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Item 8. Financial Statements and Supplementary Data

2021-02-18 compared with 2020-02-27 · 390 added, 528 removed, 1004 unchanged (48% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Index to Consolidated Financial Statements Page

JONES LANG LASALLE INCORPORATED CONSOLIDATED FINANCIAL STATEMENTS

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Notes to Consolidated Financial Statements 73

Quarterly Results of Operations (Unaudited)

Report of Independent Registered Public Accounting Firm

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Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Financial Accounting Standards Board's Accounting Standards Codification (ASC) Topic 842, Leases .

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases as of January 1, 2019 due to the adoption of Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic 842, Leases.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of acquisition-date fair value of customer relationship intangible assets acquired in the HFF, Inc.

business combination

As described in Note 4 to the consolidated financial statements, on July 1, 2019, the Company acquired HFF, Inc.

(HFF) in a business combination.

In connection with the transaction, the Company recorded a customer relationship intangible asset associated with the generation of future income from HFF’s existing customers.

The Company used the income approach to determine the acquisition-date fair value for the customer relationship asset of $185 million.

We identified the evaluation of the acquisition-date fair value of customer relationship intangible asset acquired in the HFF business combination as a critical audit matter.

There was a high degree of subjectivity in applying and evaluating the income approach used to record the acquisition-date fair value of the customer relationship asset.

Specifically, there was limited observable market information available to evaluate the forecasted cash flows attributable to existing customer relationships and discount rate assumptions.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s customer relationship intangible asset valuation process, including controls related to the review of forecasted cash flows attributable to existing customer relationships and the development of the discount rate assumptions.

We compared the Company’s forecasted cash flows attributable to existing customer relationships which included revenue, fixed costs, and variable costs to a combination of the historical results of HFF, market data observed of peer companies, and historical company experience.

In addition, we involved valuation professionals with specialized skills and knowledge who assisted in the following:

evaluating the discount rate used in the valuation, by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities

developing an estimate of the acquisition-date fair value of the customer relationship intangible asset using the Company’s cash flow forecasts and independently developed discount rate, and compared the result to the Company’s fair value estimate

performing sensitivity analyses to understand the impact of changes in the key assumptions on the fair value estimate.

Evaluation of goodwill impairment analysis for the Europe, Middle East, and Africa reporting unit

As described in Note 2 and Note 4 to the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit might exceed its fair value.

Goodwill impairment analysis for the Europe, Middle East, and Africa reporting unit

As described in Notes 2 and 4 to the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit might exceed its fair value.

The goodwill balance was $4,224.7 million as of December 31, 2020, of which $959.7 million related to the Europe, Middle East, and Africa (EMEA) reporting unit.

We identified the evaluation of the goodwill impairment analysis for the EMEA reporting unit as a critical audit matter.

We identified the evaluation of the quantitative goodwill impairment analysis for the EMEA reporting unit as a critical audit matter.

The estimated fair value of the EMEA reporting unit required the evaluation of a discounted cash flow model.

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Specifically, the forecasted revenue growth rates, forecasted profitability margins, and the discount rate assumption used to calculate the fair value of the reporting unit were challenging to test as changes to those assumptions could have a significant effect on the Company’s assessment of the carrying value of goodwill.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s goodwill impairment assessment process, including controls related to the determination of the fair value of the reporting unit, forecasted revenue growth rates, forecasted profitability margins, and discount rate assumptions.

We evaluated the Company’s forecasted revenue growth rates and forecasted profitability margins for the EMEA reporting unit, by comparing these assumptions to current performance and analysts’ revenue growth and profitability margin expectations for the Company and its peer companies.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill impairment assessment process, including controls related to the determination of the fair value of the reporting unit, forecasted revenue growth rates, forecasted profitability margins, and discount rate assumptions.

We evaluated the Company’s forecasted revenue growth rates and forecasted profitability margins for the EMEA reporting unit, by comparing these assumptions to current and historical performance and analysts’ revenue growth and profitability margin expectations for the Company and its peer companies.

In addition, we involved valuation professionals with specialized skills and knowledge who assisted in the following:

evaluating the discount rate used in the discounted cash flow model, by comparing it against a discount rate range that was independently developed using publicly availably market data for comparable entities

researching analysts’ expectations of the forecasted growth rates and forecasted profitability margins for the Company and its peer companies, to assist in evaluating these assumptions

– evaluating the discount rate used in the discounted cash flow model, by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities

– researching analysts’ expectations of the forecasted revenue growth rates and forecasted profitability margins for the Company and its peer companies, to assist in evaluating these assumptions

– developing an estimate of the EMEA reporting unit’s fair value using the reporting unit’s cash flow assumptions, and an independently developed discount rate range, and comparing the result of our estimate of fair value to the Company’s fair value estimate.

Evaluation of the sufficiency of audit evidence over income taxes

As described in Note 2 and Note 8 to the consolidated financial statements, the Company records a provision for income taxes, current taxes payable or receivable as well as deferred tax assets and liabilities for the tax jurisdictions in which they operate based on local tax regulations and rules.

Sufficiency of audit evidence over income taxes

As described in Notes 2 and 8 to the consolidated financial statements, the Company recorded a provision for income taxes of $106.9 million for the year ended December 31, 2020 based on local tax rules and regulations for the tax jurisdictions in which they operate.

The Company has operations which constitute a taxable income presence in 92 countries or other taxable jurisdictions outside of the U.S.

We identified the evaluation of the sufficiency of audit evidence over income taxes as a critical audit matter.

The Company’s global tax structure adds complexity which required subjective auditor judgment to evaluate the sufficiency of audit evidence.

We identified the evaluation of the sufficiency of audit evidence over income tax expense as a critical audit matter.

The Company’s global tax structure adds complexity that required subjective auditor judgment to evaluate the sufficiency of audit of evidence obtained.

This required the involvement of domestic and international tax professionals with specialized skills and knowledge, in order to assess the nature and extent of procedures performed in relation to the amounts recorded and disclosed in the consolidated financial statements.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s income tax process, including controls over the amounts recorded.

We performed procedures and applied auditor judgment to determine the nature and extent of procedures to be performed over the income tax accounts.

We obtained the tax amounts for certain taxing jurisdictions and agreed amounts to supporting documentation for a selection of provisions for income tax, current taxes payable or receivable, and deferred tax accounts.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s income tax process, including controls over the amounts recorded.

We applied auditor judgment to determine the nature and extent of procedures to be performed over income tax expense.

For certain taxing jurisdictions, we analyzed supporting documentation for the provision for income taxes.

In addition, we involved tax professionals with specialized skills and knowledge who evaluated certain of the Company’s interpretations and applications of the tax rules and regulations.

Further, we evaluated the overall sufficiency of audit evidence obtained over income taxes.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed over income tax expense, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 1988.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018 , and the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2019 , and related notes (collectively, the consolidated financial statements), and our report dated February 27, 2020 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired HFF Inc.

(HFF) during 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, HFF’s internal control over financial reporting associated with total assets of $652.6 million and total revenues of $392.3 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of HFF.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and related notes (collectively, the consolidated financial statements), and our report dated February 18, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Cash and cash equivalents $ 574.3 451.9

Trade receivables, net of allowances of $68.1 and $52.0

Trade receivables, net of allowance of $66.5 and $68.1 1,636.1 2,034.3

Notes and other receivables 469.9 472.8

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Warehouse receivables 1,529.2 527.1

Short-term contract assets

Short-term contract assets, net of allowance of $1.8 and n/a 265.8 333.4

Prepaid & other 517.1 377.9

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Operating lease right-of-use assets 707.4 804.4

Goodwill 4,224.7 4,168.2

Identified intangibles, net of accumulated amortization of $295.3 and $214.8 679.8 682.6

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Deferred compensation plan 446.3 349.9

Other 182.3 197.2

Total assets $ 14,316.5 13,672.6

Liabilities and Equity

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Short-term operating lease liabilities 165.7 153.4

Other 299.6 203.2

Total current liabilities 6,127.8 5,490.2

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Long-term operating lease liabilities 683.9 751.2

Other 597.5 436.2

Total liabilities 8,698.7 8,459.3

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Common stock, $0.01 par value per share, 100,000,000 shares authorized;

51,549,654 and 45,599,418 shares issued and outstanding

51,970,307 and 51,549,654 shares issued;

51,105,417 and 51,549,654 outstanding 0.5 0.5

Additional paid-in capital 2,023.3 1,962.8

Retained earnings 3,975.9 3,588.3

Treasury stock, at cost, 864,890 and - shares ( 96.1 ) —

Shares held in trust ( 5.6 ) ( 5.7 )

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Noncontrolling interest 89.2 86.6

Total equity 5,610.0 5,204.7

Total liabilities, redeemable noncontrolling interest and equity $ 14,316.5 13,672.6

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Equity earnings 8.0 36.3 32.8

Other income 15.3 2.3 17.4

Income before income taxes and noncontrolling interest 529.6 697.6 706.0

Provision for income taxes 106.9 159.7 214.3

Net income 422.7 537.9 491.7

Net income attributable to noncontrolling interest 20.2 2.6 7.2

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(in millions, except share and

per share data)

Company Shareholders' Equity

Comprehensive

Noncontrolling

Income (Loss)

per share data) Company Shareholders' Equity

Common Stock Additional Shares

Shares Outstanding Amount Paid-In Retained Held Treasury Total

Capital Earnings in Trust Stock AOCI (1)

December 31, 2017 45,373,817 $ 0.5 1,037.6 2,649.0 ( 5.9 ) — ( 341.1 ) 38.1 $ 3,378.2

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Amortization of stock-based compensation — — 26.8 — — — — — 26.8

Cumulative effect from adoption of new accounting for stock-based compensation

Shares held in trust — — — — 0.1 — — — 0.1

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Foreign currency translation adjustments — — — — — — ( 118.2 ) — ( 118.2 )

Net increase in amounts attributable to noncontrolling interest

Net decrease in amounts attributable to noncontrolling interest — — — — — — — ( 2.3 ) ( 2.3 )

Acquisition of redeemable noncontrolling interest — — 2.4 — — — — — 2.4

December 31, 2018 45,599,418 $ 0.5 1,057.3 3,095.7 ( 5.8 ) — ( 456.2 ) 43.0 $ 3,734.5

Net income (3)

— — — 535.3 — — — 2.4 537.7

Shares issued under stock-based compensation programs 301,670 — 3.7 — — — — — 3.7

Acquisition of HFF 5,733,603 — 841.2 — — — — — 841.2

Shares repurchased for payment of taxes on stock-based compensation ( 85,037 ) — ( 13.6 ) — — — — — ( 13.6 )

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Foreign currency translation adjustments — — — — — — 43.0 — 43.0

Net decrease in amounts attributable to noncontrolling interest

Acquisition of redeemable noncontrolling interest

Net increase in amounts attributable to noncontrolling interest — — — — — — — 41.2 41.2

December 31, 2019 51,549,654 $ 0.5 1,962.8 3,588.3 ( 5.7 ) — ( 427.8 ) 86.6 $ 5,204.7

Net income (3)

— — — 402.5 — — — 20.5 423.0

Shares issued under stock-based compensation programs 632,638 — 0.2 — — 3.9 — — 4.1

Acquisition of HFF

Shares repurchased for payment of taxes on stock-based compensation ( 179,938 ) — ( 23.5 ) — — — — — ( 23.5 )

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Shares held in trust — — — — 0.1 — — — 0.1

Dividends paid, $0.86 per share

Cumulative effect from adoption of new accounting for credit losses — — — ( 14.9 ) — — — — ( 14.9 )

Repurchase of common stock ( 896,937 ) — — — — ( 100.0 ) — — ( 100.0 )

Change in pension liabilities, net of tax — — — — — — ( 9.2 ) — ( 9.2 )

Foreign currency translation adjustments — — — — — — 59.8 — 59.8

Net increase in amounts attributable to noncontrolling interest

Balances at December 31, 2019

Net decrease in amounts attributable to noncontrolling interest — — — — — — — ( 17.9 ) ( 17.9 )

December 31, 2020 51,105,417 $ 0.5 2,023.3 3,975.9 ( 5.6 ) ( 96.1 ) ( 377.2 ) 89.2 $ 5,610.0

Accumulated other comprehensive income (loss)

Noncontrolling interest

(3) Excludes net (loss) income attributable to redeemable noncontrolling interest of $( 0.3 ) million and $ 0.2 million for the years ended December 31, 2020 and 2019, respectively.

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(in millions) 2020 2019 2018

Cash flows provided by operating activities:

Cash flows from operating activities:

Net income $ 422.7 537.9 491.7

Reconciliation of net income to net cash provided by operating activities:

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Amortization of stock-based compensation 83.8 74.2 26.8

(Gains) losses on mortgage servicing rights and derivatives

Net non-cash mortgage servicing rights and mortgage banking derivative activity ( 66.6 ) ( 21.2 ) ( 8.3 )

Accretion of interest and amortization of debt issuance costs 5.1 5.3 4.9

Other, net ( 27.1 ) 11.3 ( 10.0 )

Receivables 414.3 ( 330.0 ) ( 229.5 )

Reimbursable receivables and reimbursable payables 122.2 26.2 ( 215.6 )

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Net cash provided by operating activities 1,114.7 483.8 604.1

Cash flows used in investing activities:

Cash flows from investing activities:

Net capital additions – property and equipment ( 149.4 ) ( 187.8 ) ( 161.9 )

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Distributions of capital from real estate ventures 41.5 113.8 51.9

Other, net 16.6 42.5 4.0

Net cash used in investing activities ( 170.6 ) ( 1,049.7 ) ( 280.4 )

Cash flows provided by (used in) financing activities:

Proceeds from issuance of senior notes

Cash flows from financing activities:

Proceeds from borrowings under credit facility 5,217.0 5,864.0 3,145.0

Repayments of borrowings under credit facility ( 5,742.0 ) ( 5,339.0 ) ( 3,145.0 )

Net proceeds from (repayments of) short-term borrowings

Net (repayments of) proceeds from short-term borrowings ( 64.3 ) 86.8 ( 41.4 )

Payments of deferred business acquisition obligations and earn-outs ( 44.4 ) ( 77.3 ) ( 57.1 )

Shares repurchased for payment of employee taxes on stock awards ( 23.5 ) ( 13.6 ) ( 12.4 )

Common stock issued under compensation plans including tax benefit

Repurchase of common stock ( 100.0 ) — —

Payment of dividends — ( 42.7 ) ( 37.8 )

Noncontrolling interest contributions, net

Net cash provided by (used in) financing activities

Noncontrolling interest (distributions) contributions, net ( 0.9 ) 40.6 3.6

Other, net ( 13.1 ) 65.8 3.8

Net cash (used in) provided by financing activities ( 771.2 ) 584.6 ( 141.3 )

Effect of currency exchange rate changes on cash, cash equivalents and restricted cash 14.8 ( 0.8 ) ( 19.9 )

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Supplemental disclosure of cash flow information:

Restricted cash, beginning of the year $ 200.2 153.3 203.7

Restricted cash, end of the year 265.5 200.2 153.3

Cash paid during the year for:

Interest $ 50.2 58.5 49.2

Income taxes, net of refunds 138.5 280.8 153.4

Operating leases

Operating leases 191.4 171.2 n/a

Non-cash activities:

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Jones Lang LaSalle Incorporated ("Jones Lang LaSalle," which we may refer to as "JLL," "we," "us," "our," or the "Company") was incorporated in 1997.

We have corporate offices worldwide and over 93,000 employees, including approximately 38,800 employees whose costs are reimbursed by our clients.

We have corporate offices worldwide and nearly 91,000 employees, including approximately 41,100 employees whose costs are reimbursed by our clients.

We provide comprehensive integrated real estate and investment management expertise on a local, regional and global level to owner, occupier and investor clients.

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LaSalle Investment Management ("LaSalle") is one of the world's largest and most diversified real estate investment management firms, with $ 68.9 billion of assets under management (unaudited) as of December 31, 2020.

The following table shows the revenue for the major product categories into which we group our services.

The following table shows our revenue by service line.

Year Ended December 31,

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Real Estate Services:

Leasing $ 1,884.2 2,524.0 2,372.1

Capital Markets 1,407.4 1,542.2 1,145.4

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Advisory, Consulting and Other 861.0 904.7 815.2

LaSalle 421.8 526.1 533.9

Total revenue $ 16,589.9 17,983.2 16,318.4

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the income or loss attributable to the noncontrolling interest holders is reflected in Net income attributable to noncontrolling interest on the Consolidated Statements of Comprehensive Income.

Changes in amounts attributable to noncontrolling interests are reflected in the Consolidated Statements of Changes in Equity.

Changes in amounts attributable to non-redeemable noncontrolling interests are reflected in the Consolidated Statements of Changes in Equity.

Changes in amounts attributable to redeemable noncontrolling interests are presented in the following table.

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Acquisition of redeemable noncontrolling interest (1)

Impact of exchange rate movements

Redeemable noncontrolling interests as of December 31, 2018 —

Acquisition of redeemable noncontrolling interest (1)

Redeemable noncontrolling interests as of December 31, 2018

Business acquisition (2)

Net income 0.2

Redeemable noncontrolling interests as of December 31, 2019 8.6

(1) Reflects our redemption of a portion of the redeemable noncontrolling interest related to our Tenzing AB acquisition and includes $ 2.3 million , and $ 1.1 million representing the difference between the redemption value and the carrying value of the acquired interest in 2018 and 2017, respectively.

Net loss ( 0.3 )

Distribution to redeemable noncontrolling interest ( 0.5 )

Redeemable noncontrolling interests as of December 31, 2020 $ 7.8

(1) Reflects our redemption of a portion of the redeemable noncontrolling interest related to our Tenzing AB acquisition and includes $ 2.3 million, representing the difference between the redemption value and the carrying value of the acquired interest in 2018.

(2) Reflects the ownership interests retained by the seller associated with our 2019 acquisition of Latitude Real Estate Investors.

See Note 4, Business Combinations, Goodwill and Other Intangibles , for additional discussion.

Use of Estimates

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Our performance obligation is to facilitate the execution of capital transactions, and we are generally entitled to the full consideration at the point in time upon which our performance obligation is satisfied, at which time we recognize revenue.

Our mortgage banking and servicing operations - such as activities related to mortgage servicing rights ("MSR" or "MSRs"), loan origination fees and servicing income - are excluded from the scope of ASC Topic 606, Revenue from Contracts with Customers, ("ASC 606").

Such out-of-scope revenue was $ 204.6 million , $ 135.8 million , and $ 126.9 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Our mortgage banking and servicing operations - such as activities related to mortgage servicing rights ("MSR" or "MSRs"), loan origination fees and servicing income - are excluded from the scope of Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers, ("ASC Topic 606").

Such out-of-scope revenue was included entirely within Americas Capital Markets and is presented below.

Year Ended December 31,

(in millions) 2020 2019 2018

Revenue excluded from scope of ASC Topic 606 $ 305.3 204.6 135.8

Property & Facility Management

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However, except for event-driven point-in-time transactions, the majority of services provided within this service line are delivered over time due to the continuous transfer of control to our clients.

LaSalle provides real estate investment management services to clients and earns consideration in the form of advisory fees, transaction fees and incentive fees.

LaSalle provides real estate investment management services to clients and generally earns consideration in the form of advisory fees, transaction fees and incentive fees.

Typically, our performance obligation is to manage clients’ capital for a specified period of time and is delivered as a series of daily performance obligations over time.

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These deferred costs are assessed periodically for impairment.

Contract Assets

Contract Assets and Liabilities

Contract assets include amounts recognized as revenue for which we are not yet entitled to payment for reasons other than the passage of time, but that do not constrain revenue recognition.

As of December 31, 2019 and December 31, 2018 , we had $ 419.3 million and $ 396.2 million of contract assets, respectively, which are included in Short-term contract assets and Other assets on the Consolidated Balance Sheets.

Contract Liabilities

We include Contract assets in our reserving process and assess the risk of loss similar to our methodology for Trade receivables, since Contract assets are reclassified to Trade receivables when we become entitled to payment.

Accordingly, a reserve is applied upon recognition of the contract asset.

Contract liabilities include advance payments we have received which relate to performance obligations we have not yet satisfied.

As of December 31, 2019 and December 31, 2018 , we had $ 87.7 million and $ 98.9 million of contract liabilities, respectively, which are included in Short-term contract liabilities and deferred income on our Consolidated Balance Sheets.

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 Consolidated Balance Sheets.

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

Detail of our contract assets and liabilities is presented below.

(in millions) December 31, 2020 December 31, 2019

Contract assets, gross $ 347.8 419.3

Allowance for contract assets ( 2.1 ) n/a

Contract assets, net $ 345.7 419.3

Contract liabilities $ 111.0 87.7

Deferred Income

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

As of December 31, 2019 , the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue.

As of December 31, 2020, the aggregate amount of transaction price allocated to remaining performance obligations represented approximately 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 property and facility management contracts and LaSalle advisory contracts.

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Pursuant to contractual arrangements, Trade receivables, net of allowances include unbilled amounts of $ 460.1 million and $ 586.6 million as of December 31, 2020 and 2019, respectively.

We estimate the allowance necessary to provide for uncollectible accounts receivable.

The estimate includes specific amounts for which payment has become unlikely.

We also base this estimate on historical experience combined with a review of current developments and client credit quality.

The process by which we calculate the allowance begins with the individual business units where specific accounts for which collectability is uncertain are identified and reserved as part of an overall reserve that is formulaic and driven by the age profile of the receivables and our historical experience.

We then review these allowances on a quarterly basis to ensure they are appropriate.

We estimate an allowance to provide for uncollectible accounts receivable, which is applied upon recognition of the receivable.

We base this estimate on historical experience combined with a review of the receivable aging, current and expected economic conditions, and client credit quality.

Our estimate also includes specifically identified amounts for which payment has become unlikely.

As trade receivables are due within one year, changes to economic conditions are not expected to have a significant impact on our estimate of expected credit losses.

However, we will monitor economic conditions on a quarterly basis to determine if any adjustments are deemed necessary.

After all collection efforts have been exhausted by management, the outstanding balance considered not collectible is written off against the allowance.

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Allowance as of January 1, (1)

$ 71.7 52.0 51.3

Charged to income 24.3 30.8 18.8

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Allowance as of December 31, $ 66.5 68.1 52.0

(1) January 1, 2020 includes $3.6 million adjustment due to adoption of ASC Topic 326.

Refer to the "New Accounting Standards" section below for further detail.

Notes and Other Receivables and Long-Term Receivables

We make ongoing assessments of the collectability of outstanding Notes and other receivables and Long-term receivables, considering both objective and subjective factors such as the age profile of outstanding balances, the contractual terms of repayment, and credit quality.

Aspects of credit quality considered in our assessments of collectability include historical experience, current developments and our broader business relationship with the obligor.

We record an allowance against the outstanding balance when our assessments result in a determination that payment has become unlikely.

After all collection efforts have been exhausted by management, the outstanding uncollectible balance is written off against the reserve.

We make ongoing assessments of the collectability of outstanding Notes and other receivables and Long-term receivables, considering both objective and subjective factors such as the aging profile of outstanding balances, the contractual terms of repayment, and credit quality.

Aspects of credit quality considered in our assessments of collectability include historical experience, current and expected economic conditions, and our broader business relationship with the obligor.

We record an allowance against the outstanding balance when our assessments determine payment has become unlikely.

After all collection efforts have been exhausted by management, the outstanding balance is written off against the reserve.

Historically, credit quality deterioration to the point of impairment or non-performance in our Notes and other receivables and Long-term receivables has been limited and has not had a material impact on the Consolidated Financial Statements.

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These costs include direct reimbursements, primarily payroll and third-party vendor and subcontractor costs.

As our clients are contractually obligated to reimburse us for these costs, we only record an allowance based on specific identification of an uncollectible reimbursable receivable.

We record an allowance based on specific identification of an uncollectible reimbursable receivable, considering current and future economic conditions as well as client credit quality.

Historically, we have not experienced any material collection issues and, as such, have not applied a formulaic reserve to these receivables.

Reimbursable receivables relate to our Reimbursable payables, which are typically satisfied on a pay-when-paid basis.

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We typically retain no exposure for credit losses on loans subsequent to sale, except for loans under Fannie Mae's Delegated Underwriting and Servicing ("DUS") program.

See Note 13, Commitments and Contingencies , for additional information on the risk of loss retained related to DUS program loans.

See the following section, Financial Guarantees, as well as Note 13, Commitments and Contingencies, for additional information on the risk of loss retained related to DUS program loans.

Contractually specified servicing fees related to sold warehouse receivables were $ 80.0 million, $ 63.0 million and $ 49.6 million for the years ended December 31, 2020, 2019, and 2018, respectively, and are included in Revenue on the Consolidated Statements of Comprehensive Income.

Financial Guarantees

Certain loans we originate and sell under the Fannie Mae DUS program retain a percentage of the risk of loss.

This loss-sharing aspect of the program represents an off-balance sheet credit exposure, and we have established a contingent reserve ("loan loss guarantee reserve") for this risk in accordance with ASC Topic 326.

To estimate the reserve, we use a model that analyzes historical losses, current and expected economic conditions, and reasonable and supportable forecasts.

The model also considers specific details of the underlying property used as collateral, such as occupancy and financial performance.

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

As of December 31, 2020, the loan loss guarantee reserve was $ 36.7 million and was included within Other liabilities on the Consolidated Balance Sheets.

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

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 Consolidated Statements of Comprehensive Income.

The loss-sharing guarantee obligation (in accordance with ASC Topic 460, Guarantees ) is separate from the loan loss guarantee reserve discussed above.

As of December 31, 2020 and 2019, loss-sharing guarantee obligations were $ 22.1 million and $ 20.6 million, respectively, and are included in Other liabilities on the Consolidated Balance Sheets.

See Note 13, Commitments and Contingencies, for further information on the DUS program.

Mortgage Servicing Rights

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As of December 31, 2020 and 2019, we had $ 424.3 million and $ 376.4 million, respectively, of MSRs carried at the lower of amortized cost or fair value in Identified intangibles on the Consolidated Balance Sheets.

The increase is primarily attributable to HFF.

We amortize servicing rights over the estimated period net servicing income is projected to be received.

In addition, we evaluate MSR intangible assets for impairment on a quarterly basis, or more frequently if circumstances or events indicate a change in fair value.

Other than write-offs due to prepayments of sold Warehouse receivables for which we retained the servicing rights (generally only during the last six months of loan term given the punitive contractual terms of any earlier prepayment), there have been no instances of impairment during the three-year period ended December 31, 2019 .

Other than write-offs due to prepayments of sold Warehouse receivables for which we retained the servicing rights (generally only during the last six months of loan term given the punitive contractual terms of any earlier prepayment), there have been no significant instances of impairment during the three-year period ended December 31, 2020.

However, an increase in loan prepayment activity or deterioration in the credit quality of borrowers could result in a decrease to our MSR balance.

MSRs do not actively trade in an open market with readily available observable prices;

therefore, if necessary, the fair value of these rights would be determined in part based on certain assumptions and judgments that are unobservable within the fair value hierarchy, including the estimation of the present value of future cash flows to be realized from servicing the underlying mortgages.

therefore, if necessary, the fair value of these rights are determined in part based on certain assumptions and judgments that are unobservable within the fair value hierarchy, including the estimation of the present value of future cash flows to be realized from servicing the underlying mortgages.

T he estimated fair value of MSRs was $ 459.6 million and $ 423.7 million as of December 31, 2020 and 2019, respectively.

See Note 4, Business Combinations, Goodwill and Other Intangibles for additional information on MSRs.

See Note 4, Business Combinations, Goodwill and Other Intangible Assets for additional information on MSRs.

Restricted Cash

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The following table shows the gross value of major asset categories and the standard depreciable lives, as of December 31, 2020, for each of these asset categories.

($ in millions)

Depreciable Life

Furniture, fixtures and equipment

3 to 13 years

Computer equipment and software

2 to 10 years

Leasehold improvements

1 to 10 years

($ in millions) 2020 2019 Depreciable Life

Furniture, fixtures and equipment $ 127.9 115.4 3 to 13 years

Computer equipment and software 829.8 752.9 3 to 10 years

Leasehold improvements 352.4 308.6 1 to 10 years

160.0 185.7 2 to 30 years

Total 1,470.1 1,362.6

Accumulated depreciation 806.2 660.7

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We evaluate goodwill for impairment at least annually.

We define our four reporting units as the three geographic regions of RES:

(i) Americas, (ii) Europe, Middle East and Africa ("EMEA") and (iii) Asia Pacific;

We define our four reporting units as the three geographic regions of RES (i) Americas, (ii) Europe, Middle East and Africa ("EMEA") and (iii) Asia Pacific;

and (iv) LaSalle.

We have considered qualitative and quantitative factors while performing our annual impairment test of goodwill 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.

We have considered qualitative and quantitative factors while performing our annual impairment test of goodwill (as of July 1, 2020) 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.

In performing our assessments of all reporting units, we primarily considered (i) macroeconomic and industry trends, (ii) our overall financial performance, and nature of the key drivers thereof, during the year at both the reporting unit and consolidated reporting levels, (iii) near and longer-term forecasts of operating income and cash flows generated by our reporting units in relation to the carrying values of the net assets of each reporting unit, and (iv) our market capitalization in relation to the aggregate carrying value of our net assets.

With respect to our EMEA reporting unit, we performed step 1 of the goodwill impairment analysis during 2019, which indicated the estimated fair value exceeded the carrying value by over 35%.

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

we also considered the guideline public company method, a market approach.

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.

With respect to our EMEA reporting unit, we performed Step 1 of the goodwill impairment analysis during our 2020 annual impairment test, 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.

In addition to our annual impairment evaluation, we evaluated whether events or circumstances have occurred in the period subsequent to our annual impairment testing and determined it is not more-likely-than-not that the fair value of all our reporting units are less than their respective carrying values.

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We evaluate our Identified intangibles for impairment annually or more frequently if other events or circumstances indicate the carrying value may be impaired.

See Note 4, Business Combinations, Goodwill and Other Intangibles , for additional information on business combinations, goodwill and other intangible assets.

See Note 4, Business Combinations, Goodwill and Other Intangible Assets, for additional information on business combinations, goodwill and other intangible assets.

Investments in Real Estate Ventures

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Accordingly, we account for such investments at fair value or under the equity method.

See "Principles of Consolidation" above for additional discussion of the accounting for our co-investments.

For investments in real estate ventures reported at fair value, we maintain an investment account that is increased or decreased each reporting period by the difference between the fair value of the investment and the carrying value as of the balance sheet date.

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The fair value of these investments as of the balance sheet date is generally determined using NAV per share (or its equivalent), an unobservable input in the fair value hierarchy, provided by the investee.

See "Principles of Consolidation" above for additional discussion of the accounting for our co-investments.

For investments in real estate ventures accounted for under the equity method, we maintain an investment account that is (i) increased by contributions made and by our share of net income earned by the real estate ventures, and (ii) decreased by distributions received and by our share of net losses realized by the real estate ventures.

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Stock-Based Compensation

Stock-based compensation in the form of restricted stock units ("RSUs") and performance stock units ("PSUs") are an important element of our compensation programs.

Stock-based compensation in the form of restricted stock units ("RSUs") and performance stock units ("PSUs") is an important element of our compensation programs.

We determine the fair value of RSUs, subject only to service requirements, based on the closing market price of our common stock on the grant date.

PSUs are subject to service requirements and performance measures.

All PSUs contain two performance conditions consisting of a pre-defined target based on the Company’s cumulative earnings per share and targets for strategic goals.

All PSUs contain one or more performance conditions, such as a pre-defined target based on the Company’s cumulative earnings per share over a multi-year period.

For certain executives there is an additional performance measure, a market condition, based on total shareholder return ("TSR") against a peer group.

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We periodically assess the achievement probability for performance conditions.

Less than 10% of the unvested awards as of December 31, 2019 contained a market condition.

Further, for awards with market conditions, the portion of the award subject to the market condition does not exceed 10%.

As of December 31, 2020, less than 3% of unvested shares were subject to a market condition.

Employees of a specific age, with a sum of age plus years of service with the Company which meets or exceeds 65 , based on the terms of the Jones Lang LaSalle 2019 Stock Award and Incentive Plan ("SAIP"), are eligible to be considered for receipt of retirement benefits upon departure from the Company.

These award provisions require application of certain elements of ASC Topic 718, Compensation - Stock Compensation , whereby the recognition of compensation expense for restricted stock unit awards granted to employees meeting the age plus service criteria is accelerated such that all expense is recognized by the time these employees are considered retirement eligible.

These award provisions require acceleration of compensation expense such that all expense is recognized by the time these employees are considered retirement eligible.

We do not estimate forfeitures;

instead, we recognize forfeitures in Compensation & benefits expense as they occur.

We also have a "noncompensatory" Employee Stock Purchase Plan ("ESPP") for U.S.

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The fair value of options granted under the SAYE plan are determined on the grant date and amortized over the associated vesting period.

See Note 6, Share-Based Compensation , for additional information on our stock-based compensation plans.

See Note 6, Stock-Based Compensation, for additional information on our stock-based compensation plans.

We account for income taxes under the asset and liability method.

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We account for tax assessed by a governmental authority that is based on a revenue or transaction value (i.e., sales, use and value-added taxes) on a net basis, excluded from revenue, and recorded as current liabilities until paid.

Commitments and Contingencies

Other Commitments and Contingencies

We are subject to various claims and contingencies related to disputes, lawsuits and taxes as well as commitments under contractual obligations.

Many of these claims are covered under our current insurance programs, subject to deductibles.

Our current insurance programs include professional, auto and general liability.

For professional indemnity coverage, the level of risk retained by our captive insurance company is limited per claim, inclusive of the deductible.

We contract third-party insurance companies to provide coverage of risk in excess of the policy limits.

We recognize the liability associated with a loss contingency when a loss is probable and estimable.

See Note 13, Commitments and Contingencies , for additional information on commitments and contingencies.

See Note 13, Commitments and Contingencies, for additional information on our captive insurance company as well as our commitments and contingencies.

Earnings Per Share;

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Anti-dilutive shares were de minimus for all periods presented.

See Note 6, Share-Based Compensation , for additional information on our stock-based compensation plans.

See Note 6, Stock-Based Compensation, for additional information on our stock-based compensation plans.

New Accounting Standards

Recently adopted accounting guidance

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2016-02, Leases (Topic 842) , which increases transparency and comparability by requiring the recognition of lease assets and lease liabilities on the balance sheet, as well as requiring the disclosure of key information about leasing arrangements.

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2016-13, Financial Instruments - Credit Losses (ASC Topic 326) , which created a new framework to evaluate financial instruments, such as trade receivables, for expected credit losses.

This new framework replaced the existing incurred loss approach and is expected to result in more timely recognition of credit losses.

On January 1, 2020, we adopted ASU No.

2016-02, Leases (ASC Topic 842) , on a modified retrospective basis under the optional transition method.

Therefore, the application of the provisions of this ASU are effective January 1, 2019, and comparative periods are presented in accordance with Accounting Standards Codification ("ASC") Topic 840.

2016-13 using a modified-retrospective approach, as required by the ASU.

The adoption impacted our methodology of reserving for (i) Trade receivables, (ii) other receivable-related financial assets, specifically contract assets, and (iii) off-balance sheet credit exposures within the scope of this ASU.

Specifically, we evaluated our historical reserve balances for Trade receivables and the related write-off activity and developed a forward-looking process for adoption.

We also evaluated our loss-sharing guarantee obligation for certain mortgage loans we originate, sell and retain the servicing rights.

The following table details the cumulative impact to Retained earnings upon adoption of ASC Topic 326.

Published Adjustment due to Reported Under ASC Topic 326

(in millions) December 31, 2019 adoption of ASC Topic 326 on January 1, 2020

Allowance for trade receivables $ ( 68.1 ) ( 3.6 ) $ ( 71.7 )

Deferred tax assets, net 245.4 5.5 250.9

Allowance for contract assets (1)

— ( 1.7 ) ( 1.7 )

Liabilities and equity

Loan loss guarantee reserve (2)

$ — 15.1 $ 15.1

Retained earnings 3,588.3 ( 14.9 ) 3,573.4

(1) The portion of the allowance for long-term contract assets is included within Other assets on the Consolidated Balance Sheets.

(2) Included within Other liabilities on the Consolidated Balance Sheets

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) , which increased transparency and comparability by requiring the recognition of lease assets and lease liabilities on the balance sheet, as well as requiring the disclosure of key information about leasing arrangements.

On January 1, 2019, we adopted this, on a modified retrospective basis under the optional transition method.

Therefore, the application of the provisions of this ASU are effective January 1, 2019, and any prior periods are presented in accordance with ASC Topic 840.

Additionally, we elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward (i) our historical lease classification and assessments for expired and existing leases, and (ii) our historical accounting for initial direct costs for existing leases.

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Our accounting for finance leases was not materially impacted.

See Note 11, Leases , for additional information on the impact of ASC 842 adoption.

In January 2017, the FASB issued ASU No.

2017-04, Simplifying the Test for Goodwill Impairment , which eliminates Step 2 from the goodwill impairment test.

The annual goodwill impairment test will require companies to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge when the carrying amount exceeds the fair value of the reporting unit.

This ASU is effective for annual and interim goodwill impairment tests beginning after December 15, 2019, with early adoption permitted.

We adopted this guidance effective January 1, 2019, and, as a result, will no longer apply Step 2 when performing the goodwill impairment test.

This guidance had no impact on our financial statements and related disclosures .

Recently issued accounting guidance, not yet adopted

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326), which creates a new framework to evaluate financial instruments, such as trade receivables, for expected credit losses.

This new framework replaces the existing incurred loss approach and is expected to result in more timely recognition of credit losses.

This ASU is effective for annual and interim periods beginning after December 15, 2019 and early adoption is not permitted until years beginning after December 15, 2018.

Adoption using the modified-retrospective approach is required.

In advance of our adoption, we have identified our financial assets and off-balance sheet credit exposures within the scope of this ASU and have substantially completed our analysis.

Although the adoption will not have a material impact on our retained earnings as of January 1, 2020, or our financial statements thereafter, the adoption will impact our methodology of reserving for our Trade receivables and other receivable-related financial assets, including contract assets.

We have evaluated our historical reserve balances and write-off activity and have developed an appropriate forward-looking process for adoption.

The adoption will also impact the loan loss accrual for certain mortgage loans we originate, sell and retain the servicing rights.

In August 2018, the FASB issued ASU No.

2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract , which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 when determining which implementation costs to capitalize as intangible assets.

This ASU is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted.

This guidance will not have a material impact on our financial statements and related disclosures.

BUSINESS SEGMENTS

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(1) Americas,

(2) Europe, Middle East and Africa ("EMEA"), and

(3) Asia Pacific;

(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.

LaSalle provides investment management services on a global basis to institutional investors and high-net-worth individuals.

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, (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 margins and performance.

Refer to Results of Operations, included in Item 7.

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 December 31, 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 Head of Capital Markets

• Global Co-Chief Executive Officers of JLL Technologies

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 ("CODM") of JLL measures and evaluates the segment results based on Segment income for purposes of making decisions about allocating resources and assessing performance.

Our CODM is not provided with total asset information by segment and, accordingly, does not measure performance or allocate resources based on total asset information.

Therefore, we have not disclosed asset information by segment.

As of December 31, 2020, we define the CODM collectively as our Global Executive Board, which comprises the following:

• Chief Executive Officer and President • Chief Executive Officers of each of our four business segments

• Chief Financial Officer • Chief Executive Officer of Corporate Solutions

• 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.

2 unchanged sentences

Americas - Real Estate Services

Leasing $ 1,451.2 1,960.5 1,754.1

Capital Markets 952.0 914.2 500.3

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Advisory, Consulting and Other 390.3 406.7 342.7

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

Revenue $ 10,005.2 10,578.9 9,041.0

Depreciation and amortization $ 151.4 126.5 109.1

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity earnings (losses)

Equity earnings $ 19.0 1.7 0.8

Segment income $ 554.9 613.1 422.7

EMEA - Real Estate Services

Leasing $ 245.6 302.7 333.0

Capital Markets 330.7 411.9 464.1

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Advisory, Consulting and Other 274.3 300.2 295.4

Reimbursements

Revenue before reimbursements

Gross contract costs

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Revenue $ 3,092.8 3,470.7 3,495.0

Depreciation and amortization $ 40.0 43.1 50.8

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity (losses) earnings

Segment income

Summarized financial information by business segment is as follows.

Year Ended December 31,

($ in millions)

Equity losses $ — ( 1.0 ) —

Segment (loss) income $ ( 16.0 ) 46.0 77.0

Asia Pacific - Real Estate Services

Leasing $ 187.4 260.8 285.0

Capital Markets 124.7 216.1 181.0

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Advisory, Consulting and Other 196.4 197.8 177.1

Reimbursements

Revenue before reimbursements

Gross contract costs

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Revenue $ 3,070.1 3,407.5 3,248.5

Depreciation and amortization $ 27.8 26.4 23.2

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity earnings $ 1.4 2.3 2.0

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Incentive fees 41.5 138.4 215.8

Reimbursements

Revenue before reimbursements

Gross contract costs

Operating expenses, excluding reimbursed expenses:

Compensation, operating and administrative expenses

Revenue $ 421.8 526.1 533.9

Depreciation and amortization $ 7.2 6.4 3.0

Segment operating expenses, excluding reimbursed expenses

Gross contract costs

Fee-based segment operating expenses

Segment operating income

Equity earnings

Equity (losses) earnings $ ( 12.4 ) 33.3 30.0

Segment income $ 54.2 147.4 163.7

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(in millions) 2020 2019 2018

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 $ 554.9 613.1 422.7

Segment (loss) income - EMEA ( 16.0 ) 46.0 77.0

Segment income - Asia Pacific 116.4 129.6 115.1

Segment income - LaSalle 54.2 147.4 163.7

Equity earnings ( 8.0 ) ( 36.3 ) ( 32.8 )

Restructuring and acquisition charges ( 142.4 ) ( 184.4 ) ( 38.8 )

Operating income $ 559.1 715.4 706.9

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.

($ in millions)

IDENTIFIABLE ASSETS

INVESTMENTS IN REAL ESTATE VENTURES

IDENTIFIABLE ASSETS

INVESTMENTS IN REAL ESTATE VENTURES

Real Estate Services:

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

Year Ended December 31,

($ in millions)

Real Estate Services:

Total capital expenditures (1)

(1) Included in total capital expenditures for the years ended December 31, 2019 , 2018 and 2017 , were $ 79.2 million , $ 47.1 million , and $ 2.3 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.

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

TOTAL REVENUE

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United States dollar $ 9,457.8 10,054.9 8,523.8

Euro 1,350.6 1,507.7 1,527.1

British pound 1,341.1 1,514.8 1,526.3

Australian dollar 876.1 924.5 916.7

Indian rupee 524.5 651.8 580.4

Hong Kong dollar 512.2 533.8 487.2

Chinese yuan 473.1 505.9 505.5

Canadian dollar 432.6 435.5 390.5

Japanese yen 257.9 349.4 285.2

Singapore dollar 246.6 309.2 458.7

Other currencies 1,117.4 1,195.7 1,117.0

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 5 % and 6 % of our total assets as of December 31, 2019 and 2018 , respectively.

$ 16,589.9 17,983.2 16,318.4

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

During 2019, we completed four new strategic acquisitions, expanding our capabilities and increasing our presence in key regional markets.

These strategic acquisitions are presented below.

Acquired Company

Quarter of Acquisition

Primary Service Line

Latitude Real Estate Investors

United States

Corporate Concierge Services

United States

Property & Facilities Management

United States

Capital Markets

Peloton Commercial Real Estate

United States

2020 Business Combinations Activity

During 2020, we completed no new strategic acquisitions and paid $ 67.7 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2019 Business Combinations Activity

During the year ended December 31, 2019, we completed four new strategic acquisitions, all located in the Americas.

Acquisition of HFF, Inc.

On July 1, 2019, we completed the acquisition of HFF, a public commercial real estate financial intermediary providing real estate and capital markets services.

The acquisition of HFF, regarded as one of the premier capital markets advisors in the industry, greatly enhances our existing capital markets services, significantly expands our client reach and aligns with our strategy to grow the capital markets business line.

The existing HFF operations were predominantly within the U.S.

along with one office in the UK.

The acquisition of HFF, regarded as one of the premier capital markets advisors in the industry, greatly enhanced our existing capital markets services, significantly expanded our client reach and aligned with our strategy to grow the capital markets business line.

The following table details the total consideration transferred.

(in millions)

(in millions) Amount

Cash consideration (1)

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The successor to HFF in the merger acquisition is operating as a wholly-owned subsidiary of JLL and conducts business as JLL.

Our Consolidated Statements of Comprehensive Income for the year ended December 31, 2019 , includes revenue of $ 392.3 million and operating income of $ 86.7 million related to the post-acquisition operations of HFF.

Consistent with our presentation of segment operating income, this operating income figure excludes Restructuring and acquisition charges.

The following table presents the allocation of acquisition consideration to the tangible and intangible assets acquired and liabilities assumed of HFF based on their estimated fair values.

The excess purchase price over the estimated fair value of net assets acquired was recorded to goodwill.

As of December 31, 2020 our analysis to assign fair values to all tangible and intangible assets and liabilities acquired and assumed for the acquisition of HFF was final.

There were no significant adjustments to the purchase price allocation recorded during the year ended December 31, 2020.

The allocation of the purchase consideration resulted in identified intangibles of $ 349.9 million, tangible assets of $ 1,227.8 million and liabilities of $ 1,104.7 million.

The excess purchase price over the estimated fair value of net assets acquired of $ 1,397.7 million has been recorded to goodwill.

The goodwill relating to this acquisition is primarily attributable to assembled workforce and synergies.

We have completed our analysis to assign fair values to all tangible and intangible assets and liabilities acquired and assumed except for tax-related accounts, however, we do not anticipate material changes to the amounts presented below.

We expect to complete the purchase price allocation in advance of, but not later than, one year from the acquisition date.

Description (in millions)

Total acquisition consideration

Cash and cash equivalents

Trade receivables, net

Warehouse receivables (face amount of $766.0)

Prepaid & other current assets

Property and equipment

Operating lease right-of-use assets

Identified intangibles

Accounts payable and accrued liabilities

Accrued compensation & benefits

Warehouse facilities

Other current liabilities (includes short-term operating lease liabilities)

Deferred tax liabilities, net

Long-term operating lease liabilities

Other liabilities

Total liabilities

The following table provides unaudited pro forma results of operations assuming the acquisition of HFF occurred as of January 1, 2018.

Year ended December 31,

(in millions)

Net income attributable to common shareholders

These unaudited pro forma results of operations include adjustments for intangible amortization based on our current estimate of the fair value of identifiable intangibles acquired and their associated useful lives as well an adjustment to interest expense based on our estimate of interest that would have been incurred on the additional credit facility draw had these acquisitions occurred on January 1, 2018.

A blended federal and state statutory tax rate of 27% has been assumed for the pro forma adjustments.

These estimated adjustments, net of tax, were $ 39.6 million and $ 86.0 million , respectively, for the years ended December 31, 2019 and 2018.

The unaudited pro forma adjustments are subject to change within the measurement period because of the fair value assessments these adjustments are based on are not finalized.

In addition, these unaudited pro forma results do not reflect the cost of integration activities or benefits that may result from potential synergies derived from the acquisition.

Accordingly, these unaudited pro forma results of operations are not necessarily indicative of what results would have been had we acquired HFF on January 1, 2018, nor indicative of our future operating results.

The following is a summary of the preliminary estimate of the finite-lived intangible assets acquired in connection with the HFF acquisition.

Intangible Asset Class ($ in millions)

Weighted Average Useful Life

Fair Value at Acquisition Date

Mortgage servicing rights (MSRs)

Other identified intangibles 1

Total finite-lived intangibles acquired

1 Predominantly relates to customer relationships.

Other 2019 Business Combinations Activity

Aggregate terms of our acquisitions, other than HFF, included:

(i) cash paid at closing of $ 40.4 million (net of $ 3.8 million in cash acquired), (ii) guaranteed deferred consideration of $ 17.0 million and (iii) contingent earn-out consideration of $ 5.0 million , payable upon satisfaction of certain performance conditions and which we have initially recorded at their respective acquisition date fair value.

A preliminary allocation of this purchase consideration for these other acquisitions resulted in goodwill of $ 62.8 million , identifiable intangibles of $ 12.7 million , other net liabilities (assumed liabilities less acquired assets) of $ 4.7 million , and redeemable noncontrolling interest of $ 8.4 million .

As of December 31, 2019 , we have not completed our analysis to assign fair values to all of the identifiable intangible and tangible assets acquired and, therefore, we may further refine the purchase price allocations for our other 2019 acquisitions during respective open measurement periods.

During the year ended December 31, 2019 , we also paid $ 104.7 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

Of the $ 1,460.5 million of total additions to goodwill in 2019, we expected to amortize and deduct $ 25.4 million for tax purposes as of December 31, 2019, subject to statutory amortization periods.

2018 Business Combinations Activity

During the year ended December 31, 2018 , we completed six new strategic acquisitions:

four located in the Americas, one located in EMEA and one located in APAC.

Aggregate terms of these acquisitions included:

(i) cash paid at closing of $ 101.3 million , (ii) guaranteed deferred consideration of $ 3.9 million and (iii) contingent earn-out consideration of $ 11.6 million recorded at their respective acquisition date fair value, which we will pay upon satisfaction of certain performance conditions.

As of December 31, 2018 , a preliminary allocation of this purchase consideration resulted in goodwill of $ 60.8 million , identifiable intangibles of $ 57.1 million , and other net liabilities (assumed liabilities less acquired assets) of $ 1.1 million .

Aggregate terms of these acquisitions, other than HFF, included (i) cash paid at closing of $ 40.4 million (net of $ 3.8 million in cash acquired), (ii) guaranteed deferred consideration of $ 17.0 million and (iii) contingent earn-out consideration of $ 5.0 million recorded at their respective acquisition date fair value, which we will pay upon satisfaction of certain performance conditions.

As of December 31, 2019, a preliminary allocation of this purchase consideration for these other acquisitions resulted in goodwill of $ 62.8 million, identifiable intangibles of $ 12.7 million, and other net liabilities (assumed liabilities less acquired assets) of $ 4.7 million, and redeemable noncontrolling interest of $ 8.4 million.

As of December 31, 2020, the purchase price allocations for our 2019 acquisitions was final.

During the year ended December 31, 2019 , we made adjustments to the preliminary allocation of the purchase consideration for certain acquisitions completed in 2018 during their respective open measurement periods.

These adjustments resulted in a $ 1.0 million increase to goodwill, a $ 0.5 million increase to intangibles and a $ 1.5 million adjustment to other net liabilities.

There were no significant adjustments to the purchase price allocation recorded during the year ended December 31, 2020.

During the year ended December 31, 2019, we also paid $ 104.7 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

In addition, we paid $ 1.5 million to acquire the final portion of the redeemable noncontrolling interest related to our 2014 acquisition of Tenzing AB, a Swedish real estate services provider.

Of the $ 1,460.5 million of total additions to goodwill in 2019, we expected to amortize and deduct $ 25.4 million for tax purposes as of December 31, 2019, subject to statutory amortization periods.

Earn-Out Payments

($ in millions)

December 31, 2019

December 31, 2018

($ in millions) December 31, 2020 December 31, 2019

Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria 35 44

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(1) Included in Short-term and Long-term acquisition obligations on the Consolidated Balance Sheets

Assuming the achievement of the applicable performance criteria, we anticipate making these earn-out payments over the next six years.

Assuming the achievement of the applicable performance criteria, we anticipate making these earn-out payments over the next five years.

Refer to Note 9, Fair Value Measurements, and Note 14, Restructuring and Acquisition Charges, for additional discussion of our earn-out liabilities.

Goodwill and Other Intangible Assets

Goodwill and unamortized intangibles as of December 31, 2019 consisted of:

(i) goodwill of $ 4,168.2 million , (ii) identifiable intangibles of $ 632.6 million amortized over their remaining finite useful lives and (iii) $ 50.0 million of identifiable intangibles with indefinite useful lives that are not amortized.

Goodwill and unamortized intangibles as of December 31, 2020 consisted of (i) goodwill of $ 4,224.7 million, (ii) identifiable intangibles of $ 625.8 million amortized over their remaining finite useful lives and (iii) $ 54.0 million of identifiable intangibles with indefinite useful lives that are not amortized.

Significant portions of our goodwill and unamortized intangibles are denominated in currencies other than the U.S.

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The following table details, by reporting segment, the annual movements in goodwill.

($ in millions)

(in millions) Americas EMEA Asia

Pacific LaSalle Consolidated

Balance as of December 31, 2018 $ 1,452.0 906.8 316.8 22.2 $ 2,697.8

Additions, net of adjustments 1,424.4 1.6 — 35.5 1,461.5

Dispositions — ( 4.4 ) — — ( 4.4 )

Impact of exchange rate movements 1.2 11.9 0.8 ( 0.6 ) 13.3

Balance as of December 31, 2019 2,877.6 915.9 317.6 57.1 4,168.2

Additions, net of adjustments

Dispositions — ( 0.7 ) — — ( 0.7 )

Impact of exchange rate movements 0.4 44.5 11.6 0.7 57.2

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

Other Intangibles

($ in millions)

MSR Other Intangibles

(in millions) Americas Americas EMEA Asia Pacific LaSalle Consolidated

Gross Carrying Amount

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Additions, net of adjustments (1)

247.6 196.7 0.1 — 9.6 454.0

Adjustment for fully amortized intangibles ( 33.4 ) ( 0.6 ) ( 28.1 ) ( 2.0 ) — ( 64.1 )

Impairments — ( 0.5 ) — — — ( 0.5 )

Impact of exchange rate movements — 0.1 0.8 ( 0.1 ) 0.5 1.3

1 unchanged sentence

Additions, net of adjustments (1)

139.0 — — 0.5 — 139.5

Adjustment for fully amortized intangibles ( 47.3 ) ( 19.9 ) ( 1.9 ) ( 0.1 ) — ( 69.2 )

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Amortization expense, net (2)

( 65.0 ) ( 30.7 ) ( 9.5 ) ( 1.9 ) ( 2.7 ) ( 109.8 )

Adjustment for fully amortized intangibles 33.4 0.6 28.1 2.0 — 64.1

Impairments — 0.5 — — — 0.5

Impact of exchange rate movements — 0.1 0.1 — — 0.2

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Amortization expense, net (2)

( 91.1 ) ( 46.0 ) ( 7.1 ) ( 1.4 ) ( 2.6 ) ( 148.2 )

Adjustment for fully amortized intangibles 47.3 19.9 1.9 0.1 — 69.2

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Net book value as of December 31, 2020 $ 424.3 171.7 16.2 15.0 52.6 $ 679.8

(1) Included in this amount for MSRs was $ 16.6 million and $ 11.4 million for 2019 and 2018, respectively, relating to write-offs due to prepayments of sold warehouse receivables for which we retained the servicing rights.

(1) Included in this amount for MSRs was (i) $ 23.7 million and $ 16.6 million for 2020 and 2019, respectively, relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired, or retained the servicing rights and (ii) $ 0.1 million relating to a net impairment valuation allowance.

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

The remaining weighted average amortization period of MSRs and other finite-lived identifiable intangible assets is 4.4 years and 3.2 years, respectively, and the remaining estimated future amortization expense by year, as of December 31, 2020, is presented in the following table.

($ in millions)

Other Intangibles

(in millions) MSRs Other Intangibles Total

2021 $ 71.7 48.9 $ 120.6

2022 65.6 43.1 108.7

2023 59.8 40.6 100.4

2024 52.1 36.3 88.4

2025 44.1 19.1 63.2

Thereafter 131.0 13.5 144.5

Total $ 424.3 201.5 $ 625.8

INVESTMENTS IN REAL ESTATE VENTURES

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

The remaining 10% of our Investments in real estate ventures, as of December 31, 2019 , were attributable to investment vehicles that use our capital and outside capital generally provided by institutional investors to invest, primarily, in certain real estate ventures that own and operate real estate.

The remaining 10% o f our Investments in real estate ventures, as of December 31, 2020, were attributable to investment vehicles that use our capital and outside capital generally 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 $ 314.7 million as of December 31, 2019 , of which $ 60.4 million relates to our commitment to LIC II.

We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 320.7 million as of December 31, 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.

Our investments in real estate ventures include investments in entities classified as VIEs, which we analyze for potential consolidation.

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Investments in real estate ventures 9.0 13.2

Other assets 21.0 14.3

Total assets $ 147.4 153.8

Other current liabilities $ 1.9 3.2

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(in millions) 2020 2019 2018

Revenue $ 13.9 7.6 5.8

Operating and other expenses ( 15.6 ) ( 8.6 ) ( 5.1 )

Gain on sale of investment

Net (loss) income

Net gains on sale of investments (1)

Net income (loss) $ 20.4 ( 1.0 ) 2.7

(1) $12.3 million of the 2020 year-to-date gain is included in Equity earnings;

the remaining $9.8 million is included in Other income.

The 2018 year-to-date gain 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 the Consolidated Balance Sheets and as Net income attributable to noncontrolling interest in the Consolidated Statements of Comprehensive Income, respectively.

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Investments in real estate, net of depreciation $ 24,320.4 22,006.6

Total assets 28,129.3 24,784.8

Mortgage indebtedness 7,980.2 7,345.1

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Total liabilities 10,720.5 9,853.9

Total equity 17,408.8 14,930.9

Year Ended December 31,

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Statements of Operations:

There were no significant impairment charges on properties held by our investments which were other-than-temporarily impaired during the each of the years in the three-year period ended December 31, 2019 .

Based upon elections made at the date of investment, we report a majority of our investments in real estate ventures at fair value.

For such investments, we increase or decrease our investment each reporting period by the change in the fair value and we report these fair value adjustments in the Consolidated Statements of Comprehensive Income within Equity earnings.

Revenue $ 1,702.3 1,247.6 1,199.5

Net income 241.5 831.2 1,046.3

There were no significant other-than-temporary impairment charges on Investments in real estate ventures for each of the years in the three-year period ended December 31, 2020.

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

For such investments, we increase or decrease our investment each reporting period by the change in the fair value and we report these fair value adjustments in our Consolidated Statements of Comprehensive Income within Equity earnings.

The table below shows the movement in our investments in real estate ventures reported at fair value.

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Fair value investments as of January 1, $ 328.6 247.3 242.3

Investments 51.7 144.9 55.2

Distributions ( 46.8 ) ( 101.7 ) ( 63.8 )

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Fair value investments as of December 31, $ 340.3 328.6 247.3

See Note 9, Fair Value Measurements , for additional discussion of our investments in real estate ventures reported at fair value.

See Note 9, Fair Value Measurements, for further discussion of our investments in real estate ventures reported at fair value.

STOCK-BASED COMPENSATION

The SAIP provides for the granting of various stock awards to eligible employees of JLL.

Such awards have historically been solely RSUs and generally have vested in three years.

Such awards have historically been RSUs and generally vested in three years.

In 2018, we issued PSUs for the first time to certain employees, including our GEB members, under the SAIP.

PSU awards generally vest in three years, subject to performance and, for certain awards, market conditions.

The increase in stock-based compensation awards, specifically PSUs, reflects an enhanced focus towards increasing long-term compensation as a proportion of overall compensation for our senior leaders.

There were approximately 1.0 million shares available for grant under the SAIP as of December 31, 2020.

We also have a stock-based compensation plan for our UK-based employees, the SAYE plan, that allows for the purchase of stock at a 15 % discount from the market price at the beginning of the plan's vesting periods.

While there have been no options granted under the SAYE plan since 2017, approximately 281 thousand shares remain available for grant as of December 31, 2020.

Stock-based compensation expense, excluding expense related to HFF retention awards issued in conjunction with the HFF acquisition, is included within Compensation and benefits expense on the Consolidated Statements of Comprehensive Income.

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Performance stock unit awards 5.5 13.6 3.2

The increase in restricted stock unit award expense in 2019 was due to expense from the awards issued to HFF employees in conjunction with the HFF acquisition, primarily related to retention awards.

SAYE 0.2 1.2 1.3

Total $ 47.5 76.4 26.9

Restricted Stock Units and Performance Stock Units

Weighted Average

(in 000's) PSU Shares

(in 000's) Total Shares

(in 000's) Weighted Average

Fair Value Weighted Average

Contractual Life (in years)

Unvested as of December 31, 2017 727.7 — 727.7 $ 118.96 1.24

Granted 176.6 100.6 277.2 156.13

Vested ( 292.5 ) — ( 292.5 ) 125.01

Forfeited ( 52.2 ) ( 7.5 ) ( 59.7 ) 131.84

Unvested as of December 31, 2018 559.6 93.1 652.7 131.32 2.02

Granted 1,298.0 196.5 1,494.5 141.06

Vested ( 287.7 ) — ( 287.7 ) 116.32

Forfeited ( 37.6 ) ( 2.8 ) ( 40.4 ) 137.49

Unvested as of December 31, 2019 1,532.3 286.8 1,819.1 141.51 2.39

Granted 173.1 276.4 449.5 124.98

Vested ( 571.1 ) — ( 571.1 ) 137.99

Forfeited ( 38.1 ) ( 31.7 ) ( 69.8 ) 136.00

Unvested as of December 31, 2020 1,096.2 531.5 1,627.7 $ 137.42 1.69

During the year ended December 31, 2019 , we granted 1,111.3 thousand shares of RSU awards to HFF employees in conjunction with the HFF acquisition.

Of this total, 474.3 thousand shares represented grants to replace existing unvested HFF RSUs as of the acquisition date, while 637.0 thousand represented awards granted for retention of HFF employees.

As of December 31, 2020, we had $ 66.4 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate to be recognized over varying periods into 2023;

2 unchanged sentences

Shares granted during the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $ 56.2 million, $ 210.8 million and $ 36.5 million, respectively.

Other Stock-Based Compensation Programs

As previously discussed, we also maintain the SAYE plan for our UK-based employees.

There were approximately 271 thousand shares available for grant under the SAYE plan as of December 31, 2019 .

Options activity under the SAYE plan is presented in the following table.

Year Ended December 31,

(options in thousands)

Options granted

Exercise price - options granted

Options exercised

Weighted average exercise price

The fair values of options granted under the SAYE plan are amortized over their respective vesting periods.

There were approximately 69 thousand , 97 thousand , and 133 thousand options outstanding under the SAYE plan as of December 31, 2019 , 2018 and 2017 , respectively.

During the year ended December 31, 2019, we granted 1,111.3 thousand shares of RSU awards to HFF employees in conjunction with the HFF acquisition.

RETIREMENT PLANS

2 unchanged sentences

We make employer contributions under this qualified profit sharing plan that are reflected in Compensation and benefits in the accompanying Consolidated Statements of Comprehensive Income.

Based on the impact from the COVID-19 pandemic, the employer contributions were suspended between May and December of 2020.

The related trust assets of this plan are managed by trustees and are excluded from the accompanying Consolidated Financial Statements.

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(in millions) 2020 2019 2018

Current $ 16.4 38.2 39.8

Noncurrent — 0.7 35.7

Deferred 3.8 ( 12.9 ) ( 20.1 )

$ 20.2 26.0 55.4

State and Local:

Current $ 12.5 15.1 12.5

Noncurrent — — 7.5

Deferred 0.2 ( 7.0 ) ( 5.0 )

$ 12.7 8.1 15.0

International:

Our income taxes between 2017 and 2019 were impacted by tax legislation enacted in the United States in December 2017, commonly known as the Tax Cuts and Jobs Act ("the Act"), and by interpretive regulatory guidance issued through December 2019.

Current $ 103.7 156.9 145.3

Deferred ( 29.7 ) ( 31.3 ) ( 1.4 )

$ 74.0 125.6 143.9

Total $ 106.9 159.7 214.3

Our income taxes in 2018 and 2019 were impacted by tax legislation enacted in the United States in December 2017, commonly known as the Tax Cuts and Jobs Act ("the Act"), and by interpretive regulatory guidance afterward.

The Act brought significant changes to the U.S.

corporate income tax system, including (i) a federal corporate rate reduction from 35 % to 21 % ;

(ii) transition of U.S.

corporate income tax system, including a transition of U.S.

international taxation from a worldwide tax system to a modified territorial tax system, including a "transition tax" payable over an eight year period for those foreign earnings not previously taxed in the U.S.

(iii) limitations on the deductibility of interest expense and executive compensation;

(iv) creation of a new minimum tax otherwise known as the Base Erosion Anti-Abuse Tax;

and (v) a requirement that Global Intangible Low-Taxed Income earned by foreign subsidiaries be included in U.S.

taxable income.

In the fourth quarter of 2017, we recorded $ 125.9 million for the provisional expense.

This reflected our estimation of the transition tax based upon the statute and its legislative history, together with an estimation of the deferred income tax consequences of the change in the U.S.

federal income tax rate.

In 2018, the U.S.

Internal Revenue Service ("IRS") and the U.S.

Treasury Department issued notices, proposed regulations and finalized regulations which provided interpretive guidance to taxpayers on the Act.

Most significantly to our position, proposed regulations issued in November 2018 provided guidance on the application of the foreign tax credit to the transition tax.

tax purposes, our foreign subsidiaries have a November 30 fiscal year end.

Under the proposed regulations, the foreign tax credit limitation computation for those subsidiaries was less favorable than we originally concluded.

The additional $ 47.0 million expense recorded in the fourth quarter of 2018 reflected (i) the additional transition tax made clear by the proposed regulations on foreign tax credits issued in November 2018 and (ii) an adjustment to the deferred tax consequences based upon the filing of our 2017 U.S.

income tax return in October 2018.

In 2019, the IRS and the U.S.

Treasury Department issued further proposed and final regulations interpreting various provisions of the Act, specifically the transition tax and the foreign tax credits creditable against it.

In addition, some U.S.

states issued guidance on the application of the provisions of the Act to their state income tax codes.

Accordingly, we recorded $ 4.3 million of adjustments to lower our existing provisions in the fourth quarter of 2019.

In 2018, we recorded $ 47.0 million of additional expense due to regulatory interpretation of the Act and for an adjustment to the deferred tax consequences of the enactment.

In 2019, we recorded $ 4.3 million of adjustments to lower our prior provision, due to further regulatory interpretation and state income tax interpretation of the Act.

With respect to the Base Erosion Anti-Abuse Tax and Global Intangible Low-Taxed Income Tax, we treat any associated income tax as a period cost such that we will record an expense provision for any year we are subject to the taxes.

Accordingly, we have included provisions in 2019 and 2018 tax expense to reflect the estimated impact of these taxes.

In 2019 and 2018 , our current tax expense increased by $ 0.3 million and $ 22.2 million , respectively, and our deferred tax expense reduced by a corresponding amount, due to the generation of net operating loss carryovers.

In 2017 , our current tax expense was decreased by $ 3.0 million due to the utilization of net operating loss carryovers.

Accordingly, the estimated impact of these taxes was included in our Provision for income taxes in 2020, 2019 and 2018.

In 2020, 2019, and 2018 our current tax expense increased by $ 2.9 million, $ 0.3 million and $ 22.2 million, respectively, and our deferred tax expense reduced by a corresponding amount, due to the generation of net operating loss carryovers.

Income tax expense differed from the amounts computed by applying the U.S.

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Valuation allowances 4.3 0.8 7.2 1.0 12.4 1.8

Transition tax and deferred tax due to U.S.

Transition tax and deferred tax due to the Act — — ( 4.3 ) ( 0.6 ) 47.0 6.7

Other, net ( 5.4 ) ( 1.0 ) ( 5.1 ) ( 0.7 ) 13.7 1.9

Total $ 106.9 20.2 % $ 159.7 22.9 % $ 214.3 30.4 %

With respect to international earnings taxed at varying rates, we have operations which constitute a taxable income presence in 92 countries or other taxable jurisdictions outside of the U.S.

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to be a very low tax rate jurisdiction.

With respect to very low tax rate jurisdictions in which we operate, income from Hong Kong ( 16.5 % ), Singapore ( 17 % ), the United Kingdom ( 19 % ) and Saudi Arabia ( 20 % ) represent the most significant components of the international earnings line item in our effective tax rate reconciliation.

In the aggregate, these very low rate jurisdictions contributed substantially all of the difference between the actual income tax provision for international earnings and the equivalent provision at the U.S.

With respect to very low tax rate jurisdictions in which we operate, income from Hong Kong ( 16.5 %), Singapore ( 17 %), the United Kingdom ( 19 %) and Saudi Arabia ( 20 %) represent the most significant components of the international earnings line item in the effective tax rate reconciliation above.

In the aggregate, these very low rate jurisdictions were the primary driver of the difference between the actual income tax provision for international earnings and the equivalent provision at the U.S.

federal and state statutory rate in 2020.

2 unchanged sentences

(in millions) 2020 2019 2018

Domestic $ 165.2 145.9 101.3

International 364.4 551.7 604.7

Total $ 529.6 697.6 706.0

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below.

6 unchanged sentences

Pension liabilities 25.0 20.3

Other 13.1 15.6

Deferred tax assets 584.8 492.4

6 unchanged sentences

Investment in real estate ventures 14.1 3.9

Other 1.1 9.5

Deferred tax liabilities $ 336.9 282.6

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As of December 31, 2020, we had an available U.S.

federal net operating loss carryover of $ 49.8 million from an acquired company, for which we have established a full valuation allowance due to significant statutory limitations on its usage, and which will begin to expire in 2020.

federal net operating loss carryover of $ 4.1 million from an acquired company, for which we have established a full valuation allowance due to significant statutory limitations on its usage, and which began to expire in 2020.

state net operating loss carryovers with a tax effect of $ 17.1 million, which expire at various dates through 2040, and international net operating loss carryovers of $ 750.5 million, which generally do not have expiration dates.

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As of December 31, 2020, our net current receivable for income tax was $ 20.6 million, consisting of a current receivable of $ 221.5 million and current payable of $ 200.9 million, and our net noncurrent liability was $ 163.6 million, entirely a noncurrent payable.

As of December 31, 2018 , our net current payable for income tax was $ 59.1 million , consisting of a current receivable of $ 156.2 million and a current payable of $ 215.3 million , and our net noncurrent liability was $ 171.2 million , entirely a noncurrent payable.

As of December 31, 2019, our net current receivable for income tax was $ 4.4 million, consisting of a current receivable of $ 235.3 million and a current payable of $ 230.9 million, and our net noncurrent liability was $ 152.2 million, entirely a noncurrent payable.

We file income tax returns in the U.S.

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Generally, the Company's open tax years include those from 2016 to the present, although reviews of taxing authorities for more recent years have been completed or are in process in a number of jurisdictions.

As of December 31, 2019 , we were under examination in Hungary, Saudi Arabia, Spain, Australia, China, India, Indonesia, the Philippines and Thailand;

in the U.S., we were under examination in the states of Massachusetts and New York.

As of December 31, 2020, we were under examination in Germany, Nigeria, Turkey, China, India, Indonesia, Malaysia, the Philippines and Thailand;

in the U.S., we were under examination in the states of Colorado, Massachusetts and Minnesota, and in New York City.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is presented in the following table.

2 unchanged sentences

Additions based on tax positions related to the current year 2.8 1.4

Increase related to tax positions of prior years

(Decrease) increase related to tax positions of prior years ( 5.0 ) 24.3

Settlements with taxing authorities ( 0.7 ) ( 10.2 )

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We recognize interest accrued and penalties, if any, related to income taxes as a component of income tax expense.

During the years ended December 31, 2019 , 2018 , and 2017 we recognized $ 0.1 million , $ 1.6 million , and $ 1.1 million respectively, in interest expense and no penalties.

We had approximately $ 1.8 million , $ 4.4 million and $ 2.8 million of accrued interest related to income taxes as of December 31, 2019 , 2018 , and 2017 respectively.

During the year ended December 31, 2020, we recognized no interest expense or penalties and during the years 2019 and 2018, we recognized $ 0.1 million and $ 1.6 million, respectively, in interest expense and no penalties.

We had approximately $ 0.6 million and $ 1.8 million of accrued interest related to income taxes as of December 31, 2020 and 2019, respectively.

FAIR VALUE MEASUREMENTS

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

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

For the majority of our investments reported at fair value, we estimate the fair value using the NAV per share (or its equivalent) our investees provide.

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.

We did not consider adjustments to NAV estimates provided by investees, including adjustments for any restrictions to the transferability of ownership interests embedded within investment agreements to which we are a party, to be necessary based upon (i) our understanding of the methodology utilized and inputs incorporated to estimate NAV at the investee level, (ii) consideration of market demand for the specific types of real estate assets held by each venture and (iii) contemplation of real estate and capital markets conditions in the localities in which these ventures operate.

In instances where the reported NAV per share did not fully incorporate the COVID-19 pandemic’s impact on the fair value of underlying investments, we recognized an adjustment to decrease the reported NAV.

As of December 31, 2020, such adjustments totaled $22.8 million.

We did not consider any other adjustments to NAV estimates provided by investees, including adjustments for any restrictions to the transferability of ownership interests embedded within investment agreements to which we are a party, to be necessary based upon (i) our understanding of the methodology utilized and inputs incorporated to estimate NAV at the investee level, (ii) consideration of market demand for the specific types of real estate assets held by each venture and (iii) contemplation of real estate and capital markets conditions in the localities in which these ventures operate.

As of December 31, 2020 and 2019, investments in real estate ventures at fair value using NAV were $ 203.8 million and $ 224.8 million, respectively.

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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.

($ in millions)

(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Investments in real estate ventures - fair value $ 77.2 — 59.3 69.4 — 34.4

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Investments classified as Level 3 in the fair value hierarchy represent investments in early-stage non-public entities where we elected the fair value option.

The carrying value is deemed to approximate the fair value of these investments due to the proximity of the investment date to the balance sheet date as well as investee-level performance updates.

The carrying value is generally deemed to approximate the fair value of these investments due to the proximity of the investment date to the balance sheet date as well as investee-level performance updates.

To the extent there are changes in fair value, a result of pricing in subsequent funding rounds or changes in business strategy, for example, we recognize such changes through Equity earnings.

Foreign Currency Forward Contracts

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An increase to a probability of achievement would result in a higher fair value measurement.

See Note 4, Business Combinations, Goodwill and Other Intangibles , for additional discussion of our Earn-out liabilities.

See Note 4, Business Combinations, Goodwill and Other Intangible Assets, for additional discussion of our Earn-out liabilities.

Mortgage Banking Derivatives

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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).

($ in millions)

Balance as of December 31, 2018

Net change in fair value

Foreign CTA 1

Purchases / Additions

Balance as of December 31, 2019

(in millions) Balance as of December 31, 2019 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Balance as of December 31, 2020

Investments in real estate ventures $ 34.4 6.8 — 18.1 — $ 59.3

1 unchanged sentence

Earn-out liabilities 148.5 ( 14.8 ) 1.1 — ( 49.1 ) 85.7

($ in millions)

Balance as of December 31, 2017

Net change in fair value

Foreign CTA 1

Purchases / Additions

Settlements 2

Balance as of December 31, 2018

(in millions) Balance as of December 31, 2018 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Balance as of December 31, 2019

Investments in real estate ventures $ 11.5 0.8 — 22.9 ( 0.8 ) $ 34.4

2 unchanged sentences

Currency translation adjustments

2 In 2018, earn-out liabilities of $9.1 million were reclassified to guaranteed deferred acquisition obligations.

Net change in fair value, included in the tables above, is reported in Net income as follows.

Category of Assets/Liabilities using Unobservable Inputs

Consolidated Statements

Category of Assets/Liabilities using Unobservable Inputs Consolidated Statements

of Comprehensive Income Account Caption

Earn-out liabilities (Short-term and Long-term)

Restructuring and acquisition charges

Investments in real estate ventures

Equity earnings

Other current assets - Mortgage banking derivative assets

Revenue before reimbursements

Other current liabilities - Mortgage banking derivative liabilities

Revenue before reimbursements

Earn-out liabilities (short-term and long-term) Restructuring and acquisition charges

Investments in real estate ventures Equity earnings

Other current assets - Mortgage banking derivative assets Revenue before reimbursements

Other current liabilities - Mortgage banking derivative liabilities Revenue before reimbursements

Non-Recurring Fair Value Measurements

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Long-term senior notes, 2.21%, face amount of €175.0, due June 2029, net of debt issuance costs of $0.9 and $1.0 213.9 195.4

Total debt $ 755.3 1,297.4

Credit Facility

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The following table provides additional information on our Facility.

Twelve months ended December 31,

Year Ended December 31,

($ in millions) 2020 2019

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Effective interest rate on the Facility 1.6 % 3.0 %

We will continue to use the Facility for, but not limited to, business acquisitions, working capital needs (including payment of accrued incentive compensation), co-investment activities, dividend payments, share repurchases and capital expenditures.

Short-Term Borrowings and Long-Term Debt

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Warehouse Facilities

December 31, 2019

December 31, 2018

($ in millions)

Outstanding Balance

Maximum Capacity

Outstanding Balance

Maximum Capacity

December 31, 2020 December 31, 2019

($ in millions) Outstanding Balance Maximum Capacity Outstanding Balance Maximum Capacity

Warehouse facilities:

LIBOR plus 1.15%, expires September 21, 2020 (1)

LIBOR plus 1.40%, September 20, 2021 (1)

$ 144.4 400.0 104.4 375.0

LIBOR plus 1.40%, expires September 18, 2021 (2)

768.9 1,600.0 184.8 775.0

LIBOR plus 1.40%, expires August 27, 2021 (3)

195.9 900.0 11.4 100.0

Fannie Mae ASAP (4) program, LIBOR plus 1.15%

128.8 n/a 53.6 n/a

LIBOR plus 1.50% 261.6 300.0 151.6 1,000.0

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Gross warehouse facilities 1,499.6 3,200.0 516.8 2,425.0

Debt issuance costs

Debt issuance costs ( 1.2 ) n/a ( 0.9 ) n/a

Total warehouse facilities $ 1,498.4 3,200.0 515.9 2,425.0

(1) In 2019, JLL extended the Warehouse facility and negotiated a decrease to the interest rate;

previously, the facility had a maturity date of September 23, 2019 and an interest rate of LIBOR plus 1.3%.

(2) In 2019, JLL extended the Warehouse facility and negotiated a decrease to the interest rate;

previously, the facility had a maturity date of September 20, 2019 and an interest rate of LIBOR plus 1.25%.

(3) In 2019, JLL extended the Warehouse facility and negotiated a decrease to the interest rate;

previously, the facility had a maturity date of August 31, 2019 and an interest rate of LIBOR plus 1.3%.

(4) In 2019, JLL negotiated a decrease to the interest rate;

previously, the facility had an interest rate of LIBOR plus 1.30% to 1.45%.

(1) In 2020, JLL extended the Warehouse facility with an increase to the interest rate and maximum capacity;

previously, the facility had a maturity date of September 21, 2020, a maximum capacity of $375.0 million and an interest rate of LIBOR plus 1.15%.

(2) In 2020, JLL extended the Warehouse facility with an increase to the interest rate and maximum capacity;

previously, the facility had a maturity date of September 19, 2020,a maximum capacity of $775.0 million and an interest rate of LIBOR plus 1.15%.

(3) In 2020, JLL extended the Warehouse facility with an increase to the interest rate and maximum capacity;

previously, the facility had a maturity date of August 31, 2020, a maximum capacity of $100.0 million and an interest rate of LIBOR plus 1.15%.

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

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

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The difference between the price paid upon the original sale to Fannie Mae and the ultimate sale reflects borrowing costs.

For the year ended December 31, 2019 , operating lease expense was $ 170.5 million ;

variable and short-term lease expense was $ 33.3 million .

In addition, $ 310.7 million of Operating lease right-of-use assets were obtained in exchange for lease obligations during the year ended December 31, 2019 .

For the years ended December 31, 2020 and 2019, operating lease expense was $ 187.3 million and $ 170.5 million, respectively, and variable and short-term lease expense was $ 36.0 million and $ 33.3 million, respectively.

In addition, $ 94.3 million and $ 310.7 million of Operating lease right-of-use assets were obtained in exchange for lease obligations during the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, our total commitments related to finance leases was $ 13.7 million.

Leases in which we sublet also do not represent a significant portion of our leasing activity.

Minimum future lease payments due in each of the next five years and thereafter, as of December 31, 2019 , in accordance with ASC Topic 842, are presented in the table below.

Minimum future lease payments due in each of the next five years and thereafter, as of December 31, 2020, are presented in the table below.

(in millions)

Thereafter 293.7

Total future minimum lease payments $ 963.0

Less imputed interest 113.4

Total $ 849.6

Other information related to operating leases was as follows.

December 31, 2020

Weighted Average Remaining Lease Term

Weighted average remaining lease term 7.1 years

Weighted average discount rate 3.5 %

Minimum future lease payments due in each of the next five years and thereafter, as of December 31, 2018 , in accordance with ASC Topic 840, are presented in the table below.

(in millions)

Total future minimum lease payments

Total rent expense, including office space and other rentals was $ 195.3 million and $ 197.3 million for the years ended December 31, 2018 and 2017, respectively.

Total rent expense, including office space and other rentals was $ 195.3 million for the year ended December 31, 2018, in accordance with ASC Topic 840.

TRANSACTIONS WITH AFFILIATES

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Advances, travel and other (2)

Total $ 250.1 269.7

(1) These nonrecourse loans have been made to allow employees the ability to participate in investment fund opportunities.

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Although we cannot determine the ultimate liability for these matters, based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material adverse effect on our financial position, results of operations or liquidity.

Professional Indemnity Insurance

In order to better manage our global insurance program and support our risk management efforts, we supplement our traditional insurance coverage for certain types of claims by using a wholly-owned captive insurance company.

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December 31, 2017 $ 26.7

Prior year claims adjustments

New claims 3.5

Prior year claims adjustments (including foreign currency changes) 20.5

Claims paid ( 7.6 )

December 31, 2018 43.1

Prior year claims adjustments

New claims 0.1

Prior year claims adjustments (including foreign currency changes) ( 2.9 )

Claims paid ( 2.2 )

December 31, 2019 38.1

Prior year claims adjustments

New claims 6.7

Prior year claims adjustments (including foreign currency changes) 3.8

Claims paid ( 0.4 )

December 31, 2020 $ 48.2

As a lender in the Fannie Mae DUS program, we retain a portion of the risk of loss for loans we originate and sell under the DUS program.

DUS Program Loan Loss-Sharing

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.

Net losses on defaulted loans are shared with Fannie Mae based upon established loss-sharing ratios.

Generally, our share of losses is capped at 20% of the principal balance of the mortgage at origination.

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 December 31, 2020 and 2019, we had loans, funded and sold, subject to loss-sharing arrangements with an aggregate unpaid principal balance of $ 12.2 billion and $ 9.7 billion, respectively.

For all DUS program loans with loss-sharing obligations, we record a 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 recorded as an increase in Revenue on the Statements of Comprehensive Income.

Quarterly, we perform an analysis of the servicing portfolio with loss-sharing obligations to determine estimated probable losses.

If estimated probable losses exceed the existing unamortized guarantee obligation, we record an expense to increase the loan loss accrual for this difference.

As of December 31, 2019 and 2018 , loan loss accruals were $ 20.6 million and $ 17.5 million , respectively, and are included in Other liabilities on the Consolidated Balance Sheets.

There were no loan losses incurred for the years ended December 31, 2020, 2019 and 2018.

See "Financial Guarantees" section of Note 2, Summary of Significant Accounting Policies for additional information.

RESTRUCTURING AND ACQUISITION CHARGES

For the years ended December 31, 2019 , 2018 and 2017 , we recognized Restructuring and acquisition charges of $ 184.4 million , $ 38.8 million and $ 30.7 million , respectively.

For the year ended December 31, 2019 , we recognized $ 28.4 million related to net increases to earn-out liabilities that arose from prior period acquisition activity, and $ 28.0 million of non-cash stock-based compensation expense for retention awards issued in conjunction with the HFF acquisition.

In 2018 , we recognized $ 7.4 million related to net increases to earn-out liabilities that arose from prior period acquisition activity.

In 2017 , we recognized $ 1.9 million related to net increases to earn-out liabilities that arose from prior period acquisition activity.

In all periods, the remaining charges primarily consist of (i) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership, or transformation of business processes, (ii) lease exit charges and (iii) other acquisition and integration-related charges.

The following table shows the restructuring and acquisition accrual activity and related payments, which are exclusive of the adjustments individually noted above.

Restructuring and acquisition charges include cash and non-cash expenses.

Cash-based charges primarily consist of (1) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership, or transformation of business processes, (2) acquisition, transaction and integration-related charges, and (3) other restructuring including lease exit charges.

Non-cash charges include (1) stock-based compensation expense for retention awards issued in conjunction with the HFF acquisition and (2) fair value adjustments to earn-out liabilities relating to prior-period acquisition activity.

Restructuring and acquisition charges are presented in table below.

Year Ended December 31,

(in millions) 2020 2019 2018

Severance & Employment-Related

Other Restructuring and

Severance and other employment-related charges $ 69.0 31.1 25.5

Restructuring, pre-acquisition and post-acquisition charges 51.5 96.9 5.9

Stock-based compensation expense for HFF retention awards 36.7 28.0 —

Fair value adjustments to earn-out liabilities ( 14.8 ) 28.4 7.4

Restructuring and acquisition charges $ 142.4 184.4 38.8

The following tables show the accrual activity and payments relating to cash-based Restructuring and acquisition charges.

(in millions) Severance & Employment-Related Lease

Exit Other Restructuring and

December 31, 2017 $ 14.2 5.7 1.4 $ 21.3

Accruals 25.5 0.7 5.2 31.4

Payments made ( 25.7 ) ( 5.8 ) ( 6.1 ) ( 37.6 )

December 31, 2018 14.0 0.6 0.5 15.1

Accruals 31.1 11.1 85.8 128.0

Payments made ( 20.8 ) ( 3.3 ) ( 82.5 ) ( 106.6 )

December 31, 2019 24.3 8.4 3.8 36.5

Accruals 69.0 25.0 26.5 120.5

Payments made ( 52.0 ) ( 30.9 ) ( 29.1 ) ( 112.0 )

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HFF Acquisition

Charges associated with the HFF acquisition and integration included in the above tables were $ 115.1 million for the year ended December 31, 2019 .

These charges included transaction/deal costs, retention and severance expense, early lease termination costs, and other integration expenses.

Included in Restructuring and acquisition charges were $ 75.9 million for the year ended December 31, 2020 compared to $ 115.1 million for the year ended December 31, 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.

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The table below presents the changes in Accumulated other comprehensive income (loss) by component.

($ in millions)

Pension and postretirement benefit

Cumulative foreign currency translation adjustment

(in millions) Pension and postretirement benefit Cumulative foreign currency translation adjustment Total

Balance as of December 31, 2018 $ ( 57.4 ) ( 398.8 ) $ ( 456.2 )

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Amounts reclassified from AOCI after tax expense of $0.7, $- and $0.7 3.4 — 3.4

Other comprehensive loss after tax expense of $0.3, $- and $0.3

Other comprehensive income after tax benefit of $4.5, $- and $4.5 ( 14.6 ) 43.0 28.4

Balance as of December 31, 2019 ( 72.0 ) ( 355.8 ) ( 427.8 )

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For pension and postretirement benefits, we report amounts reclassified from Accumulated other comprehensive income (loss) in Other income within the Consolidated Statements of Comprehensive Income.

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The tables on the following pages set forth certain unaudited consolidated statements of operations data for each of our past eight quarters.

In our opinion, this information has been presented on the same basis as the audited Consolidated Financial Statements appearing elsewhere in this report, and includes all adjustments, consisting only of normal recurring adjustments and accruals, we consider necessary for a fair presentation.

The unaudited consolidated quarterly information should be read in conjunction with our Consolidated Financial Statements and the notes thereto as well as the "Summary of Critical Accounting Policies and Estimates" section within Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations .

The operating results for any quarter are not necessarily indicative of the results for any future period.

We note the following points regarding how we prepare and present our financial statements on a periodic basis.

Periodic Accounting for Incentive Compensation

An important part of our overall compensation package is incentive compensation, which we typically pay to employees in the year after it is earned.

In our interim financial statements, we have accrued for incentive compensation based on the percentage of compensation costs and adjusted operating income relative to forecasted compensation costs and adjusted operating income for the full year, as substantially all incentive compensation pools are based upon full year results.

The impact of this incentive compensation accrual methodology is that we accrue less compensation in the first six months of the year, with the majority of our incentive compensation accrued in the second half of the year, particularly in the fourth quarter, in line with the general trend of increasing revenue and profit as the year progresses as further discussed below.

We exclude from our standard accrual methodology incentive compensation pools not subject to the normal performance criteria.

These pools are generally accrued for on a straight-line basis.

We provide for the effects of income taxes on interim financial statements based on our estimate of the effective tax rate for the full year.

We assess our effective tax rate on a quarterly basis and reflect the benefit from tax planning actions when we believe it is probable they will be successful.

We account for the cumulative catch-up impact of any change in estimated effective tax rate our business realizes in the quarter a change is made.

Please refer to Note 8, Income Taxes for further detail and discussion of the U.S.

tax legislation enacted in December 2017.

Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses.

This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar year-end and the fact that certain expenses are constant through the year.

Historically, we have reported a relatively smaller profit in the first quarter and then increasingly larger profits during each of the following three quarters, excluding the recognition of investment-generated performance fees and realized and unrealized co-investment equity earnings and losses (each of which can be unpredictable).

We generally recognize such performance fees and realized co-investment equity earnings or losses when assets are sold, the timing of which is geared toward the benefit of our clients.

Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis.

JONES LANG LASALLE INCORPORATED QUARTERLY INFORMATION - 2019 (UNAUDITED)

Quarter Ended

($ in millions, except per share data)

March 31, 2019

September 30, 2019

December 31, 2019

Real Estate Services:

Total revenue

Operating expenses:

Real Estate Services:

Restructuring and acquisition charges

Total operating expenses

Operating income

Net income attributable to common shareholders

Basic earnings per common share (1)

Diluted earnings per common share (1)

(1) Earnings per common share amounts are individually calculated for each quarter as well as the full annual period.

In addition, the July 2019 issuance of 5.7 million shares in conjunction with the HFF acquisition impacted the weighted average shares outstanding for the third quarter, fourth quarter and full year.

As a result, quarterly earnings per common share does not sum to the total for the full year.

JONES LANG LASALLE INCORPORATED QUARTERLY INFORMATION - 2018 (UNAUDITED)

Quarter Ended

($ in millions, except per share data)

March 31, 2018

September 30, 2018

December 31, 2018

Real Estate Services:

Total revenue

Operating expenses:

Real Estate Services:

Restructuring and acquisition charges

Total operating expenses

Operating income

Net income attributable to common shareholders

Basic earnings per common share

Diluted earnings per common share

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data