

1,342.6

Gross contract costs
(284.7
)
(305.3
)
(527.4
)
(582.5
)
Fee-based segment operating expenses
381.2

389.7

726.7

760.1

Segment operating loss
$
(1.3
)
(1.4
)
$
(30.7
)
(21.4
)
Equity loss
(1.1
)
—

(1.0
)
—

Segment loss
$
(2.4
)
(1.4
)
$
(31.7
)
(21.4
)
Continued: Summarized financial information by business segment is as follows.
 
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)
2019
2018
2019
2018
Asia Pacific - Real Estate Services
 
 
 
 
Leasing
$
66.2

58.1

$
102.1

95.9

Capital Markets
48.2

50.3

77.6

82.7

Property & Facility Management
553.4

541.6

1,091.2

1,061.4

Project & Development Services
137.3

114.1

248.2

201.1

Advisory, Consulting and Other
50.1

48.8

84.8

83.1

Revenue
855.2

812.9

1,603.9

1,524.2

Reimbursements
(359.6
)
(356.2
)
(700.7
)
(677.8
)
Revenue before reimbursements
495.6

456.7

903.2

846.4

Gross contract costs
(232.7
)
(205.4
)
(442.1
)
(400.7
)
Fee revenue
262.9

251.3

461.1

445.7

Operating expenses, excluding reimbursed expenses:
 

 

 
 
Compensation, operating and administrative expenses
462.6

427.5

863.1

812.5

Depreciation and amortization
6.4

5.8

12.8

11.4

Segment operating expenses, excluding reimbursed expenses
469.0

433.3

875.9

823.9

Gross contract costs
(232.7
)
(205.4
)
(442.1
)
(400.7
)
Fee-based segment operating expenses
236.3

227.9

433.8

423.2

Segment operating income
$
26.6

23.4

$
27.3

22.5

Equity earnings
0.4

0.7

0.7

1.0

Segment income
$
27.0

24.1

$
28.0

23.5

 
 
 
 
 
LaSalle
 

 

 
 
Advisory fees
$
79.5

67.1

$
157.1

137.0

Transaction fees & other
16.3

6.7

29.5

23.4

Incentive fees
33.6

17.9

41.2

50.6

Revenue
129.4

91.7

227.8

211.0

Reimbursements
(1.9
)
(4.8
)
(3.8
)
(9.6
)
Revenue before reimbursements
127.5

86.9

224.0

201.4

Gross contract costs
(4.2
)
(1.2
)
(7.0
)
(2.5
)
Fee revenue
123.3

85.7

217.0

198.9

Operating expenses, excluding reimbursed expenses:
 

 

 
 
Compensation, operating and administrative expenses
96.0

70.4

178.9

155.0

Depreciation and amortization
1.5

0.7

3.0

1.5

Segment operating expenses, excluding reimbursed expenses
97.5

71.1

181.9

156.5

Gross contract costs
(4.2
)
(1.2
)
(7.0
)
(2.5
)
Fee-based segment operating expenses
93.3

69.9

174.9

154.0

Segment operating income
$
30.0

15.8

$
42.1

44.9

Equity earnings
10.5

9.1

15.4

22.3

Segment income
$
40.5

24.9

$
57.5

67.2


 
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)
2019
2018
2019
2018
Segment Reconciling Items
 
 
 
 
Fee revenue
$
1,630.0

1,493.5

$
2,949.1

2,775.0

Gross contract costs
713.4

668.5

1,356.0

1,275.4

Net non-cash MSR and mortgage banking derivative activity
4.8

1.3

4.7

4.0

Revenue before reimbursements
2,348.2

2,163.3

4,309.8

4,054.4

Reimbursements
1,918.3

1,740.4

3,777.3

3,404.5

Revenue
$
4,266.5

3,903.7

$
8,087.1

7,458.9

Total segment operating expenses, excluding reimbursed expenses & before restructuring and acquisition charges
$
2,172.4

2,024.6

$
4,090.0

3,861.2

Reimbursed expenses
1,918.3

1,740.4

3,777.3

3,404.5

Total segment operating expenses before restructuring and acquisition charges
$
4,090.7

3,765.0

$
7,867.3

7,265.7

Operating income before restructuring and acquisition charges
$
175.8

138.7

$
219.8

193.2

Restructuring and acquisition charges (credits)
25.7

(11.1
)
44.3

(10.4
)
Operating income
$
150.1

149.8

$
175.5

203.6