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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 192 added, 95 removed, 546 unchanged (34% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) March 31, 2023 December 31, 2022

(in millions, except share and per share data) June 30, 2023 December 31, 2022

Assets (unaudited)

58 unchanged sentences

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,

2023 2022 2023 2022

Revenue $ 5,052.5 5,278.4 $ 9,768.0 10,079.8

8 unchanged sentences

Equity (losses) earnings ( 103.5 ) 53.6 ( 106.1 ) 72.1

Other income 0.1 0.2

(Loss) income before income taxes and noncontrolling interest ( 11.0 ) 184.2

Income tax (benefit) provision ( 2.3 ) 40.3

Net (loss) income ( 8.7 ) 143.9

Net income (loss) attributable to noncontrolling interest 0.5 ( 1.7 )

Net (loss) income attributable to common shareholders $ ( 9.2 ) 145.6

Basic (loss) earnings per common share $ ( 0.19 ) 2.92

Other (expense) income ( 1.2 ) 135.3 ( 1.1 ) 135.5

Income (loss) before income taxes and noncontrolling interest 4.0 408.3 ( 7.0 ) 592.5

Income tax provision (benefit) 0.8 72.8 ( 1.5 ) 113.1

Net income (loss) 3.2 335.5 ( 5.5 ) 479.4

Net income attributable to noncontrolling interest 0.7 141.6 1.2 139.9

Net income (loss) attributable to common shareholders $ 2.5 193.9 $ ( 6.7 ) 339.5

Basic earnings (loss) per common share $ 0.05 3.98 $ ( 0.14 ) 6.89

Basic weighted average shares outstanding (in 000's) 47,748 48,718 47,652 49,247

Diluted (loss) earnings per common share $ ( 0.19 ) 2.86

Diluted earnings (loss) per common share $ 0.05 3.90 $ ( 0.14 ) 6.75

Diluted weighted average shares outstanding (in 000's) 48,334 49,651 47,652 50,292

Net (loss) income attributable to common shareholders $ ( 9.2 ) 145.6

Net income (loss) attributable to common shareholders $ 2.5 193.9 $ ( 6.7 ) 339.5

Change in pension liabilities, net of tax ( 1.1 ) — ( 1.1 ) —

Foreign currency translation adjustments 11.1 ( 164.4 ) 37.9 ( 188.5 )

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Company Shareholders' Equity

11 unchanged sentences

March 31, 2023 47,609,204 $ 0.5 1,981.3 5,566.7 ( 9.8 ) ( 883.5 ) ( 621.4 ) 121.4 $ 6,155.2

Net income (3)

— — — 2.5 — — — 0.6 3.1

Shares issued under stock-based compensation programs 288,834 — ( 2.3 ) ( 1.6 ) — 7.1 — — 3.2

Shares repurchased for payment of taxes on stock-based compensation ( 104,766 ) — — — — 0.1 — — 0.1

Amortization of stock-based compensation — — 36.3 — — — — — 36.3

Shares held in trust — — — — ( 1.8 ) — — — ( 1.8 )

Repurchase of common stock ( 72,322 ) — — — — ( 19.5 ) — — ( 19.5 )

Change in pension liabilities, net of tax — — — — — — ( 1.1 ) — ( 1.1 )

Foreign currency translation adjustments — — — — — — 11.1 — 11.1

Decrease in amounts attributable to noncontrolling interest — — — — — — — ( 1.8 ) ( 1.8 )

June 30, 2023 47,720,950 $ 0.5 2,015.3 5,567.6 ( 11.6 ) ( 895.8 ) ( 611.4 ) 120.2 $ 6,184.8

Accumulated other comprehensive income (loss)

Noncontrolling interest

(3) Excludes net income attributable to redeemable noncontrolling interest of $ 0.1 million for the three months ended June 30, 2023.

JONES LANG LASALLE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Company Shareholders' Equity

14 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

Net income (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 )

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 attributable to redeemable noncontrolling interest of $ 0.1 million for the three months ended June 30, 2022.

See accompanying notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) (unaudited) 2023 2022

1 unchanged sentence

Net (loss) income $ ( 5.5 ) 479.4

Reconciliation of net income to net cash used in operating activities:

Reconciliation of net (loss) income to net cash used in operating activities:

Depreciation and amortization 117.4 109.8

Equity losses (earnings) 106.1 ( 72.1 )

Net gain on dispositions — 0.4

Net loss (gain) on dispositions 1.8 ( 134.8 )

Distributions of earnings from investments 6.0 9.9

22 unchanged sentences

Repayments of borrowings under credit facility ( 3,853.0 ) ( 2,835.0 )

Net proceeds from short-term borrowings ( 62.3 ) ( 27.4 )

Net repayments of short-term borrowings ( 55.3 ) ( 12.5 )

Payments of deferred business acquisition obligations and earn-outs ( 21.8 ) ( 9.2 )

Repurchase of common stock ( 19.5 ) ( 447.7 )

Noncontrolling interest distributions, net — ( 134.6 )

Other, net ( 24.5 ) ( 19.7 )

13 unchanged sentences

Business acquisitions (including contingent consideration) $ — 2.0

Non-cash consideration received for disposition — 15.8

Deferred business acquisition obligations — 1.4

6 unchanged sentences

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 2022 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, 2023, and for the periods ended March 31, 2023 and 2022, are unaudited.

Our Condensed Consolidated Financial Statements as of June 30, 2023, and for the periods ended June 30, 2023 and 2022, 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.

NEW ACCOUNTING STANDARDS

8 unchanged sentences

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) 2023 2022 2023 2022

4 unchanged sentences

Such contract assets and liabilities are presented below.

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Contract assets, gross $ 427.8 447.0

4 unchanged sentences

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

As of March 31, 2023, the aggregate amount of transaction price allocated to remaining performance obligations represented less than 5 % of our total revenue.

As of June 30, 2023, 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.

17 unchanged sentences

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) 2023 2022 2023 2022

5 unchanged sentences

Depreciation and amortization (1)

Equity earnings $ 0.3 0.5

$ 16.5 16.3 $ 32.6 33.4

Equity (losses) earnings $ ( 0.1 ) 0.4 $ 0.2 0.9

Adjusted EBITDA $ 99.4 134.0 $ 171.0 245.2

18 unchanged sentences

Depreciation and amortization $ 4.1 3.9 $ 8.0 7.7

Equity earnings $ 4.9 18.8

Equity (losses) earnings $ ( 103.9 ) 44.7 $ ( 99.0 ) 63.5

Adjusted EBITDA $ ( 105.2 ) 12.9 $ ( 118.5 ) 0.6

4 unchanged sentences

Depreciation and amortization $ 2.3 1.8 $ 3.6 3.2

Equity losses $ ( 8.8 ) ( 1.9 )

Equity (losses) earnings $ ( 5.1 ) 7.0 $ ( 13.9 ) 5.1

Adjusted EBITDA $ 29.7 27.8 $ 44.0 49.1

(1) 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,

(1) 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 (loss) attributable to common shareholders.

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

(in millions) 2023 2022 2023 2022

6 unchanged sentences

Restructuring and acquisition charges $ ( 11.8 ) ( 25.9 ) $ ( 47.5 ) ( 45.4 )

Net loss on disposition ( 1.8 ) ( 7.5 ) ( 1.8 ) ( 7.5 )

Interest on employee loans, net of forgiveness 0.9 — 0.7 —

1 unchanged sentence

Interest expense, net of interest income ( 40.5 ) ( 15.7 ) ( 66.8 ) ( 25.9 )

Income tax benefit (provision) 2.3 ( 40.3 )

Income tax (provision) benefit ( 0.8 ) ( 72.8 ) 1.5 ( 113.1 )

Depreciation and amortization (1)

( 59.0 ) ( 54.4 ) ( 115.5 ) ( 108.8 )

Net (loss) income attributable to common shareholders $ ( 9.2 ) 145.6

Net income (loss) attributable to common shareholders $ 2.5 193.9 $ ( 6.7 ) 339.5

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

1 unchanged sentence

2023 Business Combinations Activity

During the three months ended March 31, 2023, there were no strategic acquisitions.

We paid $ 13.8 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

During the six months ended June 30, 2023, we completed one strategic acquisition.

This strategic acquisition is presented below.

Acquired Company Quarter of Acquisition Country Primary Segment

Kensington Capital Advisors (KCA) Q2 United States Capital Markets

Aggregate terms of our acquisition included:

(1) cash paid at closing of $ 13.6 million and (2) prior 50.0% ownership previously accounted for as an equity method investment which had a fair value of $ 10.0 million.

A preliminary allocation of purchase consideration resulted in goodwill of $ 18.7 million, identifiable intangibles of $ 2.1 million and other net assets (acquired assets less assumed liabilities) of $ 2.8 million.

As of June 30, 2023, 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 this acquisition during the open measurement period.

During the six months ended June 30, 2023, we paid $ 22.0 million for deferred business acquisition and earn-out obligations for acquisitions completed in prior years.

2022 Business Combinations Activity

During the three months ended March 31, 2022, we completed no strategic acquisitions.

During the six months ended June 30, 2022, we completed no strategic acquisitions.

Earn-Out Payments

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Number of acquisitions with earn-out payments subject to the achievement of certain performance criteria 16 17

6 unchanged sentences

Goodwill and Other Intangible Assets

Goodwill and unamortized intangibles as of March 31, 2023 consisted of:

Goodwill and unamortized intangibles as of June 30, 2023 consisted of:

(1) goodwill of $ 4,577.7 million, (2) identifiable intangibles of $ 772.1 million amortized over their remaining finite useful lives and (3) $ 49.0 million of identifiable intangibles with indefinite useful lives that are not amortized.

6 unchanged sentences

Impact of exchange rate movements 12.5 14.1 3.8 — 0.6 31.0

Balance as of March 31, 2023 $ 1,749.4 1,956.4 534.5 247.7 55.9 $ 4,543.9

Balance as of June 30, 2023 $ 1,755.4 1,982.0 536.4 247.7 56.2 $ 4,577.7

(in millions) Markets Advisory Capital Markets Work Dynamics JLL Technologies LaSalle Consolidated

2 unchanged sentences

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

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

3 unchanged sentences

Additions, net of adjustments (1)

45.5 5.8 51.3

Adjustment for fully amortized intangibles ( 20.2 ) ( 17.4 ) ( 37.6 )

Impact of exchange rate movements — 2.1 2.1

Balance as of March 31, 2023 $ 755.6 557.9 $ 1,313.5

Balance as of June 30, 2023 $ 772.6 547.5 $ 1,320.1

Accumulated Amortization

4 unchanged sentences

Impact of exchange rate movements — ( 0.7 ) ( 0.7 )

Balance as of March 31, 2023 $ ( 259.3 ) ( 221.1 ) $ ( 480.4 )

Net book value as of March 31, 2023 $ 496.3 336.8 $ 833.1

Balance as of June 30, 2023 $ ( 276.5 ) ( 222.5 ) $ ( 499.0 )

Net book value as of June 30, 2023 $ 496.1 325.0 $ 821.1

(1) Included in this amount for MSRs was $ 6.8 million relating to prepayments/write-offs due to prepayments of the underlying obligation for which we assumed, acquired or retained the servicing rights.

7 unchanged sentences

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

4 unchanged sentences

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.

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

Summarized investment balances as of March 31, 2023 and December 31, 2022 are presented in the following table.

(in millions) March 31, 2023 December 31, 2022

Summarized investment balances as of June 30, 2023 and December 31, 2022 are presented in the following table.

(in millions) June 30, 2023 December 31, 2022

JLL Technologies investments $ 469.1 483.4

3 unchanged sentences

Our JLL Technologies investments are, generally, investments in early to mid-stage proptech companies as well as proptech funds, while our LaSalle co-investments are, primarily, direct investments in 49 separate property or commingled funds, where we co-invest alongside our clients and for which we also have an advisory agreement.

We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 326.9 million and $ 16.0 million as of March 31, 2023 for our LaSalle Investment Management business and JLL Technologies, respectively.

We have maximum potential unfunded commitments to direct investments or investment vehicles of $ 324.1 million and $ 14.9 million as of June 30, 2023 for our LaSalle Investment Management business and JLL Technologies, respectively.

Of the $ 324.1 million related to LaSalle, while we remain contractually obligated, we do not expect a call on the $ 60.3 million relating to a specific investment since the underlying fund moved into its liquidation phase in January 2020.

4 unchanged sentences

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

As a result of the reconsideration event described above, there were no consolidated VIE balances as of March 31, 2023 and December 31, 2022;

As a result of the reconsideration event described above, there were no consolidated VIE balances as of June 30, 2023 and December 31, 2022;

net income was consolidated up to the reconsideration date.

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

1 unchanged sentence

Operating and other expenses — ( 6.0 ) — ( 11.7 )

Net loss $ — ( 2.2 )

We allocate the net loss of the consolidated VIEs to the noncontrolling interest holders as Net income (loss) attributable to noncontrolling interest in our Condensed Consolidated Statements of Comprehensive Income.

There were no significant other-than-temporary impairment charges on investments for the three months ended March 31, 2023 and 2022.

Net gains on sale of investments (1)

— 142.3 — 142.3

Net income $ — 141.4 $ — 139.2

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

We allocated the net income of the consolidated VIEs to the noncontrolling interest holders as Net income (loss) attributable to noncontrolling interest in our Condensed Consolidated Statements of Comprehensive Income.

There were no significant other-than-temporary impairment charges on investments for the six months ended June 30, 2023 and 2022.

We report a majority of our investments at fair value.

7 unchanged sentences

Foreign currency translation adjustments, net 5.4 ( 19.2 )

Fair value investments as of March 31, $ 825.5 677.5

Fair value investments as of June 30, $ 802.5 786.1

(1) In the second quarter of 2023, $63.8 million in Notes receivable matured and (inclusive of accrued interest) converted to equity.

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

7 unchanged sentences

Contractual Life

Unvested as of December 31, 2022

Unvested as of March 31, 2023

688.4 316.4 1,004.8 $ 192.36 1.66

2 unchanged sentences

Forfeited ( 15.1 ) ( 4.6 ) ( 19.7 ) 186.15

Unvested as of June 30, 2023

1,003.4 463.6 1,467.0 $ 174.54 1.85

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

Vested ( 28.6 ) — ( 28.6 ) 129.96

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

(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, 2022

3 unchanged sentences

Forfeited ( 22.4 ) ( 29.0 ) ( 51.4 ) 148.89

Unvested as of March 31, 2022

Unvested as of June 30, 2023

1,003.4 463.6 1,467.0 $ 174.54 1.85

As of March 31, 2023, we had $ 77.9 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2027.

Unvested as of December 31, 2021

912.4 646.0 1,558.4 $ 152.27 1.99

Granted 188.5 113.0 301.5 223.61

Vested ( 151.4 ) ( 175.1 ) ( 326.5 ) 147.57

Forfeited ( 10.5 ) ( 7.0 ) ( 17.5 ) 173.44

Unvested as of June 30, 2022

939.0 576.9 1,515.9 $ 167.23 1.98

As of June 30, 2023, we had $ 104.5 million of unamortized deferred compensation related to unvested RSUs and PSUs, which we anticipate recognizing over varying periods into 2027.

FAIR VALUE MEASUREMENTS

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The fair value and carrying value of our debt are presented in the following table.

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Long-term debt, fair value $ 363.3 360.9

6 unchanged sentences

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, 2023 and December 31, 2022, investments at fair value using NAV were $ 303.5 million and $ 284.6 million, respectively.

As of June 30, 2023 and December 31, 2022, investments at fair value using NAV were $ 314.1 million and $ 284.6 million, respectively.

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

1 unchanged sentence

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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

10 unchanged sentences

Total liabilities at fair value $ — 526.3 203.9 — 490.2 242.7

We classify one investment as Level 1 in the fair value hierarchy as quoted price are readily available.

We classify one investment as Level 1 in the fair value hierarchy as a quoted price is readily available.

We increase or decrease our investment each reporting period by the change in the fair value of the investment.

We report the fair value adjustments in our Condensed Consolidated Statements of Comprehensive Income within Equity earnings.

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 was deemed to approximate fair value for the majority of these investments due to the proximity of the investment date or date of most recent financing raise to the balance sheet date as well as consideration of 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.

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

To the extent there are changes in fair value, we recognize such changes through Equity earnings/losses.

Such changes are generally the result of pricing in subsequent funding rounds, changes in business strategy or performance updates from the investee, several of which occurred in the second quarter of 2023.

For most of our investments, the carrying value was deemed to approximate fair value due to the proximity of the investment date, or date of most recent financing raise, to the balance sheet date, as well as consideration of investee-level performance updates.

Foreign Currency Forward Contracts

3 unchanged sentences

The following table details the gross notional value and net basis of these contracts.

(in billions) March 31, 2023 December 31, 2022

(in billions) June 30, 2023 December 31, 2022

Foreign currency forward contracts, gross notional value $ 1.76 1.81

2 unchanged sentences

The outstanding balances of these contracts are presented in the following table.

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Net asset, receivable positions $ 5.4 7.7

5 unchanged sentences

Warehouse Receivables

As of March 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, 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.

Deferred Compensation Plan

Deferred Compensation

We maintain a deferred compensation plan for certain of our U.S.

employees that allows them to defer portions of their compensation.

We recorded this plan on our Condensed Consolidated Balance Sheet as of March 31, 2023 as Deferred compensation plan assets of $ 551.3 million, long-term deferred compensation plan liabilities of $ 507.9 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 9.8 million.

We recorded this plan on our Condensed Consolidated Balance Sheet as of December 31, 2022 as Deferred compensation plan assets of $ 517.9 million, long-term deferred compensation plan liabilities of $ 485.4 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $ 9.8 million.

We recorded this plan on our Condensed Consolidated Balance Sheet as Deferred compensation plan assets, long-term deferred compensation plan liabilities, included in Deferred compensation, and as a reduction of equity, Shares held in trust.

The components of the plan are presented in the following table.

(in millions) June 30, 2023 December 31, 2022

Deferred compensation plan assets $ 559.5 517.9

Long-term deferred compensation plan liabilities 517.1 485.4

Shares held in trust 11.6 9.8

Earn-Out Liabilities

5 unchanged sentences

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

For the comparative period, we have reclassified certain investments previously reported as NAV investments to Level 3 to conform with current presentation.

(in millions) Balance as of March 31, 2023 Net change in fair value Foreign CTA (1)

Purchases / Additions Settlements Transfers In (2)

Balance as of

June 30, 2023

Investments $ 466.5 ( 103.9 ) 0.7 11.0 — 63.8 $ 438.1

Mortgage banking derivative assets and liabilities, net 12.8 43.9 — 37.4 ( 35.0 ) — 59.1

Earn-out liabilities 73.1 ( 0.6 ) — — ( 8.2 ) — 64.3

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

Purchases / Additions Settlements Balance as of June 30, 2022

Investments $ 344.2 45.3 — 71.1 ( 0.2 ) $ 460.4

Mortgage banking derivative assets and liabilities, net 37.1 2.2 — 48.4 ( 66.1 ) 21.6

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

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

Purchases / Additions Settlements Balance as of

March 31, 2023

Purchases / Additions Settlements Transfers In (2)

Balance as of

June 30, 2023

Investments $ 452.0 ( 99.0 ) 1.2 20.1 — 63.8 $ 438.1

2 unchanged sentences

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

Purchases / Additions Settlements Balance as of March 31, 2022

Purchases / Additions Settlements Balance as of June 30, 2022

Investments $ 303.5 62.5 — 94.6 ( 0.2 ) $ 460.4

2 unchanged sentences

Currency translation adjustments

(2) In the second quarter of 2023, Notes receivable (inclusive of accrued interest) converted to equity upon maturity and was classified as a Level 3 investment immediately.

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

9 unchanged sentences

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, 2023 or 2022.

We did not recognize any significant investment-level impairment losses during either of the six months ended June 30, 2023 or 2022.

See Note 6, 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, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Short-term debt:

9 unchanged sentences

We have a $ 3.35 billion unsecured revolving credit facility (the "Facility") that matures on April 14, 2026.

Pricing on the Facility ranges from Adjusted Term Secured Overnight Financing Rate ("SOFR") plus 0.875% to 1.35% , with pricing as of March 31, 2023 at Adjusted Term SOFR plus 0.94 %.

In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.4 million as of both March 31, 2023 and December 31, 2022.

Pricing on the Facility ranges from Adjusted Term Secured Overnight Financing Rate ("SOFR") plus 0.875% to 1.35% , with pricing as of June 30, 2023 at Adjusted Term SOFR plus 0.99 %.

In addition to outstanding borrowings under the Facility presented in the above table, we had outstanding letters of credit under the Facility of $ 0.4 million as of both June 30, 2023 and December 31, 2022.

In addition, we have an uncommitted credit agreement (the "Uncommitted Facility"), which allows for discretionary short-term liquidity of up to $ 400.0 million.

1 unchanged sentence

Between quarter-end dates, we intend to use the proceeds to reduce indebtedness under the Facility at a lower interest rate.

As such, the Uncommitted Facility had no outstanding balance as of both March 31, 2023 and December 31, 2022.

As such, the Uncommitted Facility had no outstanding balance as of both June 30, 2023 and December 31, 2022.

The following table provides additional information on our Facility and Uncommitted Facility, collectively.

Three Months Ended March 31,

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

($ in millions) 2023 2022 2023 2022

5 unchanged sentences

Amounts outstanding are presented in the debt table above.

As of March 31, 2023, our issuer and senior unsecured ratings are investment grade:

As of June 30, 2023, our issuer and senior unsecured ratings are investment grade:

Baa1 from Moody’s Investors Service, Inc.

1 unchanged sentence

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, 2023.

We remained in compliance with all covenants as of June 30, 2023.

Warehouse Facilities

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

12 unchanged sentences

(1) Bloomberg Short-Term Bank Yield Index rate ("BSBY")

(2) In July 2023, we extended the term of the Warehouse facility to July 26, 2024.

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

2 unchanged sentences

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, 2023.

We remained in compliance with all covenants under our facilities as of June 30, 2023.

COMMITMENTS AND CONTINGENCIES

6 unchanged sentences

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

In total, these receivables were $ 22.5 million as of both March 31, 2023 and December 31, 2022 and are included in Notes and other receivables on our Condensed Consolidated Balance Sheets.

As of June 30, 2023 and December 31, 2022, these receivables were $ 2.2 million and $ 22.5 million, respectively, and are included in Notes and other receivables on our Condensed Consolidated Balance Sheets.

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

4 unchanged sentences

Claims paid —

March 31, 2023 $ 2.3

June 30, 2023 $ 6.9

December 31, 2021 $ 1.2

1 unchanged sentence

Claims paid —

March 31, 2022 $ 1.2

June 30, 2022 $ 1.1

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

2 unchanged sentences

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, 2023 and December 31, 2022, we had loans, funded and sold, subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 18.9 billion and $ 18.3 billion, respectively.

As of June 30, 2023 and December 31, 2022, we had loans, funded and sold, subject to such loss-sharing arrangements with an aggregate unpaid principal balance of $ 19.9 billion and $ 18.3 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, 2023 and December 31, 2022, the loss-sharing guarantee obligations were $ 28.9 million and $ 29.0 million, respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets.

There were no loan losses incurred during the three months ended March 31, 2023 and 2022.

As of June 30, 2023 and December 31, 2022, the loss-sharing guarantee obligations were $ 30.2 million and $ 29.0 million, respectively, and are included in Other liabilities on our Condensed Consolidated Balance Sheets.

There were no loan losses incurred during the six months ended June 30, 2023 and 2022.

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 March 31, 2023 and December 31, 2022, the loan loss guarantee reserve was $ 20.6 million and $ 24.8 million, respectively, and is included within Other liabilities on our Condensed Consolidated Balance Sheets.

The loan loss guarantee reserve was $ 24.8 million as of both June 30, 2023 and December 31, 2022, and is included within Other liabilities on our Condensed Consolidated Balance Sheets.

RESTRUCTURING AND ACQUISITION CHARGES

3 unchanged sentences

Restructuring and acquisition charges are presented in the table below.

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

4 unchanged sentences

Restructuring and acquisition charges $ 11.8 25.9 $ 47.5 45.4

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 March 31, 2023 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, 2023 will be paid during the next twelve months.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

1 unchanged sentence

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

Balance as of December 31, 2022 $ ( 64.2 ) ( 584.0 ) $ ( 648.2 )

Other comprehensive income before reclassification — 26.8 26.8

Balance as of March 31, 2023 $ ( 64.2 ) ( 557.2 ) $ ( 621.4 )

Other comprehensive (loss) income before reclassification ( 1.1 ) 11.1 10.0

Amounts reclassified from AOCI after tax expense of

$ -, $ - and $ - — — —

Other comprehensive income after tax expense of $ - , $ - and $ - — 26.8 26.8

Other comprehensive (loss) income after tax expense of $ - , $ - and $ - ( 1.1 ) 11.1 10.0

Balance as of June 30, 2023 $ ( 65.3 ) ( 546.1 ) $ ( 611.4 )

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

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

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

Amounts reclassified from AOCI after tax expense of

$ - , $ - and $ - — — —

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 December 31, 2022 $ ( 64.2 ) ( 584.0 ) $ ( 648.2 )

Other comprehensive (loss) income before reclassification ( 1.1 ) 37.9 36.8

Amounts reclassified from AOCI after tax expense of

$ - , $ - and $ - — — —

Other comprehensive (loss) income after tax expense of $ - , $ - and $ - ( 1.1 ) 37.9 36.8

Balance as of June 30, 2023 $ ( 65.3 ) ( 546.1 ) $ ( 611.4 )

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

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

Other comprehensive loss before reclassification — ( 188.5 ) ( 188.5 )

2 unchanged sentences

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

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

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

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

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