What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-09 · 168 added, 81 removed, 629 unchanged (28% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) March 31, 2022 December 31, 2021

(in millions, except share and per share data) June 30, 2022 December 31, 2021

Assets (unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, except share and per share data) (unaudited) Three Months Ended March 31,

(in millions, except share and per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenue $ 5,278.4 4,495.0 $ 10,079.8 8,532.1

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Equity earnings 53.6 40.8 72.1 89.3

Other income 0.2 11.8

Other income (expense) 135.3 ( 0.2 ) 135.5 11.6

Income before income taxes and noncontrolling interest 408.3 254.3 592.5 384.9

1 unchanged sentence

Net income 335.5 199.4 479.4 301.8

Net loss attributable to noncontrolling interest ( 1.7 ) ( 0.6 )

Net income (loss) attributable to noncontrolling interest 141.6 ( 0.6 ) 139.9 ( 1.2 )

Net income attributable to common shareholders $ 193.9 200.0 $ 339.5 303.0

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Company Shareholders' Equity

13 unchanged sentences

March 31, 2022 49,608,928 $ 0.5 2,066.8 5,083.2 ( 5.1 ) ( 552.7 ) ( 419.5 ) 242.0 $ 6,415.2

Company Shareholder's Equity

Net income (loss) (3)

— — — 193.9 — — — 141.7 335.6

Shares issued under stock-based compensation programs 36,251 — ( 25.4 ) ( 1.7 ) — 42.2 — — 15.1

Shares repurchased for payment of taxes on stock-based compensation ( 6,592 ) — ( 16.5 ) — — ( 16.5 ) — — ( 33.0 )

Amortization of stock-based compensation — — 25.8 — — — — — 25.8

Repurchase of common stock ( 1,397,915 ) — — — — ( 297.7 ) — — ( 297.7 )

Foreign currency translation adjustments — — — — — — ( 164.4 ) — ( 164.4 )

Decrease in amounts attributable to noncontrolling interest — — — — — — — ( 149.9 ) ( 149.9 )

Balances at June 30, 2022 48,240,672 $ 0.5 2,050.7 5,275.4 ( 5.1 ) ( 824.7 ) ( 583.9 ) 233.8 $ 6,146.7

Accumulated other comprehensive income (loss)

Noncontrolling interest

(3) Excludes net (loss) income attributable to redeemable noncontrolling interest of $( 0.1 ) million for the three months ended June 30, 2022

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Company Shareholders' Equity

Common Stock Additional Shares

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March 31, 2021 51,306,200 $ 0.5 2,015.5 4,078.9 ( 5.4 ) ( 85.7 ) ( 383.6 ) 86.7 $ 5,706.9

Net income (loss) — — — 200.0 — — — ( 0.6 ) 199.4

Shares issued under stock-based compensation programs 13,712 — ( 1.0 ) — — 1.5 — — 0.5

Shares repurchased for payment of taxes on stock-based compensation ( 2,184 ) — ( 0.2 ) — — ( 0.2 ) — — ( 0.4 )

Amortization of stock-based compensation — — 26.3 — — — — — 26.3

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

Change in pension liabilities, net of tax — — — — — — 0.7 — 0.7

Repurchase of common stock ( 172,500 ) — — — — ( 37.9 ) — — ( 37.9 )

Foreign currency translation adjustments — — — — — — ( 0.2 ) — ( 0.2 )

Increase in amounts attributable to noncontrolling interest — — — — — — — 4.3 4.3

Balances at June 30, 2021 51,145,228 $ 0.5 2,040.6 4,278.9 ( 5.3 ) ( 122.3 ) ( 383.1 ) 90.4 $ 5,899.7

Accumulated other comprehensive income (loss)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) (unaudited) 2022 2021

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Equity earnings ( 72.1 ) ( 89.3 )

Net loss (gain) on dispositions 0.4 ( 11.4 )

Net gain on dispositions ( 134.8 ) ( 11.4 )

Distributions of earnings from investments 9.9 4.6

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Repurchase of common stock ( 447.7 ) ( 37.9 )

Noncontrolling interest (distributions) contributions, net ( 134.6 ) 2.2

Other, net ( 19.7 ) 7.1

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Management's Discussion and Analysis of Financial Condition and Results of Operations and to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for further discussion of our significant accounting policies and estimates.

Our Condensed Consolidated Financial Statements as of March 31, 2022, and for the periods ended March 31, 2022 and 2021, are unaudited.

Our Condensed Consolidated Financial Statements as of June 30, 2022, and for the periods ended June 30, 2022 and 2021, are unaudited.

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

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Changes in the geographic mix of income can impact our estimated effective tax rate.

As a result of the items mentioned above, the results for the periods ended March 31 are not fully indicative of what our results will be for the full fiscal year.

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

Change in Reporting Segments

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Such out-of-scope revenue is presented below.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2022 2021 2022 2021

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Such contract assets and liabilities are presented below.

(in millions) March 31, 2022 December 31, 2021

(in millions) June 30, 2022 December 31, 2021

Contract assets, gross $ 449.2 438.7

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

As of March 31, 2022, the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue.

As of June 30, 2022, the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue.

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

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Allocated expenses primarily consist of corporate functional costs across the globe, which we allocate to the business segments using an expense-specific driver-based methodology.

Adjusted EBITDA does not include (i) depreciation and amortization, (ii) restructuring and acquisition charges, (iii) interest expense, net of interest income, (iii) provision for income tax, (iv) gain on disposal, (v) net non-cash MSR and mortgage which are otherwise included in Net income on the Condensed Consolidated Statements of Comprehensive Income.

Adjusted EBITDA does not include (i) depreciation and amortization, (ii) restructuring and acquisition charges, (iii) interest expense, net of interest income, (iv) provision for income tax, (v) gain on disposal, (vi) net non-cash MSR and mortgage which are otherwise included in Net income on the Condensed Consolidated Statements of Comprehensive Income.

The Chief Operating Decision Maker ("CODM") of JLL measures and evaluates the segment results based on Adjusted EBITDA for purposes of making decisions about allocating resources and assessing performance.

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Summarized financial information by business segment is as follows.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2022 2021 2022 2021

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Revenue $ 1,118.2 951.3 $ 2,117.7 1,744.0

Depreciation and amortization $ 17.1 15.9

Depreciation and amortization (a)

$ 16.3 16.7 $ 33.4 32.6

Equity earnings $ 0.4 0.1 $ 0.9 0.5

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Depreciation and amortization $ 17.0 16.8 $ 33.5 33.0

Equity earnings $ 0.3 0.1

Equity earnings (losses) $ 0.9 ( 0.3 ) $ 1.2 ( 0.2 )

Adjusted EBITDA $ 57.6 51.2 $ 92.8 76.1

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Depreciation and amortization $ 1.8 2.1 $ 3.2 4.2

Equity (losses) earnings $ ( 1.9 ) 13.0

Equity earnings $ 7.0 23.4 $ 5.1 36.4

Adjusted EBITDA $ 27.8 48.0 $ 49.1 74.1

(a) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders.

The following table is a reconciliation of Adjusted EBITDA to Net income attributable to common shareholders.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2022 2021 2022 2021

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Restructuring and acquisition charges $ ( 25.9 ) ( 18.1 ) $ ( 45.4 ) ( 35.3 )

Gain on disposition — 12.0

Net (loss) gain on disposition ( 7.5 ) — ( 7.5 ) 12.0

Net non-cash MSR and mortgage banking derivative activity 11.2 5.7 7.6 15.4

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Provision for income taxes ( 72.8 ) ( 54.9 ) ( 113.1 ) ( 83.1 )

Depreciation and amortization ( 54.4 ) ( 53.0 )

Depreciation and amortization (a)

( 54.4 ) ( 54.5 ) ( 108.8 ) ( 107.5 )

Net income attributable to common shareholders $ 193.9 200.0 $ 339.5 303.0

(a) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders.

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

2022 Business Combinations Activity

During the three months ended March 31, 2022, there were no strategic acquisitions.

During the six months ended June 30, 2022, there were no strategic acquisitions.

We paid $ 13.9 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2021 Business Combinations Activity

During the three months ended March 31, 2021 we completed no strategic acquisitions.

During the six months ended June 30, 2021 we completed no strategic acquisitions.

Earn-Out Payments

($ in millions) March 31, 2022 December 31, 2021

($ in millions) June 30, 2022 December 31, 2021

Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria 18 19

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Our analysis indicated that no impairment existed as the estimated fair value of each of our reporting units exceeded its respective carrying value.

Goodwill and unamortized intangibles as of March 31, 2022 consisted of:

Goodwill and unamortized intangibles as of June 30, 2022 consisted of:

(1) goodwill of $ 4,519.9 million, (2) identifiable intangibles of $ 824.6 million amortized over their remaining finite useful lives, and (3) $ 47.3 million of identifiable intangibles with indefinite useful lives that are not amortized.

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Impact of exchange rate movements ( 40.2 ) ( 43.5 ) ( 11.8 ) ( 0.2 ) ( 1.8 ) ( 97.5 )

Balance as of March 31, 2022 $ 1,775.0 1,975.9 542.1 247.9 57.0 $ 4,597.9

Balance as of June 30, 2022 $ 1,742.7 1,941.2 532.7 247.7 55.6 $ 4,519.9

(in millions)

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Impact of exchange rate movements — ( 7.7 ) ( 7.7 )

Balance as of March 31, 2022 $ 691.7 555.6 $ 1,247.3

Balance as of June 30, 2022 $ 714.0 552.1 $ 1,266.1

Accumulated Amortization

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Impact of exchange rate movements — 2.1 2.1

Balance as of March 31, 2022 $ ( 204.7 ) ( 163.1 ) $ ( 367.8 )

Net book value as of March 31, 2022 $ 487.0 392.5 $ 879.5

Balance as of June 30, 2022 $ ( 216.0 ) ( 178.2 ) $ ( 394.2 )

Net book value as of June 30, 2022 $ 498.0 373.9 $ 871.9

(1) Included in this amount for MSRs was $ 16.7 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights.

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Impact of exchange rate movements — ( 1.6 ) ( 1.6 )

Balance as of March 31, 2021 $ 605.4 393.9 $ 999.3

Balance as of June 30, 2021 $ 616.8 376.4 $ 993.2

Accumulated Amortization

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Impact of exchange rate movements — ( 0.2 ) ( 0.2 )

Balance as of March 31, 2021 $ ( 162.7 ) ( 149.6 ) $ ( 312.3 )

Net book value as of March 31, 2021 $ 442.7 244.3 $ 687.0

Balance as of June 30, 2021 $ ( 175.5 ) ( 145.2 ) $ ( 320.7 )

Net book value as of June 30, 2021 $ 441.3 231.2 $ 672.5

(1) Included in this amount for MSRs was $ 7.6 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights.

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

As of March 31, 2022 and December 31, 2021, we had investments of $ 785.3 million and $ 745.7 million, respectively.

As of June 30, 2022 and December 31, 2021, we had investments of $ 901.9 million and $ 745.7 million, respectively.

Summarized investment balances are presented in the following table.

(in millions) March 31, 2022 December 31, 2021

(in millions) June 30, 2022 December 31, 2021

JLL Technologies investments $ 511.6 353.6

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Total $ 901.9 745.7

Approximately 90% of our investments, as of March 31, 2022, are (i) investments by JLL Technologies in proptech funds and early to mid-stage proptech companies, or (ii) direct investments in 55 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement.

The remaining 10% of our investments, as of March 31, 2022, were attributable to investment vehicles that use our capital and outside capital primarily provided by institutional investors to invest, generally, in certain real estate ventures that own and operate real estate.

Approximately 90% of our investments, as of June 30, 2022, are (i) investments by JLL Technologies in proptech funds and early to mid-stage proptech companies, or (ii) direct investments in 55 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement.

The remaining 10% of our investments, as of June 30, 2022, were attributable to investment vehicles that use our capital and outside capital primarily provided by institutional investors to invest, generally, 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 $ 360.8 million as of March 31, 2022.

We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 344.9 million as of June 30, 2022.

Of this amount, while we remain contractually obligated, we do not expect a call on the $ 60.3 million relating to our investment in LIC II as its fund life terminated in January 2020.

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Summarized financial information for our consolidated VIEs is presented in the following tables.

(in millions) March 31, 2022 December 31, 2021

(in millions) June 30, 2022 December 31, 2021

Property and equipment, net $ 187.4 184.7

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Total liabilities and members' equity $ 223.6 212.6

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2022 2021 2022 2021

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Operating and other expenses ( 6.0 ) ( 3.5 ) ( 11.7 ) ( 6.7 )

Net loss $ ( 2.2 ) ( 0.6 )

Net gains on sale of investments (1)

142.3 — 142.3 —

Net income/(loss) $ 141.4 ( 0.6 ) $ 139.2 ( 1.2 )

(1) The gain was included in Other income (expense) on the Condensed Consolidated Statements of Comprehensive Income.

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

There were no significant other-than-temporary impairment charges on investments for the three months ended March 31, 2022 and 2021.

There were no significant other-than-temporary impairment charges on investments for the six months ended June 30, 2022 and 2021.

We report a majority of our investments at fair value.

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Foreign currency translation adjustments, net ( 19.2 ) ( 3.1 )

Fair value investments as of March 31, $ 677.5 435.4

Fair value investments as of June 30, $ 786.1 505.0

See Note 7, Fair Value Measurements, for additional discussion of our investments reported at fair value.

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Contractual Life

Unvested as of December 31, 2021 912.4 646.0 1,558.4 $ 152.27 1.99

Unvested as of March 31, 2022 786.8 466.1 1,252.9 $ 152.62 1.84

Granted 188.5 113.0 301.5 224.59

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Forfeited ( 7.7 ) ( 2.2 ) ( 9.9 ) 173.02

Unvested as of June 30, 2022 939.0 576.9 1,515.9 $ 167.23 1.98

Unvested as of March 31, 2021 940.3 439.1 1,379.4 $ 134.84 1.70

Granted 200.5 107.2 307.7 186.21

Vested ( 10.7 ) — ( 10.7 ) 142.07

Forfeited ( 12.0 ) ( 1.1 ) ( 13.1 ) 123.85

Unvested as of June 30, 2021 1,118.1 545.2 1,663.3 $ 144.01 1.92

(in 000's) PSU Shares

(in 000's) Total Shares

(in 000's) Weighted Average

Fair Value Weighted Average

Contractual Life

Unvested as of December 31, 2021 912.4 646.0 1,558.4 $ 152.27 1.99

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Forfeited ( 10.5 ) ( 7.0 ) ( 17.5 ) 173.44

Unvested as of March 31, 2021 940.3 439.1 1,379.4 $ 134.84 1.70

As of March 31, 2022, we had $ 86.5 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2026.

Unvested as of June 30, 2022 939.0 576.9 1,515.9 $ 167.23 1.98

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

Granted 257.1 107.2 364.3 179.95

Vested ( 218.1 ) ( 79.0 ) ( 297.1 ) 150.45

Forfeited ( 17.1 ) ( 14.5 ) ( 31.6 ) 138.47

Unvested as of June 30, 2021 1,118.1 545.2 1,663.3 $ 144.01 1.92

As of June 30, 2022, we had $ 121.8 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2026.

FAIR VALUE MEASUREMENTS

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

We estimated the fair value of our Long-term debt, including its current portion, as $ 667.9 million and $ 687.2 million as of March 31, 2022 and December 31, 2021, respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy.

The carrying value of our Long-term debt includes (1) the current portion of $ 274.7 million as of both March 31, 2022 and December 31, 2021, which included debt issuance costs of $ 0.3 million;

and (2) the long-term portion of $ 387.8 million and $ 395.6 million, as of March 31, 2022 and December 31, 2021, respectively, which included debt issuance costs of $ 1.4 million as of both March 31, 2022 and December 31, 2021.

We estimated the fair value of our Long-term debt, including its current portion, as $ 622.9 million and $ 687.2 million as of June 30, 2022 and December 31, 2021, respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy.

The carrying value of our Long-term debt includes (i) the current portion of $ 274.8 million and $ 274.7 million as of June 30, 2022 and December 31, 2021, respectively, which included debt issuance costs of $ 0.2 million and $ 0.3 million, respectively;

and (ii) the long-term portion of $ 364.4 million and $ 395.6 million, as of June 30, 2022 and December 31, 2021, respectively, which included debt issuance costs of $ 1.4 million as of both June 30, 2022 and December 31, 2021.

Investments at Fair Value - Net Asset Value ("NAV")

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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 Condensed Consolidated Statements of Comprehensive Income within Equity earnings.

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.

For a subset 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 any 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 March 31, 2022 and December 31, 2021, investments at fair value using NAV were $ 387.4 million and $ 372.8 million, respectively.

As of June 30, 2022 and December 31, 2021, investments at fair value using NAV were $ 267.0 million and $ 251.6 million, respectively.

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

Recurring Fair Value Measurements

During the second quarter of 2022, certain investments previously reported as NAV investments were reclassified as Level 3 within the fair value hierarchy.

Prior period amounts within the fair value table below have been reclassified to reflect the current period presentation.

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.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

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

As of March 31, 2022 and December 31, 2021, these contracts had a gross notional value of $ 2.41 billion ($ 1.28 billion on a net basis) and $ 2.61 billion ($ 1.51 billion on a net basis), respectively.

As of June 30, 2022 and December 31, 2021, these contracts had a gross notional value of $ 1.83 billion ($ 1.14 billion on a net basis) and $ 2.61 billion ($ 1.51 billion on a net basis), respectively.

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

The $ 19.3 million asset as of March 31, 2022, was composed of gross contracts with receivable positions of $ 22.0 million and payable positions of $ 2.8 million.

The $ 4.0 million liability as of March 31, 2022, was composed of gross contracts with receivable positions of $ 2.4 million and payable positions of $ 6.4 million.

The $ 7.8 million asset as of June 30, 2022, was composed of gross contracts with receivable positions of $ 8.9 million and payable positions of $ 1.1 million.

The $ 1.2 million liability as of June 30, 2022, was composed of gross contracts with receivable positions of $ 0.2 million and payable positions of $ 1.4 million.

As of December 31, 2021, the $ 15.9 million asset was composed of gross contracts with receivable positions of $ 19.2 million and payable positions of $ 3.3 million.

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Warehouse Receivables

As of March 31, 2022 and December 31, 2021, all of our Warehouse receivables were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S.

As of June 30, 2022 and December 31, 2021, all of our Warehouse receivables were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S.

government or GSE mortgage-backed security program.

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employees that allows them to defer portions of their compensation.

We recorded this plan on our Condensed Consolidated Balance Sheet as of March 31, 2022 as Deferred compensation plan assets of $ 558.3 million, long-term deferred compensation plan liabilities of $ 493.8 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.1 million.

We recorded this plan on our Condensed Consolidated Balance Sheet as of June 30, 2022 as Deferred compensation plan assets of $ 528.1 million, long-term deferred compensation plan liabilities of $ 484.9 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.1 million.

We recorded this plan on our Condensed Consolidated Balance Sheet as of December 31, 2021 as Deferred compensation plan assets of $ 528.8 million, long-term deferred compensation plan liabilities of $ 513.0 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 5.2 million.

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

(in millions) Balance as of December 31, 2021 Net change in fair value Foreign CTA (1)

Balance as of March 31, 2022 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Balance as of

March 31, 2022

June 30, 2022

Investments $ 344.2 45.3 — 71.1 ( 0.2 ) $ 460.4

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Earn-out liabilities 79.5 1.0 ( 0.3 ) — ( 5.3 ) 74.9

Balance as of March 31, 2021 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Level transfer out (2)

Balance as of June 30, 2021

Investments $ 140.1 6.3 — 37.1 — ( 1.9 ) $ 181.6

Mortgage banking derivative assets and liabilities, net 32.9 ( 7.6 ) — 29.6 ( 42.3 ) — 12.6

Earn-out liabilities 68.2 1.1 — — ( 51.3 ) — 18.0

(in millions) Balance as of December 31, 2021 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Balance as of

March 31, 2021

June 30, 2022

Investments $ 303.5 62.5 — 94.6 ( 0.2 ) $ 460.4

1 unchanged sentence

Earn-out liabilities 84.1 0.3 ( 0.4 ) 2.0 ( 11.1 ) 74.9

(in millions) Balance as of December 31, 2020 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Level transfer out (2)

Balance as of June 30, 2021

Investments $ 59.3 38.1 — 86.2 ( 0.1 ) ( 1.9 ) $ 181.6

Mortgage banking derivative assets and liabilities, net 13.7 11.3 — 70.7 ( 83.1 ) — 12.6

Earn-out liabilities 85.7 1.0 ( 0.3 ) 3.8 ( 72.2 ) — 18.0

Currency translation adjustments

(2) In 2021, an investment previously treated as a Level 3 investment became publicly traded on the NYSE and was considered a Level 1 investment immediately.

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

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

We did not recognize any significant investment-level impairment losses during either of the three months ended March 31, 2022 or 2021.

We did not recognize any significant investment-level impairment losses during either of the six months ended June 30, 2022 or 2021.

See Note 5, Investments, for additional information, including information related to impairment charges recorded at the investee level.

Debt is composed of the following obligations.

($ in millions) March 31, 2022 December 31, 2021

($ in millions) June 30, 2022 December 31, 2021

Short-term debt:

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Credit Facility

We have a $ 2.75 billion unsecured revolving credit facility (the "Facility") that matures on April 14, 2026.

Pricing on the Facility ranges from LIBOR plus 0.875% to 1.35% , with pricing as of March 31, 2022 at LIBOR plus 0.88 %.

In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.7 million as of both March 31, 2022 and December 31, 2021.

On June 16, 2022, we executed Amendment No.

3 ("Amendment No.

3") to the Second Amended and Restated Multicurrency Credit Agreement dated as of June 21, 2016 (as amended, the "Credit Agreement") with a syndicate of lenders.

The borrowing capacity under the Credit Agreement remains at $ 2.75 billion, with no changes to the maturity date of April 14, 2026.

The features of the Credit Agreement, as amended, provide for (i) Greenhouse Gas Emissions KPI to align with the World Green Building Council ("WGBC") Commitment to reach net zero by 2030 and (ii) incorporates the Adjusted Term Secured Overnight Financing Rate ("SOFR") successor rates for USD and other currency borrowings.

Pricing on the unsecured revolving credit facility (the "Facility") ranges from Adjusted Term SOFR plus 0.875% to 1.35% , with pricing as of June 30, 2022 at Adjusted Term SOFR plus 0.95 %.

In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.7 million as of both June 30, 2022 and December 31, 2021.

The following tables provides additional information on our Facility.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2022 2021 2022 2021

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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, share repurchases and capital expenditures.

Short-Term Borrowings and Long-Term Debt

Short-Term and Long-Term Debt

In addition to our Facility, we have the capacity to borrow up to an additional $ 52.1 million under local overdraft facilities.

Amounts outstanding are presented in the debt table above.

As of March 31, 2022, our issuer and senior unsecured ratings are investment grade:

As of June 30, 2022, our issuer and senior unsecured ratings are investment grade:

Baa1 from Moody’s Investors Service, Inc.

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

We remained in compliance with all covenants as of March 31, 2022.

We remained in compliance with all covenants as of June 30, 2022.

Warehouse Facilities

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

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Total warehouse facilities $ 622.3 2,600.0 795.7 2,600.0

(1) In July 2022, we extended the term of the Warehouse facility to July 28, 2023 and amended the interest rate to SOFR plus 1.40%.

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

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

We remained in compliance with all covenants under our facilities as of March 31, 2022.

We remained in compliance with all covenants under our facilities as of June 30, 2022.

COMMITMENTS AND CONTINGENCIES

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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.

Effective April 1, 2022, the level of risk retained by our captive insurance company, with respect to professional indemnity claims, increased from $2.5 million to $10.0 million per claim, inclusive of the deductible.

We contract third-party insurance companies to provide coverage of risk in excess of this amount.

When a potential loss event occurs, we estimate the ultimate cost of the claim and accrue the amount in Other current and long-term liabilities on our Condensed Consolidated Balance Sheets when probable and estimable.

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

In total, these receivables were $ 22.5 million as of both March 31, 2022 and December 31, 2021 and are included in Notes and other receivables and Long-term receivables on our Condensed Consolidated Balance Sheets.

In total, these receivables were $ 22.5 million as of both June 30, 2022 and December 31, 2021, and are included in Notes and other receivables and Long-term receivables on our Condensed Consolidated Balance Sheets.

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

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Claims paid —

March 31, 2022 $ 1.2

June 30, 2022 $ 1.1

December 31, 2020 $ 48.2

New claims 1.3

Prior year claims adjustments (including foreign currency changes) ( 30.7 )

Claims paid ( 11.9 )

March 31, 2021 $ 17.6

June 30, 2021 $ 6.9

Delegated Underwriting and Servicing ("DUS") Program Loan Loss-Sharing

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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 March 31, 2022 and December 31, 2021, we had loans subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 15.8 billion and $ 15.4 billion, respectively.

As of June 30, 2022 and December 31, 2021, we had loans subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 16.5 billion and $ 15.4 billion, respectively.

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

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

As of March 31, 2022 and December 31, 2021, the loss-sharing guarantee obligations were $ 24.8 million and $ 24.6 million, respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets.

There were no loan losses incurred for the three months ended March 31, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, the loss-sharing guarantee obligations were $ 26.3 million and $ 24.6 million, respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets.

There were no loan losses incurred for the three and six months ended June 30, 2022 and 2021.

The loss-sharing aspect of the program represents an off-balance sheet credit exposure.

We record a separate contingent reserve for this risk calculated on an individual loan level.

As of both March 31, 2022 and December 31, 2021, the loan loss guarantee reserve was $ 22.9 million, and is included within Other liabilities on our Condensed Consolidated Balance Sheets.

As of June 30, 2022 and December 31, 2021, the loan loss guarantee reserve was $ 20.0 million and $ 22.9 million, respectively, and is included within Other liabilities on our Condensed Consolidated Balance Sheets.

RESTRUCTURING AND ACQUISITION CHARGES

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Restructuring and acquisition charges are presented in table below.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2022 2021 2022 2021

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Restructuring and acquisition charges $ 25.9 18.1 $ 45.4 35.3

Nearly all expenses related to (i) severance and other employment-related charges and (ii) restructuring, pre-acquisition and post-acquisition charges as of March 31, 2022 will be paid during the next twelve months.

We expect nearly all expenses related to (i) severance and other employment-related charges and (ii) restructuring, pre-acquisition and post-acquisition charges as of June 30, 2022 will be paid during the next twelve months.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

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

Balance as of December 31, 2021 $ ( 42.7 ) ( 352.7 ) $ ( 395.4 )

Balance as of March 31, 2022 $ ( 42.7 ) ( 376.8 ) $ ( 419.5 )

Other comprehensive loss before reclassification — ( 164.4 ) ( 164.4 )

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Other comprehensive loss after tax expense of $ - , $ - and $ - — ( 164.4 ) ( 164.4 )

Balance as of June 30, 2022 $ ( 42.7 ) ( 541.2 ) $ ( 583.9 )

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

Balance as of March 31, 2021 $ ( 81.4 ) ( 302.2 ) $ ( 383.6 )

Other comprehensive income before reclassification — ( 0.2 ) ( 0.2 )

Amounts reclassified from AOCI after tax expense of

$ - , $ - and $ - 0.7 — 0.7

Other comprehensive income after tax expense of $ - , $ - and $ - 0.7 ( 0.2 ) 0.5

Balance as of June 30, 2021 $ ( 80.7 ) ( 302.4 ) $ ( 383.1 )

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

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Other comprehensive loss after tax expense of $ - , $ - and $ - — ( 188.5 ) ( 188.5 )

Balance as of March 31, 2021 $ ( 81.4 ) ( 302.2 ) $ ( 383.6 )

Balance as of June 30, 2022 $ ( 42.7 ) ( 541.2 ) $ ( 583.9 )

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

Balance as of December 31, 2020 $ ( 81.2 ) ( 296.0 ) $ ( 377.2 )

Other comprehensive loss before reclassification — ( 6.4 ) ( 6.4 )

Amounts reclassified from AOCI after tax expense of

$ - , $ - and $ - 0.5 — 0.5

Other comprehensive loss after tax expense of $ - , $ - and $ - 0.5 ( 6.4 ) ( 5.9 )

Balance as of June 30, 2021 $ ( 80.7 ) ( 302.4 ) $ ( 383.1 )

For pension and postretirement benefits, we report amounts reclassified from AOCI relating to employer service cost in Compensation and benefits within the Condensed Consolidated Statements of Comprehensive Income.

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

What changed 10-Q

Item 1. Financial Statements