UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number 1-13145
JONES LANG LASALLE INCORPORATED
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 36-4150422
------------------------- ---------------------------------
(State or other jurisdic- (IRS Employer Identification No.)
tion of incorporation or
organization)
200 East Randolph Drive, Chicago, IL 60601
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/782-5800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class May 14, 1999
----- --------------
Common Stock ($0.01 par value) 30,562,182
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . 18
Item 3. Quantitative and Qualitative Disclosures about
Market Risk. . . . . . . . . . . . . . . . . . . . . 25
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 26
Item 4. Submission of Matters to a Vote of
Securities Holders . . . . . . . . . . . . . . . . . 27
Item 5. Other Matters. . . . . . . . . . . . . . . . . . . . 27
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 28
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
($ in thousands, except share data)
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
---------- -----------
ASSETS
- ------
Current assets:
Cash and cash equivalents. . . . . . . . . $ 39,987 16,941
Trade receivables, net of allowances
of $10,257 and $3,978 in 1999 and
1998, respectively . . . . . . . . . . . 204,760 116,965
Notes receivable and advances to
real estate ventures . . . . . . . . . . 18,169 17,042
Other receivables. . . . . . . . . . . . . 9,364 3,385
Prepaid expenses . . . . . . . . . . . . . 7,194 2,185
Other assets . . . . . . . . . . . . . . . 2,568 --
Deferred and current tax benefit . . . . . 27,819 9,926
---------- ---------
Total current assets . . . . . . . 309,861 166,444
Property and equipment, at cost,
less accumulated depreciation of
$39,649 and $35,859 in 1999
and 1998, respectively . . . . . . . . . . 63,411 28,773
Intangibles resulting from
business acquisitions, net of
accumulated amortization of $17,860
and $11,961 in 1999 and 1998,
respectively . . . . . . . . . . . . . . . 390,304 229,437
Investments in real estate ventures. . . . . 49,908 52,976
Long-term receivables, net . . . . . . . . . 21,109 10,950
Deferred tax assets. . . . . . . . . . . . . 7,518 660
Prepaid pension asset. . . . . . . . . . . . 21,583 --
Other assets, net. . . . . . . . . . . . . . 3,194 1,681
---------- ----------
$ 866,888 490,921
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and
accrued liabilities. . . . . . . . . . . $ 116,109 51,101
Accrued compensation . . . . . . . . . . . 64,849 58,398
Short-term borrowings. . . . . . . . . . . 19,951 --
Other liabilities. . . . . . . . . . . . . 56,901 8,324
---------- ----------
Total current liabilities. . . . . 257,810 117,823
Long-term liabilities:
Credit facilities. . . . . . . . . . . . . 292,378 202,923
Other. . . . . . . . . . . . . . . . . . . 4,343 603
Commitments and contingencies
---------- ----------
Total liabilities. . . . . . . . . 554,531 321,349
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS - CONTINUED
MARCH 31, 1999 AND DECEMBER 31, 1998
($ in thousands, except share data)
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
---------- -----------
Stockholders' equity:
Common stock, $.01 par value per share,
100,000,000 shares authorized;
30,560,307 shares issued and
outstanding. . . . . . . . . . . . . . . 306 163
Additional paid-in capital . . . . . . . . 472,365 123,543
Deferred stock compensation. . . . . . . . (150,379) --
Unallocated ESOT shares. . . . . . . . . . (9) --
Retained earnings/(deficit). . . . . . . . (10,623) 44,792
Accumulated other comprehensive
income . . . . . . . . . . . . . . . . . 697 1,074
---------- ----------
Total stockholders' equity . . . . 312,357 169,572
---------- ----------
$ 866,888 490,921
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
($ in thousands, except share data)
(UNAUDITED)
1999 1998
---------- ----------
Revenue:
Fee-based services . . . . . . . . . . . . . $ 100,704 49,902
Equity in earnings from unconsolidated
ventures . . . . . . . . . . . . . . . . . 181 692
Other income . . . . . . . . . . . . . . . . 536 471
---------- --------
Total revenue. . . . . . . . . . . . . 101,421 51,065
Operating expenses:
Compensation and benefits. . . . . . . . . . 75,439 37,353
Operating, administrative and other. . . . . 31,317 16,445
Depreciation and amortization. . . . . . . . 6,955 2,616
---------- --------
Total operating expenses before merger
related non-recurring charges. . . . 113,711 56,414
---------- --------
Operating loss before merger
related non-recurring charges. . . . (12,290) (5,349)
Merger related non-recurring charges:
Stock compensation expense . . . . . . . . . 46,199 --
Integration and transition expenses. . . . . 7,844 --
---------- --------
Total merger related non-recurring
charges. . . . . . . . . . . . . . . 54,043 --
---------- --------
Total operating expenses . . . . . . . 167,754 56,414
---------- --------
Operating loss . . . . . . . . . . . . (66,333) (5,349)
Interest expense . . . . . . . . . . . . . . . 2,642 244
---------- --------
Loss before benefit for
income taxes . . . . . . . . . . . . (68,975) (5,593)
Net benefit for income taxes . . . . . . . . . (13,560) (2,153)
---------- --------
Net loss . . . . . . . . . . . . . . . $ (55,415) (3,440)
========== ========
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME - CONTINUED
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
($ in thousands, except share data)
(UNAUDITED)
1999 1998
---------- ----------
Other comprehensive income (loss),
net of tax:
Foreign currency translation
adjustments. . . . . . . . . . . . . . . . $ (433) 295
---------- ----------
Comprehensive loss . . . . . . . . . . . . . . $ (55,848) (3,145)
========== ==========
Basic loss per common share. . . . . . . . . . $ (3.09) (.21)
========== ==========
Weighted average shares outstanding. . . . . . 17,914,221 16,200,000
========== ==========
Diluted loss per common share. . . . . . . . . $ (3.09) (.21)
========== ==========
Diluted weighted average shares
outstanding. . . . . . . . . . . . . . . . . 17,914,221 16,359,961
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
PERIODS ENDED MARCH 31, 1999 AND DECEMBER 31, 1998
($ in thousands, except share data)
(UNAUDITED)
<CAPTION>
Deferred Effect of
Common Stock Additional Retained Stock Unallocated Cumulative
------------------- Paid-In Earnings Compen- ESOT Translation
Shares Amount Capital (Deficit) sation Shares Adjustment Total
---------- ------ ---------- --------- ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31,
1997 . . . . . . . . . 16,200,000 162 121,778 24,327 -- -- 630 146,897
Net earnings. . . . . -- -- -- 20,465 -- -- -- 20,465
Shares issued
under stock
purchase plan. . . . 64,176 1 1,765 -- -- -- -- 1,766
Other . . . . . . . . -- -- -- -- -- -- 444 444
---------- ----- -------- ------ -------- ------- ------ --------
Balances at
December 31, 1998 . . . 16,264,176 163 123,543 44,792 -- -- 1,074 169,572
Net loss. . . . . . . -- -- -- (55,415) -- -- -- (55,415)
Shares issued in
connection with:
Stock option
plan . . . . . . . 4,417 -- 107 -- -- -- -- 107
Stock compensa-
tion program . . . 37,598 -- 1,256 -- -- -- -- 1,256
Merger with JLW. . . 14,254,116 143 355,233 -- (160,253) (9) -- 195,114
Stock compensa-
tion adjustments. . -- -- (7,774) -- 6,383 -- -- (1,391)
Amortization of
deferred stock
compensation. . . . -- -- -- -- 3,491 -- -- 3,491
Other . . . . . . . . -- -- -- -- -- -- (377) (377)
---------- ----- -------- ------- -------- ------- ------ --------
Balances at
March 31, 1999 . . . . 30,560,307 $ 306 472,365 (10,623) (150,379) (9) 697 312,357
========== ===== ======== ======= ======== ======= ====== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
($ in thousands, unless otherwise noted)
(UNAUDITED)
1999 1998
-------- --------
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . $(55,415) (3,440)
Reconciliation of net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . 6,955 2,616
Equity in earnings from unconsolidated
ventures . . . . . . . . . . . . . . . . . . (181) (692)
Provision for loss on receivables and
other assets . . . . . . . . . . . . . . . . 2,524 1,043
Stock compensation expense . . . . . . . . . . 46,199 --
Changes in:
Receivables. . . . . . . . . . . . . . . . . . 31,729 515
Prepaid expenses and other assets. . . . . . . (4,894) 517
Deferred and current tax benefit . . . . . . . (20,180) 185
Accounts payable, accrued liabilities and
compensation and other liabilities . . . . . (97,057) (29,518)
-------- --------
Net cash used in operating activities. . . (90,320) (28,774)
Cash flows provided by (used in) investing
activities:
Net capital additions - property and
equipment. . . . . . . . . . . . . . . . . . . (5,888) (2,863)
Cash balances assumed in Jones Lang Wootton
merger, net of cash paid (Note 4). . . . . . . 26,039 --
Acquisition of Compass Birmann Asset
Management Services, net of cash acquired. . . (1,380) --
Acquisition of Satulah Group, net of
cash acquired. . . . . . . . . . . . . . . . . -- (5,465)
Investments in real estate ventures:
Capital contributions and advances to
real estate ventures . . . . . . . . . . . . (366) (11,549)
Distributions, repayments of advances
and sale of investments. . . . . . . . . . . 3,525 878
-------- --------
Net cash provided by (used in)
investing activities . . . . . . . . . . 21,930 (18,999)
Cash flows provided by (used in) financing
activities:
Net borrowings under long-term credit
facilities . . . . . . . . . . . . . . . . . . 91,397 30,519
Common stock issued under stock option plan. . . 107 --
-------- --------
Net cash provided by financing activities. 91,504 30,519
Effects of foreign currency translation on
cash balances. . . . . . . . . . . . . . . . . . (68) 68
-------- --------
Net increase (decrease) in
cash and cash equivalents. . . . . . . . 23,046 (17,186)
Cash and cash equivalents, beginning of period . . 16,941 30,660
-------- --------
Cash and cash equivalents, end of period . . . . . $ 39,987 13,474
======== ========
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
($ in thousands, unless otherwise noted)
(UNAUDITED)
Supplemental disclosure of cash flow information:
Interest paid was $2.6 million and $.2 million for the periods
ended March 31, 1999 and 1998, respectively.
Taxes paid were $10.0 million and $1.5 million for the periods
ended March 31, 1999 and 1998, respectively.
See accompanying notes to consolidated financial statements.
<PAGE>
JONES LANG LASALLE INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
($ in millions, except where otherwise noted)
(UNAUDITED)
Readers of this quarterly report should refer to our audited financial
statements for the year ended December 31, 1998, which are included in our
1998 Form 10-K, filed with the Securities and Exchange Commission, as
certain footnote disclosures which would substantially duplicate those
contained in such audited financial statements have been omitted from this
report.
(1) ORGANIZATION
Jones Lang LaSalle Incorporated ("Jones Lang LaSalle"), formerly
LaSalle Partners Incorporated [successor to LaSalle Partners Limited
Partnership and LaSalle Partners Management Limited Partnership
(collectively, the "Predecessor Partnerships")], was incorporated in
Maryland on April 15, 1997 (collectively referred to as the "Company"). On
July 22, 1997, the Company completed an initial public offering (the
"Offering") of 4.0 million shares of Jones Lang LaSalle common stock, $.01
par value per share (the "Common Stock"). In addition, all of the
partnership interests held in the Predecessor Partnerships were contributed
to the Company, pursuant to agreements among the general and limited
partners, in exchange for an aggregate of 12.2 million shares of common
stock. The contribution occurred immediately prior to the closing of the
Offering. The 4.0 million shares were offered at $23 per share,
aggregating $82.8 million, net of offering costs, of which $63.5 million
was used to retire long-term debt and related interest.
The Predecessor Partnerships were subject to a reorganization as part
of the Company's incorporation. Due to the existence of a paired share
arrangement between the Predecessor Partnerships and between the former
general partners of the Predecessor Partnerships, as well as the existence
of identical ownership before and after the incorporation of the
Predecessor Partnerships, such transactions were accounted for in a manner
similar to the accounting used for a pooling of interests. Thus, the
Company's financial statements include the financial positions and results
of operations of the Predecessor Partnerships at their historical basis.
On March 11, 1999, LaSalle Partners Incorporated and Jones Lang
Wootton ("JLW") completed the merger of their operations. In connection
with the merger, LaSalle Partners changed its name to Jones Lang LaSalle
Incorporated.
(2) INTERIM INFORMATION
The consolidated financial statements as of March 31, 1999 and for
the three months ended March 31, 1999 and 1998 are unaudited; however, in
the opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair presentation of the
consolidated financial statements for these interim periods have been
included. The results for the periods ended March 31, 1999 and 1998 are
not necessarily indicative of the results to be obtained for the full
fiscal year.
Certain 1998 amounts have been reclassified to conform with the 1999
presentation.
<PAGE>
(3) STOCK-BASED COMPENSATION
Jones Lang LaSalle grants stock options for a fixed number of shares
to employees with an exercise price equal to the fair value of the shares
at the date of grant. Jones Lang LaSalle follows the requirements of the
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees" in accounting for stock-based compensation, and,
accordingly, recognizes no compensation expense for stock option grants,
but provides the annual pro forma disclosures required by the Statement of
Financial accounting Standards ("SFAS") No. 123, "Accounting for Stock-
Based Compensation".
In connection with the merger with JLW, Jones Lang LaSalle issued
shares to former employees of JLW which are subject to vesting provisions
or are contingently returnable. Shares issued that are contingently
returnable are accounted for as a variable stock award plan. The remaining
shares issued are accounted for as a fixed stock award plan. Compensation
expense associated with shares subject to vesting is recognized over the
vesting period.
(4) JONES LANG WOOTTON MERGER
In accordance with the purchase and sale agreements, Jones Lang
LaSalle issued 14.3 million shares of its common stock, which is subject to
a post-closing net worth adjustment, plus $6.2 million in cash
(collectively, the "Consideration") in connection with the acquisition of
the property and asset management, advisory and other real estate
businesses operated by a series of JLW partnerships and corporations in
Europe, Asia, Australia, North America and New Zealand. Approximately 12.5
million of the shares were issued to former JLW equity owners (having both
direct and indirect ownership) and 1.8 million of the shares were placed in
an employee ownership trust ("ESOT") to be distributed by December 31, 2000
to selected employees of the former JLW entities. Issuance of the shares
was not registered under the U.S. securities laws, and the shares are
generally subject to a contractual one-year restriction on sale.
The transaction, which was principally structured as a share
exchange, has been treated as a purchase and is being accounted for using
both APB Opinion No. 16, "Business Combinations" and APB Opinion No. 25,
"Accounting for Stock Issued to Employees". Accordingly, JLW's operating
results will be included in Jones Lang LaSalle's results as of March 1,
1999, the effective date of the merger for accounting purposes.
Assuming that the closing net worth requirements are met, 7.6 million
shares, or 53% of the shares issued, are subject to accounting under APB
Opinion No. 16. The value of those shares totaled $149.5 million for
accounting purposes based on the five-day average closing stock price
surrounding the date the financial terms of the merger with JLW were
substantially complete, discounted at a rate of 20% for transferability
restrictions. The value of the shares, in addition to a cash payment of
$5.7 million and capitalizable transaction costs of approximately $12.5
million were allocated to the identifiable assets and liabilities acquired,
based on management's estimate of fair value, totaling $238.3 million and
$220.4 million, respectively. Included in the assets acquired is $26.0
million in cash, of which $6.5 million represents cash held on behalf of
clients and $11.2 million represents cash held pursuant to regulatory
requirements. Included in the liabilities assumed is $34.0 million due to
former equity owners of JLW primarily representing prior year profit
distributions. The excess purchase price of $155.4 million was allocated
to goodwill which is being amortized on a straight-line basis over 40 years
based on management's estimate of useful lives.
<PAGE>
The remaining 6.7 million shares, or 47% of the shares issued, and
$.4 million in cash paid are subject to accounting under APB Opinion No.
25. Accordingly, shares issued are being accounted for as compensation
expense or deferred compensation expense to the extent they are subject to
forfeiture or vesting provisions. Included in the 6.7 million shares are
1.6 million shares that are subject to variable stock award plan
accounting. The remaining 5.1 million shares and the $.4 million in cash
paid are subject to fixed stock award plan accounting. Compensation expense
incurred for the three months ended March 31, 1999 totaled $46.2 million,
inclusive of the compensation expense recognized at closing and the
amortization of deferred compensation for the period.
(5) EARNINGS PER SHARE
The basic and diluted losses per common share were calculated based
on basic weighted average shares outstanding of 17.9 million for the three
months ended March 31, 1999. Consideration shares issued as a result of
the merger with JLW, to the extent included, have been weighted as of March
11, 1999. As a result of the operating loss incurred for the period,
diluted weighted average shares outstanding for the three months ended
March 31, 1999 do not give effect to common stock equivalents, consisting
principally of consideration shares issued in connection with the JLW
merger that are subject to vesting provisions or are contingently
returnable, as to do so would create an anti-dilutive effect. Basic and
diluted losses per common share for the three months ended March 31, 1998
were based on weighted average shares outstanding of 16.2 million and 16.4
million, respectively. The 1998 diluted weighted average shares
outstanding reflect an increase of .2 million shares primarily representing
the dilutive effect of outstanding stock options whose exercise price was
less than the average market price of the Company's stock for the period
and, to a lesser extent, the dilutive effect of shares to be issued under
the Company's employee stock benefit plans.
(6) BUSINESS SEGMENTS
As a result of the merger with JLW, Jones Lang LaSalle is managing
its business along a combination of functional and geographic lines.
Accordingly, operations have been classified into six business segments,
two global functional businesses: (i) Investment Management and (ii) Hotel
Services; and four geographic regions consisting of the: (iii) Americas;
(iv) Europe; (v) Asia; and (vi) Australasia. The Investment Management
segment provides real estate investment management services to
institutional investors, corporations, and high net worth individuals. The
Hotels Services segment provides strategic advisory, sales, acquisition and
asset management services. The geographic regions of the Americas, Europe,
Asia and Australasia each provide Owner and Occupier Services which consist
primarily of tenant representation and agency leasing, investment
disposition and acquisition, and valuation services (collectively,
"implementation services") and property, facility, development and project
management services (collectively, "management fees"). Results for 1998
have been realigned based upon the current business segments.
Total revenue by industry segment includes revenue derived from
services provided to other segments. Operating income represents total
revenue less direct and indirect allocable expenses. The Company allocates
all expenses, other than interest and income taxes, as substantially all
expenses incurred benefit one or more of the segments. Merger related non-
recurring charges are not allocated to the segments.
<PAGE>
Summarized unaudited financial information by business segment for
the three month periods ended March 31, 1999 and 1998 is as follows ($ in
thousands):
SEGMENT
OPERATING RESULTS
--------------------------
1999 1998
---------- ----------
OWNER AND OCCUPIER SERVICES -
AMERICAS
Revenue:
Implementation services. . . . . . . . . . $ 15,434 10,801
Management fees. . . . . . . . . . . . . . 26,610 15,666
Equity earnings. . . . . . . . . . . . . . (180) (5)
Other services . . . . . . . . . . . . . . 2,247 1,290
Intersegment revenue . . . . . . . . . . . 62 71
---------- ----------
44,173 27,823
Operating expenses:
Compensation, operating and
administrative expenses. . . . . . . . . 57,086 38,037
Depreciation and amortization. . . . . . . 5,043 994
---------- ----------
Operating loss . . . . . . . . . . . $ (17,956) (11,208)
========== ==========
EUROPE
Revenue:
Implementation services. . . . . . . . . . $ 18,434 --
Management fees. . . . . . . . . . . . . . 6,331 3
Equity earnings. . . . . . . . . . . . . . (21) --
Other services . . . . . . . . . . . . . . 3,039 --
---------- ----------
27,783 3
Operating expenses:
Compensation, operating and
administrative expenses. . . . . . . . . 21,189 285
Depreciation and amortization. . . . . . . 615 --
---------- ----------
Operating income (loss). . . . . . . $ 5,979 (282)
========== ==========
AUSTRALASIA
Revenue:
Implementation services. . . . . . . . . . $ 3,232 --
Management fees. . . . . . . . . . . . . . 1,575 --
Equity earnings. . . . . . . . . . . . . . (24) --
Other services . . . . . . . . . . . . . . 463 --
---------- ----------
5,246 --
Operating expenses:
Compensation, operating and
administrative expenses. . . . . . . . . 6,370 --
Depreciation and amortization. . . . . . . 198 --
---------- ----------
Operating loss . . . . . . . . . . . $ (1,322) --
========== ==========
<PAGE>
SEGMENT
OPERATING RESULTS
--------------------------
1999 1998
---------- ----------
ASIA
Revenue:
Implementation services. . . . . . . . . . $ 2,300 45
Management fees. . . . . . . . . . . . . . 1,893 --
Other services . . . . . . . . . . . . . . 288 1
---------- ----------
4,481 46
Operating expenses:
Compensation, operating and
administrative expenses. . . . . . . . . 5,001 381
Depreciation and amortization. . . . . . . 208 2
---------- ----------
Operating loss . . . . . . . . . . . $ (728) (337)
========== ==========
HOTEL SERVICES -
Revenue:
Implementation services. . . . . . . . . . $ 854 --
---------- ----------
854 --
Operating expenses:
Compensation, operating and
administrative expenses. . . . . . . . . 920 --
Depreciation and amortization. . . . . . . 11 --
---------- ----------
Operating loss . . . . . . . . . . . $ (77) --
========== ==========
INVESTMENT MANAGEMENT -
Revenue:
Implementation services. . . . . . . . . . $ 1,606 952
Advisory fees. . . . . . . . . . . . . . . 16,614 21,416
Equity earnings. . . . . . . . . . . . . . 406 697
Other services . . . . . . . . . . . . . . 320 199
Intersegment revenue . . . . . . . . . . . 35 --
---------- ----------
18,981 23,264
Operating expenses:
Compensation, operating and
administrative expenses. . . . . . . . . 16,286 16,022
Depreciation and amortization. . . . . . . 881 764
---------- ----------
Operating income . . . . . . . . . . $ 1,814 6,478
========== ==========
Total segment revenue. . . . . . . . . . . . . $ 101,518 51,136
Intersegment revenue eliminations. . . . . . . (97) (71)
---------- ----------
Total revenue. . . . . . . . . . . . $ 101,421 51,065
========== ==========
Total segment operating expenses . . . . . . . $ 113,808 56,485
Intersegment operating expense
eliminations . . . . . . . . . . . . . . . . (97) (71)
---------- ----------
Total operating expenses
before merger related
non-recurring charges. . . . . . . $ 113,711 56,414
========== ==========
Operating loss before
merger related
non-recurring charges. . . . . . . $ (12,290) (5,349)
========== ==========
<PAGE>
(7) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Pro Forma results for the three months ended March 31,
1999 give effect to the merger with JLW as if it occurred on January 1,
1999. Jones Lang LaSalle Actual results reflect the results of operations
of the LaSalle Partners' businesses for the two months ended February 28,
1999 and the operations of the merged Jones Lang LaSalle businesses for the
month ended March 31, 1999. JLW Results reflect operating results for each
of the JLW companies for the two months ended February 28, 1999, as
adjusted for market compensation, taxes and other costs associated with the
integration of the companies. Acquisition Adjustments represent the impact
of the additional amortization of goodwill resulting from the merger, and
income taxes as if Jones Lang LaSalle was taxable for the period at an
effective tax rate of 38%. Merger-Related Adjustments reflect the
additional non-cash compensation expense associated with certain shares
issued in connection with the JLW merger and the related income tax effect
as if the merger had occurred on January 1, 1999. Pro Forma weighted
average shares outstanding include shares issued in connection with the
merger with JLW, excluding those shares which are contingently returnable
or subject to vesting provisions, as though they were issued on January 1,
1999.
The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The pro forma
consolidated financial statements are not necessarily indicative of what
the actual results of operations would have been for the period ended
March 31, 1999 had the JLW merger been completed as of the dates indicated
nor does it purport to represent the future financial position or results
of operations of Jones Lang LaSalle.
<PAGE>
<TABLE>
<CAPTION>
Jones Lang Merger-
LaSalle JLW Acquisition Adjusted Related
Actual Results Adjustments Pro Forma Adjustments Pro Forma
---------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Fee-based services . . . . . $ 100,704 58,039 -- 158,743 -- 158,743
Equity in earnings from uncon-
solidated ventures . . . . 181 -- -- 181 -- 181
Other income . . . . . . . . 536 421 -- 957 -- 957
---------- ---------- ---------- ---------- ---------- ----------
Total revenue. . . . . 101,421 58,460 -- 159,881 -- 159,881
Operating expenses:
Compensation and benefits. . 75,439 43,610 -- 119,049 -- 119,049
Operating, administrative
and other. . . . . . . . . 31,317 18,360 -- 49,677 -- 49,677
Depreciation and
amortization . . . . . . . 6,955 2,197 850 10,002 -- 10,002
---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses before
merger related non-
recurring charges. . 113,711 64,167 850 178,728 -- 178,728
---------- ---------- ---------- ---------- ---------- ----------
Operating loss before
merger related non-
recurring charges. . (12,290) (5,707) (850) (18,847) -- (18,847)
Merger related non-recurring charges:
Compensation expense
associated with shares
issued . . . . . . . . . 46,199 -- -- 46,199 8,663 54,862
Integration and transition
expenses . . . . . . . . 7,844 12,325 -- 20,169 -- 20,169
---------- ---------- ---------- ---------- ---------- ----------
Total merger related
non-recurring
charges. . . . . . . 54,043 12,325 -- 66,368 8,663 75,031
---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses . . . . . . 167,754 76,492 850 245,096 8,663 253,759
---------- ---------- ---------- ---------- ---------- ----------
Operating loss . . . . (66,333) (18,032) (850) (85,215) (8,663) (93,878)
Interest expense, net. . . . 2,642 (93) -- 2,549 -- 2,549
---------- ---------- ---------- ---------- ---------- ----------
<PAGE>
Jones Lang Merger-
LaSalle JLW Acquisition Adjusted Related
Actual Results Adjustments Pro Forma Adjustments Pro Forma
---------- ---------- ----------- ---------- ----------- ----------
Loss before benefit
for income taxes . . (68,975) (17,939) (850) (87,764) (8,663) (96,427)
Net provision (benefit)
for income taxes . . . . . (13,560) (2,133) (323) (16,016) 328 (15,688)
---------- ---------- ---------- ---------- ---------- ----------
Net loss . . . . . . . $ (55,415) (15,806) (527) (71,748) (8,991) (80,739)
========== ========== ========== ========== ========== ==========
Basic loss per common share. $ (3.09) $ (3.47)
========== ==========
Weighted average shares
outstanding. . . . . . . . 17,914,221 23,269,711
========== ==========
Diluted loss per common
share. . . . . . . . . . . $ (3.09) $ (3.47)
========== ==========
Diluted weighted average
shares outstanding . . . . 17,914,221 23,269,711
========== ==========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Jones Lang LaSalle Incorporated (formerly LaSalle Partners
Incorporated) is a leading full-service real estate services firm that
provides investment management, hotel acquisition, disposition, strategic
advisory and valuation, property management, facility management,
development management, project management, tenant and agency leasing,
investment disposition and acquisition and financing and capital placement
services on a local, regional and global basis. With over 6,000 employees
in 96 major markets spanning 34 countries and five continents, Jones Lang
LaSalle is able to satisfy local service needs on a regional and
international basis. The ability to provide this network of services
around the globe was solidified effective March 11, 1999 with the merger of
LaSalle Partners Incorporated with the Jones Lang Wootton ("JLW")
companies.
In accordance with the purchase and sale agreements, Jones Lang
LaSalle issued 14.3 million shares of common stock, which is subject to a
post closing net worth adjustment, in addition to $6.2 million in cash
(collectively, the "Consideration"). Included in the 14.3 million shares
are 1.2 million shares subject to the closing net worth adjustment.
Management anticipates that these calculations will be completed in the
second quarter of 1999 with the resulting impact on shares issued resolved
shortly thereafter. Approximately 12.5 million of those shares were issued
to former JLW equity owners and 1.8 million shares were placed in an
employee ownership trust ("ESOT") to be distributed by December 31, 2000 to
selected employees of the former JLW entities. Included in the total ESOT
shares are .9 million that were allocated on March 11, 1999, with the
remaining shares of .3 million and .6 million to be allocated on
December 31, 1999 and 2000, respectively. Issuance of the shares was not
registered under the U.S. securities laws, and the shares are generally
subject to a contractual one-year restriction on sale.
The merger, which was principally structured as a share exchange, has
been treated as an acquisition and is being accounted for using both APB
Opinion No. 16, "Business Combinations" and APB Opinion No. 25, "Accounting
for Stock Issued to Employees". In accordance with the purchase and sale
agreements, the merger is effective for accounting purposes as of March 1,
1999. Accordingly, the results of operations for the former JLW entities
have been included in the first quarter results of Jones Lang LaSalle from
that date.
As a general matter, the accounting treatment of the Consideration is
dependent on whether the recipient (i) had a legal ownership interest in
the JLW entities prior to the integration of those entities ("Current JLW
Owners"); (ii) obtained their legal ownership interest in the JLW entities
as part of the JLW integration ("New JLW Owners"); or, (iii) will receive
their shares from the ESOT. The accounting treatment is further dependent
on whether the shares issued are non-restricted ("Non-restricted Shares"),
issued from the ESOT ("ESOT Shares"), or are subject to (i) forfeiture
provisions ("Forfeiture Shares); (ii) indemnification provisions
("Indemnification Shares"); or, (iii) closing net worth requirements
("Adjustment Shares").
All Consideration paid to Current JLW Owners, excluding Forfeiture
Shares, has been accounted for using the purchase method of accounting
under APB Opinion No. 16. Such Consideration, assuming the net worth
requirements are met, consists of 7.6 million shares and $5.7 million in
cash. The shares were valued based on the average price of Jones Lang
LaSalle (formerly LaSalle Partners Incorporated) common stock of $24.66 per
<PAGE>
share for the five day period that includes the two trading days
immediately preceding, the trading day of, and the two trading days
immediately following the date of substantial completion of negotiations
regarding the principal financial terms of the merger (October 9, 1998)
discounted at a rate of 20%, to account for transferability restrictions
applicable to such shares. The total value attributed to the issuance of
shares, $149.5 million, in addition to the cash payment and capitalizable
transaction costs of approximately $12.5 million have been allocated to the
identifiable assets and liabilities acquired with the excess value being
allocated to goodwill which is being amortized over its estimated useful
life of 40 years.
Accounting under APB Opinion No. 25 is being applied to the remaining
6.7 million shares which represents all shares issued to New JLW Owners,
shares allocated from the ESOT and Forfeiture Shares issued to Current JLW
Owners. Shares issued or allocated from the ESOT at March 11, 1999 were
valued at $35.375, the market price of Jones Lang LaSalle common stock on
March 10, 1999. Shares to be allocated from the ESOT on December 31, 1999
and 2000, totaling .9 million, will be valued based on the prevailing
market price of the common stock on those dates.
Of the 5.8 million shares issued or allocated from the ESOT on
March 11, 1999, 1.4 million shares, which are deemed to be contingently
returnable, are being accounted for as a variable stock award plan. Such
shares include Forfeiture Shares issued to the JLW Asia Shareholders (which
are subject to indemnification provisions) in addition to Adjustment and
Indemnification Shares issued to New JLW Owners and allocated from the ESOT
at March 11, 1999. 1.2 million shares subject to forfeiture or vesting
provisions have been accounted for as deferred compensation with
compensation expense to be recognized over the forfeiture or vesting
period. The value of the remaining .2 million shares was accounted for as
compensation expense on March 11, 1999. Under a variable stock award plan,
the amount of compensation expense and value of deferred compensation will
be adjusted at the end of each quarter based on the change in stock price
from the previous quarter until the final number of shares to be issued is
known.
The remaining 4.4 million shares issued or allocated from the ESOT on
March 11, 1999 subject to accounting under APB Opinion No. 25 are being
accounted for as a fixed stock award plan. Such shares include Forfeiture
Shares issued to Current JLW Owners (excluding Forfeiture Shares issued to
JLW Asia Shareholders which are subject to indemnification provisions) and
New JLW Owners in addition to shares allocated from the ESOT on March 11,
1999 which are not subject to indemnity and adjustment provisions. 3.4
million of those shares are subject to forfeiture or vesting provisions and
have been accounted for as deferred compensation with compensation expense
to be recognized over the forfeiture or vesting period. The value of the
remaining 1.0 million shares, in addition to a cash payment of $.4 million,
were accounted for as compensation expense on March 11, 1999.
Compensation expense incurred for the three months ended March 31,
1999 related to the issuance of shares and the amortization of deferred
compensation totaled $46.2 million, net of the quarterly adjustment for the
change in stock price from March 11, 1999 to March 31, 1999. Deferred
compensation at March 31, 1999 totaled $150.4 million, including the effect
of the quarterly adjustment for the change in stock price, which will be
amortized into compensation expense through December 31, 2000. Such
compensation expense, in addition to compensation expense anticipated to be
incurred at December 31, 1999 and 2000 associated with the final
allocations of ESOT shares, is expected to result in significant non-cash
net losses for Jones Lang LaSalle for those periods.
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1998
Operating results for the three months ended March 31, 1999 include
the results of the acquired Compass businesses (the acquisition was
completed in October 1998) and the results of the JLW entities effective
March 1, 1999. Total revenue, after elimination of intersegment revenue,
increased $50.4 million to $101.4 million for the three months ended
March 31, 1999 from $51.1 million in the prior year period, primarily as a
result of these two transactions. Total operating expenses, after
elimination of intersegment expenses and excluding the effect of merger
related non-recurring charges, increased $57.3 million to $113.7 million
for the three months ended March 31, 1999 from $56.4 million in the prior
year period, also substantially a result of these transactions, and, to a
lesser extent, to increased personnel and related personnel and facility
costs in the Americas Region as a result of the continued strength in the
United States real estate environment.
Merger related non-recurring charges totaled $54.0 million for the
three months ended March 31, 1999. $46.2 million of these charges
represent non-cash compensation expense recorded as a result of shares
issued to certain former employees of JLW in connection with the merger.
$7.8 million of these charges represent non-recurring transition and
integration costs of which approximately 50% are attributable to the
integration of the acquired Compass businesses. The remaining transition
expense relates to the merger with JLW, and represents non-capitalizable
expenses such as rebranding, office consolidations, and information
technology initiatives.
SEGMENT OPERATING RESULTS
INVESTMENT MANAGEMENT. Investment Management revenue decreased $4.3
million to $19.0 million for the three months ended March 31, 1999 from
$23.3 million for the prior year period. This decrease is primarily
attributable to performance fees generated in the first quarter of 1998 on
the disposition of certain assets under management, partially offset by
increased advisory and acquisition fees earned as a result of the merger
with JLW. Operating expenses increased $.4 million to $17.2 million for
the three months ended March 31, 1999 from $16.8 million in the prior year
period primarily as a result of the merger with JLW, partially offset by
decreased incentive compensation levels in the first quarter of 1999
consistent with the lower operating income.
HOTEL SERVICES. Hotel Services, a new reportable segment as a result
of the recent merger, had total revenue of $.9 million. Services provided
represented a combination of valuation, disposition and acquisition
services. Operating expenses for the segment totaled $.9 million for the
three months ended March 31, 1999.
AMERICAS REGION. Revenue for the Americas Region increased $16.4
million to $44.2 million for the three months ended March 31, 1999 from
$27.8 million in the prior year period. The increase is primarily
attributable to the acquisition of Compass and the resulting increase in
leasing, property management and facility management fees, and, to a lesser
extent, to performance fees generated on the disposition of certain assets
by the Investment Banking Unit, an increased number of strategic alliance
clients for the Project Management unit and the merger with JLW. Operating
expenses for the segment increased to $23.1 million to $62.1 million for
the three months ended March 31, 1999 from $39.0 million in the prior year
period. The increase is primarily a result of the acquisition of Compass
and the merger with JLW, and, to a lesser extent, to increased staffing
levels and related facility costs associated with the continued strength of
the United States economy and resulting deal flow.
<PAGE>
EUROPE REGION. Revenue for the Europe Region, which is substantially
a new reportable segment as a result of the merger and the acquisition of
Compass, totaled $27.8 million for the three months ended March 31, 1999.
The revenue generated by the Region primarily reflects robust activity
within the United Kingdom primarily in the form of tenant and agency
leasing activities and investment sales and acquisition transactions, and
to a lesser extent to property and facility management activities.
Operating expenses for the region totaled $21.8 million for the three
months ended March 31, 1999.
ASIA REGION. Revenue for the Asia Region, also substantially a new
reportable segment as a result of the merger, totaled $4.5 million for the
three months ended March 31, 1999, primarily reflecting strong activity
within Hong Kong representing management fees, agency leasing activity and
valuation services. Operating expenses totaled $5.2 million for the three
months ended March 31, 1999.
AUSTRALASIA REGION. Revenue for the Australasia Region, a new
reportable segment as a result of the merger and the acquisition of
Compass, totaled $5.2 million for the three months ended March 31, 1999.
Operating expenses totaled $6.6 million for the three months ended
March 31, 1999.
OPERATING LOSS
The operating loss, excluding the effect of merger related non-
recurring charges increased $6.9 million to a loss of $12.3 million for the
three months ended March 31, 1999 from a loss of $5.3 million for the prior
year period. Operating expenses, excluding merger related non-recurring
charges, remained relatively constant as a percentage of revenue at 112%
for the three months ended March 31, 1999 compared to 110% for the prior
year period.
Including the effect of the merger related non-recurring charges, the
operating loss increased $61.0 million to a loss of $66.3 million for the
three months ended March 31, 1999 from a loss of $5.3 million in the prior
year period.
INTEREST EXPENSE
Interest expense increased $2.4 million to $2.6 million for the three
months ended March 31, 1999 from $.2 million in the prior year period,
primarily as a result of the acquisition of Compass and the related
borrowings on the acquisition facility.
BENEFIT FOR INCOME TAXES
The benefit for income taxes increased $11.4 million to $13.6 million
for the three months ended March 31, 1999 from $2.2 million in the prior
year period as a result of the increased net loss, exclusive of the
compensation expense associated with the issuance of shares to former JLW
employees in connection with the merger, at an effective tax rate of 38%.
In addition, a benefit has been recognized on a portion of the stock
compensation expense, which is largely non-deductible for tax purposes,
based on the rates prevailing in the applicable country.
<PAGE>
NET LOSS
The net loss increased $52.0 million to $55.4 million for the three
months ended March 31, 1999 from a loss of $3.4 million in the prior year
period. Exclusive of the merger related non-recurring charges and the
associated tax benefit, the net loss for the three months ended March 31,
1999 represented 9% of operating revenue compared to 7% in the prior year
period. The increase is primarily attributed to the increase in interest
expense associated with the acquisition of Compass and related borrowings
on the acquisition facility.
LIQUIDITY AND CAPITAL RESOURCES
Jones Lang LaSalle meets its cash requirements primarily from
operating activities. No one client accounts for more than 10% of total
revenue. During the three months ended March 31, 1999, cash flows used in
operating activities totaled $90.3 million, an increase of $61.5 million
over the prior year period. The increased use is primarily a result of
higher bonus accruals at December 31, 1998 as compared to December 31,
1997, which are paid in the first quarter of the following year, resulting
from stronger operating results. Additionally, increased operating
expenses resulting from the acquisition of Compass and the merger with JLW,
and the related payment of integration and transition expenses further
impacted the operating cash use.
Jones Lang LaSalle will continue to pursue co-investment opportunities
with investment management clients, for which the holding period typically
ranges from three to seven years. Management anticipates that co-
investment activity within the Americas and Europe regions will increase
with potential expansion into Asia and Australasia, as appropriate
opportunities arise. This strategy should serve to grow the assets under
management, generate returns on investment and create potential
opportunities to provide other services. Such co-investments are
represented by non-controlling general partner and limited partner
interests. In addition to a share of investment returns, we typically earn
investment management fees, and in some cases, property management and
leasing fees on these investments. The equity earnings from these co-
investments have had a relatively small impact on our current earnings and
cash flow. However, our increased participation could increase
fluctuations in our net earnings and cash flow as a result of the timing
and magnitude of the gains or losses and potential incentive participation
fees, if any, to be recognized upon the disposition of these assets. In
certain of these investments, we will not have complete discretion to
control the timing of the disposition of such investments. As of March 31,
1999, we had a total investment of $49.7 million in 31 separate property or
fund co-investments with additional capital commitments of $15.8 million
for future fundings of co-investments.
Net cash provided by investing activities was $21.9 million for the
three months ended March 31, 1999 compared with net cash used in investing
activities of $18.9 million for the prior year period. The increased cash
provided of $40.8 million is primarily attributable to the net cash
balances assumed in the merger with JLW of $26.0 million, of which $6.5
million represents cash held on behalf of clients and $11.2 million
represents cash held pursuant to regulatory requirements. The 1999
increase, as compared to the prior year period, is further impacted by the
higher level of co-investment during 1998 in addition to the acquisition of
the project management business of the Satulah Group Inc. in January 1998
for $5.5 million in cash. Finally, we experienced increased net capital
expenditures of $3.0 million primarily as a result of the continued
customization and implementation of a new property accounting and
information system and expansion of corporate offices as a result of the
recent merger and acquisition, in addition to the recurring replacement of
personal computers. We anticipate that future capital expenditures will
increase as a result of the needs of our expanded global organization as
well as due to the integration of our operations, including improvements
for our global accounting and communication systems.
<PAGE>
Historically, we have financed our operations, acquisitions and co-
investments with internally generated funds, ownership equity and
borrowings under revolving credit facilities. In addition to our existing
five year unsecured revolving credit facility of $150 million and our $175
million credit facility which was used exclusively to finance the
acquisition of Compass, we obtained a short-term facility of $45.0 million
in May 1999 which bears variable rates of interest based on market rates
and matures on July 31, 1999. We are also in the process of increasing our
revolving credit facility through our existing lenders or new lenders.
There can be no assurance as to the terms and conditions of such increased
facility. The revolving credit facility and short-term credit facility are
available for working capital, co-investment, and acquisitions. The
facilities are guaranteed by certain of our subsidiaries. We must maintain
a certain level of consolidated net worth and ratio of funded debt to
EBITDA, and must meet a minimum fixed charge coverage ratio. Additionally,
we are restricted from, among other things, incurring certain levels of
indebtedness to lenders outside of the facilities and disposing of a
significant portion of our assets, and are subject to lender approval on
certain levels of co-investment. The facilities bear variable rates of
interest based on market rates. We had outstanding borrowings of $292.4
million as of March 31, 1999 on our long-term credit facilities. Our
effective interest rate on our long-term revolving credit facilities was
5.8% and 6.4% for the three months ended March 31, 1999 and 1998,
respectively.
Jones Lang LaSalle has additional access to capital via various
overdraft facilities and short-term credit facilities in Europe, Asia and
Australia. The amount available under these facilities totals $38.4
million, of which $20.0 million was outstanding at March 31, 1999.
Borrowings on these facilities are limited to $25.0 million under the terms
of the revolving credit facility.
Net cash provided by financing activities was $91.5 million for the
three months ended March 31, 1999 compared with $30.5 million in the prior
year period. The increase in cash flows is primarily a result of increased
borrowings on our long-term credit facilities as a result of increased
bonus compensation paid in 1999 related to higher 1998 operating profits,
the $6.2 million cash payment at closing related to the merger with JLW and
payments of integration and transition expenses as previously discussed.
To a lesser extent, the increase in cash flows are due to increased
borrowings on our revolving credit facility to fund the Compass Birmann
Asset Management Services Group acquisition and capital expenditures as
previously discussed. Management believes, based on current operating
plans, that cash generated from operations, available borrowings, and
ownership equity will be sufficient to meet our capital and liquidity
requirements for the foreseeable future.
SEASONALITY
Historically, our revenue, operating profits and net earnings in the
first three calendar quarters are substantially lower than in the fourth
quarter. This seasonality is due to a calendar year-end focus on the
completion of transactions, which is consistent with the real estate
industry generally. In contrast, our Investment Management segment earns
performance fees on client's returns on their real estate investments.
Such performance fees are generally earned when the asset is disposed of,
the timing of which we do not have complete discretion over. Our non-
variable operating expenses, which are treated as expenses when incurred
during the year, are relatively constant on a quarterly basis. Therefore,
we typically sustain a loss in the first quarter of each calendar year,
typically report a small profit or loss in the second and third quarters
and record a substantial majority of our earnings in the fourth calendar
quarter, barring the recognition of investment generated performance fees.
<PAGE>
INFLATION
Jones Lang LaSalle's operations are directly affected by various
national and local economic conditions, including interest rates, the
availability of credit to finance real estate transactions and the impact
of tax laws. To date, we do not believe that general inflation has had a
material impact on operations, as revenue, commissions, and other variable
costs related to revenue are primarily impacted by real estate supply and
demand rather than general inflation.
OTHER MATTERS
ACCOUNTING MATTERS
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" becomes effective for all
fiscal quarters for fiscal years beginning after June 15, 1999 and is not
expected to have a material impact on our financial statements.
YEAR 2000 ISSUES
The "Year 2000 Issue" is the result of computer programs and systems
having been designed and developed to use two digits, rather than four, to
define the applicable year. As a result, these computer programs and
systems may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in system failure or miscalculations causing
disruption of operations, including, among other things, a temporary
inability to process transactions, pay invoices or engage in similar normal
business activities. Jones Lang LaSalle has defined five key phases in
addressing the Year 2000 Issue: awareness, assessment, renovation,
validation and implementation.
Under the guidance of a Year 2000 program team, whose strategy is
supported by senior management, we have in place a firmwide awareness phase
and will continue this phase through December 31, 1999 to maintain a
heightened sense of awareness to the Year 2000 Issue. As part of the
assessment phase, we have reviewed the year 2000 readiness of our
information technology systems through the creation of critical
applications, systems software and hardware inventories. These inventories
included detailed information relating to the potential impact of the
Year 2000 issue to Jones Lang LaSalle. The global assessment phase was
completed in early 1999.
Renovation and validation efforts have commenced throughout the Year
2000 program. We conduct our business primarily with commercial software
purchased from third-party vendors versus in house developed software.
Over the last two years, we have significantly upgraded our information
systems capabilities, and are currently in the final stages of rolling out
new property and client accounting systems. Continued upgrades of critical
business systems provide a historically sound software infrastructure, and
positively impact the degree of effort necessary related to the renovation
process of converting, replacing or eliminating selected platforms,
applications, databases and utilities, as well as the validation process of
testing and verifying for Year 2000 readiness. The schedule for completion
of these renovations and validation efforts remains on schedule with
anticipated completion by the third quarter of 1999.
The continuing implementation phase, which involves returning the
tested systems to operational status and the development of contingency
plans for critical business systems, is also anticipated to be completed by
the third quarter of 1999.
<PAGE>
Management expects that the cost of additional modifications to our
software to meet Year 2000 requirements will not be material. Factors that
could impact our ability to make the necessary modifications of replacement
to our software include, but are not limited to, the availability and cost
of trained personnel and the ability of such personnel to locate and
correct all relevant computer codes. If such modifications are not
completed on a timely basis or are more costly to implement than
anticipated financial condition or results of operations could be
materially adversely affected.
Properties for which we provide management services rely on a variety
of third party suppliers to provide critical operating services. These
suppliers may utilize systems and embedded technologies to control the
operation of building systems such as utilities, lighting, security,
elevators, heating, ventilation and air conditioning systems. Jones Lang
LaSalle is in the process of obtaining assurances from suppliers as to
their Year 2000 readiness and preparing contingency plans, including the
identification of alternative suppliers. We do not control these third
party suppliers, and for some suppliers, such as utility companies, there
may be no feasible alternative suppliers available. The failure to these
suppliers' systems could have a material adverse effect on the operations
of the affected property, and widespread failures could have a material
adverse effect on Jones Lang LaSalle. Plans for a complete millennium
period staffing and communication strategy are underway to address any
concerns.
A corporate business resumption strategy has been defined to create
specific response action plans throughout our organization to deal with
situations that arise that could cause interruption to or have serious
impact on the continuation of normal business operations. The strategy
includes specific remedies and implementation plans to be instituted at the
time of an emergency, and will allow our resources to effectively react to
critical issues resulting from any Year 2000 related occurrences.
The ability of third parties with whom we transact business or
companies that we may acquire to adequately address their Year 2000 issues
is outside Jones Lang LaSalle's control. At this time we are in the
process of reviewing the Year 2000 readiness of our major suppliers and
customers. There can be no assurance that the failure of major suppliers
and customers to adequately address Year 2000 issues will not have a
material adverse effect on our business, financial condition, and results
of operations.
Although we are not aware of any threatened claims related to the
Year 2000, we may become subject to litigation arising from such claims
and, depending on the outcome, such litigation could have a material
adverse affect on Jones Lang LaSalle. It is not clear whether our
insurance coverage would be adequate to offset these and other business
risks related to the Year 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
Jones Lang LaSalle is exposed to interest rate changes primarily as a
result of our lines of credit used to maintain liquidity and to fund
capital expenditures, acquisitions and expansion of our real estate
investment portfolio and operations. Our interest rate risk management
objective is to limit the impact of interest rate changes on earnings and
cash flows and to lower our overall borrowing costs. To achieve our
objectives, we borrow primarily at variable rates and enter into derivative
financial instruments such as interest rate swap agreements when
appropriate. We do not enter into derivative or interest rate transactions
for speculative purposes.
<PAGE>
As of March 31, 1999, the outstanding borrowings on our long-term
credit facilities were $292.4 million. The long-term credit facilities
bear a variable rate of interest based on market rates which approximated
5.8% for the quarter ended March 31, 1999. In addition, we have entered
into interest rate swap agreements with a notional amount of $65.0 million
providing for an average fixed interest rate of approximately 4.83% through
September 21, 1999. Such interest rate swap agreements had an approximate
market value of $.1 million. The carrying value of the debt approximates
its fair value.
FOREIGN CURRENCY RISK
Jones Lang LaSalle's reporting currency is the U.S. Dollar. We
transact business in various foreign currencies throughout Europe, Asia,
and Australasia. The financial statements of subsidiaries outside the
U.S., except those located in highly inflationary economies, are generally
measured using the local currency as the functional currency. As a result,
fluctuations in the U.S. Dollar relative to the other currencies in which
we generate earnings can impact our business, operating results and
financial condition. For the quarter ended March 31, 1999, on a pro forma
basis (excluding the effect of stock compensation expense), 60.5% of our
net loss was denominated in U.S. Dollars and 39.5% was denominated in other
currencies. Our revenues and expenses have primarily been earned and
incurred in the currency of the location where the operations generating
the revenues and expenses have occurred. Therefore, our exposure to
exchange rate fluctuations has been limited.
On a limited basis, we enter into forward currency exchange contracts
to manage currency risks and reduce our exposure resulting from
fluctuations in the designated foreign currency associated with existing
commitments, assets or liabilities. There were no forward exchange
contracts in effect at March 31, 1999. We do not use foreign currency
exchange contracts for trading purposes.
DISCLOSURE OF LIMITATIONS
As the information presented above includes only those exposures that
exist as of March 31, 1999, it does not consider those exposures or
positions which could arise after that date. Moreover, because firm
commitments are not presented, the information presented has limited
predictive value. As a result, our ultimate realized gain or loss with
respect to interest rate and foreign currency fluctuations will depend on
the exposures that arise during the period, our hedging strategies at the
time and interest and foreign currency rates.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Jones Lang LaSalle is a defendant in various litigation matters
arising in the ordinary course of business, some of which involve claims
for damages that are substantial in amount. Most of these matters are
covered by insurance. In the opinion of management, the ultimate resolution
of such litigation matters is not expected to have a material adverse
effect on our financial position, results of operations and liquidity.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 11, 1999, Jones Lang LaSalle issued 14,254,116 shares of
common stock in connection with the acquisition of the property and asset
management, advisory and other real estate businesses which had been
operated by a series of partnerships and corporations in Europe, Asia,
Australia, North America and New Zealand under the name "Jones Lang
Wootton" or "JLW". The shares were issued to owners and employees of these
<PAGE>
businesses and certain other persons. The shares issued to persons in the
United States were issued in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, and the shares
issued to persons outside the United States were issued in reliance upon
the exemption from registration provided by Regulation S promulgated under
the Securities Act of 1933.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
At the special meeting of stockholders held on March 10, 1999, the
following business was conducted:
A. Stockholders approved the issuance of up to 14,254,116 shares
of common stock in connection with the acquisition of the property and
asset management, advisory and other real estate businesses which had been
operated by a series of partnerships and corporations in Europe, Asia,
Australia, North America and New Zealand under the name "Jones Lang
Wootton" or "JLW" as follows:
Votes for: 13,550,771
Votes against: 113,231
Votes abstained: 2,850
B. Stockholders approved the amendment to the charter to change
the name of the Company from "LaSalle Partners Incorporated" to "Jones Lang
LaSalle Incorporated" as follows:
Votes for: 13,611,884
Votes against: 45,838
Votes abstained: 9,130
C. Stockholders approved the amendment to the 1997 Stock award and
Incentive Plan to increase the number of shares issuable thereunder to
4,160,000 from 2,215,000 as follows:
Votes for: 13,437,777
Votes against: 216,651
Votes abstained: 12,425
ITEM 5. OTHER MATTERS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995:
Certain statements in this filing and elsewhere (such as in reports,
other filings with the Securities and Exchange Commission, press releases,
presentations and communications by Jones Lang Lasalle or its management
and written and oral statements) may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance, achievements, plans and objectives to be materially different
from any future results, performance, achievements, plans and objectives
expressed or implied by such forward-looking statements. Such factors are
<PAGE>
discussed in (i) this Quarterly Report on Form 10-Q, in Item 2.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", Item 3. "Quantitative and Qualitative Disclosures About Market
Risk", and elsewhere, (ii) our Annual Report on Form 10-K for the year
ended December 31, 1998, in Item 1. "Business", Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
Item 7A. "Quantitative and Qualitative Disclosures About Market Risk", and
elsewhere, and (iii) our Proxy Statement dated February 4, 1999 under the
captions "Risk Factors", "The Transactions", "The Purchase Agreements",
"JLW Management's Discussion and Analysis of Financial Condition and
Results of Operations of the JLW Companies", and elsewhere, and in other
reports filed with the Securities and Exchange Commission. We expressly
disclaim any obligation or undertaking to update or revise any
forward-looking statements to reflect any changes in events or
circumstances or in our expectations or results.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) A list of exhibits is set forth in the Exhibit Index which
immediately precedes the exhibits and which is incorporated by reference
herein.
(b) Reports on Form 8-K
The following Form 8-K's were filed during the 1999 first quarter:
1. Form 8-K, dated February 22, 1999, to provide a press
release issued on that date which contained 1998 financial information for
LaSalle Partners and Jones Lang Wootton.
2. Form 8-K, dated March 11, 1999, to announce the closing
of the merger with Jones Lang Wootton which included the required
historical financial statements of each of the JLW companies acquired and
pro forma financial information on a combined basis.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
LASALLE PARTNERS INCORPORATED
Dated: May 14, 1999 BY:/S/ WILLIAM E. SULLIVAN
------------------------------
William E. Sullivan
Executive Vice President and
Chief Financial Officer
(Authorized Officer and
Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Articles of Amendment to the Company's
Articles of Incorporation, dated March 11, 1999.
10.1 Second Amendment to the Company's
$150,000,000 Multicurrency Credit Agreement, dated as of March 10, 1999.
10.2 First Amendment to the Company's $175,000,000
Credit Agreement, dated as of March 10, 1999.
27.1 Financial Data Schedule.
99.1 Jones Lang LaSalle press release announcing
first quarter 1999 earnings.
EXHIBIT 3.1
- -----------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
LASALLE PARTNERS INCORPORATED
LaSalle Partners Incorporated, a Maryland corporation having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking
out Article 1 of the Articles of Incorporation and inserting in lieu
thereof the following:
FIRST: The name of the Corporation is: Jones Lang LaSalle
Incorporated.
SECOND: The amendment of the charger of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, LaSalle Partners Incorporated has caused these
Articles of Amendment to be signed in its name and on its behalf as of the
11th day of March, 1999.
LASALLE PARTNERS INCORPORATED
By: /s/ Robert Hagan
------------------------------
Robert Hagan
Its: Vice President
ATTEST:
By: /s/ Fritz E Freidinger
------------------------------
Fritz E. Freidinger
Its: Assistant Secretary
<PAGE>
THE UNDERSIGNED, Robert Hagan, Vice President and Fritz Freidinger,
Assistant Secretary of LaSalle Partners Incorporated, in connection with
the foregoing Articles of Amendment, of which this certificate is made a
part, hereby acknowledge, in the name and on behalf of the Corporation, the
foregoing Articles of Amendment, of which this certificate is made a part,
to be the corporate act of the Corporation and further certify that, to the
best of their knowledge, information, and belief, the matters and facts set
forth therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/ Robert Hagan /s/ Fritz E Freidinger
- ------------------------------ ------------------------------
Robert Hagan Fritz E. Freidinger
Vice President Assistant Secretary
<PAGE>
STATE OF MARYLAND
713144
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
Date: March 12, 1999
THIS IS TO ADVISE YOU THAT THE ARTICLES OF AMENDMENT WITH A NAME
CHANGE FOR LASALLE PARTNERS INCORPORATED CHANGING TO JONES LANG LASALLE
INCORPORATED WERE RECEIVED AND APPROVED FOR RECORD ON MARCH 11, 1999 AT
4:26 PM.
FEE PAID: 50.00
JOSEPH V. STEWART
CHARTER SPECIALIST
[STATE OF MARYLAND SEAL]
EXHIBIT 10.1
- ------------
SECOND AMENDMENT TO MULTICURRENCY CREDIT AGREEMENT
This Second Amendment to Multicurrency Credit Agreement (the
"Amendment") dated as of March 10, 1999 among LaSalle Partners Incorporated
(the "Borrower"), the Guarantors party hereto, the Banks, and Harris Trust
and Savings Bank, as Agent;
W I T N E S S E T H:
Whereas, the Borrower, Guarantors, Banks and Harris Trust and Savings
Bank, as Agent, have heretofore executed and delivered a Multicurrency
Credit Agreement dated as of November 25, 1997 (as amended by the First
Amendment to Credit Agreement dated as of September 21, 1998, the "Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that
the Credit Agreement shall be and hereby is amended as follows:
ARTICLE 1
AMENDMENTS
1.1 Section 1.1 of the Credit Agreement is hereby amended by
deleting the amount "$40,000,000" appearing in the eleventh line thereof
and inserting in its place the amount "$75,000,000."
1.2. Section 1.2 of the Credit Agreement is hereby amended by
deleting the amount "$20,000,000" appearing in the fourth line thereof and
inserting in its place the amount "$35,000,000."
1.3. The definitions of "Alternative Currency" and "EBITDA"
contained in Section 4 of the Credit Agreement are hereby amended in their
entirety and as so amended shall read as follows:
"Alternative Currency" means any of Australian Dollars, Belgian
Francs, Deutsche Marks, Dutch Guilders, Euros, Hong Kong Dollars, Japanese
Yen, New Zealand Dollar, Pound Sterling, Spanish Pesetas, Canadian Dollars,
French Francs, Italian Lira, Swiss Francs, and Mexican Pesos, and any other
currency approved by all the Banks, in each case for so long as such
currency is readily available to all the Banks and is freely transferable
and freely convertible to U.S. Dollars and the Dow Jones Telerate Service
or Reuters monitor Money Rates Service (or any successor to either) reports
a LIBOR for such currency for interest periods of one, two, three and six
calendar months; provided that if any Bank provides written notice to the
Borrower (with a copy to the Agent) that any currency control or other
exchange regulations are imposed in the country in which any such
Alternative Currency is issued and that in the reasonable opinion of such
Bank funding a Loan in such currency is impractical, then such currency
shall cease to be an Alternative Currency hereunder until such time as all
the Banks reinstate such country's currency as an Alternative Currency.
<PAGE>
"EBITDA" means, for any period, Consolidated Net Income for such
period plus all amounts deducted in arriving at such Consolidated Net
Income amount for such period for (i) Interest Expense, (ii) federal, state
and local income tax expense, (iii) all amounts properly charged for
depreciation of fixed assets and amortization of intangible assets on the
books of the Borrower and its Restricted Subsidiaries, (iv) reasonable non-
recurring transition costs incurred by the Borrower in connection with the
Compass Acquisition to the extent such costs do not exceed $10,500,000
during calendar year ended December 31, 1998 and $9,000,000 during calendar
year ended December 31, 1999, (v) all non-cash contributions or accruals to
or with respect to deferred profit sharing or compensation, incurred
through December 31, 2000, (vi) reasonable non-recurring transition costs
incurred by the Borrower after March 9, 1999 and before January 1, 2000 in
connection with the JLW Acquisition to the extent such costs do not exceed
$25,000,000, and (vii) non-recurring reasonable charges incurred by JLW
prior to March 10, 1999 in connection with the JLW Acquisition and the
Integration Plan (as defined in the JLW Purchase Agreement) to the extent
such charges do not exceed $25,000,000; provided that any amounts added to
Consolidated Net Income pursuant to clause (v) above for any period shall
be deducted from Consolidated Net Income for the period, if ever, in which
such amounts are paid in cash by the Borrower or any of its Subsidiaries.
1.4 Section 4 of the Credit Agreement is hereby further amended by
inserting in proper alphabetical order the following new defined terms:
"JLW Acquisition" means the transactions contemplated by the Purchase
and Sale Agreements, dated as of October 21, 1998 (the "JLW Purchase
Agreements") providing for the acquisition by Borrower and its Subsidiaries
of the entities conducting business worldwide under the name Jones Lang
Wootten (collectively, "JLW").
"Non-Real Estate Restricted Subsidiary" means a Restricted Subsidiary
which is not established solely for the purpose of making investments in
real estate and real estate related assets, including notes and other
securities, as permitted under Section 7.14(j) or Section 7.14(k) hereof.
1.5 Section 7.9 of the Credit Agreement is hereby amended by (a)
deleting the phrase "$5,000,000 at any time outstanding;" appearing in
clause (i) thereof and inserting in its place the phrase "$10,000,000 at
any time outstanding;" and (b) inserting immediately after clause (i) new
clauses (j) and (k) as follows:
(j) Liens not otherwise permitted under this Section 7.9 on any
Property of any Person or on the stock or other interest in any Person
existing at the time such Person becomes a Subsidiary in connection with
the JLW Acquisition or any Person that is merged or consolidated with or
into the Borrower or any of its Subsidiaries in connection with the JLW
Acquisition provided that, (i) such Liens do not at any time extend to the
Property of any other Person, (ii) such Liens shall be released no later
than March 10, 2000 and (iii) such Liens are listed on Schedule 7.9(j)
hereof; and
(k) Liens not otherwise permitted under this Section 7.9 on any
Property of any Person at the time such Person becomes a Subsidiary in
connection with the JLW Acquisition or any Person that is merged or
consolidated with or into the Borrower or any of its Subsidiaries in
connection with the JLW Acquisition which Liens do not, in the aggregate
for all such Liens, attach on Property with a fair market value in excess
of $5,000,000.
1.6. Section 7.14(i) and (k) of the Credit Agreement are hereby
amended in their entirety and as so amended shall read as follows:
(i) loans and advances to employees and relocation companies
in the ordinary course of business not to exceed $8,000,000 in the
aggregate at any one time outstanding;
<PAGE>
(k) Acquisitions or Investments in a line of business related
to that of the Borrower and its Subsidiaries and Investments directly and
indirectly through Subsidiaries and other Persons in real estate and real
estate related assets, including notes and other securities, provided that
(i) no Default or Event of Default exists or would exist after giving
effect to such Acquisition or Investment, (ii) in the case of an
Acquisition, the Board of Directors or other governing body or the holders
of 100% of the equity interests of such Person whose Property, or Voting
Stock or other interests in which, are being so acquired has approved the
terms of such Acquisition, (iii) in the case of Investments not
constituting Acquisitions, such Investment together with all other
Investments not constituting Acquisitions permitted under this subsection
(k) during the term of this Agreement reduced by the amount of proceeds of
the disposition of all or any part of any such Investments does not exceed
(i) $100,000,000 in aggregate purchase price, if on the date such
Investment is made the Borrower's EBITDA for the most recently ended four
fiscal quarters of the Borrower for which the Borrower has delivered
financial statements pursuant to Section 7.6(a) hereof is $100,000,000 or
less or (ii) $125,000,000 in aggregate purchase price, if on the date such
Investment is made the Borrower's EBITDA for the most recently ended four
fiscal quarters of the Borrower for which the Borrower has delivered
financial statements pursuant to Section 7.6(a) hereof is greater than
$100,000,000; provided further that if the aggregate purchase price for
any single Investment by the Borrower or any Subsidiary exceeds $15,000,000
the Borrower shall have received the prior written consent of the Required
Banks;
1.7. Section 7.15 of the Credit Agreement is hereby amended by (a)
deleting the amount "$100,000,000" appearing in the fourth line thereof and
inserting in its place the amount $150,000,000", (b) inserting immediately
after the phrase "program or plans" appearing in the sixth line thereof the
following " and the JLW Acquisition" and (c) deleting the date "January 1,
1999" appearing in the eighth line thereof and inserting in its place the
date "January 1, 2000".
1.8. Sections 7.19(c) and (h) of the Credit Agreement are hereby
amended in their entirety and as so amended shall read as follows:
(c) Capitalized Lease Obligations in an aggregate principal amount
outstanding not to exceed $10,000,000 on any date of determination;
(h) Indebtedness not otherwise permitted by this Section 7.19 of
not more than $25,000,000 in aggregate principal amount outstanding on any
date of determination for the Borrower and its Restricted Subsidiaries.
1.9 Section 7.22 of the Credit Agreement is hereby amended in its
entirety and as so amended shall be read as follows:
Section 7.22. Additional Guarantors. (a) If on the last day of any
calendar quarter the total assets (not including investments in
Subsidiaries) of any non-Guarantor Subsidiary of the Borrower (other than
JLW Supply Company) which is a Non-Real Estate Restricted Subsidiary,
equals or exceeds 5% of the total consolidated assets of the Borrower and
its Non-Real Estate Restricted Subsidiaries, then the Borrower will, within
15 Business Days of the date on which the balance sheet for such date is
required to be delivered pursuant to Section 7.6(i) or Section 7.6(ii),
cause each such Subsidiary to become a Guarantor hereunder. To the extent
any Subsidiary becomes a Guarantor as a result of the requirements of this
Section 7.22(a), the Guaranty of such Subsidiary shall be released upon
request of the Borrower if on the last day of two successive calendar
quarters the total assets (not including investments in Subsidiaries) of
such Guarantor Subsidiary was less than 5% of the total consolidated assets
of the Borrower and its Non-Real Estate Restricted Subsidiaries, provided
that no Event of Default or Default is continuing. The Agent is hereby
authorized to execute all appropriate documents on behalf of the Lenders to
document the release of such Subsidiary from its Guaranty.
<PAGE>
(b) In addition to the requirements of Section 7.22(a), if on the
last day of any calendar quarter either (I) (i) the Borrower's ratio of
Total Funded Debt as of such day to EBITDA for the four calendar quarters
then ended is greater than 2.50 to 1.00 and (ii) the total assets (not
including investments in Subsidiaries) of the non-Guarantor Subsidiaries of
the Borrower which are Non-Real Estate Restricted Subsidiaries equals or
exceeds 25% of the total consolidated assets of the Borrower and its Non-
Real Estate Restricted Subsidiaries, or (II) (i) the Borrower's ratio of
Total Funded Debt as of such day to EBITDA for the four calendar quarters
then ended is 2.50 to 1.00 or less and (ii) the total assets (not including
investments in Subsidiaries) of the non-Guarantor Subsidiaries of the
Borrower which are Non-Real Estate Restricted Subsidiaries equals or
exceeds 50% of the total consolidated assets of the Borrower and its Non-
Real Estate Restricted Subsidiaries, then the Borrower will, within 15
Business Days of the date on which the balance sheet for such date is
required to be delivered pursuant to Section 7.6(a)(i) or Section
7.6(a)(ii), cause an additional Subsidiary or additional Subsidiaries to
become a Guarantor or Guarantors hereunder such that the total assets (not
including investments in Subsidiaries) of the non-Guarantor Subsidiaries of
the Borrower which are Non-Real Estate Restricted Subsidiaries, are less
than 25%, in the case of clause (I) above, or 50%, in the case of clause
(II) above, of the total consolidated assets of the Borrower and its Non-
Real Estate Restricted Subsidiaries. To the extent any Subsidiary becomes
a Guarantor as a result of the requirements of this Section 7.22(b) such
Guaranty shall be released upon request of the Borrower if after giving
effect to such release the Borrower is in compliance with this Section
7.22(b) and provided that no Default or Event of Default is continuing.
The Agent is hereby authorized to execute all appropriate documents on
behalf of the Banks to document the release of such Subsidiary from its
Guaranty.
(c) In addition to the requirements of Section 7.22(a) and (b) the
Borrower will cause JLW Supply Company to become a Guarantor hereunder
within 90 days of the date on which the balance sheet and income statement
for any calendar quarter is required to be delivered pursuant to Section
7.6(i), Section 7.6(ii) or this Section 7.22(c), if such balance sheet and
income statement shows that the portion of EBITDA for the Borrower and its
Non-Real Estate Restricted Subsidiaries attributable solely to JLW Supply
Company is equal to or in excess of 5% of the EBITDA for the Borrower and
its Non-Real Estate Restricted Subsidiaries; provided that JLW Supply
Company need not become a Guarantor prior to September 7, 1999. The
Borrower agrees to deliver to the Agent no later than June 10, 1999 a
balance sheet and income statement of the Borrower and its Subsidiaries
prepared as of December 31, 1998 on a pro forma basis as if the JLW
Acquisition had become effective on January 1, 1998. To the extent JLW
Supply Company becomes a Guarantor such Guaranty shall be released upon
request of the Borrower if on the last day of two successive calendar
quarters the portion of EBITDA of the Borrower and its Non-Real Estate
Restricted Subsidiaries attributable solely to JLW Supply Company was less
than 5% of the total EBITDA of the Borrower and its Non-Real Estate
Restricted Subsidiaries, provided that no Event of Default or Default is
continuing. The Agent is hereby authorized to execute all appropriate
documents on behalf of the Banks to document the release of such Guaranty.
(d) To the extent Section 7.22(a), (b) or (c) would require that a
Foreign Subsidiary or JLW Supply Company, as applicable, be added as a
Guarantor, in lieu of having such Subsidiary provide a Guaranty pursuant to
Section 11, the Borrower may elect to provide, and to cause its
Subsidiaries to provide, within 60 days of the date on which the Borrower
is required by either Section 7.22(a) or (b) above to cause such Foreign
Subsidiary to become a Guarantor, or by the date on which the Borrower is
required by Section 7.22(c) above to cause JLW Supply Company to become a
Guarantor, the Agent with a security interest in 65% of the issued and
outstanding capital stock owned by the Borrower and its Subsidiaries of
such Foreign Subsidiary or JLW Supply Company, as applicable, pursuant to a
<PAGE>
security agreement in form and substance reasonably acceptable to the
Agent. Each Foreign Subsidiary or JLW Supply Company, as applicable, with
respect to which a security interest is granted pursuant to this Section
7.22(d) shall be regarded as a Guarantor for purposes of this Section 7.22.
To the extent a security interest in the stock of any Foreign Subsidiary or
JLW Supply Company, as applicable, is provided pursuant to this Section
7.22(d), such security interest shall be released upon request of the
Borrower if after giving effect to such release the Borrower is in
compliance with Sections 7.22(a) and (b) and (c) and provided that no Event
of Default or Default is continuing. The Agent is hereby authorized to
execute all appropriate documents on behalf of the Banks to document the
release of such security interest.
1.10 Section 8.1(k) of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
(k) a Change of Control shall have occurred other than in
connection with the JLW Acquisition as provided in the JLW Purchase
Agreements.
1.11. A new Schedule 7.9(j) to the Credit Agreement is hereby added
to the Credit Agreement immediately following Schedule 7.9 in the form of
Schedule 7.9(j) attached to this Amendment.
ARTICLE II
CONDITIONS PRECEDENT
2.1 This Amendment shall become effective as of the date hereof on
the date that each of the following conditions precedent have been met:
(a) the Agent shall have received counterparts hereof
executed by the Borrower, Guarantors and Required Banks;
(b) the Agent shall have received (i) a certificate of the
Secretary of the Borrower dated the date of this Amendment certifying that
attached thereto is a true and complete copy of resolutions adopted by the
Board of Directors of the Borrower, authorizing the execution, delivery and
performance of this Amendment and certifying the names and true signatures
of the officers of the Borrower authorized to sign this Amendment and (ii)
such supporting documents as the Agent may reasonably request;
(c) the JLW Acquisition shall have been consummated as
contemplated by the JLW Purchase Agreements;
(d) the Agent shall have received the opinion of Hagen &
Associates, counsel to the Borrower and Guarantors, in form and substance
satisfactory to the Agent; and
(e) each Bank which has executed this Amendment shall have
received a non-refundable amendment fee from the Borrower equal to 0.05% of
such Bank's Commitment.
<PAGE>
ARTICLE III
MISCELLANEOUS
3.1. To induce the Agent and the Banks to enter into this Amendment,
the Borrower and each Guarantor represents and warrants to the Agent and
the Banks that: (a) the representations and warranties contained in the
Credit Documents, as amended by the Amendment, are true and correct in all
material respects as of the date hereof with the same effect as though made
on the date hereof; (b) after giving effect to this Amendment, no Event of
Default or Default exists; (c) this Amendment has been duly authorized by
all necessary corporate proceedings and duly executed and delivered by the
Borrower and each Guarantor, and the Credit Agreement, as amended by the
Amendment, and each of the other Credit Documents are the legal, valid and
binding obligations of the Borrower or Guarantor, enforceable against such
Borrower or Guarantor in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors' rights
or by general principles of equity; and (d) no consent, approval,
authorization, order, registration or qualification with any governmental
authority is required for, and in the absence of which would adversely
effect, the legal and valid execution and delivery or performance by the
Borrower or any Guarantor of this Amendment or the performance by the
Borrower or any Guarantor of the Credit Agreement, as amended by the
Amendment, or any other Credit Document to which they are a party.
3.2. This Amendment may be executed in any number of counterparts
and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Amendment.
3.3. Except as specifically provided above, the Credit Agreement and
the other Credit Documents shall remain in full force and effect and are
hereby ratified and confirmed in all respects. The execution, delivery,
and effectiveness of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power, or remedy of the Agent or
any Bank under the Credit Agreement or any of the other Credit Documents,
nor constitute a waiver or modification of any provision of any of the
other Credit Documents.
3.4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of
the State of Illinois.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
Dated as of the date first above written.
LASALLE PARTNERS INCORPORATED
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE PARTNERS CO-INVESTMENT,
INC., as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LP INTERNATIONAL,
a limited liability company, as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE PARTNERS INTERNATIONAL, INC.,
as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE ADVISORS CAPITAL MANAGEMENT, INC.,
as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE PARTNERS MANAGEMENT SERVICES,
INC., as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
<PAGE>
LASALLE PARTNERS CORPORATE & FINANCIAL
SERVICES, INC., as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE HOTEL ADVISORS, INC.,
as Guarantor
By: /s/ Vaughn Hooks
Title: Vice President and Assistant Treasurer
HARRIS TRUST AND SAVINGS BANK,
in its individual capacity as a Bank and as Agent
By: /s/ Scott Geik
Title: Managing Director
LASALLE NATIONAL BANK
By: /s/ Lisa Cunningham
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Lynn Braun
Title: Corporate Banking Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Christine M. Tierney
Title: Senior Vice President
THE CHASE MANHATTAN BANK
By: /s/ Charles Hoaglaud
Title: Vice President
FIRSTAR BANK, N.A.
By: /s/ Thomas Gibbons
Title: Vice President
<PAGE>
SCHEDULE 7.9(j)
--------------
Liens on the Property of, and the stock or other interest in, the
following Persons:
JLW Australia Pty Ltd;
JLW (NSW) Pty Ltd;
JLW (VIC) Pty Ltd;
JLW (QLD) Pty Ltd;
JLW (WA) Pty Ltd;
JLW (ACT) Pty Ltd;
JLW (SA) Pty Ltd;
JLW Strata Management Pty Ltd;
JLW Advisory Services Pty Ltd;
JLW Advisory Corporate Property Pty Ltd;
JLW Advisory Corporate Property (Vic) Pty Ltd;
JLW Management Services Pty Ltd;
JLW Property Fund Advisors Ltd;
JLW CRES Pty Ltd; and
Jones Lang Wootton Transact Pty Ltd.
EXHIBIT 10.2
- ------------
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (the "Amendment") dated as
of March 10, 1999 among LaSalle Partners Incorporated (the "Borrower"), the
Guarantors party hereto, the Lenders, and The First National Bank of
Chicago, as Administrative Agent;
W I T N E S S E T H:
Whereas, the Borrower, Guarantors, Lenders and The First National
Bank of Chicago, as Administrative Agent, have heretofore executed and
delivered a Credit Agreement dated as of September 21, 1998 (the "Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that
the Credit Agreement shall be and hereby is amended as follows:
ARTICLE 1
AMENDMENTS
1.1. The definition of "EBITDA" contained in Article III of the
Credit Agreement is hereby amended in its entirety and as so amended shall
read as follows:
"EBITDA" means, for any period, Consolidated Net Income for such
period plus all amounts deducted in arriving at such Consolidated Net
Income amount for such period for (i) Interest Expense, (ii) federal, state
and local income tax expense, (iii) all amounts properly charged for
depreciation of fixed assets and amortization of intangible assets on the
books of the Borrower and its Restricted Subsidiaries, (iv) reasonable non-
recurring transition costs incurred by the Borrower in connection with the
Compass Acquisition to the extent such costs do not exceed $10,500,000
during calendar year ended December 31, 1998 and $9,000,000 during calendar
year ended December 31, 1999, (v) all non-cash contributions or accruals to
or with respect to deferred profit sharing or compensation, incurred
through December 31, 2000, (vi) reasonable non-recurring transition costs
incurred by the Borrower after March 9, 1999 and before January 1, 2000 in
connection with the JLW Acquisition to the extent such costs do not exceed
$25,000,000, and (vii) non-recurring reasonable charges incurred by JLW
prior to March 10, 1999 in connection with the JLW Acquisition and the
Integration Plan (as defined in the JLW Purchase Agreement) to the extent
such charges do not exceed $25,000,000; provided that any amounts added to
Consolidated Net Income pursuant to clause (v) above for any period shall
be deducted from Consolidated Net Income for the period, if ever, in which
such amounts are paid in cash by the Borrower or any of its Subsidiaries.
1.2 Article III of the Credit Agreement is hereby further amended
by inserting in proper alphabetical order the following new defined terms:
<PAGE>
"JLW Acquisition" means the transactions contemplated by the Purchase
and Sale Agreements, dated as of October 21, 1998 (the "JLW Purchase
Agreements") providing for the acquisition by Borrower and its Subsidiaries
of the entities conducting business worldwide under the name Jones Lang
Wootten (collectively, "JLW").
"Non-Real Estate Restricted Subsidiary" means a Restricted Subsidiary
which is not established solely for the purpose of making investments in
real estate and real estate related assets, including notes and other
securities, as permitted under Section 6.14(j) or Section 6.14(k) hereof.
1.3 Section 6.9 of the Credit Agreement is hereby amended by
(a) deleting the phrase "$5,000,000 at any time outstanding;" appearing in
clause (i) thereof and inserting in its place the phrase "$10,000,000 at
any time outstanding;" and (b) inserting immediately after clause (i) new
clauses (j) and (k) as follows:
(j) Liens not otherwise permitted under this Section 6.9 on any
Property of any Person or on the stock or other interest in any Person
existing at the time such Person becomes a Subsidiary in connection with
the JLW Acquisition or any Person that is merged or consolidated with or
into the Borrower or any of its Subsidiaries in connection with the JLW
Acquisition provided that, (i) such Liens do not at any time extend to the
Property of any other Person, (ii) such Liens shall be released no later
than March 10, 2000 and (iii) such Liens are listed on Schedule 6.9(j)
hereof; and
(k) Liens not otherwise permitted under this Section 6.9 on any
Property of any Person at the time such Person becomes a Subsidiary in
connection with the JLW Acquisition or any Person that is merged or
consolidated with or into the Borrower or any of its Subsidiaries in
connection with the JLW Acquisition which Liens do not, in the aggregate
for all such Liens, attach on Property with a fair market value in excess
of $5,000,000.
1.4. Section 6.14(i) and (k) of the Credit Agreement are hereby
amended in their entirety and as so amended shall read as follows:
(i) loans and advances to employees and relocation companies
in the ordinary course of business not to exceed $8,000,000 in the
aggregate at any one time outstanding;
(k) Acquisitions or Investments in a line of business related
to that of the Borrower and its Subsidiaries and Investments directly and
indirectly through Subsidiaries and other Persons in real estate and real
estate related assets, including notes and other securities, provided that
(i) no Default or Unmatured Default exists or would exist after giving
effect to such Acquisition or Investment, (ii) in the case of an
Acquisition, the Board of Directors or other governing body or the holders
of 100% of the equity interests of such Person whose Property, or Voting
Stock or other interests in which, are being so acquired has approved the
terms of such Acquisition, (iii) in the case of Investments not
constituting Acquisitions, such Investment together with all other
Investments not constituting Acquisitions permitted under this subsection
(k) during the term of this Agreement reduced by the amount of proceeds of
the disposition of all or any part of any such Investments does not exceed
(i) $100,000,000 in aggregate purchase price, if on the date such
Investment is made the Borrower's EBITDA for the most recently ended four
fiscal quarters of the Borrower for which the Borrower has delivered
financial statements pursuant to Section 6.6(a) hereof is $100,000,000 or
less or (ii) $125,000,000 in aggregate purchase price, if on the date such
Investment is made the Borrower's EBITDA for the most recently ended four
fiscal quarters of the Borrower for which the Borrower has delivered
financial statements pursuant to Section 6.6(a) hereof is greater than
$100,000,000; provided further that if the aggregate purchase price for
any single Investment by the Borrower or any Subsidiary exceeds $15,000,000
the Borrower shall have received the prior written consent of the Required
Lenders;
<PAGE>
1.5. Section 6.15 of the Credit Agreement is hereby amended by
(a) deleting the amount "$100,000,000" appearing in the fourth line thereof
and inserting in its place the amount "$150,000,000", (b) inserting
immediately after the phrase "program or plans" appearing in the sixth line
thereof the following " and the JLW Acquisition" and (c) deleting the date
"January 1, 1999" appearing in the eighth line thereof and inserting in its
place the date "January 1, 2000".
1.6. Sections 6.19(c) and (h) of the Credit Agreement are hereby
amended in their entirety and as so amended shall read as follows:
(c) Capitalized Lease Obligations in an aggregate principal
amount outstanding not to exceed $10,000,000 on any date of determination;
(h) Indebtedness not otherwise permitted by this Section 6.19
of not more than $25,000,000 in aggregate principal amount outstanding on
any date of determination for the Borrower and its Restricted Subsidiaries.
1.7 Section 6.22 of the Credit Agreement is hereby amended in its
entirety and as so amended shall be read as follows:
Section 6.22. Additional Guarantors. (a) If on the last day of any
calendar quarter the total assets (not including investments in
Subsidiaries) of any non-Guarantor Subsidiary of the Borrower (other than
JLW Supply Company) which is a Non-Real Estate Restricted Subsidiary,
equals or exceeds 5% of the total consolidated assets of the Borrower and
its Non-Real Estate Restricted Subsidiaries, then the Borrower will, within
15 Business Days of the date on which the balance sheet for such date is
required to be delivered pursuant to Section 6.6(i) or Section 6.6(ii),
cause each such Subsidiary to become a Guarantor hereunder. To the extent
any Subsidiary becomes a Guarantor as a result of the requirements of this
Section 6.22(a), the Guaranty of such Subsidiary shall be released upon
request of the Borrower if on the last day of two successive calendar
quarters the total assets (not including investments in Subsidiaries) of
such Guarantor Subsidiary was less than 5% of the total consolidated assets
of the Borrower and its Non-Real Estate Restricted Subsidiaries, provided
that no Unmatured Default or Default is continuing. The Administrative
Agent is hereby authorized to execute all appropriate documents on behalf
of the Lenders to document the release of such Subsidiary from its
Guaranty.
(b) In addition to the requirements of Section 6.22(a), if on
the last day of any calendar quarter either (I) (i) the Borrower's ratio of
Total Funded Debt as of such day to EBITDA for the four calendar quarters
then ended is greater than 2.50 to 1.00 and (ii) the total assets (not
including investments in Subsidiaries) of the non-Guarantor Subsidiaries of
the Borrower which are Non-Real Estate Restricted Subsidiaries equals or
exceeds 25% of the total consolidated assets of the Borrower and its Non-
Real Estate Restricted Subsidiaries, or (II) (i) the Borrower's ratio of
Total Funded Debt as of such day to EBITDA for the four calendar quarters
then ended is 2.50 to 1.00 or less and (ii) the total assets (not including
investments in Subsidiaries) of the non-Guarantor Subsidiaries of the
Borrower which are Non-Real Estate Restricted Subsidiaries equals or
exceeds 50% of the total consolidated assets of the Borrower and its Non-
Real Estate Restricted Subsidiaries, then the Borrower will, within 15
Business Days of the date on which the balance sheet for such date is
required to be delivered pursuant to Section 6.6(a)(i) or
Section 6.6(a)(ii), cause an additional Subsidiary or additional
Subsidiaries to become a Guarantor or Guarantors hereunder such that the
total assets (not including investments in Subsidiaries) of the non-
Guarantor Subsidiaries of the Borrower which are Non-Real Estate Restricted
Subsidiaries, are less than 25%, in the case of clause (I) above, or 50%,
in the case of clause (II) above, of the total consolidated assets of the
Borrower and its Non-Real Estate Restricted Subsidiaries. To the extent
any Subsidiary becomes a Guarantor as a result of the requirements of this
<PAGE>
Section 6.22(b) such Guaranty shall be released upon request of the
Borrower if after giving effect to such release the Borrower is in
compliance with this Section 6.22(b) and provided that no Default or
Unmatured Default is continuing. The Administrative Agent is hereby
authorized to execute all appropriate documents on behalf of the Lenders to
document the release of such Subsidiary from its Guaranty.
(c) In addition to the requirements of Section 6.22(a) and
(b) the Borrower will cause JLW Supply Company to become a Guarantor
hereunder within 90 days of the date on which the balance sheet and income
statement for any calendar quarter is required to be delivered pursuant to
Section 6.6(i), Section 6.6(ii) or this Section 6.22(c), if such balance
sheet and income statement shows that the portion of EBITDA for the
Borrower and its Non-Real Estate Restricted Subsidiaries attributable
solely to JLW Supply Company is equal to or in excess of 5% of the EBITDA
for the Borrower and its Non-Real Estate Restricted Subsidiaries; provided
that JLW Supply Company need not become a Guarantor prior to September 7,
1999. The Borrower agrees to deliver to the Administrative Agent no later
than June 10, 1999 a balance sheet and income statement of the Borrower and
its Subsidiaries prepared as of December 31, 1998 on a pro forma basis as
if the JLW Acquisition had become effective on January 1, 1998. To the
extent JLW Supply Company becomes a Guarantor such Guaranty shall be
released upon request of the Borrower if on the last day of two successive
calendar quarters the portion of EBITDA of the Borrower and its Non-Real
Estate Restricted Subsidiaries attributable solely to JLW Supply Company
was less than 5% of the total EBITDA of the Borrower and its Non-Real
Estate Restricted Subsidiaries, provided that no Unmatured Default or
Default is continuing. The Administrative Agent is hereby authorized to
execute all appropriate documents on behalf of the Lenders to document the
release of such Guaranty.
(d) To the extent Section 6.22(a), (b) or (c) would require
that a Foreign Subsidiary or JLW Supply Company, as applicable, be added as
a Guarantor, in lieu of having such Subsidiary provide a Guaranty pursuant
to Section 11, the Borrower may elect to provide, and to cause its
Subsidiaries to provide, within 60 days of the date on which the Borrower
is required by either Section 6.22(a) or (b) above to cause such Foreign
Subsidiary to become a Guarantor, or by the date on which the Borrower is
required by Section 6.22(c) above to cause JLW Supply Company to become a
Guarantor, the Administrative Agent with a security interest in 65% of the
issued and outstanding capital stock owned by the Borrower and its
Subsidiaries of such Foreign Subsidiary or JLW Supply Company, as
applicable, pursuant to a security agreement in form and substance
reasonably acceptable to the Administrative Agent. Each Foreign Subsidiary
or JLW Supply Company, as applicable, with respect to which a security
interest is granted pursuant to this Section 6.22(d) shall be regarded as a
Guarantor for purposes of this Section 6.22. To the extent a security
interest in the stock of any Foreign Subsidiary or JLW Supply Company, as
applicable, is provided pursuant to this Section 6.22(d), such security
interest shall be released upon request of the Borrower if after giving
effect to such release the Borrower is in compliance with Sections 6.22(a)
and (b) and (c) and provided that no Unmatured Default or Default is
continuing. The Administrative Agent is hereby authorized to execute all
appropriate documents on behalf of the Lenders to document the release of
such security interest.
<PAGE>
1.8 Section 7.1(k) of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
(k) a Change of Control shall have occurred other than in
connection with the JLW Acquisition as provided in the JLW Purchase
Agreements.
1.9. A new Schedule 6.9(j) to the Credit Agreement is hereby added
to the Credit Agreement immediately following Schedule 6.9 in the form of
Schedule 6.9(j) attached to this Amendment.
ARTICLE II
CONDITIONS PRECEDENT
2.1 This Amendment shall become effective as of the date hereof on
the date that each of the following conditions precedent have been met:
(a) the Administrative Agent shall have received counterparts
hereof executed by the Borrower, Guarantors and Required Lenders;
(b) the Administrative Agent shall have received (i) a
certificate of the Secretary of the Borrower dated the date of this
Amendment certifying that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of the Borrower, authorizing
the execution, delivery and performance of this Amendment and certifying
the names and true signatures of the officers of the Borrower authorized to
sign this Amendment and (ii) such supporting documents as the
Administrative Agent may reasonably request;
(c) the JLW Acquisition shall have been consummated as
contemplated by the JLW Purchase Agreements;
(d) the Administrative Agent shall have received the opinion
of Hagen & Associates, counsel to the Borrower and Guarantors, in form and
substance satisfactory to the Administrative Agent; and
(e) each Lender which has executed this Amendment shall have
received a non-refundable amendment fee from the Borrower equal to 0.05% of
the aggregate principal amount of such Lender's outstanding Loans.
ARTICLE III
MISCELLANEOUS
3.1. To induce the Administrative Agent and the Lenders to enter
into this Amendment, the Borrower and each Guarantor represents and
warrants to the Administrative Agent and the Lenders that: (a) the
representations and warranties contained in the Credit Documents, as
amended by the Amendment, are true and correct in all material respects as
of the date hereof with the same effect as though made on the date hereof;
(b) after giving effect to this Amendment, no Unmatured Default or Default
exists; (c) this Amendment has been duly authorized by all necessary
corporate proceedings and duly executed and delivered by the Borrower and
each Guarantor, and the Credit Agreement, as amended by the Amendment, and
each of the other Credit Documents are the legal, valid and binding
obligations of the Borrower or Guarantor, enforceable against such Borrower
or Guarantor in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors' rights
or by general principles of equity; and (d) no consent, approval,
authorization, order, registration or qualification with any governmental
authority is required for, and in the absence of which would adversely
effect, the legal and valid execution and delivery or performance by the
Borrower or any Guarantor of this Amendment or the performance by the
Borrower or any Guarantor of the Credit Agreement, as amended by the
Amendment, or any other Credit Document to which they are a party.
<PAGE>
3.2. This Amendment may be executed in any number of counterparts
and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Amendment.
3.3. Except as specifically provided above, the Credit Agreement and
the other Credit Documents shall remain in full force and effect and are
hereby ratified and confirmed in all respects. The execution, delivery,
and effectiveness of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power, or remedy of the
Administrative Agent or any Lender under the Credit Agreement or any of the
other Credit Documents, nor constitute a waiver or modification of any
provision of any of the other Credit Documents.
3.4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of
the State of Illinois.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
Dated as of the date first above written.
LASALLE PARTNERS INCORPORATED
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE PARTNERS CO-INVESTMENT,
INC., as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LP INTERNATIONAL,
a limited liability company, as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE PARTNERS INTERNATIONAL, INC.,
as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE ADVISORS CAPITAL MANAGEMENT, INC.,
as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE PARTNERS MANAGEMENT SERVICES,
INC., as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
<PAGE>
LASALLE PARTNERS CORPORATE & FINANCIAL
SERVICES, INC., as Guarantor
By: /s/ Brian P. Hake
Title: Vice President and Treasurer
LASALLE HOTEL ADVISORS, INC.,
as Guarantor
By: /s/ Vaughn Hooks
Title: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
in its individual capacity as a Bank and as
Administrative Agent
By: /s/ Lynn Braun
Title: Corporate Banking Officer
HARRIS TRUST AND SAVINGS BANK
By: /s/ Scott Geik
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Charles Hoagland
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Christine M. Tierney
Title: Senior Vice President
LASALLE NATIONAL BANK
By: /s/ Lisa Cunningham
Title: Senior Vice President
THE NORTHERN TRUST COMPANY
By: /s/ Craig Mizushima
Title: Vice President
FIRST BANK, N.A.
By: /s/ Thomas Gibbons
Title: Vice President
<PAGE>
SCHEDULE 6.9(j)
--------------
Liens on the Property of, and the stock or other interest in, the following
Persons:
JLW Australia Pty Ltd;
JLW (NSW) Pty Ltd;
JLW (VIC) Pty Ltd;
JLW (QLD) Pty Ltd;
JLW (WA) Pty Ltd;
JLW (ACT) Pty Ltd;
JLW (SA) Pty Ltd;
JLW Strata Management Pty Ltd;
JLW Advisory Services Pty Ltd;
JLW Advisory Corporate Property Pty Ltd;
JLW Advisory Corporate Property (Vic) Pty Ltd;
JLW Management Services Pty Ltd;
JLW Property Fund Advisors Ltd;
JLW CRES Pty Ltd; and
Jones Lang Wootton Transact Pty Ltd.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH
REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 39,987
<SECURITIES> 0
<RECEIVABLES> 242,550
<ALLOWANCES> 10,257
<INVENTORY> 0
<CURRENT-ASSETS> 309,861
<PP&E> 103,060
<DEPRECIATION> 39,649
<TOTAL-ASSETS> 866,888
<CURRENT-LIABILITIES> 257,810
<BONDS> 0
<COMMON> 306
0
0
<OTHER-SE> 312,051
<TOTAL-LIABILITY-AND-EQUITY> 866,888
<SALES> 0
<TOTAL-REVENUES> 101,421
<CGS> 0
<TOTAL-COSTS> 165,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,524
<INTEREST-EXPENSE> 2,642
<INCOME-PRETAX> (68,975)
<INCOME-TAX> (13,560)
<INCOME-CONTINUING> (55,415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,415)
<EPS-PRIMARY> (3.09)
<EPS-DILUTED> (3.09)
</TABLE>
EXHIBIT 99.1
- ------------
JONES LANG LASALLE NEWS RELEASE
200 East Randolph Drive, Chicago, Illinois 60601
tel + 1 312 782 5800 fax + 1 312 228 0360
22 Hanover Square London W1A 2BN
tel + 440171 399 5616 tel + 440171 3995610
fax + 440171 355 1350
FOR IMMEDIATE RELEASE CONTACT: Bill Sullivan
Chief Financial Officer
+1 44-171-399-5252
JONES LANG LASALLE ANNOUNCES FIRST QUARTER RESULTS
Company Realigns Segments Reporting
Following Merger to Reflect Expanded Regional and Global Expertise
CHICAGO and LONDON, MAY 11, 1999 -- Jones Lang LaSalle Incorporated (NYSE:
JLL) today reported first quarter actual revenue of $101.4 million versus
$51.1 million for the first quarter of 1998, and a net loss of $55.4
million in the first quarter 1999 versus a net loss of $3.4 million for the
prior year period. The first quarter 1999 loss of $3.09 per share includes
$46.2 million of non-cash compensation expenses associated with the
issuance of shares pursuant to the recent merger between LaSalle Partners
and the Jones Lang Wootton companies, and $7.8 million of non-recurring
transition and integration costs associated with the merger and the October
1998 acquisition of COMPASS.
In order to provide Jones Lang LaSalle shareholders and potential investors
with a better understanding of the ongoing operations of the Company,
attached to this release is an analysis of the first quarter 1999 adjusted
pro forma operations of Jones Lang LaSalle. These adjusted pro forma
results include the operations of the Jones Lang Wootton companies from the
beginning of the year through the closing date of the merger, and exclude
the non-recurring transition and integration costs and non-cash
compensation expenses associated with the merger and the COMPASS
acquisition.
On an adjusted pro forma basis, Jones Lang LaSalle reported a loss for the
quarter of $13.3 million, on adjusted pro forma revenue of $159.9 million.
The adjusted pro forma loss, which equated to $.43 per share on total
committed shares, was consistent with the Company's historical reporting
patterns and management's expectations.
Underscoring the seasonal nature of the real estate industry, the Company
typically reports a sizeable loss in the first quarter, followed by modest
profitability in the second and third quarters, with the fourth quarter
generating the vast majority of full-year profitability.
-- more --
<PAGE>
JONES LANG LASALLE ANNOUNCES FIRST QUARTER RESULTS -- Add One
Stuart L. Scott, chairman and chief executive officer of Jones Lang
LaSalle, said: "the first quarter has historically been a building period
for us each year as it is for the real estate industry in general, and, as
expected, we reported a new loss for the period. However, I am confident
that the benefits we impart to our clients as a result of our merger will
create a platform for future success. Already this merger is generating
opportunities to leverage our strength as 'The Real Estate Services Firm of
the Future [trademark]' and support the development of several growth
strategies we have outlined. Since the completion of the merger, we have:
. Worked to achieve our goal of delivering consistent, high-quality
service across markets and disciplines for clients with multinational real
estate requirements, through the creation of our Global Services Management
group. This group, which is staffed with senior professionals from around
the globe, is providing the resources and foundation to create best
practices and deliver consistent client service throughout the Company.
. Supported our objective of expanding existing client relationships
while attracting new clients who require a single global partner. In the
first quarter of 1999, Jones Lang LaSalle gained 15 new business
assignments, attributed principally to the strength of geographic and
product coverage resulting from the merger. These new business wins
include Xerox Corporation for a disposition and hotel services assignment
in Northern Virginia, Saks Fifth Avenue for an investment sales transaction
in San Francisco, and a new strategic alliance with SAIC, a San Diego-based
global consultancy firm, for exclusive tenant representation services and
project management services across the United States.
Explaining the Company's new reporting structure, Scott stated, "To align
our reported financial information with the new management structure of the
Company, and to more effectively convey our scope of services and
geographic breadth, we have reorganized our segment reporting into six
components. The new segments are comprised of the two globally managed
operations of Hotel Services and Investment Management, as well as four
regionally managed segments within Owner and Occupier Services that consist
of the Americas, Europe, Asia and Australasia. The regionally managed
Owner and Occupier Services include our property management, facility
services, leasing and transaction services. We believe this reporting
structure better reflects the wide range of vertically integrated services
we now deliver on a regional and global basis as a result of our merger."
-- more --
<PAGE>
JONES LANG LASALLE ANNOUNCES FIRST QUARTER RESULTS -- Add Two
Jones Lang LaSalle (NYSE: JLL) is the world's leading real estate services
and investment management firm, operating across 96 key markets in 34
countries on five continents. The Company provides comprehensive and wide
ranging integrated expertise on a local, regional and global level to
owners, occupiers and investors. It operates through six business
segments: Hotel Services, Investment Management and four geographic
regions of Owner and Occupier Services. The Company's investment
management business, LaSalle Investment Management, is one of the world's
largest and most diverse real estate investment management firms with $20.5
billion ([pound/sterling]12.6 billion) of assets under management. Jones
Lang LaSalle is also the industry leader in real estate management services
with a portfolio of more than 680 million square feet of property under
management.
STATEMENTS IN THIS PRESS RELEASE REGARDING, AMONG OTHER THINGS, FUTURE
FINANCIAL RESULTS AND PERFORMANCE, ACHIEVEMENTS, PLANS AND OBJECTIVES MAY
BE CONSIDERED FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS INVOLVE KNOWN
AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL
RESULTS, PERFORMANCE, ACHIEVEMENTS, PLANS AND OBJECTIVES OF JONES LANG
LASALLE TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY INCLUDE THOSE DISCUSSED UNDER "BUSINESS," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,"
"QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK," AND ELSEWHERE
IN LASALLE PARTNERS' ANNUAL REPORT ON FORM 10-K FOR THE YEARS ENDED
DECEMBER 31, 1998, UNDER "RISK FACTORS," "THE TRANSACTIONS," "THE PURCHASE
AGREEMENTS," "JLW MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONAL AND RESULTS OF OPERATIONS OF THE JLW COMPANIES," AND ELSEWHERE
IN LASALLE PARTNERS' PROXY STATEMENT DATED FEBRUARY 4, 1999, AND IN OTHER
REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. STATEMENTS
SPEAK ONLY AS OF THE DATE OF THIS RELEASE. JONES LANG LASALLE EXPRESSLY
DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO UPDATE OR REVISE ANY FORWARD-
LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN JONES LANG
LASALLE'S EXPECTATIONS OR RESULTS, OR ANY CHANGE IN EVENTS. STATEMENTS IN
THIS PRESS RELEASE REGARDING PARTIES OTHER THAN JONES LANG LASALLE ARE
BASED UPON REPRESENTATIONS OF SUCH OTHER PARTIES.
<PAGE>
JONES LANG LASALLE ANNOUNCES FIRST QUARTER RESULTS -- Add Three
NOTE TO THE EDITORS:
Media contacts may listen to the Jones Lang LaSalle first quarter earnings
discussion at 9:00 a.m. EDT on May 11, 1999 with investors and market
analysts by dialing +1 719-457-2637 outside the United States, or +1 800-
946-0705 within the United States. A replay of the call may be accessed by
dialing +1 401-220-0866 outside the United States and +1 888-831-6373 in
the United States between 12:00 p.m. EDT on May 11, 1999 to 5:00 p.m. EDT
on May 18, 1999.
###
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
For the Three Months Ended March 31, 1999 and 1998
($ in thousands, except share data)
(Unaudited)
1999 1998
---------- ----------
Revenue:
Fee-based services . . . . . . . . . . . $ 100,704 49,902
Equity in earnings from unconsolidated
ventures . . . . . . . . . . . . . . . 181 692
Other income . . . . . . . . . . . . . . 536 471
---------- ----------
Total revenue. . . . . . . . . . . 101,421 51,065
Operating expenses:
Compensation and benefits. . . . . . . . 75,439 37,353
Operating, administrative and other. . . 31,317 16,445
Depreciation and amortization. . . . . . 6,955 2,616
---------- ----------
Total operating expenses before
merger related non-recurring
charges. . . . . . . . . . . . . 113,711 56,414
---------- ----------
Operating loss before merger
related non-recurring
charges. . . . . . . . . . . . . (12,290) (5,349)
Merger related non-recurring charges:
Stock compensation expense . . . . . . 46,199 --
Integration and transition expenses. . 7,844 --
---------- ----------
Total merger related
non-recurring charges. . . . . . 54,043 --
---------- ----------
Total operating expenses . . . . . 167,754 56,414
---------- ----------
Operating loss . . . . . . . . . . (66,333) (5,349)
Interest expense, net. . . . . . . . . . . 2,642 244
---------- ----------
Loss before benefit for
income taxes . . . . . . . . . . (68,975) (5,593)
Net benefit for income taxes . . . . . . . (13,560) (2,153)
---------- ----------
Net loss . . . . . . . . . . . . . $ (55,415) (3,440)
========== ==========
Other comprehensive income (loss),
net of tax:
Foreign currency translation
adjustments. . . . . . . . . . . . . . $ (433) 295
---------- ----------
Comprehensive loss . . . . . . . . $ (55,848) (3,145)
========== ==========
Basic loss per common share. . . . . . . . $ (3.09) (0.21)
========== ==========
Weighted average shares outstanding. . . . 17,914,221 16,200,000
========== ==========
Diluted loss per common share. . . . . . . $ (3.09) (0.21)
========== ==========
Diluted weighted average shares
outstanding. . . . . . . . . . . . . . . 17,914,221 16,359,961
========== ==========
<PAGE>
JONES LANG LASALLE INCORPORATED
Adjusted Actual and Adjusted Pro Forma Consolidated Statement of Earnings
For the Three Months Ended March 31, 1999
($ in thousands, except share data)
(Unaudited)
Pro Forma Adjusted
Actual Adjust- Pro Forma
Results (1) ments (2) Results (3)
---------- ---------- -----------
Revenue:
Fee-based services . . . . . . . $ 100,704 58,039 158,743
Equity in earnings from
unconsolidated ventures. . . . 181 -- 181
Other income . . . . . . . . . . 536 421 957
---------- ---------- ----------
Total revenue. . . . . . . 101,421 58,460 159,881
Operating expenses:
Compensation and benefits. . . . 75,439 43,610 119,049
Operating, administrative
and other. . . . . . . . . . . 31,317 18,360 49,677
Depreciation and amortization. . 6,955 3,047 10,002
---------- ---------- ----------
Total operating expenses
before merger related
non-recurring charges. . 113,711 65,017 178,728
---------- ---------- ----------
Operating loss before
merger related
non-recurring charges. . (12,290) (6,557) (18,847)
Merger related non-recurring
charges:
Compensation expense
associated with shares
issued . . . . . . . . . . . 46,199 -- 46,199
Integration and transition
expenses . . . . . . . . . . 7,844 12,325 20,169
---------- ---------- ----------
Total merger related
non-recurring charges. . 54,043 12,325 66,368
---------- ---------- ----------
Total operating expenses . 167,754 77,342 245,096
---------- ---------- ----------
Operating loss . . . . . . (66,333) (18,882) (85,215)
Interest expense, net. . . . . . 2,642 (93) 2,549
---------- ---------- ----------
Loss before benefit for
income taxes . . . . . . (68,975) (18,789) (87,764)
Net benefit for income taxes . . (13,560) (2,456) (16,016)
---------- ---------- ----------
Net loss . . . . . . . . . $ (55,415) (16,333) (71,748)
========== ========== ==========
Adjustments:
Merger related non-recurring
charges. . . . . . . . . . . . $ 54,043 12,325 66,368
Associated tax benefit . . . . . (7,886) -- (7,886)
---------- ---------- ----------
Adjusted net earnings. . . $ (9,258) (4,008) (13,266)
========== ========== ==========
<PAGE>
JONES LANG LASALLE INCORPORATED
Adjusted Actual and Adjusted Pro Forma Consolidated Statement of Earnings
- Continued
For the Three Months Ended March 31, 1999
($ in thousands, except share data)
(Unaudited)
Pro Forma Adjusted
Actual Adjust- Pro Forma
Results (1) ments (2) Results (3)
---------- ---------- -----------
Adjusted EBITDA (4). . . . . . . . $ (5,335) (3,510) (8,845)
========== ========== ==========
Adjusted earnings per common
share (5). . . . . . . . . . . . $ (0.30) (0.13) (0.43)
========== ========== ==========
Adjusted shares outstanding (5). . 30,538,404 30,538,404 30,538,404
========== ========== ==========
(1) Actual Results represent the operations of the LaSalle Partners'
businesses for the two months ended February 28, 1999 and the operations of
the merged Jones Lang LaSalle businesses for the month ended March 31,
1999.
(2) Pro Forma Adjustments give effect to the operating results of the
Jones Lang Wootton companies for the two months ended February 28, 1999,
the period prior to their merger with LaSalle Partners Incorporated,
amortization expense of the goodwill resulting from the merger as if the
merger occurred on January 1, 1999, and a benefit for taxes as if the Jones
Lang Wootton companies and LaSalle Partners Incorporated were taxable
entities at an effective tax rate of 38% as of January 1, 1999.
(3) Adjusted Pro Forma Results give effect to the results of operations
for Jones Lang Wootton and LaSalle Partners Incorporated as if the merger
occurred on January 1, 1999, except for the effect of compensation expense
incurred as a result of the shares issued to former employees of Jones Lang
Wootton which has been reflected as of the date of the merger.
(4) Adjusted EBITDA represents earnings before interest expense, income
taxes, depreciation and amortization and merger related non-recurring
charges. Merger related non-recurring charges represent non-cash
compensation expense resulting from the issuance of shares to former Jones
Lang Wootton employees including the effect of quarterly adjustments on
certain of those shares as a result of changes in the stock price, in
addition to non-capitalizable integration and transition costs incurred
related to the acquisition of Compass and the merger with Jones Lang
Wootton.
(5) Adjusted earnings per common share represents adjusted net earnings
divided by the weighted average committed shares outstanding. Committed
shares are inclusive of shares subject to forfeiture, vesting, indemnity
and adjustment provisions which are not considered in the calculation of
weighted average basic or diluted shares outstanding under generally
accepted accounting principles.
<PAGE>
JONES LANG LASALLE INCORPORATED
SEGMENT OPERATING RESULTS
Actual and Pro Forma for the Three Months Ended March 31, 1999
Actual for the Three Months Ended March 31, 1999
($ in thousands)
(Unaudited)
Actual (1)
---------------------- Pro Forma
1999 1998 1999 (2)
--------- ---------- -----------
OWNER & OCCUPIER SERVICES -
AMERICAS
Revenue:
Implementation services. . . . $ 15,434 10,801 19,075
Management fees. . . . . . . . 26,610 15,666 26,610
Equity earnings. . . . . . . . (180) (5) (180)
Other services . . . . . . . . 2,247 1,290 2,247
Intersegment revenue . . . . . 62 71 62
---------- ---------- ----------
44,173 27,823 47,814
Operating expenses:
Compensation, operating and
administrative expenses. . . 57,086 38,037 64,327
Depreciation and amortization. 5,043 994 5,318
---------- ---------- ----------
Operating loss . . . . . . $ (17,956) (11,208) (21,831)
========== ========== ==========
EUROPE
Revenue:
Implementation services. . . . $ 18,434 -- 44,973
Management fees. . . . . . . . 6,331 3 13,038
Equity earnings. . . . . . . . (21) -- (21)
Other services . . . . . . . . 3,039 -- 7,046
---------- ---------- ----------
27,783 3 65,036
Operating expenses:
Compensation, operating and
administrative expenses. . . 21,189 285 56,986
Depreciation and amortization. 615 -- 2,263
---------- ---------- ----------
Operating income (loss). . $ 5,979 (282) 5,787
========== ========== ==========
AUSTRALASIA
Revenue:
Implementation services. . . . $ 3,232 -- 6,313
Management fees. . . . . . . . 1,575 -- 3,958
Equity earnings. . . . . . . . (24) -- (24)
Other services . . . . . . . . 463 -- 699
---------- ---------- ----------
5,246 -- 10,946
Operating expenses:
Compensation, operating and
administrative expenses. . . 6,370 -- 14,209
Depreciation and amortization. 198 -- 464
---------- ---------- ----------
Operating loss . . . . . . $ (1,322) -- (3,727)
========== ========== ==========
<PAGE>
JONES LANG LASALLE INCORPORATED
SEGMENT OPERATING RESULTS - CONTINUED
Actual and Pro Forma for the Three Months Ended March 31, 1999
Actual for the Three Months Ended March 31, 1999
($ in thousands)
(Unaudited)
Actual (1)
---------------------- Pro Forma
1999 1998 1999 (2)
--------- ---------- -----------
ASIA
Revenue:
Implementation services. . . . $ 2,300 45 7,327
Management fees. . . . . . . . 1,893 -- 5,742
Other services . . . . . . . . 288 1 734
---------- ---------- ----------
4,481 46 13,803
Operating expenses:
Compensation, operating and
administrative expenses. . . 5,001 381 13,887
Depreciation and amortization. 208 2 943
---------- ---------- ----------
Operating loss . . . . . . $ (728) (337) (1,027)
========== ========== ==========
HOTEL SERVICES -
Revenue:
Implementation services. . . . $ 854 -- 1,928
Other services . . . . . . . . -- -- 371
---------- ---------- ----------
854 -- 2,299
Operating expenses:
Compensation, operating and
administrative expenses. . . 920 -- 2,570
Depreciation and amortization. 11 -- 68
---------- ---------- ----------
Operating loss . . . . . $ (77) -- (339)
========== ========== ==========
INVESTMENT MANAGEMENT -
Revenue:
Implementation services. . . . $ 1,606 952 1,942
Advisory fees. . . . . . . . . 16,614 21,416 17,191
Equity earnings. . . . . . . . 406 697 406
Other services . . . . . . . . 320 199 506
Intersegment revenue . . . . . 35 -- 35
---------- ---------- ----------
18,981 23,264 20,080
Operating expenses:
Compensation, operating and
administrative expenses. . . 16,286 16,022 16,843
Depreciation and amortization. 881 764 947
---------- ---------- ----------
Operating income . . . . $ 1,814 6,478 2,290
========== ========== ==========
<PAGE>
JONES LANG LASALLE INCORPORATED
SEGMENT OPERATING RESULTS - CONTINUED
Actual and Pro Forma for the Three Months Ended March 31, 1999
Actual for the Three Months Ended March 31, 1999
($ in thousands)
(Unaudited)
Actual (1)
---------------------- Pro Forma
1999 1998 1999 (2)
--------- ---------- -----------
Total segment revenue. . . . . . . $ 101,518 51,136 159,978
Intersegment revenue eliminations. (97) (71) (97)
---------- ---------- ----------
Total revenue. . . . . . $ 101,421 51,065 159,881
========== ========== ==========
Total segment operating expenses . $ 113,808 56,485 178,825
Intersegment operating expense
eliminations . . . . . . . . . . (97) (71) (97)
---------- ---------- ----------
Total operating expenses
before merger related
non-recurring charges. $ 113,711 56,414 178,728
========== ========== ==========
Operating loss before
merger related
non-recurring charges. $ (12,290) (5,349) (18,847)
========== ========== ==========
(1) Actual results for the three months ended March 31, 1999 represent
the operations of the LaSalle Partners' businesses for the two months ended
February 28, 1999 and the operations of the merged Jones Lang LaSalle
businesses for the month ended March 31, 1999.
(2) Pro Forma 1999 gives effect to the operating results of the Jones
Lang Wootton companies for the two months ended February 28, 1999, the
period prior to their merger with LaSalle Partners Incorporated.
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and December 31, 1998
($ in thousands, except share data)
(Unaudited)
March 31, December 31,
1999 1998
---------- ------------
ASSETS
- ------
Current assets:
Cash and cash equivalents. . . . . . . $ 39,987 16,941
Trade receivables, net of allowances
of $10,257 and $3,978 in 1999 and
1998, respectively . . . . . . . . . 204,760 116,965
Notes receivable and advances to
real estate ventures . . . . . . . . 18,169 17,042
Other receivables. . . . . . . . . . . 9,364 3,385
Prepaid expenses . . . . . . . . . . . 7,194 2,185
Other assets . . . . . . . . . . . . . 2,568 --
Deferred and current tax benefit . . . 27,819 9,926
---------- ----------
Total current assets . . . . . . 309,861 166,444
Property and equipment, at cost, less
accumulated depreciation of $39,649
and $35,859 for 1999 and 1998,
respectively . . . . . . . . . . . . . 63,411 28,773
Intangibles resulting from business
acquisitions, net of accumulated
amortization of $17,860 and $11,961
in 1999 and 1998, respectively . . . . 390,304 229,437
Investments in real estate ventures. . . 49,908 52,976
Prepaid pension asset. . . . . . . . . . 21,583 --
Long-term receivables, net . . . . . . . 21,109 10,950
Deferred tax assets. . . . . . . . . . . 7,518 660
Other assets, net. . . . . . . . . . . . 3,194 1,681
---------- ----------
$ 866,888 490,921
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued
liabilities. . . . . . . . . . . . . $ 116,109 51,101
Accrued compensation . . . . . . . . . 64,849 58,398
Short-term borrowings. . . . . . . . . 19,951 --
Other liabilities. . . . . . . . . . . 56,901 8,324
---------- ----------
Total current liabilities. . . . 257,810 117,823
Long-term liabilities:
Credit facilities. . . . . . . . . . . 292,378 202,923
Other. . . . . . . . . . . . . . . . . 4,343 603
Commitments and contingencies
---------- ----------
Total liabilities. . . . . . . . 554,531 321,349
<PAGE>
JONES LANG LASALLE INCORPORATED
CONSOLIDATED BALANCE SHEETS - CONTINUED
March 31, 1999 and December 31, 1998
($ in thousands, except share data)
(Unaudited)
March 31, December 31,
1999 1998
---------- ------------
Stockholders' equity:
Common stock, $.01 par value per
share, 100,000,000 shares
authorized; 30,560,307 shares
issued and outstanding . . . . . . . 306 163
Additional paid-in capital . . . . . . 472,365 123,543
Deferred stock compensation. . . . . . (150,379) --
Unallocated ESOT shares. . . . . . . .` (9) --
Retained earnings/(deficit). . . . . . (10,623) 44,792
Accumulated other comprehensive
income . . . . . . . . . . . . . . . 697 1,074
---------- ----------
Total stockholders' equity . . . 312,357 169,572
---------- ----------
$ 866,888 490,921
========== ==========
