What changed in this filing

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Item 1. Financial Statements

2020-11-02 compared with 2020-08-06 · 160 added, 178 removed, 623 unchanged (35% of the section changed)

3 unchanged sentences

(in millions, except share and per share data)

June 30, 2020

September 30, 2020

December 31, 2019

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(in millions, except share and per share data) (unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Revenue before reimbursements

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Interest expense, net of interest income

Equity earnings (losses)

Equity earnings

Income before income taxes and noncontrolling interest

Income tax provision

Net (loss) income attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Net income attributable to the Company

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Foreign currency translation adjustments

Comprehensive income (loss) attributable to the Company

Comprehensive income attributable to the Company

See accompanying notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Company Shareholders' Equity

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June 30, 2020

Net income (3)

Shares issued under stock-based compensation programs

Shares repurchased for payment of taxes on stock-based compensation

Amortization of stock-based compensation

Shares held in trust

Repurchase of common stock

Change in pension liabilities, net of tax

Foreign currency translation adjustments

Decrease in amounts attributable to noncontrolling interest

September 30, 2020

Accumulated other comprehensive income (loss)

Noncontrolling interest

(3) Excludes net income attributable to redeemable noncontrolling interest of $ 0.1 million for the three months ended June 30, 2020.

(3) Excludes net (loss) income attributable to redeemable noncontrolling interest of $( 0.2 ) million and $ 0.1 million for the three months ended September 30, 2020 and June 30, 2020, respectively.

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Company Shareholder's Equity

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June 30, 2019

Shares issued under stock-based compensation programs

Acquisition of HFF

Shares repurchased for payment of taxes on stock-based compensation

Amortization of stock-based compensation

Shares held in trust

Change in pension liabilities, net of tax

Foreign currency translation adjustments

Increase in amounts attributable to noncontrolling interest

September 30, 2019

(3) Excludes net income attributable to redeemable noncontrolling interest of $ 0.1 million for the three months ended June 30, 2019.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) (unaudited)

Cash flows used in operating activities:

Cash flows from operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

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Changes in working capital, net

Net cash used in operating activities

Cash flows used in investing activities:

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Net capital additions – property and equipment

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Net cash used in investing activities

Cash flows provided by financing activities:

Cash flows from financing activities:

Proceeds from borrowings under credit facility

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Payment of dividends

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Effect of currency exchange rate changes on cash, cash equivalents and restricted cash

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You should also refer to the "Summary of Critical Accounting Policies and Estimates" section within Item 7.

Management's Discussion and Analysis of Financial Condition and Result of Operations and to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for further discussion of our significant accounting policies and estimates.

Our Condensed Consolidated Financial Statements as of June 30, 2020 , and for the periods ended June 30, 2020 and 2019 , are unaudited.

Management's Discussion and Analysis of Financial Condition and Results of Operations and to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for further discussion of our significant accounting policies and estimates.

Our Condensed Consolidated Financial Statements as of September 30, 2020 , and for the periods ended September 30, 2020 and 2019 , are unaudited.

In the opinion of management, we have included all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the Condensed Consolidated Financial Statements for these interim periods.

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Changes in the geographic mix of income, including as a result of the COVID-19 pandemic, can impact our estimated effective tax rate.

As a result of the items mentioned above, the results for the periods ended June 30 are not fully indicative of what our results will be for the full fiscal year.

As a result of the items mentioned above, the results for the periods ended September 30 are not fully indicative of what our results will be for the full fiscal year.

NEW ACCOUNTING STANDARDS

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The loan loss guarantee reserve is calculated on an individual loan level.

As of June 30, 2020, the loan loss guarantee reserve was $ 45.7 million and was included within Other liabilities on the Condensed

Consolidated Balance Sheets.

As of September 30, 2020, the loan loss guarantee reserve was $ 45.7 million and was included within Other liabilities on the Condensed Consolidated Balance Sheets.

This balance reflected a notable increase from our opening balance (reflected in the table below) as a result of incorporating, into our model, economic conditions and projections related to the COVID-19 pandemic.

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Such revenue was included entirely within Americas Capital Markets and is presented below.

Three Months Ended June 30,

Six months ended June 30,

Three Months Ended September 30,

Nine months ended

September 30,

(in millions)

Revenue excluded from scope of ASC Topic 606

Contract assets - As of June 30, 2020 and December 31, 2019 , we had $ 405.3 million and $ 419.3 million of contract assets, net of allowance, respectively, which are included in Short-term contract assets and Other assets on the Condensed Consolidated Balance Sheets.

Contract liabilities - As of June 30, 2020 and December 31, 2019 , we had $ 93.0 million and $ 87.7 million of contract liabilities, respectively, which are included in Short-term contract liabilities and deferred income on our Condensed Consolidated Balance Sheets.

Contract assets and liabilities - Our contract assets, net of allowance, are included in Short-term contract assets and Other assets and our contract liabilities are included in Short-term contract liabilities and deferred income on our Condensed Consolidated Balance Sheets.

The majority of contract liabilities are recognized as revenue within 90 days.

Such contract assets and liabilities are presented below.

(in millions)

September 30, 2020

December 31, 2019

Contract assets, gross

Contract asset allowance

Contract assets, net

Contract liabilities

Remaining performance obligations - Remaining performance obligations represent the aggregate transaction price for contracts where our performance obligations have not yet been satisfied.

As of June 30, 2020 , the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue.

As of September 30, 2020 , the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue.

In accordance with ASC Topic 606, excluded from the aforementioned remaining performance obligations are (i) amounts attributable to contracts expected to be completed within 12 months and (ii) variable consideration for services performed as a series of daily performance obligations, such as facilities management, property management, and LaSalle contracts.

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LaSalle provides investment management services on a global basis 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, 2020 , we define the Chief Operating Decision Maker collectively as our Global Executive Board, which comprises the following:

Segment income does not include (i) restructuring and acquisition charges, (ii) interest expense, net of interest income, (iii) other income, and (iv) provision for income tax, which are otherwise included in Net income on the Consolidated Statements of Comprehensive Income.

The Chief Operating Decision Maker of JLL measures and evaluates the segment results based on Segment income for purposes of making decisions about allocating resources and assessing performance.

As of September 30, 2020 , we define the Chief Operating Decision Maker collectively as our Global Executive Board, which comprises the following:

• Chief Executive Officer and President

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• Chief Executive Officer of Corporate Solutions

• Chief Administrative Officer

• Chief Executive Officer of Capital Markets

• Chief Human Resources Officer

• Chief Executive Officer of Capital Markets

• Co-Chief Executive Officers of JLL Technologies

Summarized financial information by business segment is as follows.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

Americas - Real Estate Services

Capital Markets

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Advisory, Consulting and Other

Reimbursements

Revenue before reimbursements

Gross contract costs

Net non-cash MSR and mortgage banking derivative activity

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Depreciation and amortization

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity earnings

Segment income

EMEA - Real Estate Services

Capital Markets

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Advisory, Consulting and Other

Reimbursements

Revenue before reimbursements

Gross contract costs

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Depreciation and amortization

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating loss

Equity losses

Summarized financial information by business segment is as follows.

Three Months Ended June 30,

Six Months Ended June 30,

(in millions)

Asia Pacific - Real Estate Services

Equity earnings (losses)

Segment income (loss)

Capital Markets

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Advisory, Consulting and Other

Reimbursements

Revenue before reimbursements

Gross contract costs

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Depreciation and amortization

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity earnings (losses)

Equity earnings

Segment income

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Incentive fees

Reimbursements

Revenue before reimbursements

Gross contract costs

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Depreciation and amortization

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity earnings (losses)

Segment income (loss)

Three Months Ended June 30,

Six Months Ended June 30,

Segment income

The following table is a reconciliation of Segment income to consolidated Operating income.

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

Segment Reconciling Items

Gross contract costs

Net non-cash MSR and mortgage banking derivative activity

Revenue before reimbursements

Reimbursements

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

Reimbursed expenses

Total segment operating expenses before restructuring and acquisition charges

Operating income before restructuring and acquisition charges

Segment income - Americas

Segment income (loss) - EMEA

Segment income - APAC

Segment income - LaSalle

Equity earnings

Restructuring and acquisition charges

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2020 Business Combinations Activity

During the six months ended June 30, 2020 , we completed no new acquisitions and paid $ 47.7 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2019 Business Combination Activity

During the six months ended June 30, 2020 , we made no adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2019.

As of June 30, 2020 , we have completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired for our 2019 acquisitions.

During the nine months ended September 30, 2020 , we completed no new acquisitions and paid $ 58.5 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2019 Business Combinations Activity

During the nine months ended September 30, 2020 , we made no adjustments to our preliminary allocation of the purchase consideration for certain acquisitions completed in 2019.

As of September 30, 2020 , we have completed our analysis to assign fair values to all the identifiable intangible and tangible assets acquired for our 2019 acquisitions.

Earn-Out Payments

($ in millions)

June 30, 2020

September 30, 2020

December 31, 2019

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Goodwill and Other Intangible Assets

Goodwill and unamortized intangibles as of June 30, 2020 consisted of:

Goodwill and unamortized intangibles as of September 30, 2020 consisted of:

(1) goodwill of $ 4,164.0 million , (2) identifiable intangibles of $ 601.9 million amortized over their remaining finite useful lives, and (3) $ 52.0 million of identifiable intangibles with indefinite useful lives that are not amortized.

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dollar, which means a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates.

In addition to our annual impairment evaluation, we periodically evaluate whether events or changes in circumstances indicate the carrying value of a reporting unit(s) may be impaired ("triggering event").

During the three months ended June 30, 2020, we determined our EMEA reporting unit had a triggering event which required us to determine if it was not more-likely-than-not that the fair value of our reporting unit was less than its carrying value.

As a result, we performed step 1 of the goodwill impairment analysis which indicated the estimated fair value exceeded the carrying value by over 30%.

During the three months ended September 30, 2020, as part of our annual impairment test of goodwill, we have considered qualitative and quantitative factors and determined it is not more-likely-than-not that the fair value of our Americas, Asia Pacific, and LaSalle reporting units are less than their carrying values.

With respect to our EMEA reporting unit reporting, we performed step 1 of the goodwill impairment analysis which indicated the estimated fair value exceeded the carrying value by over 20%.

In performing step 1, we relied on the discounted cash flow (“DCF”) method, an income approach, in determining the estimated fair value.

Our DCF analysis relied on significant judgments and assumptions in determining the inputs, specifically, forecasted revenue growth, forecasted profitability margin, and the discount rate used to present value the cash flows.

The following tables detail, by reporting segment, movements in goodwill.

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Impact of exchange rate movements

Balance as of June 30, 2020

Balance as of September 30, 2020

Real Estate Services

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Impact of exchange rate movements

Balance as of June 30, 2019

Balance as of September 30, 2019

The following tables detail, by reporting segment, movements in the gross carrying amount and accumulated amortization of our identifiable intangibles.

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Impact of exchange rate movements

Balance as of June 30, 2020

Balance as of September 30, 2020

Accumulated Amortization

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Impact of exchange rate movements

Balance as of June 30, 2020

Net book value as of June 30, 2020

(1) Included in this amount for MSRs was (i) $ 9.3 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights and (ii) $ 2.8 million relating to an impairment valuation allowance, recognized during the three months ended June 30, 2020.

Balance as of September 30, 2020

Net book value as of September 30, 2020

(1) Included in this amount for MSRs was (i) $ 15.3 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights and (ii) $ 1.9 million relating to a net impairment valuation allowance.

(2) Amortization of MSRs is included in Revenue before reimbursements within the Condensed Consolidated Statements of Comprehensive Income.

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Impact of exchange rate movements

Balance as of June 30, 2019

Balance as of September 30, 2019

Accumulated Amortization

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Impact of exchange rate movements

Balance as of June 30, 2019

Net book value as of June 30, 2019

Balance as of September 30, 2019

Net book value as of September 30, 2019

(1) Included in this amount for MSRs was $ 10.6 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights.

(2) Amortization of MSRs is included in Revenue before reimbursements within the Condensed Consolidated Statements of Comprehensive Income.

The remaining estimated future amortization expense of MSRs and other identifiable intangible assets, by year, as of June 30, 2020 , is presented in the following table.

The remaining estimated future amortization expense of MSRs and other identifiable intangible assets, by year, as of September 30, 2020 , is presented in the following table.

(in millions)

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INVESTMENTS IN REAL ESTATE VENTURES

As of June 30, 2020 and December 31, 2019 , we had Investments in real estate ventures of $ 393.6 million and $ 404.2 million , respectively.

Approximately 85% of our investments, as of June 30, 2020 , are direct investments in 47 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement.

These also include investments by JLL Spark in property-technology funds and early-stage companies.

The remaining 15% of our Investments in real estate ventures, as of June 30, 2020 , were attributable to investment vehicles that use our capital and outside capital primarily provided by institutional investors to invest, primarily, in certain real estate ventures that own and operate real estate.

As of September 30, 2020 and December 31, 2019 , we had Investments in real estate ventures of $ 389.6 million and $ 404.2 million , respectively.

Approximately 90% of our investments, as of September 30, 2020 , are primarily (i) direct investments in 48 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement and (ii) investments by JLL Spark in property-technology funds and early-stage companies.

The remaining 10% of our Investments in real estate ventures, as of September 30, 2020 , were attributable to investment vehicles that use our capital and outside capital primarily provided by institutional investors to invest, primarily, in certain real estate ventures that own and operate real estate.

Of our investments attributable to investment vehicles, the majority was invested in LaSalle Investment Company II ("LIC II"), in which we held an effective ownership interest of 48.78 % .

We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 338.5 million as of June 30, 2020 .

We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 338.8 million as of September 30, 2020 .

Of this amount, while we remain contractually obligated, we do not expect a call on the $ 60.4 million relating to our investment in LIC II as its fund life terminated in January 2020.

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(in millions)

June 30, 2020

September 30, 2020

December 31, 2019

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Total liabilities and members' equity

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

Operating and other expenses

Net gains on sale of investments (included in Equity earnings)

Net (loss) income

Net gains on sale of investments 1

Net income (loss)

(1) $12.2 million of the year-to-date gain is included in Equity earnings;

the remaining $3.1 million is included in Other income.

We allocate the members' equity and net income of the consolidated VIEs to the noncontrolling interest holders as Noncontrolling interest on our Condensed Consolidated Balance Sheets and as Net income attributable to noncontrolling interest in our Condensed Consolidated Statements of Comprehensive Income, respectively.

There were no significant other-than-temporary impairment charges on Investments in real estate ventures for the six months ended June 30, 2020 and 2019 .

There were no significant other-than-temporary impairment charges on Investments in real estate ventures for the nine months ended September 30, 2020 and 2019 .

We report a majority of our investments in real estate ventures at fair value.

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Foreign currency translation adjustments, net

Fair value investments as of June 30,

Fair value investments as of September 30,

See Note 8, Fair Value Measurements , for additional discussion of our investments in real estate ventures reported at fair value.

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Contractual Life

Unvested as of March 31, 2020

Unvested as of June 30, 2020

Unvested as of March 31, 2019

Unvested as of September 30, 2020

Unvested as of June 30, 2019

Unvested as of September 30, 2019

Weighted Average

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Unvested as of December 31, 2019

Unvested as of June 30, 2020

Unvested as of September 30, 2020

Unvested as of December 31, 2018

Unvested as of June 30, 2019

As of June 30, 2020 , we had $ 122.4 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2024 ;

Unvested as of September 30, 2019

As of September 30, 2020 , we had $ 84.3 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2024 ;

$ 41.5 million relates to the awards issued in conjunction with the HFF acquisition.

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The carrying values of our Credit facility and Short-term borrowings approximate their estimated fair values given the variable interest rate terms and market spreads.

We estimated the fair value of our Long-term debt as $ 645.4 million and $ 685.9 million as of June 30, 2020 and December 31, 2019 , respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy.

The carrying value of our Long-term debt was $ 665.4 million and $ 664.6 million as of June 30, 2020 and December 31, 2019 , respectively, and included debt issuance costs of $ 2.8 million and $ 3.1 million , respectively.

We estimated the fair value of our Long-term debt as $ 686.1 million and $ 685.9 million as of September 30, 2020 and December 31, 2019 , respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy.

The carrying value of our Long-term debt was $ 682.9 million and $ 664.6 million as of September 30, 2020 and December 31, 2019 , respectively, and included debt issuance costs of $ 2.7 million and $ 3.1 million , respectively.

Investments in Real Estate Ventures at Fair Value - Net Asset Value ("NAV")

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Critical inputs to NAV estimates included valuations of the underlying real estate assets and borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates, rental and expense growth rates, and asset-specific market borrowing rates.

As of June 30, 2020 and December 31, 2019 , investments in real estate ventures at fair value using NAV were $ 187.8 million and $ 224.8 million , respectively.

As of September 30, 2020 and December 31, 2019 , investments in real estate ventures at fair value using NAV were $ 192.4 million and $ 224.8 million , respectively.

As these investments are not required to be classified in the fair value hierarchy, they have been excluded from the following table.

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The following table categorizes by level in the fair value hierarchy the estimated fair value of our assets and liabilities measured at fair value on a recurring basis.

June 30, 2020

September 30, 2020

December 31, 2019

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The inputs for these valuations are Level 2 inputs in the fair value hierarchy.

As of June 30, 2020 and December 31, 2019 , these contracts had a gross notional value of $ 2.00 billion ( $ 0.98 billion on a net basis) and $ 2.30 billion ( $ 1.05 billion on a net basis), respectively.

As of September 30, 2020 and December 31, 2019 , these contracts had a gross notional value of $ 2.03 billion ( $ 1.05 billion on a net basis) and $ 2.30 billion ( $ 1.05 billion on a net basis), respectively.

We recognize gains and losses from revaluation of these contracts as a component of Operating, administrative and other expense.

They are offset by the gains and losses we recognize on the revaluation of intercompany loans and other foreign currency balances.

The impact to net income was not significant for the six months ended June 30, 2020 or 2019 .

The impact to net income was not significant for the nine months ended September 30, 2020 or 2019 .

We record the asset and liability positions for our foreign currency forward contracts based on the net payable or net receivable position with the financial institutions from which we purchase these contracts.

The $ 3.0 million asset as of June 30, 2020 , was composed of gross contracts with receivable positions of $ 3.6 million and payable positions of $ 0.7 million .

The $ 5.0 million liability as of June 30, 2020 , was composed of gross contracts with receivable positions of $ 0.6 million and payable positions of $ 5.5 million .

The $ 3.2 million asset as of September 30, 2020 , was composed of gross contracts with receivable positions of $ 3.4 million and payable positions of $ 0.2 million .

The $ 10.5 million liability as of September 30, 2020 , was composed of gross contracts with receivable positions of $ 1.9 million and payable positions of $ 12.4 million .

As of December 31, 2019 , the $ 10.5 million asset was composed of gross contracts with receivable positions of $ 10.6 million and payable positions of $ 0.1 million .

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Warehouse Receivables

As of June 30, 2020 and December 31, 2019 , all of our Warehouse receivables were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S.

As of September 30, 2020 and December 31, 2019 , all of our Warehouse receivables were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S.

government or GSE mortgage-backed security program.

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employees that allows them to defer portions of their compensation.

We recorded this plan on our Condensed Consolidated Balance Sheet as of June 30, 2020 , as Deferred compensation plan assets of $ 372.4 million , long-term deferred compensation plan liabilities of $ 351.1 million , included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.7 million .

We recorded this plan on our Condensed Consolidated Balance Sheet as of September 30, 2020 , as Deferred compensation plan assets of $ 410.7 million , long-term deferred compensation plan liabilities of $ 388.4 million , included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.6 million .

We recorded this plan on our Condensed Consolidated Balance Sheet as of December 31, 2019 , as Deferred compensation plan assets of $ 349.9 million , long-term deferred compensation plan liabilities of $ 346.1 million , included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.7 million .

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The tables below present a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

Balance as of March 31, 2020

Balance as of June 30, 2020

Net change in fair value

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Purchases / Additions

Balance as of June 30, 2020

Balance as of September 30, 2020

Investments in real estate ventures

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Earn-out liabilities

Balance as of March 31, 2019

Balance as of June 30, 2019

Net change in fair value

1 unchanged sentence

Purchases / Additions

Balance as of June 30, 2019

Balance as of September 30, 2019

Investments in real estate ventures

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Purchases / Additions

Balance as of June 30, 2020

Balance as of September 30, 2020

Investments in real estate ventures

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Investments in real estate ventures

Equity earnings (losses)

Equity earnings

Other current assets - Mortgage banking derivative assets

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Our determination of fair value primarily relies on Level 3 inputs.

We did not recognize any significant investment-level impairment losses during either of the six months ended June 30, 2020 or 2019 .

We did not recognize any significant investment-level impairment losses during either of the three or nine months ended September 30, 2020 or 2019 .

See Note 6, Investments in Real Estate Ventures , for additional information, including information related to impairment charges recorded at the investee level.

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(in millions)

June 30, 2020

September 30, 2020

December 31, 2019

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We have a $ 2.75 billion unsecured revolving credit facility (the "Facility") that matures on May 17, 2023 .

Pricing on the Facility ranges from LIBOR plus 0.875% to 1.35% , with pricing as of June 30, 2020 , at LIBOR plus 1.00 % .

In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.7 million and $ 0.8 million as of June 30, 2020 and December 31, 2019 , respectively.

Pricing on the Facility ranges from LIBOR plus 0.875% to 1.35% , with pricing as of September 30, 2020 , at LIBOR plus 0.95 % .

In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.7 million and $ 0.8 million as of September 30, 2020 and December 31, 2019 , respectively.

The following tables provides additional information on our Facility.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended

September 30,

($ in millions)

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Amounts outstanding are presented in the debt table above.

As of June 30, 2020 , our issuer and senior unsecured ratings are investment grade:

As of September 30, 2020 , our issuer and senior unsecured ratings are investment grade:

Baa1 from Moody’s Investors Service, Inc.

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Our Facility and senior notes are subject to customary financial and other covenants, including cash interest coverage ratios and leverage ratios, as well as event of default conditions.

We remained in compliance with all covenants as of June 30, 2020 .

We remained in compliance with all covenants as of September 30, 2020 .

Warehouse Facilities

June 30, 2020

September 30, 2020

December 31, 2019

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Warehouse Facilities:

LIBOR plus 1.15%, expires September 21, 2020

LIBOR plus 1.15%, October 21, 2020 1

LIBOR plus 1.40%, expires September 18, 2021 2

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Total warehouse facilities

1 In the third quarter of 2020, JLL extended the Warehouse facility;

previously, the facility had a maturity date of September 21, 2020.

In October 2020, JLL extended the Warehouse facility to September 20, 2021 with a maximum capacity of $400 million and an increase to the interest rate (to LIBOR plus 1.40%).

2 In the third quarter of 2020, JLL extended the Warehouse facility with an increase to the interest rate;

previously, the facility had a maturity date of September 19, 2020 and an interest rate of LIBOR plus 1.15%.

3 In the third quarter of 2020, JLL extended the Warehouse facility with an increase to the interest rate;

previously, the facility had a maturity date of August 31, 2020 and an interest rate of LIBOR plus 1.15%.

4 As Soon As Pooled ("ASAP") funding program

5 In the third quarter of 2020, the maximum capacity was reduced from $1.0 billion to $500 million.

We have lines of credit established for the sole purpose of funding our Warehouse receivables.

1 unchanged sentence

Pursuant to these warehouse facilities, we are required to comply with certain financial covenants regarding (1) minimum net worth, (2) minimum servicing-related loans, and (3) minimum adjusted leverage ratios.

We remained in compliance with all covenants under our Warehouse facilities as of June 30, 2020 .

We remained in compliance with all covenants under our Warehouse facilities as of September 30, 2020 .

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

In addition, we have established receivables from third-party insurance providers for claim amounts in excess of the risk retained by our captive insurance company.

In total, these receivables were $ 36.9 million and $ 37.7 million as of June 30, 2020 and December 31, 2019 , respectively, and are included in Notes and other receivables and Long-term receivables on our Condensed Consolidated Balance Sheets.

In total, these receivables were $ 41.0 million and $ 37.7 million as of September 30, 2020 and December 31, 2019 , respectively, and are included in Notes and other receivables and Long-term receivables on our Condensed Consolidated Balance Sheets.

The following table shows the professional indemnity accrual activity and related payments.

2 unchanged sentences

Prior year claims adjustments (including foreign currency changes)

June 30, 2020

September 30, 2020

December 31, 2018

Prior year claims adjustments (including foreign currency changes)

June 30, 2019

September 30, 2019

As a participant in the DUS program, we retain a portion of the risk of loss for loans that are originated and sold under the DUS program.

1 unchanged sentence

Generally, we share approximately one-third of incurred losses, subject to a cap of 20% of the principal balance of the mortgage at origination.

As of June 30, 2020 and December 31, 2019 , we had loans subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 10.5 billion and $ 9.7 billion , respectively.

As of September 30, 2020 and December 31, 2019 , we had loans subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 11.0 billion and $ 9.7 billion , respectively.

For all DUS program loans with loss-sharing obligations, we record a non-contingent liability equal to the estimated fair value of the guarantee obligations undertaken upon sale of the loan, which reduces our gain on sale of the loan.

Subsequently, this liability is amortized over the estimated life of the loan and recognized as Revenue on the Condensed Consolidated Statements of Comprehensive Income.

As of June 30, 2020 and December 31, 2019 , the loss-sharing guarantee obligations were $ 20.9 million and $ 20.6 million , respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets.

There were no loan losses incurred for the three and six months ended June 30, 2020 and 2019 .

As of September 30, 2020 and December 31, 2019 , the loss-sharing guarantee obligations were $ 20.7 million and $ 20.6 million , respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets.

There were no loan losses incurred for the three and nine months ended September 30, 2020 and 2019 .

RESTRUCTURING AND ACQUISITION CHARGES

3 unchanged sentences

Restructuring and acquisition charges are presented in table below.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

11 unchanged sentences

Payments made

June 30, 2020

September 30, 2020

(in millions)

4 unchanged sentences

Payments made

June 30, 2019

We expect the majority of accrued severance and other accrued acquisition costs as of June 30, 2020 will be paid during the next twelve months.

September 30, 2019

We expect the majority of accrued severance and other accrued acquisition costs as of September 30, 2020 will be paid during the next twelve months.

Lease exit payments depend on the terms of various leases, which extend as far out as 2022.

HFF Acquisition

Included in Restructuring and acquisition charges were $ 20.1 million and $ 41.4 million , respectively, for the three and six months ended June 30, 2020 compared to $ 3.2 million and $ 9.7 million , respectively, for the three and six months ended June 30, 2019 of charges relating to the acquisition and integration of HFF (including transaction/deal costs, retention and severance expense, early lease termination costs, and other integration expenses).

Included in Restructuring and acquisition charges were $ 13.8 million and $ 55.2 million , respectively, for the three and nine months ended September 30, 2020 compared to $ 60.1 million and $ 69.8 million , respectively, for the three and nine months ended September 30, 2019 of charges relating to the acquisition and integration of HFF (including transaction/deal costs, retention and severance expense, early lease termination costs, and other integration expenses).

During the integration of HFF, we expect to incur significant charges over the two years following the acquisition in an effort to maximize the value of the combined organization.

9 unchanged sentences

Cumulative foreign currency translation adjustment

Balance as of March 31, 2020

Balance as of June 30, 2020

Other comprehensive income before reclassification

2 unchanged sentences

Other comprehensive income after tax expense of $ - , $ - and $ -

Balance as of June 30, 2020

Balance as of September 30, 2020

(in millions)

1 unchanged sentence

Cumulative foreign currency translation adjustment

Balance as of March 31, 2019

Balance as of June 30, 2019

Other comprehensive loss before reclassification

2 unchanged sentences

Other comprehensive loss after tax expense of $ - , $ - and $ -

Balance as of June 30, 2019

Balance as of September 30, 2019

(in millions)

6 unchanged sentences

Other comprehensive loss after tax expense of $ - , $ - and $ -

Balance as of June 30, 2020

Balance as of September 30, 2020

(in millions)

6 unchanged sentences

Other comprehensive (loss) income after tax expense of $ - , $ - and $ -

Balance as of June 30, 2019

Balance as of September 30, 2019

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements