UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 11, 1999
JONES LANG LASALLE INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-13145 36-4150422
- ------------------------ ------------------------ ---------------
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation Identification
or organization) No.)
200 East Randolph Drive, Chicago, IL 60601
------------------------------------ ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (312) 782-5800
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 11, 1999, LaSalle Partners Incorporated ("LaSalle") and Jones
Lang Wootton ("JLW") completed the merger of their operations following the
approval of the transaction by LaSalle's shareholders. JLW, which was
headquartered in London, was an employee owned company with more than 4,000
employees located in 32 countries throughout Europe, Asia, North America
and Australia, and provided a wide range of real estate advisory,
transactional and asset management services to local, national and
international clients in both the private and public sectors. In
connection with the merger, LaSalle changed its name to Jones Lang LaSalle
Incorporated ("Jones Lang LaSalle") and changed its New York Stock Exchange
ticker symbol to "JLL". Jones Lang LaSalle provides a wide range of
comprehensive, integrated services on a local, regional or international
level to owners, occupiers and investors through three core business
segments: Financial and Corporate Services, Investment Management, and
Leasing and Management Services. These services will be provided by more
than 6,000 employees in 34 countries throughout North and South America,
Europe, Asia and Australasia. Jones Lang LaSalle is one of the world's
leading fully integrated real estate services and investment management
firms with more than 680 million square feet of office, retail, and
industrial space under management and approximately $20.5 billion in assets
under management.
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 through 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 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". Accordingly, JLW's operating
results will be included in Jones Lang LaSalle's results effective the date
of the closing.
As a general matter, the accounting treatment for 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 a 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, will be accounted for using the purchase method of accounting under
APB Opinion No. 16. Accordingly, the value of the aggregate consideration
and any capitalizable transaction costs will be allocated to identifiable
assets and liabilities being acquired and the excess allocated to goodwill
which will be amortized over its estimated useful life of 40 years.
<PAGE>
The Non-restricted Shares issued and cash paid to New JLW Owners
and/or allocated from the ESOT; Forfeiture Shares issued to Current JLW
Owners and New JLW Owners (with the exception of Forfeiture Shares issued
to JLW Asia Shareholders which will also be subject to indemnification
provisions), and Forfeiture Shares allocated from the ESOT, will be
accounted for as a fixed stock award plan under APB Opinion No. 25.
Accordingly, compensation expense will be incurred and valued at Closing,
or with respect to the ESOT Shares, when they are allocated to employees.
The amount of the compensation expense will be based on the market price of
the common stock on the measurement dates. To the extent the shares are
subject to forfeiture or vesting, the related compensation expense will be
recognized over the forfeiture or vesting period. The compensation costs
related to these shares, as well as the cash paid, will be charged to
expense immediately at the measurement dates. Compensation costs related
to shares that are forfeited will be adjusted upon reallocation of such
shares at December 31, 2000, based on the change in stock price on such
date and the date compensation expense was initially recorded.
The Forfeiture Shares issued to JLW Asia Shareholders (which are
subject to indemnification provisions), and Adjustment and Indemnification
Shares issued to New JLW Owners and allocated from the ESOT will be
accounted for as a variable stock award plan under APB Opinion No. 25.
Accordingly, compensation expense will be recognized at Closing or, with
respect to ESOT Shares, when the shares are allocated to employees. The
amount of compensation expense will be based on the market price of the
Jones Lang LaSalle common stock on the measurement dates. To the extent
any of these shares are subject to forfeiture or vesting, the compensation
costs will be recognized as expense over the forfeiture or vesting period.
The compensation cost related to all other of these shares will be charged
to expense immediately at their initial measurement dates. The amount of
compensation cost will be adjusted at the end of each quarter until the
final number of shares to be issued is known. The amount of the quarterly
adjustment will be based on the change in the stock price from the
preceding quarter. As a result of this treatment, Jones Lang LaSalle's
reported results of operations will be subject to quarterly fluctuations
based on its stock price.
Shares subject to forfeiture are amortized into compensation expense
from the date of issuance (i.e. Closing or December 31, 1999) through
December 31, 2000. Total ESOT Shares of 1,772,324 include 525,332 shares,
assuming the net worth requirements are met, to be allocated from the ESOT
at Closing or on December 31, 1999 which are subject to vesting through
December 31, 2000. Accordingly, the value of those shares is amortized
into compensation expense over the vesting period.
Assuming that the closing net worth requirements are met and using the
closing price of Jones Lang LaSalle's common stock on March 10, 1999 of
$35.375, the value of the 14.3 million shares was approximately $504.2
million and the cash paid was $6.2 million for a total Consideration of
approximately $510.4 million. Of such shares issued, approximately 7.6
million shares, or 53%, and $5.7 million in cash are subject to accounting
under APB Opinion No. 16. The remaining 6.7 million shares, or 47%, and
$.4 million in cash are subject to accounting under APB Opinion No. 25 and
will be treated as compensation expense.
As a result, Jones Lang LaSalle expects to incur compensation expense
associated with the issuance of shares totaling approximately $131.8
million and $104.8 million in the years ended December 31, 1999 and 2000,
respectively, assuming that the closing net worth requirements are met.
Included in the total compensation expense of $236.6 million is expense of
$55.3 million which will be subject to fluctuation based on quarterly
changes in the price of Jones Lang LaSalle common stock. Management
anticipates that this compensation expense, $236.2 million of which
represents a non-cash charge, will cause Jones Lang LaSalle to report
operating losses for these periods.
<PAGE>
Included in Item 7 (b), found elsewhere in this document, are pro
forma statements of earnings for the JLW entities and for Jones Lang
LaSalle for the year ended December 31, 1998. Also included are pro forma
consolidated balance sheets for the JLW entities and Jones Lang LaSalle at
December 31, 1998. The pro forma statements for the JLW entities give
effect to the integration (the "Integration") of those entities which had
previously operated under substantially separate ownership structures, as
if the Integration occurred on January 1, 1998 with regard to the statement
of earnings and on December 31, 1998 with regard to the consolidated
balance sheet. The pro forma statements for Jones Lang LaSalle give effect
to the acquisition of Compass and the merger with JLW as if the
transactions occurred on January 1, 1998 with regard to the statement of
earnings and as of December 31, 1998 for the consolidated balance sheet.
As reflected in the summary share table located in Item 7(b), approximately
.1 million Adjustment Shares would have been returned to Jones Lang LaSalle
as a result of closing net worth as of December 31, 1998.
For a more complete discussion of the merger and more detailed
information regarding JLW, please see the LaSalle Partners Proxy Statement
on Schedule 14A, which was filed on February 8, 1999 with the Securities
and Exchange Commission.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired:
The various JLW companies operated their business in four
geographic regions, Europe, Asia, Australasia and North America. As a
result of substantially independent ownership structures among and within
these regions, historical financial reporting has been presented for the
following five separate groups: Jones Lang Wootton (the English
Partnership and subsidiaries) which excludes Scotland and Ireland and
includes North America ("JLW Europe"), Jones Lang Wootton Scotland ("JLW
Scotland"), Jones Lang Wootton - Irish Practice ("JLW Ireland"), JLW Asia
Holdings Limited and subsidiaries ("JLW Asia"), and JLW Australia Group
("JLW Australasia"). The following financial statements presented herein
represent the JLW businesses acquired:
JLW EUROPE
- ----------
Independent Auditors' Report
Consolidated Profit and Loss Accounts for the Years Ended 31 December 1998,
1997 and 1996
Consolidated Statements of Movements on Partners' Funds for the Years
Ended 31 December 1998, 1997 and 1996
Consolidated Balance Sheets as of 31 December 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended 31 December 1998,
1997 and 1996
Consolidated Statements of Total Recognised Gains and Losses for the
Years Ended 31 December 1998, 1997 and 1996
Reconciliations of Movements in Partners' Funds for the Years Ended
31 December 1998, 1997 and 1996
Notes to the Accounts
JLW SCOTLAND
- ------------
Independent Auditors' Report
Consolidated Profit and Loss Accounts for the Years Ended 31 December 1998,
1997 and 1996
Statement of Total Recognized Gains and Losses for the Years Ended 31
December 1998, 1997 and 1996
Consolidated Balance Sheets as of 31 December 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended 31 December 1998,
1997 and 1996
Statements of Movements on Funds for the Years Ended 31 December 1998, 1997
and 1996
Notes to the Accounts
JLW IRELAND
- -----------
Independent Auditors' Report
Combined Profit and Loss Accounts for the Years Ended 31 December 1998,
1997, 1996 and 1995
Combined Balance Sheets as at 31 December 1998, 1997 and 1996
Combined Statements of Total Recognised Gains and Losses for the
Years Ended 31 December 1998, 1997, 1996 and 1995
Combined Statements of Movements in Partners' Funds for the Years Ended 31
December 1998, 1997, 1996 and 1995
Combined Statements of Cash Flows for the Years Ended 31 December 1998,
1997, 1996 and 1995
Notes to the Combined Financial Statements
<PAGE>
JLW ASIA
- --------
Independent Auditors' Report
Group Profit and Loss Accounts for the Years Ended 31 December 1998,
1997 and 1996
Group Balance Sheets as at 31 December 1998 and 1997
Group Cash Flow Statements for the Years Ended 31 December 1998,
1997 and 1996
Group Statements of Total Recognised Gains and Loss for the Years
Ended 31 December 1998, 1997 and 1996
Reconciliation of Shareholders' Funds for the Years Ended 31 December 1998,
1997 and 1996
Notes to the Group Financial Statements
JLW PROPERTY CONSULTANTS PTE LTD:
- --------------------------------
Independent Auditors' Report
JLW AUSTRALASIA:
- ---------------
Independent Auditors' Report
Combined Profit and Loss Accounts for the Years Ended 31 December 1998,
1997 and 1996
Statement of Movements on Reserves for the Years Ended 31 December 1998,
1997 and 1996
Combined Balance Sheets as at 31 December 1998 and 1997
Combined Statements of Cash Flows for the Years Ended 31 December 1998,
1997 and 1996
Combined Statements of Total Recognised Gains and Losses for the
Years Ended 31 December 1998, 1997 and 1996
Reconciliation of Movements in Combined Shareholders' Funds for the
Years Ended 31 December 1998 and 1997
Notes to the Accounts
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
INDEPENDENT AUDITORS' REPORT TO THE PARTNERS OF
JONES LANG WOOTTON
We have audited the accompanying consolidated balance sheets of Jones Lang
Wootton (the English partnership, hereafter "the Firm") and its
subsidiaries as of 31 December 1998 and 1997, and the related consolidated
profit and loss accounts, consolidated statements of cash flows and
consolidated statements of movements on partners' funds for each of the
three years ended 31 December 1998. These consolidated financial
statements are the responsibility of the Partners. Our responsibility is
to express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United Kingdom and the United States of America. Those
standards require that we plan and perform audits to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Jones
Lang Wootton and its subsidiaries as of 31 December 1998 and 1997, and the
results of their operations and their cash flows for each of the three
years ended 31 December 1998 in conformity with accounting principles
generally accepted in the United kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States of America. Application of accounting principles
generally accepted in the United States of America would have affected the
results of operations for each of the three years ended 31 December 1998
and the determination of Partners' funds as of 31 December 1998 and 1997,
to the extent summarised in Note 28 to the accounts.
Deloitte & Touche
Chartered Accountants
London, United Kingdom
23 March 1999
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
Fee income: group and
share of joint ventures. . 320,620 254,033 215,164
Less: share of joint
ventures . . . . . . . . . (308) (1,138) (901)
-------- -------- --------
FEE INCOME . . . . . . . . . 2 320,312 252,895 214,263
Administrative expenses. . . (268,105) (217,501) (185,321)
Merger-related non-recurring
charges. . . . . . . . . . 3 (12,345) -- --
-------- -------- --------
OPERATING PROFIT . . . . . . 3 39,862 35,394 28,942
Share of operating profit
in joint ventures and
associated undertaking . . 4 162 600 821
Gain on sale of investment
in associated company. . . 3,825 2,348 --
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES
BEFORE INTEREST. . . . . . 43,849 38,342 29,763
Investment income. . . . . . 5 3,817 2,795 2,023
Interest payable and
similar charges. . . . . . 6 (946) (649) (804)
-------- -------- --------
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION 2 46,720 40,488 30,982
Tax on profit on ordinary
activities . . . . . . . . 7 (7,188) (3,300) (3,478)
-------- -------- --------
PROFIT ON ORDINARY
ACTIVITIES AFTER TAXATION. 39,532 37,188 27,504
Minority interests . . . . . (1,090) (1,450) (59)
-------- -------- --------
PROFIT FOR THE YEAR. . . . . 38,442 35,738 27,445
======== ======== ========
All activities derive from continuing operations.
Included in fee income and operating profit for 1998 is $5,833 and $32
respectively derived from acquisitions of subsidiary undertakings.
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF MOVEMENTS ON PARTNERS' FUNDS
Years ended 31 December 1998, 1997 and 1996
(US$ in thousands, except where stated otherwise)
<CAPTION>
Corporate
Foreign Profit
Exchange and Loss
Other Translation Annuitants' Partners' Account
Reserves Reserves Balances Balances Reserves Total
-------- ----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at 1
January 1996 . . . . . 1,322 1,282 95 11,603 14,084 28,386
Profit for the year. . . -- -- 887 23,333 3,225 27,445
Goodwill on disposal
of a business. . . . . 56 -- -- -- -- 56
Partner drawings . . . . -- -- (462) (18,042) -- (18,504)
Foreign exchange
translation
differences. . . . . . 142 (1,741) 50 1,692 1,748 1,891
------- ------- ------- ------- ------- -------
Balance at 31 December
1996 . . . . . . . . . 1,520 (459) 570 18,586 19,057 39,274
Profit for the year. . . -- -- 1,242 29,318 5,178 35,738
Annuitants buyout,
transferred from
partners' balances . . -- -- 8,685 (8,685) -- --
Goodwill written off
to reserves. . . . . . (401) -- -- -- -- (401)
Partner drawings . . . . -- -- (1,298) (22,678) -- (23,976)
Foreign exchange
translation
differences. . . . . . (61) (519) 14 (724) (712) (2,002)
------- ------- ------- ------- ------- -------
<PAGE>
CONSOLIDATED STATEMENTS OF MOVEMENTS ON PARTNERS' FUNDS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Corporate
Foreign Profit
Exchange and Loss
Other Translation Annuitants' Partners' Account
Reserves Reserves Balances Balances Reserves Total
-------- ----------- ----------- ---------- --------- ---------
Balance at 31 December
1997 . . . . . . . . . 1,058 (978) 9,213 15,817 23,523 48,633
Profit for the year. . . -- -- 1,522 33,665 3,255 38,442
Annuitants buyout,
transferred from
partners' balances . . -- -- 837 (837) -- --
Partner drawings . . . . -- -- (1,228) (35,574) -- (36,802)
Foreign exchange
translation
differences. . . . . . (4) 584 72 164 180 996
------- ------- ------- ------- ------- -------
Balance at 31 December
1998 . . . . . . . . . 1,054 (394) 10,416 13,235 26,958 51,269
======= ======= ======= ======= ======= =======
<FN>
Other reserves are not distributable and represent the net amount of capital reserves and goodwill arising on
consolidation to date together with legal reserves in certain subsidiaries.
Corporate profit and loss account reserves represent the amounts retained, within the corporate entities
consolidated in these accounts.
</TABLE>
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED BALANCE SHEETS
31 DECEMBER 1998 AND 1997
(US$ in thousands, except where stated otherwise)
<CAPTION>
Note 1998 1998 1997 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets. . . . . . . . . . . . . 8 3,403 439
Tangible assets. . . . . . . . . . . . . . 9 23,695 19,301
Investments in joint ventures:
Share of gross assets. . . . . . . . . . 408 649
Share of gross liabilities . . . . . . . (41) (208)
------- -------
10 367 441
Other investments other than loans . . . . 11 93 87
------- -------
27,558 20,268
------- -------
CURRENT ASSETS
Work in progress . . . . . . . . . . . . . 2,138 2,468
Trade debtors due beyond one year. . . . . 6,104 282
Debtors. . . . . . . . . . . . . . . . . . 12 106,887 77,073
Cash at bank and in hand . . . . . . . . . 24,097 21,242
------- -------
139,226 101,065
CREDITORS: amounts falling due
within one year. . . . . . . . . . . . . 13 (107,348) (68,750)
------- -------
NET CURRENT ASSETS . . . . . . . . . . . . 31,878 32,315
------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES. . . . . . . . . . . . . . . 59,436 52,583
CREDITORS: amounts falling due after
more than one year . . . . . . . . . . . 14 (4,505) (240)
PROVISIONS FOR LIABILITIES AND CHARGES . . 16 (1,672) (2,335)
MINORITY INTERESTS
Minority interests . . . . . . . . . . . . (1,990) (1,375)
------- -------
51,269 48,633
======= =======
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED BALANCE SHEETS - CONTINUED
31 DECEMBER 1998 AND 1997
(US$ in thousands, except where stated otherwise)
1998 1997
------ ------
PARTNERS' FUNDS
Other reserves . . . . . . . . . . . . . . 1,054 1,058
Foreign exchange translation reserve . . . (394) (978)
Annuitant balances . . . . . . . . . . . . 10,416 9,213
Partner balances . . . . . . . . . . . . . 13,235 15,817
Corporate reserves . . . . . . . . . . . . 26,958 23,523
------- -------
51,269 48,633
======= =======
These financial statements were approved by the Partners on 18 March 1999.
Signed on behalf of the Partners.
Partner
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
Net cash inflow from
operating activities. . . . 17 43,008 48,948 31,328
------- ------- -------
Amounts distributed from
joint ventures . . . . . . 287 680 664
Returns on investments and
servicing of finance
Interest received. . . . . . 2,619 1,532 1,290
Interest paid. . . . . . . . (946) (647) (704)
Interest element of finance
lease rental payments. . . -- (2) (100)
Amounts distributed from
investments. . . . . . . . 1,291 733 462
Dividends paid to minority
interests. . . . . . . . . -- -- (215)
------- ------- -------
Net cash inflow from
returns on investments
and servicing of finance . 2,964 1,616 733
------- ------- -------
Taxation
UK corporation tax paid. . . (2,206) (193) (206)
Overseas tax paid. . . . . . (1,395) (4,017) (1,555)
------- ------- -------
Tax paid . . . . . . . . . . (3,601) (4,210) (1,761)
------- ------- -------
Capital expenditure and
financial investment
Payments to acquire
intangible fixed assets. . -- -- (733)
Payments to acquire tangible
fixed assets . . . . . . . (13,795) (11,474) (8,333)
Receipts from sales of
tangible fixed assets. . . 1,316 767 790
Payments to acquire fixed
asset investments. . . . . (317) (18) --
Receipts from sales of
fixed asset investments. . 4,079 2,492 2,154
------- ------- -------
Net cash outflow from
capital expenditure and
financial investment . . . (8,717) (8,233) (6,122)
------- ------- -------
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
Acquisitions
Payments to acquire
investments in
subsidiaries . . . . . . . 20 (2,325) (401) --
Net overdraft acquired
with subsidiaries. . . . . (238) -- --
------- ------- -------
Net cash outflow from
acquisitions . . . . . . . (2,563) (401) --
------- ------- -------
Distributions to partners
Partners' drawings . . . . . (36,802) (23,976) (18,504)
------- ------- -------
Net cash outflow from dis-
tributions to partners . . (36,802) (23,976) (18,504)
------- ------- -------
Net cash (outflow)/inflow
before financing . . . . . (5,424) 14,424 6,338
------- ------- -------
Financing
Capital element of finance
lease rental additions/
(payments) . . . . . . . . -- (280) (433)
------- ------- -------
Net cash outflow from
financing. . . . . . . . . -- (280) (433)
------- ------- -------
(Decrease)/increase in cash. 18,19 (5,424) 14,144 5,905
======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1998 1997 1996
------- ------- -------
Profit for the year. . . . . . . . 38,442 35,738 27,445
Currency translation differences
on foreign currency net
investments. . . . . . . . . . . 996 (2,002) 1,891
------- ------- -------
Total recognised gains and
losses relating to the year. . . 39,438 33,736 29,336
======= ======= =======
RECONCILIATIONS OF MOVEMENTS IN PARTNERS' FUNDS
Years ended 31 December 1998, 1997 and 1996
(US$ in thousands, except where stated otherwise)
1998 1997 1996
------- ------- -------
Profit for the year. . . . . . . . 38,442 35,738 27,445
Distributions to Partners. . . . . (36,802) (23,976) (18,504)
------- ------- -------
1,640 11,762 8,941
Other recognised gains and
losses relating to the period. . 996 (2,002) 1,891
Goodwill written back on
disposal of a business . . . . . -- -- 56
Goodwill written off . . . . . . . -- (401) --
------- ------- -------
Net addition to partners' funds. . 2,636 9,359 10,888
Opening partners' funds. . . . . . 48,633 39,274 28,386
------- ------- -------
Closing partners' funds. . . . . . 51,269 48,633 39,274
======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Jones Lang Wootton, through its operational subsidiaries, provides a
full range of advisory, transactional and asset management services to a
wide variety of local and international clients in almost every industry
and service sector for all types of real estate. The main geographical
markets are the UK, Europe and North America.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention and in accordance with accounting principles generally accepted
in the United kingdom.
BASIS OF CONSOLIDATION
The financial statements incorporate the results of the Jones Lang
Wootton partnership and its subsidiary undertakings for the years ended 31
December 1998, 31 December 1997 and 31 December 1996.
The financial statements consolidate all the interests of the
Partners of the English Partnership of Jones Lang Wootton, although not all
partners have an equal interest therein.
ACQUISITIONS AND DISPOSALS
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the Firm's share of
net tangible assets. Where the cost of acquisition exceed the values
attributable to such net assets, the difference is treated as purchased
goodwill. Purchased goodwill arising on acquisitions prior to 1 January
1998 is written off directly to reserves in the year of acquisition.
Amounts arising on acquisitions after that date are capitalised and
amortised over a period of ten years, the expected useful life.
The profit or loss on the disposal of a previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business.
FEE INCOME
Revenue is recognised upon substantial completion of the underlying
contract, excluding VAT. All trading arises from the provision by the Firm
of advice on all aspects of commercial real estate and other services,
including surveying, property management and related services.
INTANGIBLE FIXED ASSET
Intangible fixed assets are stated at cost less accumulated
amortisation and are amortised over the expected useful lives of the assets
held. The expected useful life of contract rights currently held is four
years. Goodwill is amortised over ten years.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES (continued)
DEPRECIATION
Depreciation is provided annually on the various categories of fixed
assets using the following expected useful lives:
Motor vehicles - on written down value 2-5 years
Office machinery and
fixtures - on cost greater than $825 3-10 years
Office machinery and
fixtures - on cost less than $825 1 year
Computer equipment - on cost 3-4 years
Short leasehold
improvements - on cost The length of
the lease
Leasehold property is amortised equally over the length of the lease.
No depreciation is provided on fine art, since its value is not
considered to decrease.
TAXATION
Taxation is provided on the taxable profits of the corporate entities
within the Firm. No current or deferred taxation is provided on the
profits attributable to the partners as the liability for taxation falls on
the individual partners.
DEFERRED TAXATION
Deferred taxation is provided at the anticipated tax rates on timing
differences arising from the inclusion of items of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future.
INVESTMENTS
Except as stated below, investments held as fixed assets are stated
at cost less provision for any permanent diminution in value.
In the consolidated accounts, shares in joint ventures are accounted
for using the gross equity method of accounting in accordance with
Financial Reporting Standard 9 ("Associates and Joint Ventures"). The
consolidated profit and loss account includes the Firm's share of pre-tax
profits and losses and attributable taxation of the joint ventures. In the
consolidated balance sheet, the investment in joint ventures is shown as
the Firm's share of the separate gross assets and liabilities of the joint
ventures.
In the consolidated accounts, shares in associated undertakings are
accounted for using the net equity method of accounting in accordance with
Financial Reporting Standard 9 ("Associates and Joint Ventures").
Investment income includes the share of profits of Jones Lang Wootton
Scotland and Jones Lang Wootton Ireland attributable to certain partners in
Jones Lang Wootton who participate in the profit of those firms for the
benefit of all partners in Jones Lang Wootton.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES (continued)
WORK IN PROGRESS
Work in progress represents work done by the Firm but not yet
substantially complete and not yet billed. work in progress is included in
the accounts at the lower of cost including attributable overheads, and net
realisable value.
LEASES
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
PENSION COSTS
The Firm operates a variety of schemes including defined benefit and
defined contribution schemes:
(i) UK Schemes
DEFINED BENEFIT SCHEME - J.L.W. SUPPLY COMPANY
The expected cost of providing pensions, as calculated
periodically by professionally qualified actuaries, is charged to the
profit and loss account so as to spread the cost over the service lives of
the employees in the scheme, in such a way that the pension cost is a
substantially level percentage of current and expected future pensionable
payroll.
DEFINED CONTRIBUTION SCHEME - PROPERTY MANAGEMENT RESOURCES
LIMITED
Retirement benefits to employees are provided by a defined
contribution scheme. Contributions payable to the scheme in respect of
each accounting period are recharged to clients of the firm.
(ii) OVERSEAS SCHEMES
The pension charges relating to overseas schemes are determined
in accordance with local best practice and regulations in the countries
concerned.
FOREIGN EXCHANGE
Transactions of companies within the Firm denominated in foreign
currencies are translated at the rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the rates ruling at
that date. These translation differences are dealt with in the profit and
loss account.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES (continued)
The balance sheets of foreign subsidiaries are translated at the
closing rates of exchange and the profit and loss accounts and cash flow
statements at average rates. The differences arising from the translation
of the opening net investment in subsidiaries at the closing rates and the
profit and loss accounts at average rates are taken directly to reserves.
Where foreign currency borrowings have been used to finance Firm
investments, the exchange gains or losses arising on the translation of the
foreign borrowings are offset as a reserve movement against the exchange
differences arising on the retranslation of the net investments.
The functional currency of Jones Lang Wootton and its subsidiaries is
generally the local currency, accordingly its transactions are measured in
the local currency and the results of its subsidiaries are translated upon
consolidation into sterling according to the above accounting policy. The
reporting currency for the purposes of these financial statements is the
United States dollar and the sterling consolidated financial statements
have been translated using the closing rate of exchange for the balance
sheet and the weighted average rate of exchange for the profit and loss
account. The opening capital and reserves at 1 January 1995 were
translated using the rate at that date. All differences arising as a
result of this translation have been taken directly to the foreign exchange
translation reserve.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
2. ANALYSES OF FEE INCOME, PROFIT BEFORE TAX AND NET ASSETS
Fee Income
1998 1997 1996
------- ------- -------
United Kingdom . . . . . . . 133,260 109,635 83,256
Continental Europe:
France . . . . . . . . . . . 26,750 21,769 21,475
Germany. . . . . . . . . . . 37,675 31,888 36,097
Holland. . . . . . . . . . . 21,385 17,349 17,135
Belgium and Luxembourg . . . 16,184 13,805 13,393
Other Continental
European countries . . . . 22,658 10,708 6,861
------- ------- -------
Total Continental Europe . . 124,652 95,519 94,961
------- ------- -------
North America. . . . . . . . 62,400 47,741 36,046
------- ------- -------
Total . . . . . . . . . . . 320,312 252,895 214,263
======= ======= =======
Turnover from joint ventures and the associated undertaking arises in
North America.
Profit on ordinary activities before tax
1998 1997 1996
------- ------- -------
United Kingdom . . . . . . . 40,397 33,331 22,576
Continental Europe:
France . . . . . . . . . . . 723 1,079 (1,013)
Germany. . . . . . . . . . . (128) 59 2,834
Holland. . . . . . . . . . . 1,822 1,619 2,319
Belgium and Luxembourg . . . 2,074 1,014 552
Other Continental
European countries . . . . 1,900 1,009 771
------- ------- -------
Total Continental Europe . . 6,391 4,780 5,463
------- ------- -------
North America:
Group. . . . . . . . . . . (230) 1,777 2,122
Joint Ventures and
associated undertaking . 162 600 821
------- ------- -------
Total North America. . . . . (68) 2,377 2,943
------- ------- -------
Total . . . . . . . . . . . 46,720 40,488 30,982
======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
2. ANALYSES OF FEE INCOME, PROFIT BEFORE TAX AND NET ASSETS - CONTINUED
Net assets
31 December
-------------------
1998 1997
------- -------
United Kingdom . . . . . . . . . . . . . 32,271 33,184
Continental Europe:
France . . . . . . . . . . . . . . . . . 1,420 821
Germany. . . . . . . . . . . . . . . . . 2,595 2,984
Holland. . . . . . . . . . . . . . . . . 4,987 3,804
Belgium. . . . . . . . . . . . . . . . . 1,175 274
Other Continental
European countries . . . . . . . . . . 2,763 1,588
------- -------
Total Continental Europe . . . . . . . . 12,940 9,471
------- -------
North America:
Group. . . . . . . . . . . . . . . . . 5,691 5,537
Joint Ventures . . . . . . . . . . . . 367 441
------- -------
Total North America. . . . . . . . . . . 6,058 5,978
------- -------
Total . . . . . . . . . . . . . . . . . 51,269 48,633
======= =======
3. OPERATING PROFIT
1998 1997 1996
------- ------- -------
Operating profit is stated
after charging/(crediting):
(a) Other operating income:
Gross rents
receivable . . . . . . (384) (344) (330)
======= ======= =======
(b) Staff costs:
Wages and salaries . . 139,050 106,385 93,096
Social security costs. 18,109 12,989 12,672
Other pension
costs (note 21). . . 2,342 2,733 2,261
------- ------- -------
159,501 122,107 108,029
======= ======= =======
No. No. No.
Average number of
persons employed:
Technical and
administration . . . 2,373 2,216 2,004
======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
3. OPERATING PROFIT - CONTINUED
1998 1997 1996
------- ------- -------
(c) Other operating charges:
Rentals under operat-
ing leases:
Hire of plant and
machinery. . . . . . . . . 3,178 2,226 1,885
Other operating
leases . . . . . . . . . . . 12,818 12,696 9,738
Other operating
charges. . . . . . . . . . . 83,487 73,195 59,851
------- ------- -------
99,483 88,117 71,474
======= ======= =======
(d) Depreciation and other
amounts written off
fixed assets:
Owned tangible fixed
assets . . . . . . . . . . . 8,995 7,326 5,894
Tangible fixed assets
held under finance
leases . . . . . . . . . . . 42 80 152
Intangible fixed assets. . . . 468 215 102
======= ======= =======
As at 31 December 1998, the firm was in merger talks with LaSalle
Partners Incorporated. External costs incurred during the year of $12,345
in connection with the proposed merger have been expensed in the profit and
loss account and have been shown separately. As noted in Note 27, the
merger occurred on 11 March 1999.
4. SHARE OF OPERATING PROFIT IN JOINT VENTURES AND ASSOCIATED
UNDERTAKINGS
1998 1997 1996
------- ------- -------
Turnover . . . . . . . . . . 308 1,138 901
Administration expenses. . . (146) (538) (294)
------- ------- -------
Share of operating profit. . 162 600 607
======= ======= =======
No tax charge arises on the
profits in joint ventures
Share of operating profit
of associated undertaking. -- -- 214
======= ======= =======
The share of turnover and administrative expenses in the associated
undertaking in 1996 are not disclosed on grounds of immateriality.
5. INVESTMENT INCOME
1998 1997 1996
------- ------- -------
Income from Jones Lang
Wootton Scotland . . . . . 620 934 375
Income from Jones Lang
Wootton Ireland. . . . . . 578 329 358
Other interest receivable
and similar income . . . . 2,619 1,532 1,290
------- ------- -------
3,817 2,795 2,023
======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
6. INTEREST PAYABLE AND SIMILAR CHARGES
1998 1997 1996
------- ------- -------
Bank loans and overdrafts. . 943 647 704
Finance charges -
finance leases . . . . . . 3 2 100
------- ------- -------
946 649 804
======= ======= =======
7. TAX ON PROFIT ON ORDINARY ACTIVITIES
1998 1997 1996
------- ------- -------
United Kingdom corporation
tax at 31% (1997 - 31%;
1996 - 33%) based on the
profit for the year. . . . 3,395 1,817 309
Overseas taxation. . . . . . 3,793 1,483 3,169
------- ------- -------
7,188 3,300 3,478
======= ======= =======
The tax charge is disproportionately low as no taxation is provided
on the profits attributable to the partners in accordance with the Firm's
accounting policies.
8. INTANGIBLE FIXED ASSETS
Contract
Goodwill Rights Total
-------- ------- -------
Cost
At 1 January 1998. . . -- 763 763
Additions. . . . . . . 3,398 -- 3,398
Foreign exchange
movements. . . . . . 34 -- 34
------- ------- -------
At 31 December 1998. . 3,432 763 4,195
------- ------- -------
Accumulated amortisation
At 1 January 1998. . . -- 324 324
Charge for the year. . 279 189 468
------- ------- -------
At 31 December 1998. . 279 513 792
------- ------- -------
Net book value
At 31 December 1998. . 3,153 250 3,403
======= ======= =======
At 31 December 1997. . -- 439 439
======= ======= =======
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
9. TANGIBLE FIXED ASSETS
<CAPTION>
Office
machinery, Improve-
computer ments
equipment to short Short
Motor and leasehold Leasehold
Vehicles fixtures Fine Art Premises Property Total
-------- ---------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Cost
At 1 January 1998. . . . . . 14,560 26,660 329 3,775 522 45,846
Foreign exchange trans-
lation differences . . . . 322 998 3 17 4 1,344
Subsidiaries acquired. . . . 44 224 -- -- -- 268
Additions. . . . . . . . . . 4,509 8,953 -- 504 -- 13,966
Disposals. . . . . . . . . . (3,524) (2,099) -- -- -- (5,623)
-------- -------- -------- -------- -------- --------
At 31 December 1998. . . . . 15,911 34,736 332 4,296 526 55,801
-------- -------- -------- -------- -------- --------
Accumulated depreciation
At 1 January 1998. . . . . . 7,952 16,278 -- 1,942 373 26,545
Foreign exchange trans-
lation differences . . . . 216 803 -- 8 3 1,030
Subsidiaries acquired. . . . 7 84 -- -- -- 91
Charge for the year. . . . . 3,003 5,574 -- 395 65 9,037
Disposals. . . . . . . . . . (2,785) (1,812) -- -- -- (4,597)
-------- -------- -------- -------- -------- --------
At 31 December 1998. . . . . 8,393 20,927 -- 2,345 441 32,106
-------- -------- -------- -------- -------- --------
Net book value
At 31 December 1998. . . . . 7,518 13,809 332 1,951 85 23,695
======== ======== ======== ======== ======== ========
At 31 December 1997. . . . . 6,608 10,382 329 1,833 149 19,301
======== ======== ======== ======== ======== ========
<FN>
The net book value of the Firm's fixed assets at 31 December 1998 includes motor vehicles amounting to $131
(31 December 1997 - $41) and office equipment amounting to $64 (31 December 1997 - $nil) in respect of assets held
under finance leases.
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
10. INVESTMENTS IN JOINT VENTURES
1998 1997
------- -------
Sandalwood . . . . . . . . . . . . . . . 178 --
Global Realty Advisers . . . . . . . . . 189 189
GRA (Bermuda) Limited. . . . . . . . . . -- 252
------- -------
367 441
======= =======
Share of
equity
--------
At 1 January 1998. . . . . . . . . . . . 441
Additions. . . . . . . . . . . . . . . . 305
Profit for the year. . . . . . . . . . . 162
Profits distributed. . . . . . . . . . . (287)
Disposals. . . . . . . . . . . . . . . . (254)
-------
At 31 December 1998. . . . . . . . . . . 367
=======
Additional information on joint ventures is given in note 26. In
accordance with Financial Reporting Standard 9 ("Associates and Joint
Ventures") the above investments have been accounted for as joint ventures.
In the financial statements for 1997, these investments were accounted for
as associates. The 1997 comparative in these accounts reflects this
reclassification.
11. OTHER INVESTMENTS OTHER THAN LOANS
Cost
-------
At 1 January 1998. . . . . . . . . . . . 87
Foreign exchange retranslation . . . . . 6
-------
At 31 December 1998. . . . . . . . . . . 93
=======
12. DEBTORS
1998 1997
------- -------
Trade debtors due within one year. . . . 77,215 57,372
Other debtors:
Due within one year. . . . . . . . . . 17,661 9,222
Due after more than one year . . . . . 881 524
Prepayments and accrued income . . . . . 11,130 9,955
------- -------
106,887 77,073
======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1998 1997
------- -------
Bank loans and overdrafts (note 15). . . 11,170 3,232
Obligations under finance leases
(note 23). . . . . . . . . . . . . . . 134 5
Taxation and social security . . . . . . 21,161 14,582
Other creditors. . . . . . . . . . . . . 9,471 9,325
Accruals and deferred income . . . . . . 65,412 41,606
------- -------
107,348 68,750
======= =======
14. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1998 1997
------- -------
Obligation under finance leases
(note 23). . . . . . . . . . . . . . . 48 7
Other creditors. . . . . . . . . . . . . 4,457 233
------- -------
4,505 240
======= =======
15. BORROWINGS
J.L.W. Supply Company has given guarantees to the bankers of some of
its subsidiary companies in order to secure otherwise unsecured loan and
credit facilities. The amount of each guarantee and the subsidiary to
which it relates are listed below.
Amount of loan/
overdraft at
31 December
---------------
1998
--------
Subsidiaries
French Francs
25,000,000
Jones Lang Wootton SA France . . . . . . 826
Sterling
75,000
Jones Lang Wootton Kft Hungary . . . . . --
-------
826
=======
At 31 December 1998 J.L.W. Supply Company had given guarantees of
[sterling]901 ($1,496 at year end exchange rates) in respect of overseas
related parties.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
16. PROVISIONS FOR LIABILITIES AND CHARGES
Charged/
(credited)
Balance at Exchange to profit Balance at
31 December losses/ and loss 31 December
1997 (gains) account 1998
----------- -------- ---------- -----------
Provision for
computer software
upgrade . . . . . 823 -- (823) --
Insurance fund . . 1,272 11 (15) 1,268
Pension - back
service provision
re Jones Lang
Wootton BV,
Holland. . . . . 240 4 22 266
Deferred taxation. -- -- 138 138
------- ------- ------- -------
2,335 15 (678) 1,672
======= ======= ======= =======
The insurance fund relates to the underwriting of insurance and
reinsurance business by Orchid Insurance Limited. Additional information
on Orchid Insurance Limited is given in note 26.
Deferred tax assets of the firm have not been recognised.
17. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
1998 1997 1996
------- ------- -------
Operating profit . . . . . . . 39,862 35,394 28,942
Depreciation and amortisation
charges. . . . . . . . . . . 9,505 7,621 6,148
Profit on sale of tangible
fixed assets . . . . . . . . (290) (119) (173)
Decrease/(increase) in work
in progress. . . . . . . . . 355 (367) (272)
(Decrease)/increase in
provisions for liabilities
and charges. . . . . . . . . (690) 1,021 176
Increase in debtors. . . . . . (31,092) (7,848) (10,854)
Increase in creditors. . . . . 25,415 13,077 7,864
Goodwill written back to
reserves on disposal of
a business . . . . . . . . . -- -- 56
Foreign exchange trans-
action differences . . . . . (57) 169 (559)
------- ------- -------
Net cash inflow from
operating activities . . . . 43,008 48,948 31,328
======= ======= =======
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
18. ANALYSIS OF NET FUNDS
<CAPTION>
Other
Cash non-cash Exchange
1996 Flow changes movement 1997
------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Cash in hand and at bank . . . . . . . . 14,844 7,177 -- (779) 21,242
Overdrafts . . . . . . . . . . . . . . . (10,637) 6,967 -- 438 (3,232)
------- ------- ------- ------- -------
4,207 14,144 -- (341) 18,010
Finance leases . . . . . . . . . . . . . (305) 280 -- 13 (12)
------- ------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . 3,902 14,424 -- (328) 17,998
======= ======= ======= ======= =======
Other
Cash non-cash Exchange
1997 Flow changes movement 1998
------- ------- -------- -------- -------
Cash in hand and at bank . . . . . . . . 21,242 2,357 -- 498 24,097
Overdrafts . . . . . . . . . . . . . . . (3,232) (7,781) -- (157) (11,170)
------- ------- ------- ------- -------
18,010 (5,424) -- 341 12,927
Finance leases . . . . . . . . . . . . . (12) -- (171) 1 (182)
------- ------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . 17,998 (5,424) (171) 342 12,745
======= ======= ======= ======= =======
<FN>
Other non-cash changes represent new finance leases entered into during the year.
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
19. RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1998 1997 1996
------- ------- -------
Increase/(decrease) in cash
in the year. . . . . . . . (5,424) 14,144 5,905
Cash inflow from decrease
in debt and lease
financing. . . . . . . . . 280 433
------- ------- -------
Change in net funds
resulting from cash
flows. . . . . . . . . . . (5,424) 14,424 6,338
New finance leases . . . . . (171) -- (66)
Translation difference . . . 342 (328) (161)
------- ------- -------
Movement in net funds
in the year. . . . . . . . (5,253) 14,096 6,111
Net funds at start of year . 17,998 3,902 (2,209)
------- ------- -------
Net funds at end of year . . 12,745 17,998 3,902
======= ======= =======
20. ACQUISITION OF SUBSIDIARY UNDERTAKINGS
Effective 1 January 1998, the Firm acquired Laese SA and its
subsidiaries, a group of companies operating in Spain and Portugal.
On 13 March 1998, the Firm acquired all the shares of NorthWest Asset
Management Company, Inc., a California Corporation. $1,400 of the purchase
price is payable in three equal installments on 13 March 1999, 2000 and
2001.
Acquisition accounting has been used for both the above acquisitions.
Aggregated information regarding the acquisitions is presented below.
There is no significant difference between book value and fair value of the
assets and liabilities acquired.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
20. ACQUISITION OF SUBSIDIARY UNDERTAKINGS - CONTINUED
1998
-------
Tangible fixed assets. . . . . . . . . . . . . . . . 177
Debtors. . . . . . . . . . . . . . . . . . . . . . . 2,527
Cash at bank and in hand . . . . . . . . . . . . . . 72
Creditors. . . . . . . . . . . . . . . . . . . . . . (2,139)
Bank overdraft . . . . . . . . . . . . . . . . . . . (310)
-------
327
Goodwill . . . . . . . . . . . . . . . . . . . . . . 3,398
-------
3,725
=======
Satisfied by:
Cash . . . . . . . . . . . . . . . . . . . . . . . 2,325
Deferred consideration . . . . . . . . . . . . . . . 1,400
-------
3,725
=======
The subsidiary undertakings acquired during the year contributed $347
to the firm's net operating cash flows, paid $106 in respect of net returns
on investment and servicing of finance and utilised $67 for investing
activities.
21. PENSION COSTS
The Firm operates a number of pension schemes.
The main UK scheme is operated by J.L.W. Supply Company ("the
Company"). This scheme is a defined benefit scheme providing benefits
based on final pensionable pay. The pension scheme is set up under a trust
and the assets of the scheme are, therefore, held separately from those of
the Company.
The pension cost charged to the profit and loss account is calculated
by the actuary so as to spread the cost of pensions over the employees'
working lives with the Company. The pension costs are based on the most
recent actuarial valuation which was completed with an effective date of 31
December 1997. The actuarial method used was the projected unit funding
method. The most significant assumptions for their effect on the pension
costs are those relating to the rate of return on the investments of the
scheme and the rate of increase in salaries and pensions. The investment
return used was 7.5 per cent per annum. The rate of earnings increase used
was 5.5 per cent per annum and pensions were assumed to increase at the
rate of 3.5 per cent per annum in payment.
The pension cost charged to the profit and loss account for the year
in respect of the Company was $Nil (1997 - $28; 1996 - $52).
The actuarial valuation at 31 December 1997 showed that the market
value of the scheme's assets was $91,369 and the actuarial value of those
assets represented 139% of the liability for benefits, under the valuation
method, for service to the valuation date and based on salaries projected
to retirement or earlier exit.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
21. PENSION COSTS - CONTINUED
Other schemes operated by the Firm are as follows:
Property Management Resources Limited ("PMR") operates a defined
contribution pension scheme. The assets of the scheme are held separately
from PMR in an independently administered fund. The pension cost charge
represents contributions payable by PMR to the fund and amounted to $816 in
1998 (1997 - $567; 1996 - $458). Such costs are recharged to clients of
the firm.
OVERSEAS COMPANIES
The element of total pension cost relating to foreign schemes,
excluding the Jones Lang Wootton USA, Inc. ("JLW USA") scheme includes
$2,000 for the year (1997 - $2,081; 1996 - $1,812) where the charge has
been determined in accordance with local best practice and regulations in
Holland, Belgium, France, Germany, Spain and Luxembourg. JLW USA operates
a 401(k) pension and profit sharing plan which covers substantially all of
JLW USA's employees. The pension expense relating to this scheme in 1998
was $342 (1997 - $624; 1996 - $397).
22. OPERATING LEASE COMMITMENTS
At 31 December 1998 and 1997, the Firm was committed to making the
following payments during the next year in respect of operating leases:
1998 1998 1997 1997
Land and Office Land and Office
buildings equipment buildings equipment
--------- --------- --------- ---------
Lease which expire:
Within one year . . 5,216 755 987 535
Within two to
five years . . . . 4,240 1,803 4,474 1,371
After five years. . 3,194 168 7,875 166
------- ------- ------- -------
12,650 2,726 13,336 2,072
======= ======= ======= =======
23. OBLIGATIONS UNDER FINANCE LEASES
1998 1997
------- -------
The minimum lease payments
(net of interest charge) to
which the Firm was committed
at 31 December were as follows:
Due within one year. . . . . . . . . . . . 134 5
Due within two to five years . . . . . . . 48 7
------- -------
182 12
======= =======
Due within one year. . . . . . . . . . . . 134 5
Due after more than one year . . . . . . . 48 7
------- -------
182 12
======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
24. CAPITAL COMMITMENTS
1998 1997
------- -------
Contracted for but not provided. . . . . . 478 1,619
======= =======
25. RELATED PARTY TRANSACTIONS
At 31 December 1998 prepayments include $249 (1997 - $1,586) due from
the Jones Lang Wootton Retirement Benefits Scheme.
At 31 December 1998 other debtors due within one year includes $249
(1997 - $1,097) due from Jones Lang Wootton Scotland, $301 (1997 - $334)
due from Jones Lang Wootton Ireland, and $11,419 (1997 - $1,070) due from
other entities in the Jones Lang Wootton organisation in which the Firm has
no shareholding.
At 31 December 1998, other creditors include $nil (1997 - $214) due
to Jones Lang Wootton Scotland $110 (1997 - $115) due to Jones Lang Wootton
Ireland and $543 (1997 - $1,050) due to other entities in the Jones Lang
Wootton organisation in which the Firm has no shareholding.
Transactions with related parties include investment income, profit
shares, cost recharges, fee sharing arrangements, management charges and
payments of cash. The movements on the debtor and creditor balances
reflect the cumulative effect of these transactions.
The Firm is taking advantage of the exemption granted by paragraph
3(a) of Financial Reporting Standard No. 8 "Related Party Disclosures" not
to disclose transactions with group companies which are related parties.
<PAGE>
<TABLE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
26. ADDITIONAL INFORMATION ON SUBSIDIARIES AND OTHER INVESTMENTS
<CAPTION>
Country of Proportion
Incorporation/ of ordinary
Registration shares held
Subsidiaries and operation Activity %
------------ -------------- -------- -----------
<S> <C> <C> <C> <C>
DIRECT HOLDINGS
J.L.W. Supply Company England Service Company 100
Jones Lang Wootton USA Inc USA Surveying services 100
INDIRECT HOLDINGS
Jones Lang Wootton European Holdings Limited England Holding company 100
J.L.W. European Holdings Limited Channel Islands Holding company 100
Orchid Insurance Limited Channel Islands Insurance underwriting 100
JLW Resources England Employment company 100
Property Management Resources Limited England Staff services provider 100
JLW Staff Resources England Dormant company 100
JLW Finance Limited England Financial services 100
J.L.W. Pension Trustees England Trustee company 100
J.L.W. Nominees Limited England Nominee company 100
J.L.W. Second Nominees Limited England Nominee company 100
Jones Lang Wootton Fund Management Limited England Dormant company 100
Jones Lang Wootton Europe Limited England Dormant company 100
J.L.W. Jones Limited England Surveying services 100
J.L.W. Building Surveying Services England Dormant company 100
Jones Lang Wootton Country
(formerly JLW Development Services) England Dormant company 100
J.L.W. Estate Management Services England Dormant company 100
Wootton Asset Managers Limited England Dormant company 100
Jones Lang Wootton Insurance Services England Dormant company 100
Jones Lang Wootton European Services Limited England Surveying services 100
JLW Canadian Holdings Inc. Canada Holding company 100
Jones Lang Wootton SA Belgium Surveying services 100
Jones Lang Wootton GmbH Germany Surveying services 100
Jones Lang Wootton SA Spain Surveying services 100
Jones Lang Wootton SA France Surveying services 100
Jones Lang Wootton Property Management Services SARL France Surveying services 100
Jones Lang Wootton Balay Prenot SA France Surveying services 100
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
26. ADDITIONAL INFORMATION ON SUBSIDIARIES AND OTHER INVESTMENTS - CONTINUED
Country of Proportion
Incorporation/ of ordinary
Registration shares held
Subsidiaries and operation Activity %
------------ -------------- -------- -----------
Jones Lang Wootton AB Sweden Surveying services 100
Jones Lang Wootton SRL Italy Surveying services 100
Jones Lang Wootton BV Holland Surveying services 100
Jones Lang Wootton Secs Luxembourg Surveying services 100
Wonderment NV Curacao Holding company 100
Wonderment BV Holland Holding company 100
Jones Lang Wootton Kft Hungary Surveying services 90
Jones Lang Wootton GmbH Austria Surveying services 100
Jones Lang Wootton SP. z.o.o. Poland Surveying services 100
Jones Lang Wootton Services Romania Sri Romania Surveying services 100
Jones Lang Wootton KK Japan Surveying services 66.7
Jones Lang Wootton International Limited Bermuda Global investment advise 66.7
JLW Real Estate Securities, Inc. USA Surveying services 100
JLW Realty Inc. USA Holding company 100
JLW Holdings USA Inc. USA Holding company 100
Jones Lang Wootton Canada Inc. Canada Surveying services 100
Jones Lang Wootton California, Inc.
(formerly Northwest Asset Management Company (Inc.) USA Surveying services 100
JLW Capital Management Inc. USA Dormant company 100
JLW Holdings USA Inc. USA Dormant company 100
JLW Real Estate Securities Inc. USA Financial services 100
JLW Laese SA Spain Surveying services 100
Laese de Servicios para contros comerciales SA Spain Surveying services 100
Laese de Desarrullo de centros comerciales SA Spain Surveying services 100
Laese de Gestion de centroxs comerciales SA Spain Surveying services 100
Laese de Centro Comerciales SA Portugal Surveying services 100
Jones Lang Wootton Eastern European Services Limited England Surveying services 100
Jones Lang Wootton European Resources Limited England Surveying services 100
Jones Lang Wootton, LLC Russia Surveying services 100
JOINT VENTURES
Sandalwood Singapore Surveying services 50
Global Realty Advisors Bermuda Surveying services 33.3
OTHER INVESTMENTS
SJI Management Limited Cyprus Holding company 50
JLW Management Services LLC Russia Surveying services 50
JLW & WAE Residential England Surveying services 50
</TABLE>
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
26. ADDITIONAL INFORMATION ON SUBSIDIARIES AND OTHER INVESTMENTS -
CONTINUED
Global Realty Advisers is a partnership.
The Firm also owns 100% of the preference shares in JLW Canadian
Holdings Inc.
Certain partners in Jones Lang Wootton have an interest in the
results of Jones Lang Wootton Scotland and Jones Lang Wootton Ireland.
Their interest is held for the benefit of all partners in Jones Lang
Wootton.
27. SIGNIFICANT POST BALANCE SHEET EVENT
On 11 March 1999, the business of Jones Lang Wootton and its
subsidiaries was acquired by LaSalle Partners Incorporated, a company
incorporated in the United States of America. LaSalle Partners
Incorporated then changed its name to Jones Lang LaSalle Incorporated.
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements are prepared in accordance with
UK GAAP which differs in certain significant respects from US GAAP. The
principal differences that affect the consolidated profit for the year and
the partners' funds are explained below and the approximate effect is shown
below the explanations.
GOODWILL
Under UK GAAP, goodwill arising on business combinations prior to 1
January 1998 treated as acquisitions may be written-off against retained
profits. Under US GAAP, goodwill may not be written-off to retained
profits, and must be capitalised and amortised over its expected useful
life but not in excess of 40 years. Accordingly, the adjustment to reflect
this differing treatment in these financial statements is to capitalise all
goodwill and amortise it over a period of ten years, the expected useful
life.
PENSIONS
Under UK GAAP, pension costs are accounted for in accordance with the
rules set out in the UK Accounting Standards Board Statement Accounting
Practice No. 24, where the expected cost of providing pensions, as
calculated by actuaries, is charged to the profit and loss so as to spread
the cost over the service lives of the employees under the scheme. The
differences between UK GAAP and US GAAP occur primarily in the way the
actuarial assumptions are made and the methods used to calculate market
values for the pension plan assets. The adjustment under US GAAP relates
to the recognition of the pension surplus over the expected working
lifetime of active members after taking account of the transition asset
arising upon adoption of the US Financial Accounting Standards Board's
Statement of Financial Accounting Standard No. 87.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
DEFERRED TAXATION
Under UK GAAP, taxation is provided for a the anticipated tax rates
on timing differences arising from the inclusion of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future. Under US GAAP, deferred
taxation is provided for on all temporary differences under the liability
method subject to a valuation allowance on deferred tax assets where
applicable.
CONSOLIDATED INCOME STATEMENT
1998 1997 1996
------- ------- -------
Net income as reported in
accordance with UK GAAP. . 38,442 35,738 27,445
Adjustments:
Goodwill amortisation. . . . (238) (233) (226)
Net periodic pension
(cost)/benefit . . . . . . . (1,112) (602) 469
Deferred income tax. . . . . 958 (193) (366)
------- ------- -------
Net income as reported in
accordance with US GAAP. . 38,050 34,710 27,322
======= ======= =======
CONSOLIDATED BALANCE SHEET
1998 1997
------- -------
Partners' funds as reported
in accordance with
UK GAAP. . . . . . . . . . 51,269 48,633
Goodwill (net book value). . 830 1,050
Pension scheme . . . . . . . 8,451 9,464
Deferred income tax. . . . . 640 (311)
------- -------
Partners' funds as reported
in accordance with
US GAAP. . . . . . . . . . 61,190 58,836
======= =======
CONSOLIDATED STATEMENTS OF CASH FLOWS
The consolidated statements of cash flows prepared under UK GAAP
differ in certain presentational respects from the format required under
Statement of Cash Flows ("SFAS") 95. Under UK GAAP, a reconciliation of
operating profit to cash flows from operating activities is presented in a
note, and cash paid for interest and income taxes are presented separately
from cash flows from operating activities.
Under SFAS 95, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
Summary consolidated cash flow information as presented in accordance
with SFAS 95:
1998 1997 1996
------- ------- -------
Cash was provided by (used in):
Operating activities . . . . 42,658 47,034 30,964
Investing activities . . . . (11,280) (8,634) (6,122)
Financing activities . . . . (28,864) (31,223) (25,882)
------- ------- -------
Net increase in cash . . . . 2,514 7,177 (1,040)
Exchange movement. . . . . . 341 (779) 897
Cash at the beginning of
the period . . . . . . . . 21,242 14,844 14,987
------- ------- -------
Cash at the end of the
period . . . . . . . . . . 24,097 21,242 14,844
======= ======= =======
A reconciliation between the consolidated statement of cash flows
presented in accordance with UK GAAP and US GAAP is set out below:
1998 1997 1996
------- ------- -------
OPERATING ACTIVITIES
Net cash inflow from operat-
ing activities (UK GAAP) . 43,008 48,948 31,328
Interest received. . . . . . 2,619 1,532 1,290
Interest paid. . . . . . . . (943) (647) (704)
Interest element of finance
lease rentals. . . . . . . (3) (2) (100)
Amounts distributed from
joint ventures . . . . . . 287 680 664
Amounts distributed from
investments. . . . . . . . 1,291 733 462
Dividends paid to minority
shareholders . . . . . . . -- -- (215)
Tax paid . . . . . . . . . . (3,601) (4,210) (1,761)
------- ------- -------
Net cash provided by
operating activities . . . 42,658 47,034 30,964
======= ======= =======
INVESTING ACTIVITIES
Net cash outflow from capital
expenditure and financial
investment (UK GAAP) . . . (8,717) (8,233) (6,122)
ACQUISITIONS
Payments to acquire
investments in
subsidiaries (UK GAAP) . . (2,563) (401) --
------- ------- -------
Net cash used in investing
activities (US GAAP) . . . (11,280) (8,634) (6,122)
======= ======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
FINANCING ACTIVITIES
Net cash outflow from
financing (UK GAAP). . . . -- (280) (433)
Partners' drawings . . . . . (36,802) (23,976) (18,504)
Increase/(decrease) in
overdraft. . . . . . . . . 7,938 (6,967) (6,945)
------- ------- -------
Net cash used in financing
activities (UK GAAP) . . . (28,864) (31,223) (25,882)
======= ======= =======
In addition to the adjustments made, the following reclassifications
have been made between the UK GAAP balance sheet and the US GAAP balance
sheet that follow.
TRADE RECEIVABLES
Included in trade receivables are the following balances:
1998 1997
------- -------
Trade debtors. . . . . . . . . . . . . . 77,215 57,372
Unbilled fee income. . . . . . . . . . . 6,190 1,974
Work in progress . . . . . . . . . . . . 2,138 2,468
------- -------
Trade receivables reported in
accordance with US GAAP. . . . . . . . 85,543 61,814
======= =======
Unbilled fee income is included in 'prepayments and accrued income'
in the UK GAAP balance sheet.
OTHER NON-CURRENT ASSETS
Other non-current assets is the US GAAP balance sheet comprises
debtors due after one year in the UK GAAP balance sheet and the pension
scheme asset arising under US GAAP.
OTHER CURRENT LIABILITIES
Other current labilities comprises:
1998 1997
------- -------
Obligations under finance leases . . . . 134 5
Other creditors. . . . . . . . . . . . . 9,471 9,325
Other taxes. . . . . . . . . . . . . . . 15,421 12,514
------- -------
Other current liabilities reported in
accordance with US GAAP. . . . . . . . 25,026 21,844
======= =======
Other taxes include social security, payroll taxes, value added and
other sales taxes, which under UK GAAP are included in taxation and social
security. Under US GAAP, taxation includes only the corporate tax
liabilities.
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
The following balance sheets and profit and loss accounts have been
prepared in accordance with US GAAP and reflect the preceding adjustments
and reclassifications.
1998 1997
------- -------
BALANCE SHEET
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . 24,097 21,242
Trade receivables, net . . . . . . . . 85,543 61,814
Other receivables. . . . . . . . . . . 17,661 9,222
Prepaid expenses . . . . . . . . . . . 4,940 7,981
Deferred tax asset . . . . . . . . . . 1,471 1,209
------- -------
TOTAL CURRENT ASSETS . . . . . . . . . . 133,712 101,468
Property and equipment, at cost, less
accumulated depreciation of $32,106
and $26,845 and in 1998 and 1997,
respectively . . . . . . . . . . . . . 23,695 19,301
Intangibles resulting from business
acquisitions, net of accumulated
amortisation of $2,151 and $1,616
in 1998 and 1997, respectively . . . . 3,983 1,050
Other intangible assets, net of
accumulated amortisation of $513
and $324 in 1998 and 1997,
respectively . . . . . . . . . . . . . 250 439
Investments. . . . . . . . . . . . . . . 460 528
Deferred tax asset . . . . . . . . . . . 1,789 1,746
Trade receivables - long-term. . . . . . 6,104 282
Other assets . . . . . . . . . . . . . . 9,332 9,988
------- -------
TOTAL ASSETS . . . . . . . . . . . . . . 179,325 134,802
======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
BALANCE SHEET
1998 1997
------- -------
LIABILITIES AND PARTNERS' FUNDS
CURRENT LIABILITIES
Accounts payable and accrued
liabilities. . . . . . . . . . . . . . 65,412 41,606
Taxation . . . . . . . . . . . . . . . . 5,740 2,068
Other liabilities. . . . . . . . . . . . 25,026 21,844
Borrowings . . . . . . . . . . . . . . . 11,170 3,232
------- -------
TOTAL CURRENT LIABILITIES. . . . . . . . 107,348 68,750
Deferred tax liability . . . . . . . . . 2,620 3,266
Other long-term liabilities. . . . . . . 6,177 2,575
------- -------
TOTAL LIABILITIES. . . . . . . . . . . . 116,145 74,591
MINORITY INTERESTS . . . . . . . . . . . 1,990 1,375
PARTNERS' FUNDS
Partners' balances and other reserves. . 50,741 50,284
Annuitant balances . . . . . . . . . . . 10,416 9,213
Effects of cumulative translation
adjustments. . . . . . . . . . . . . . 33 (661)
------- -------
TOTAL PARTNERS' FUNDS. . . . . . . . . . 61,190 58,836
------- -------
TOTAL LIABILITIES AND PARTNERS' FUNDS. . 179,325 134,802
======= =======
<PAGE>
JONES LANG WOOTTON
(The English Partnership and subsidiaries)
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
28. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
1998 1997 1996
------- ------- -------
PROFIT AND LOSS ACCOUNT
Operating revenue. . . . . 320,312 252,895 214,263
Interest revenue . . . . . 2,619 1,532 1,290
Other income . . . . . . . 5,569 4,555 1,884
------- ------- -------
TOTAL REVENUE. . . . . . . . 328,500 258,982 217,437
OPERATING EXPENSES
Compensation and benefits. 160,613 122,709 107,560
Operating, administrative
and other. . . . . . . . 99,483 88,117 71,474
Merger-related non-
recurring charges. . . . 12,345 -- --
Depreciation and
amortisation . . . . . . 9,743 7,854 6,374
------- ------- -------
TOTAL OPERATING EXPENSES . . 282,184 218,680 185,408
------- ------- -------
OPERATING INCOME . . . . . . 46,316 40,302 32,029
Interest expense . . . . . . (946) (649) (804)
------- ------- -------
EARNINGS BEFORE PROVISION
FOR INCOME TAX . . . . . . 45,370 39,653 31,225
Provision for income taxes . (7,188) (3,300) (3,478)
Deferred tax benefit/
(expense). . . . . . . . . 958 (193) (366)
------- ------- -------
(6,230) (3,493) (3,844)
------- ------- -------
NET EARNINGS AFTER TAXATION,
BEFORE MINORITY INTEREST . 39,140 36,160 27,381
Minority interest. . . . . . (1,090) (1,450) (59)
------- ------- -------
NET INCOME . . . . . . . . . 38,050 34,710 27,322
======= ======= =======
Earnings per share information has not been presented as the firm is
not a corporate entity.
<PAGE>
JONES LANG WOOTTON - SCOTLAND
INDEPENDENT AUDITORS' REPORT
to the partners of Jones Lang Wootton - Scotland
We have audited the accompanying consolidated balance sheets of Jones Lang
Wootton - Scotland and its subsidiary undertaking as of 31 December 1998
and 1997, and the related consolidated profit and loss accounts, and
consolidated statements of total recognized gains and losses, cash flows
and movements on funds for each of the three years in the period ended 31
December 1998. These consolidated financial statements are the
responsibility of the partners. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with United Kingdom auditing
standards which do not differ in any significant respect from the United
States generally accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Jones
Lang Wootton - Scotland and its subsidiary undertaking as at 31 December
1998 and 1997, and the consolidated results of their operations and their
consolidated cash flows for each of the three years in the period ended 31
December 1998 in conformity with accounting principles generally accepted
in the United Kingdom, which differ in certain respects from those followed
in the United States (see note 15 of notes to the financial statements.)
Ernst & Young
Glasgow, Scotland
26 February 1999
<PAGE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
FEE INCOME . . . . . . . . . 1 9,873 9,042 5,618
Administrative expenses. . . (5,474) (4,046) (3,546)
------- ------ -------
OPERATING PROFIT . . . . . . 2 4,399 4,996 2,072
Profit on disposal of
tangible fixed assets . . . 11 20 23
------- ------- -------
PROFIT ON ORDINARY ACTIVITIES
BEFORE INTEREST . . . . . . 4,410 5,016 2,095
Investment income. . . . . . 3 207 102 57
Interest payable and
similar charges . . . . . . 4 (8) (12) (13)
------- ------- -------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION . . . . . . 4,609 5,106 2,139
Tax on profit on ordinary
activities. . . . . . . . . 5 61 (46) (36)
------- ------- -------
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION TRANSFERRED
TO RESERVES . . . . . . . . 4,670 5,060 2,103
======== ======= =======
All activities derive from continuing operations.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Years ended 31 December 1998, 1997 and 1996
(US$ in thousands, except where state otherwise)
1998 1997 1996
Profit for the year. . . . . 4,670 5,060 2,103
Currency translation
differences on foreign
currency net investments . . 29 (98) 187
------- ------- -------
Total recognized gains
and losses relating to
the year . . . . . . . . . 4,699 4,962 2,290
------- ------- -------
<PAGE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED BALANCE SHEETS
AT 31 DECEMBER 1998 AND 1997
(US$ in thousands, except where stated otherwise)
Note 1998 1997
---- ------- -------
FIXED ASSETS
Tangible assets. . . . . . . 6 1,047 863
Business investment. . . . . 7 -- --
------- ------
1,047 863
------- ------
CURRENT ASSETS
Work in progress . . . . . . 96 128
Debtors. . . . . . . . . . . 8 3,432 2,478
Cash at bank and in hand . . 3,499 2,642
------- -------
7,027 5,248
CREDITORS: amounts falling
due within one year . . . . 9 (1,702) (1,447)
-------- -------
NET CURRENT ASSETS . . . . . 5,325 3,801
-------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES. . . . . . . . 6,372 4,664
======== =======
CAPITAL AND RESERVES
Partner balances . . . . . . 5,926 4,160
Corporate reserves . . . . . 417 602
Foreign exchange trans-
lation reserve. . . . . . . 29 (98)
-------- -------
6,372 4,664
======== =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- ------
NET CASH INFLOW FROM
OPERATING ACTIVITIES . . . 10 4,214 4,498 2,506
------- ------ -------
RETURNS ON INVESTMENTS
AND SERVICING OF
FINANCE
Interest received. . . . . . 207 95 37
Interest paid. . . . . . . . (8) (12) (13)
------- ------ -------
NET CASH INFLOW FROM
RETURNS ON INVEST-
MENTS AND SERVICING
OF FINANCE . . . . . . . . 199 83 24
------- ------ ------
TAXATION
UK corporation tax paid. . . (65) (43) (50)
------- ------ ------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire tangible
fixed assets . . . . . . . (589) (351) (421)
Receipts from sales of
tangible fixed assets. . . 117 120 126
------- ------- ------
NET CASH OUTFLOW FROM
CAPITAL EXPENDITURE
AND FINANCIAL INVESTMENT . (472) (231) (295)
-------- ------- -------
DISTRIBUTIONS TO PARTNERS
Partners' drawing. . . . . . (2,991) (2,394) (1,530)
-------- -------- -------
NET CASH OUTFLOW FROM
DISTRIBUTIONS TO
PARTNERS . . . . . . . . . (2,991) (2,394) (1,530)
-------- -------- -------
NET CASH INFLOW/(OUTFLOW)
BEFORE FINANCING . . . . . 885 1,913 655
Net cash outflow from
financing. . . . . . . . . -- -- --
-------- ------- -------
INCREASE IN CASH . . . . . . 11/12 885 1,913 655
======== ======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
STATEMENT OF MOVEMENTS ON FUNDS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Corporate
profit Foreign
and loss exchange
Partners' account translation
balances reserves reserves Total
----------- -------- ---------- -----------
Balance at
1 January 1996 . . 847 497 (8) 1,336
Profit for the
year . . . . . . 2,066 37 -- 2,103
Partner drawings. . (1,530) -- -- (1,530)
Foreign exchange
translation
differences. . . . (64) 56 195 187
------- ------- ------- -------
Balance at 31
December 1996. . 1,319 590 187 2,096
Profit for the
year . . . . . . 5,024 36 -- 5,060
Partner drawings . (2,394) -- -- (2,394)
Foreign exchange
translation
differences. . . 211 (24) (285) (98)
------- ------- ------- -------
Balance at 31
December 1997. . 4,160 602 (98) 4,664
Profit for the
year . . . . . . 4,527 143 -- 4,670
Partner drawings . (2,991) -- -- (2,991)
Foreign exchange
translation
differences. . . (105) 7 127 29
Transfer of
reserves . . . . . 335 (335) -- --
------- ------- ------- -------
Balance at 31
December 1998. . 5,926 417 29 6,372
======== ======== ======== =========
Corporate profit and loss account reserves represent the amounts retained
within the corporate entity consolidated in these financial statements.
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Jones Lang Wootton - Scotland provides a full range of advisory,
transactional and asset management services to a wide variety of local and
international clients in almost every industry and service sector for all
types of real estate.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention and in accordance with applicable accounting standards in the
United Kingdom, modified as appropriate for the circumstances of a
partnership.
BASIS OF CONSOLIDATION
The financial statements incorporate the results of the Jones Lang
Wootton - Scotland partnership and its subsidiary undertaking.
FEE INCOME
Revenue is recognised upon completion of the underlying contract,
excluding VAT. All trading arises from the provision by Jones Lang Wootton
- - Scotland of advice on all aspects of commercial real estate and other
services, including surveying, property management and related services.
DEPRECIATION
Depreciation is provided annually on the various categories of fixed
assets using the following rates:
Motor vehicles - on written down value 25%
Office machinery and
fixtures - on cost 20%
Leasehold improve-
ments - on cost over the out-
standing period
of the lease
TAXATION
Taxation is provided on the taxable profits of the corporate entity
within Jones Lang Wootton - Scotland. No current or deferred taxation is
provided on the profits attributable to the partners as the liability for
taxation falls on the individual partners.
DEFERRED TAXATION
Deferred taxation is provided for the corporate entity at the
anticipated tax rates on timing differences arising from the inclusion of
items of income and expenditure in tax computations in periods different
from those in which they are included in financial statements to the extent
that it is probable that a liability or asset will crystallise in the
future.
INVESTMENTS
Investments held as fixed assets are stated at cost less provision
for any permanent diminution in value.
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
WORK IN PROGRESS
Work in progress represents work done by the firm and not yet billed
and is included in the accounts at the lower of cost including attributable
overheads, and net realisable value.
LEASES
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
PENSION COSTS
Eligible employees of JLW (Scotland) Service Company participate in a
defined benefit pension scheme, the assets of which are held in a separate
trustee administered fund. Costs are charged to the profit and loss
account so as to spread the cost over the service lives of the
participating employees. Additional funding may be made at the partners'
discretion.
Partners make their own provision for pensions by contributing to
personal pension arrangements.
FOREIGN EXCHANGE
The functional currency of Jones Lang Wootton - Scotland and its
subsidiary undertaking is the local currency (Sterling) and its
transactions are measured in that currency. The reporting currency for the
purposes of these financial statements is the United States dollar and the
Sterling consolidated financial statements have been translated using the
closing rate of exchange for the balance sheet and the weighted average
rate of exchange for the profit and loss account.
2. OPERATING PROFIT
Operating profit is stated after including:
1998 1997 1996
------- ------- -------
(a) Other operating income:
Gross rents receivable 65 64 62
Directors' fees. . . . 31 34 24
------- ------- -------
96 98 86
======= ======= =======
(b) Staff costs:
Wages and salaries . . 2,626 2,096 1,803
Social security
costs. . . . . . . . . 248 205 170
------- ------- -------
2,874 2,301 1,973
======= ======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
2. OPERATING PROFIT - CONTINUED
1998 1997 1996
No. No. No.
------- ------- -------
Average number of
persons employed:
Technical and
administration. . . 62 56 55
======= ======= =======
(c) Operating lease
rentals . . . . . . . 339 335 314
======= ======= =======
(d) Depreciation and
other amounts
written off tangible
fixed assets:
Own tangible fixed
assets and business
investments . . . . . 306 304 228
======= ======= =======
(e) Auditors'
remuneration. . . . . 17 21 14
======= ======= =======
3. INVESTMENT INCOME
1998 1997 1996
------- ------- -------
Other interest receivable
and similar income. . . . . 207 102 57
======= ======= =======
4. INTEREST PAYABLE AND SIMILAR CHARGES
1998 1997 1996
------- ------- -------
Bank loans, overdrafts
and other loans . . . . . . 8 12 13
======= ======= =======
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
1998 1997 1996
------- ------- -------
United Kingdom corporation
tax (credit)/charge
based on the profit
for the year for the
corporate entity. . . . . . (61) 46 36
======= ======= =======
The tax charge is disproportionately low as no taxation is provided
on the profits attributable to the partners in accordance with the firm's
accounting policies.
<PAGE>
<TABLE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
<CAPTION>
6. TANGIBLE FIXED ASSETS
Office
machinery,
computer Improve-
equipment ments to
Motor and leasehold
vehicles fixtures premises Total
-------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cost:
At 1 January 1997. . . . . . . . . . . . . . 1,039 1,187 124 2,350
Foreign exchange translation differences . . (43) (49) (5) (97)
Additions. . . . . . . . . . . . . . . . . . 220 131 -- 351
Disposals. . . . . . . . . . . . . . . . . . (256) -- -- (256)
------- ------- ------- -------
At 31 December 1997. . . . . . . . . . . . . 960 1,269 119 2,348
Foreign exchange translation differences . . 8 11 1 20
Additions. . . . . . . . . . . . . . . . . . 417 161 10 588
Disposals. . . . . . . . . . . . . . . . . . (276) -- -- (276)
------- ------- ------- -------
At 31 December 1998. . . . . . . . . . . . . 1,109 1,441 130 2,680
Accumulated depreciation:
At 1 January 1997. . . . . . . . . . . . . . 399 896 102 1,397
Foreign exchange translation differences . . (17) (37) (4) (58)
Charge for the year. . . . . . . . . . . . . 193 100 9 302
Disposals. . . . . . . . . . . . . . . . . . (156) -- -- (156)
------- ------- ------- -------
At 31 December 1997. . . . . . . . . . . . . 419 959 107 1,485
Foreign exchange translation differences . . 3 8 1 12
Charge for the year. . . . . . . . . . . . . 178 117 11 306
Disposals. . . . . . . . . . . . . . . . . . (170) -- -- (170)
------- ------- ------- -------
At 31 December 1998. . . . . . . . . . . . . 430 1,084 119 1,633
------- ------- ------- -------
Net book value:
At 31 December 1998. . . . . . . . . . . . . 679 357 11 1,047
======= ======= ======= =======
At 31 December 1997. . . . . . . . . . . . . 541 310 12 863
======= ======= ======= =======
</TABLE>
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
7. INVESTMENTS
1998 1997
------- -------
Net book value:
Business investment. . . . . . . . . . . -- --
======= =======
Other investments other than loans:
At 1 January . . . . . . . . . . . . . . -- 960
Amortisation . . . . . . . . . . . . . . -- (960)
------- -------
At 31 December . . . . . . . . . . . . . -- --
======= =======
8. DEBTORS
1998 1997
------- -------
Trade debtors. . . . . . . . . . . . . . 2,839 2,094
Other debtors due within one year. . . . 132 95
Prepayments and accrued income . . . . . 406 289
Corporation tax recoverable. . . . . . . 55 --
------- -------
3,432 2,478
======= =======
9. CREDITORS - amounts falling due within one year
1998 1997
------- -------
Bank overdraft . . . . . . . . . . . . . 68 111
Trade creditors. . . . . . . . . . . . . 130 162
Other taxes and social security costs. . 625 530
Corporation tax. . . . . . . . . . . . . -- 70
Accruals and deferred income . . . . . . 745 494
Other creditors. . . . . . . . . . . . . 134 80
------- -------
1,702 1,447
======= =======
10. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
1998 1997 1996
------- ------- -------
Operating profit . . . . . . 4,399 4,996 2,072
Depreciation and
amortisation charges . . . 306 304 228
Decrease/(increase) in
work in progress . . . . . 33 (62) (6)
Increase in debtors. . . . . (883) (1,082) (175)
Increase in creditors. . . . 359 342 387
------- ------- -------
Net cash inflow from
operating activities . . . 4,214 4,498 2,506
======= ======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
11. ANALYSIS OF NET FUNDS
Cash Exchange
1997 flow movement 1996
------- ------- -------- -------
Cash in hand and
at bank. . . . . . 2,642 2,016 (36) 662
Overdraft. . . . . . (111) (103) 1 (9)
------- ------- ------- -------
2,531 1,913 (35) 653
======= ======= ======= =======
Cash Exchange
1998 flow movement 1997
------- ------- -------- -------
Cash in hand and
at bank. . . . . . 3,499 840 17 2,642
Overdraft. . . . . . (68) 45 (2) (111)
------- ------- ------- -------
3,431 885 15 2,531
======= ======= ======= =======
12. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1998 1997 1996
------- ------- -------
Increase in cash in
the year . . . . . . . . . 885 1,913 655
Translation difference . . . 15 (35) 47
------- ------- -------
Movement in net funds
in the year. . . . . . . . 900 1,878 702
Net funds at start of year . 2,531 653 (49)
------- ------- -------
Net funds at end of year . . 3,431 2,531 653
======= ======= =======
13. OPERATING LEASE COMMITMENTS
At 31 December 1998 and 1997, the Firm was committed to making the
following payments during the next year in respect of operating leases:
Land and buildings
-------------------
1998 1997
------- -------
Leases which expire:
Within one year. . . . . . . . . . . . . 57 --
Within two to five years . . . . . . . . -- 97
After five years . . . . . . . . . . . . 457 206
------- -------
514 303
======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
14. PENSION COSTS
The company participates in the Jones Lang Wootton Retirement
Benefits Scheme which provides benefits based on final pensionable pay.
The pension scheme is set up under trust and the assets of the scheme are
therefore held separately from those of the participating companies. The
scheme is non-contributory.
Employees of the company represent only a small proportion of the
total membership of the scheme and contributions are based on pension costs
for the membership as a whole. There were no contributions paid to the
scheme on behalf of the employees of the company in either of the years
ended 31 December 1997 and 1998.
15. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United Kingdom (UK GAAP)
which differs in certain significant respects from accounting principles
generally accepted in the United States (US GAAP). However, there are no
significant differences between UK GAAP and US GAAP in respect of the
income statements and balance sheets included in these accounts.
CONSOLIDATED STATEMENTS OF CASH FLOWS:
The consolidated statements of cash flows prepared under UK GAAP
differ in certain presentational respects from the format required under US
GAAP. Under UK GAAP, a reconciliation of operating profit to cash flows
from operating activities is presented in a note, and cash paid for
interest and income taxes are presented separately from cash flows from
operating activities.
Under US GAAP, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
Summary consolidated cash flow information as presented in accordance
with US GAAP:
1998 1997 1996
------- ------- -------
Cash was provided by (used in):
Operating activities . . . . 4,348 4,538 2,480
Investing activities . . . . (472) (231) (295)
Financing activities . . . . (3,036) (2,291) (1,590)
------- ------- -------
Net increase in cash . . . . 840 2,016 595
Exchange movement. . . . . . 17 (36) 49
Cash at the beginning
of the period. . . . . . . 2,642 662 18
------- ------- -------
Cash at the end of
the period . . . . . . . . 3,499 2,642 662
======= ======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
15. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
A reconciliation between the consolidated statement of cash flows
presented in accordance with UK GAAP and US GAAP is set out below:
1998 1997 1996
------- ------- -------
Operating activities:
Net cash inflow from
operating activities
(UK GAAP). . . . . . . . . 4,214 4,498 2,506
Interest received. . . . . . 207 95 37
Interest paid. . . . . . . . (8) (12) (13)
Tax paid . . . . . . . . . . (65) (43) (50)
------- ------- -------
Net cash provided by
operating activities . . . 4,348 4,538 2,480
======= ======= =======
Investing activities:
Net cash outflow from
capital expenditure,
financial investment
and acquisitions
(UK GAAP). . . . . . . . . (472) (231) (295)
------- ------- -------
Net cash used in
investing activities
(US GAAP). . . . . . . . . (472) (231) (295)
======= ======= =======
Financing activities:
Net cash outflow from
financing (UK GAAP). . . . -- -- --
Partners' drawings . . . . . (2,991) (2,394) (1,530)
(Decrease)/increase in
overdraft. . . . . . . . . (45) 103 (60)
------- ------- -------
Net cash used in
financing activities
(US GAAP). . . . . . . . . (3,036) (2,291) (1,590)
======= ======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
16. BALANCE SHEETS AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP
The following balance sheets and profit and loss accounts have been
presented in accordance with US GAAP.
Balance sheet:
1998 1997
------- -------
Assets:
Current assets:
Cash and cash equivalents. . . . . . . . 3,499 2,642
Trade receivables, net . . . . . . . . . 3,063 2,342
Other receivables (including
taxation of $55) . . . . . . . . . . . 187 95
Prepaid expenses . . . . . . . . . . . . 278 169
------- -------
Total current assets . . . . . . . . . . 7,027 5,248
Property and equipment, at cost
less accumulated depreciation
of $1,633 and $1,485 in 1998 and
1997, respectively . . . . . . . . . . 1,047 863
Investments. . . . . . . . . . . . . . . -- --
------- -------
Total assets . . . . . . . . . . . . . . 8,074 6,111
======= =======
Liabilities and partners' funds:
Current liabilities:
Accounts payable and accrued
liabilities. . . . . . . . . . . . . . 875 656
Taxation . . . . . . . . . . . . . . . . -- 70
Other liabilities. . . . . . . . . . . . 759 610
Borrowings . . . . . . . . . . . . . . . 68 111
------- -------
Total current liabilities. . . . . . . . 1,702 1,447
Deferred tax liability . . . . . . . . . -- --
Other long-term liabilities. . . . . . . -- --
Partners' funds:
Partners' balances and other reserves. . 6,343 4,762
Effects of cumulative translation
adjustments. . . . . . . . . . . . . . 29 (98)
------- -------
Total partners' funds. . . . . . . . . . 6,372 4,664
------- -------
Total liabilities and partners' funds. . 8,074 6,111
======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
16. BALANCE SHEETS AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP - CONTINUED
PROFIT AND LOSS ACCOUNTS:
1998 1997 1996
------- ------- -------
Revenue:
Operating revenue. . . . . . 9,873 9,042 5,618
Interest revenue . . . . . . 207 102 57
Other income . . . . . . . . 96 98 86
------- ------- -------
Total revenue. . . . . . . . 10,176 9,242 5,761
Operating expenses:
Compensation and benefits. . 2,874 2,301 1,973
Operating, administrative
and other. . . . . . . . . 2,390 1,539 1,431
Depreciation and
amortisation . . . . . . . 295 284 205
------- ------- -------
Total operating expenses . . 5,559 4,124 3,609
------- ------- -------
Operating income . . . . . . 4,617 5,118 2,152
Interest expense . . . . . . (8) (12) (13)
------- ------- -------
Earnings before provision
for income tax . . . . . . 4,609 5,106 2,139
Provision for income
taxes. . . . . . . . . . . 61 (46) (36)
------- ------- -------
Net earnings after
taxation before
minority interest. . . . . 4,670 5,060 2,103
Minority interest. . . . . . -- -- --
------- ------- -------
Net income . . . . . . . . . 4,670 5,060 2,103
======= ======= =======
The following reclassifications have been made between the UK GAAP
balance sheets and the US GAAP balance sheets
Trade receivables
Included in trade receivables are the following balances:
1998 1997
------- -------
Trade debtors. . . . . . . . . . . . . . 2,839 2,094
Unbilled fee income. . . . . . . . . . . 128 120
Work in progress . . . . . . . . . . . . 96 128
------- -------
Trade receivables reported in
accordance with US GAAP . . . . . . . . 3,063 2,342
======= =======
<PAGE>
JONES LANG WOOTTON - SCOTLAND
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
16. BALANCE SHEETS AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP - CONTINUED
Unbilled fee income is included in prepayments and accrued income in
the UK GAAP balance sheet
Other current liabilities
Other current liabilities comprises:
1998 1997
------- -------
Other creditors. . . . . . . . . . . . . 134 80
Other taxes. . . . . . . . . . . . . . . 625 530
------- -------
Other current liabilities reported
in accordance with US GAAP . . . . . . 759 610
======= =======
Other taxes include social security, payroll taxes, value added and
other sales taxes, which under UK GAAP are included in taxation and social
security. Under US GAAP, taxation includes only the corporate tax
liabilities.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
INDEPENDENT AUDITORS' REPORT TO THE PARTNERS OF
JONES LANGE WOOTTON - IRISH PRACTICE
We have audited the accompanying combined balance sheets of Jones Lang
Wootton - Irish Practice as of 31 December 1998, 1997 and 1996, the related
combined profit and loss accounts, combined statements of cash flows,
combined statements of total recognised gains and losses and combined
statements of movements in partners' funds for each of the years in the
four year period ended 31 December 1998. These combined financial
statements are the responsibility of the Partners. Our responsibility is
to express an opinion on these combined financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in Ireland and the United Kingdom and the United States of
America. Those standards require that we plan and perform audits to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Jones Lang
Wootton -Irish Practice as of 31 December 1998, 1997 and 1996, and the
results of its operations and its cash flows for each of the years in the
four year period ended 31 December 1998, in conformity with accounting
principles generally accepted in Ireland and the United Kingdom.
Accounting principles generally accepted in Ireland and the United Kingdom
vary in certain significant respects from accounting principles generally
accepted in the United States of America. Application of accounting
principles generally accepted in the United States of America would have
affected the results of operations for each of the years in the four year
period ended 31 December 1998 and the determination of Partners' funds as
of 31 December 1998, 1997 and 1996 to the extend summarised in Notes 20 and
21 to the combined financial statements.
Deloitte & Touche
Chartered Accountants
Dublin
5 March 1999
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED PROFIT AND LOSS ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996 1995
---- ------- ------- ------- -------
FEE INCOME . . . . . 12,107 9,223 9,466 6,953
Administrative
expenses.. . . . . 2 (5,596) (5,420) (5,421) (5,258)
Merger related
non-recurring
charges. . . . . . (1,073) -- -- --
------- ------- ------- -------
OPERATING PROFIT . . 5,438 3,803 4,045 1,695
Profit on disposal
of tangible fixed
assets . . . . . . -- 13 -- 5
------- ------- ------- -------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
INTEREST . . . . . 5,438 3,816 4,045 1,700
Interest
receivable . . . . 56 78 21 --
Interest payable
and similar
charges. . . . . . (43) (60) (82) (21)
------- ------- ------- -------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION . . . . . 2 5,451 3,834 3,984 1,679
Tax on profit on
ordinary
activities . . . . 4 -- (4) (4) --
------- ------- ------- -------
PROFIT AFTER TAXATION 5,451 3,830 3,980 1,679
------- ------- ------- -------
DISTRIBUTABLE TO:
Former partners
and dependents . . 114 135 87 48
Proprietary
partners -
transferred to
partners' fund . . 14 5,337 3,695 3,893 1,631
------- ------- ------- -------
All activities derive from continuing operations.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED BALANCE SHEETS
AS AT 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
FIXED ASSETS
Tangible assets. . . . . . . . 5 1,249 1,443 1,220
------- ------- -------
CURRENT ASSETS
Work in progress . . . . . . . 6 -- -- --
Debtors and prepayments. . . . 7 2,296 2,611 2,438
Cash at bank and in hand . . . 3,054 676 1,211
------- ------- -------
5,350 3,287 3,649
CREDITORS: (Amounts falling
due within one year) . . . . 8 (2,783) (1,288) (1,549)
------- ------- -------
NET CURRENT ASSETS . . . . . . 2,567 1,999 2,100
------- ------- -------
TOTAL ASSETS LESS
CURRENT LIABILITIES. . . . . 3,816 3,442 3,320
CREDITORS: (Amounts falling
due after more than
one year). . . . . . . . . . 9 (121) (247) (441)
------- ------- -------
3,695 3,195 2,879
------- ------- -------
PARTNERS' FUNDS
Revaluation reserve. . . . . . 14 276 285 --
Foreign exchange
translation reserve. . . . . 14 (136) (275) 204
Partner balances . . . . . . . 14 2,555 3,185 2,675
Provision for annuitants . . . 14 1,000 -- --
------- ------- -------
3,695 3,195 2,879
------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
1998 1997 1996 1995
------- ------- ------- -------
Profit distributable to:
Proprietary partners . . . . . 5,337 3,695 3,893 1,631
Former partners and
dependents . . . . . . . . . 114 135 87 48
------- ------- ------- -------
5,451 3,830 3,980 1,679
Unrealised surplus on
revaluation of leasehold
interest . . . . . . . . . . -- 299 -- --
Foreign exchange transla-
tion difference. . . . . . . 139 (479) 142 62
------- ------- ------- -------
Total recognised
gains and losses . . . . . . 5,590 3,650 4,122 1,741
------- ------- ------- -------
COMBINED STATEMENTS OF MOVEMENTS IN PARTNERS FUNDS
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
1998 1997 1996 1995
------- ------- ------- -------
Opening funds. . . . . . . . . 3,195 2,879 1,297 1,609
Profit for the period. . . . . 5,337 3,695 3,893 1,631
Drawings . . . . . . . . . . . (4,979) (3,308) (2,499) (2,038)
Cash introduced. . . . . . . . 3 123 46 33
Unrealised surplus on
revaluation of leasehold
interest . . . . . . . . . . -- 285 -- --
Foreign exchange
translation difference . . . 139 (479) 142 62
------- ------- ------- -------
Closing funds. . . . . . . . . 3,695 3,195 2,879 1,297
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
Notes 1998 1997 1996 1995
----- ------- ------- ------- -------
Net cash inflow
from operating
activities . . . . 11 6,737 3,531 4,856 2,379
------- ------- ------- -------
Returns on invest-
ments and servicing
of finance
Interest received. . 56 78 21 --
Interest paid. . . . (16) (18) (18) (18)
Interest element
of finance
lease rental
payments . . . . . (27) (42) (64) (3)
------- ------- ------- -------
Net cash inflow/
(outflow) from
returns on invest-
ments and servic-
ing of finance . . 13 18 (61) (21)
------- ------- ------- -------
Taxation
Corporation tax
paid . . . . . . . -- (7) -- --
------- ------- ------- -------
Tax paid . . . . . . -- (7) -- --
------- ------- ------- -------
Capital expenditure
and financial
investment
Payments to acquire
tangible fixed
assets . . . . . . (131) (556) (97) (420)
Receipts from sales
of tangible fixed
assets . . . . . . 25 79 9 28
------- ------- ------- -------
Net cash outflow
from capital
expenditure and
financial invest-
ment . . . . . . . (106) (477) (88) (392)
------- ------- ------- -------
Distributions
Partners' drawings
less cash
introduced . . . . (4,976) (3,185) (2,453) (2,005)
Former partners
and dependents . . (114) (135) (87) (48)
------- ------- ------- -------
Net cash outflow
from distribu-
tions. . . . . . . (5,090) (3,320) (2,540) (2,053)
------- ------- ------- -------
Net cash inflow/(outflow)
before financing . 1,554 (255) 2,167 (87)
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
(US$ in thousands, except where stated otherwise)
Notes 1998 1997 1996 1995
----- ------- ------- ------- -------
Financing
Capital element of
finance lease
rental payments. . (125) (118) (114) (76)
------- ------- ------- -------
Net cash outflow
from financing . . (125) (118) (114) (76)
Increase/(decrease)
in cash. . . . . . 13 1,429 (373) 2,053 (163)
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
PREPARATION OF COMBINED FINANCIAL STATEMENTS
These combined financial statements have been prepared solely for the
purpose of the proposed transaction with LaSalle Partners Incorporated and
do not replace the normal financial statements of Jones Lang Wootton -
Irish practice which are prepared under different accounting policies and
drawn up to different dates.
DESCRIPTION OF BUSINESS
Jones Lang Wootton - Irish Practice, provides advice on all aspects
of commercial real estate. Substantially all of the turnover arises
from services provided in the Republic of Ireland.
ACCOUNTING CONVENTION
The combined financial statements have been prepared under the
historical cost convention, as modified by the revaluation of an operating
leasehold interest, and in accordance with accounting principles generally
accepted in Ireland and the United Kingdom.
BASIS OF COMBINATION
The combined financial statements represent a combination of the
financial statements of the Irish Partnership of Jones Lang Wootton and two
corporate entities being Utrillo Limited and Jones Lang Wootton Property
Management Services. These corporate entities are under the control of the
Irish Partnership of Jones Lang Wootton -Irish Practice.
Transactions and balances in respect of property management services,
including monies held on behalf of clients and staff costs of certain staff
employed on behalf of property management clients are not reflected within
the financial statements.
PARTNERS' REMUNERATION
Remuneration of proprietary partners, including pension contributions
and remuneration payable by corporate entities, is treated as partners'
drawings and not charged in determining the profit for the year.
Remuneration of salaried partners is included within administration
expenses. Amounts owing to or from salaried partners are included within
creditors and debtors.
FEE INCOME
Revenue is recognised upon substantial completion of the underlying
engagement.
DEPRECIATION
Depreciation is provided on tangible assets using the following
rates:
Leasehold property - Period of Lease
Office furniture and fittings - 12 1/2% straight line
Motor vehicles - 25% reducing balance
Computer and other equipment - 25% straight line
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
TAXATION
Corporation tax is provided on the taxable profits of the corporate
entities. The taxation payable on partnership profit is a personal
liability of the partners and no current or deferred taxation is provided
on the profits attributable to the partners.
DEFERRED TAXATION
Deferred taxation is provided at the anticipated tax rates on timing
differences arising from the inclusion of items of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future.
WORK IN PROGRESS
Work in progress is included in respect of engagements which are not
dependent on future events and which have not been substantially completed.
Work in progress is valued at the lower of cost, including attributable
overheads, and net realisable value.
LEASED ASSETS
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to profit and loss in equal
amounts over the lease terms.
PENSION COSTS
Eligible employees participate in defined benefit pension schemes,
the assets of which are held in separate trustee administered funds. Costs
are charged to the profit and loss account so as to spread the cost over
the service lives of the participating employees.
FOREIGN EXCHANGE
The functional currency is Irish pounds and the transactions are
recorded in Irish pounds. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated at the rates at
that date. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction, all differences being dealt with in
the profit and loss account.
The reporting currency for the purposes of these financial statements
is the United States dollar. The Irish pound combined financial statements
have been translated using the closing rate of exchange for the balance
sheet and the weighted average rate of exchange for the profit and loss
account and movements in partners funds. The opening partners' funds have
been translated using the rate of 1 January 1995. All differences arising
as a result of translation have bene taken directly to the foreign exchange
translation reserve.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
2. PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION
1998 1997 1996 1995
------- ------- ------- -------
The profit is stated
after crediting:
Rents receivable . . . . 54 57 61 61
------- ------- ------- -------
and charging:
Depreciation:
- own assets . . . . . . 246 224 132 168
- assets held under
finance leases . . . . 102 129 134 21
Interest payable and
similar charges
- bank overdraft . . . . 16 18 18 18
- finance charges
on leased assets . . . 27 42 64 3
Operating lease
charges. . . . . . . . 250 261 282 280
------- ------- ------- -------
3. STAFF COSTS
1998 1997 1996 1995
------- ------- ------- -------
Wages and salaries . . . 3,197 2,899 2,975 2,833
Social Security costs. . 269 251 240 218
Pension Costs. . . . . . 79 169 190 244
------- ------- ------- -------
3,545 3,319 3,405 3,295
------- ------- ------- -------
Comprising:
Jones Lang Wootton &
Jones Lang Wootton
Property Management
Services. . . . . . . . 2,598 2,440 2,520 2,409
Utrillo Limited. . . . . 947 879 885 886
------- ------- ------- -------
3,545 3,319 3,405 3,295
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
3. STAFF COSTS - CONTINUED
Average number of
employees:
(excluding proprietary
partners)
No. No. No. No.
Technical administration:
Jones Lang Wootton &
Jones Lang Wootton
Property Management
Services . . . . . . . 46 47 46 47
Utrillo Limited. . . . . 37 36 36 36
------- ------- ------- -------
83 83 82 83
------- ------- ------- -------
4. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
1998 1997 1996 1995
------- ------- ------- -------
Based on the profit
for the year:
Corporation tax
on corporate
entities . . . . . . . -- 4 4 --
------- ------- ------- -------
No taxation is provided on the profits of the partnership in
accordance with the accounting policies as such taxation is a personal
liability of the partners.
There are no differences which give rise to material deferred tax
timing differences.
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
5. TANGIBLE FIXED ASSETS
<CAPTION>
Office Computers
Motor Furniture and Other Leasehold
Vehicles and Fittings Equipment Interest Total
-------- ------------ --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
COST OR VALUATION
At 1 January 1997 507 1,145 747 -- 2,399
Additions. . . . . 386 79 91 -- 556
Disposals. . . . . (216) -- (1) -- (217)
On revaluation . . -- -- -- 285 285
Foreign exchange
translation
differences. . . (88) (185) (122) -- (395)
------- ------- ------- ------- -------
At 31 December
1997 . . . . . . 589 1,039 715 285 2,628
Additions. . . . . -- 6 125 -- 131
Disposals. . . . . (35) (1) (1) -- (37)
On revaluation . . -- -- -- -- --
Foreign exchange
translation
differences. . . 22 41 33 11 107
------- ------- ------- ------- -------
At 31 December
1998 . . . . . . 576 1,085 872 296 2,829
------- ------- ------- ------- -------
ACCUMULATED DEPRECIATION
At 1 January
1997 . . . . . . 214 448 517 -- 1,179
charge for year. . 124 136 93 -- 353
Disposals. . . . . (151) -- -- -- (151)
Foreign exchange
translation
differences. . . (32) (77) (87) -- (196)
------- ------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
5. TANGIBLE FIXED ASSETS - CONTINUED
Office Computers
Motor Furniture and Other Leasehold
Vehicles and Fittings Equipment Interest Total
-------- ------------ --------- --------- -------
At 31 December
1997 . . . . . . 155 507 523 -- 1,185
Charge for year. . 110 113 106 19 348
Disposals. . . . . (11) -- -- -- (11)
Foreign exchange
translation
differences. . . 9 24 25 -- 58
------- ------- ------- ------- -------
At 31 December
1998 . . . . . . 263 644 654 19 1,580
------- ------- ------- ------- -------
NET BOOK VALUE
At 31 December
1998
Cost . . . . . . 313 441 218 -- 972
Valuation. . . . . -- -- -- 277 277
------- ------- ------- ------- -------
313 441 218 277 1,249
------- ------- ------- ------- -------
At 31 December
1997 . . . . . . 434 532 192 285 1,443
------- ------- ------- ------- -------
At 31 December
1996 . . . . . . 293 697 230 -- 1,220
------- ------- ------- ------- -------
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
5. TANGIBLE FIXED ASSETS - CONTINUED
The leasehold premises, which are held under an operating lease, were
valued as at 31 December 1997 by Harrington Bannon, Chartered Valuation
Surveyors, on an open market value basis reflecting existing use.
The net book value of fixed assets includes an amount of US$287
(1997: US$380) in respect of assets held under finance leases.
6. WORK IN PROGRESS
There is no material work in progress at the balance sheet dates.
7. DEBTORS
1998 1997 1996
------- ------- -------
Trade debtors. . . . . . . . . . . 1,763 1,481 1,455
Prepayments and accrued income . . 533 1,130 983
------- ------- -------
2,296 2,611 2,438
------- ------- -------
8. CREDITORS: (Amounts falling
due within one year)
1998 1997 1996
------- ------- -------
Bank overdraft . . . . . . . . . . 894 19 8
Taxation and social security . . . 527 328 457
Accruals . . . . . . . . . . . . . 1,226 816 950
Obligations under finance
leases (note 10) . . . . . . . . 136 125 134
------- ------- -------
2,783 1,288 1,549
------- ------- -------
9. CREDITORS: (Amounts falling due
after more than one year)
1998 1997 1996
------- ------- -------
Obligations under finance
leases (note 10) . . . . . . . . . 121 247 441
------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
10. LEASE OBLIGATIONS
Net lease obligations to third parties under finance leases were as
follows:
1998 1997 1996
------- ------- -------
The minimum lease payments to
which the practice was committed
at 31 December were as follows:
Due within one year. . . . . . . . 152 151 181
Due within two to five years . . . 127 268 498
------- ------- -------
279 419 679
Less: Interest allocated to
future periods . . . . . . . . . . (22) (47) (104)
------- ------- -------
257 372 575
------- ------- -------
The leases expire:
Within one year. . . . . . . . . . 136 125 134
After more than one year . . . . . 121 247 441
------- ------- -------
257 372 575
------- ------- -------
At 31 December 1998 there were commitments to make annual payments of
US$249 in respect of an operating lease on a property, which expires after
five years. Under the terms of the lease the annual rental payments are
due for review on 1 November 1999.
11. RECONCILIATION OF OPERATING PROFIT TO NET
CASH INFLOW FROM OPERATING ACTIVITIES
1998 1997 1996 1995
------- ------- ------- -------
Operating profit . . . . 5,438 3,803 4,045 1,695
Depreciation . . . . . . 348 353 266 189
Decrease/(Increase)
in debtors . . . . . . 406 (586) (157) 82
Increase/(Decrease)
in creditors . . . . . 545 (39) 702 413
------- ------- ------- -------
Net cash inflow from
operating activities . 6,737 3,531 4,856 2,379
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
12. ANALYSIS OF NET FUNDS
Cash Exchange Cash Exchange
1996 flow movement 1997 flow movement 1998
------ ------ -------- ------ ------ -------- ------
Cash in
hand and
at bank . 1,211 (360) (175) 676 2,274 103 3,053
Overdraft. (8) (13) 2 (19) (845) (29) (893)
------ ------ ------ ------ ------ ------ ------
1,203 (373) (173) 657 1,429 74 2,160
Finance
leases. . (575) 118 85 (372) 125 (11) 258
------ ------ ------ ------ ------ ------ ------
Total. . . 628 (255) (88) 285 1,554 63 1,902
------ ------ ------ ------ ------ ------ ------
Cash Exchange
1998 flow movement 1997
------- ------- -------- -------
Cash in hand and
at bank. . . . . . 3,053 2,274 103 676
Overdraft. . . . . . (893) (845) (29) (19)
------- ------- ------- -------
2,160 1,429 74 657
Finance leases . . . 258 125 (11) (372)
------- ------- ------- -------
Total . . . . . . . 1,902 1,554 63 285
======= ======= ======= =======
13. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1998 1997 1996 1995
------- ------- -------- -------
(Decrease)/increase in
cash in the year. . . . 1,429 (373) 2,053 (163)
Cash outflow from
decrease in lease
financing . . . . . . . 125 118 113 75
------- ------- ------- -------
Change in net funds
resulting from
cash flows . . . . . . . 1,554 (255) 2,166 (88)
New finance leases . . . . -- -- (258) (403)
Translation difference . . 63 (88) 16 (21)
------- ------- ------- -------
Movement in net
funds in the year. . . . 1,617 (343) 1,924 (512)
Net funds at start
of year . . . . . . . 285 628 (1,296) (784)
------- ------- ------- -------
Net funds at
end of year. . . . . . . 1,902 285 628 (1,296)
------- ------- ------- -------
<PAGE>
<TABLE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
14. PARTNERS' FUNDS
<CAPTION> Partners
Foreign balances
exchange (including Provision
translation Revaluation retired for
reserves reserves partners) annuitants Total
----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
At 1 January 1995. . . . . . . . . . . -- -- 1,609 -- 1,609
Profit for year. . . . . . . . . . . . -- -- 1,631 -- 1,631
Partners drawings net of cash
introduced . . . . . . . . . . . . . -- -- (2,005) -- (2,005)
Foreign exchange translation
differences. . . . . . . . . . . . . 62 -- -- -- 62
------- ------- ------- ------- -------
At 31 December 1995. . . . . . . . . . 62 -- 1,235 -- 1,297
Profit for year. . . . . . . . . . . . -- -- 3,893 -- 3,893
Partners drawings net of cash
introduced . . . . . . . . . . . . . -- -- (2,453) -- (2,453)
Foreign exchange translation
differences. . . . . . . . . . . . . 142 -- -- -- 142
------- ------- ------- ------- -------
At 31 December 1996. . . . . . . . . . 204 -- 2,675 -- 2,879
Profit for year. . . . . . . . . . . . -- -- 3,695 -- 3,695
Partners drawings net of cash
introduced . . . . . . . . . . . . . -- -- (3,185) -- (3,185)
Foreign exchange translation
differences. . . . . . . . . . . . . (479) -- -- -- (479)
Unrealised surplus on revaluation
of leasehold interest. . . . . . . . -- 285 -- -- 285
------- ------- ------- ------- -------
At 31 December 1997. . . . . . . . . . (275) 285 3,185 -- 3,195
Profit for year. . . . . . . . . . . . -- -- 5,337 -- 5,337
Partners drawings, net of cash
introduced . . . . . . . . . . . . . -- -- (4,976) -- (4,976)
Foreign exchange translation
differences. . . . . . . . . . . . . 139 (9) 9 -- 139
Provision for annuitants . . . . . . . -- -- (1,000) 1,000 --
------- ------- ------- ------- -------
At 31 December 1998. . . . . . . . . . (136) 276 2,555 1,000 3,695
======= ======= ======= ======= =======
</TABLE>
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
14. PARTNERS' FUNDS - CONTINUED
On 3 September 1998 the three UK partners retired from the
partnership and two salaried partners were admitted to the partnership as
profit sharing partners. For the purposes of the 1998 combined financial
statements the remuneration of the two newly admitted partners has been
charged in determining the profit for the year and amounts owing to them
have been included in creditors with no transactions or balances reflected
through Partners Funds. The Partners' Funds at 31 December 1998 include
amounts owing to the retired partners.
15. COMMITMENTS
The partnership had commitments to a former partner and a dependent
of a former partner to pay annuities. The annuities were dependent on, and
calculated on, profits for each year. In the case of the dependent, the
annuity also depended on the life span of the annuitant. No provision has
been included in the financial statements for any annuities payable in
subsequent years based on profits of subsequent years as they could not be
determined with reasonable accuracy.
In 1998 an agreement was reached with the annuitants for US$1,137 to
purchase the right to these annuities. US$137 of this was paid in 1998.
The payment of the balance of US$1,000 is conditional upon the completion
of the transaction with LaSalle Partners Incorporated and if this does not
proceed the partnership will continue to pay the annuitant.
16. PENSION COMMITMENTS
Jones Lang Wootton Partnership and Utrillo Limited operate separate
defined benefit schemes, which provide benefits based on final pensionable
salaries for eligible employees and salaried partners.
The contributions are based on the advice of independent actuaries
obtained at three yearly intervals, using the attained age method of
funding.
The last actuarial valuation of the partnership pension scheme was at
1 January 1998. The principal assumption in the valuation was that, over
the long-term, the net return on investments will exceed the future salary
increases by 2% per annum. The actuarial report of the partnership scheme
disclosed that the actuarial value of the scheme's assets was US$3,148 and
the actuarial accrued liability was US$1,647. The standard contribution
rate as a percentage of salaries is 14.2%. The actuary has recommended
that the future contribution rate until the next triennial valuation be 4%
of salaries.
The last actuarial valuation of the Utrillo Limited scheme as at 1
August 1996. The principal assumption was that, over the long term, the
net return on investments would exceed future salary increases by 2% per
annum. The Utrillo Limited actuarial report disclosed that the actuarial
value of the scheme's assets was US$138 and the actuarial accrued liability
was US$87. The actuary recommended a funding rate of 9.6% of the
pensionable salaries until the next triennial valuation.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
16. PENSION COMMITMENTS
The following are reflected in the financial statements:
1998 1997 1996 1995
------- ------- ------- -------
Pension costs. . . . . 79 169 190 244
------- ------- ------- -------
Prepaid pension costs
included in pre-
payments and
accrued income . . . 73 70 53
------- ------- -------
Accrued pension
costs included
in accruals. . . . . -- -- --
======= ======= =======
17. RELATED PARTY DISCLOSURES
At 31 December 1998 Jones Lang Wootton - Irish Practice owed $390 to
Jones Lang Wootton English Partnership. This arises mainly from recharge
expenses.
18. INFORMATION REGARDING CORPORATE ENTITIES
The corporate entities which are wholly owned and controlled by Jones
Lang Wootton - Irish Practice are:
Country of
Company Incorporation Activity
------- ------------- --------
Utrillo Limited Ireland Staff services provider
Jones Lang Wootton Ireland Property management
Property Management services provider
Services
JLW Financial Services Ireland Dormant company
Limited
JLW Limited Ireland Dormant company
Jones Lang Wootton Ireland Dormant company
Limited
19. YEAR 2000 AND EURO
The JLW Ireland Group conducts its business primarily with systems
utilising commercial software purchased from suppliers and customised
software. Efforts to ensure that such systems, data communication and
telecommunications equipment are Year 2000 compliant are being coordinated
on a global basis by the JLW Companies. The Jones Lang Wootton - Irish
Practice has determined that its accounting systems are not Year 2000
compliant and plans to replace these systems before June 1999 at an
estimated cost of US$100. Other software, systems and equipment are
expected to be substantially Year 2000 compliant, and completion of Year
2000 compliance is not expected to have a material impact on the business,
operations or financial condition of the Jones Lang Wootton - Irish
Practice.
There is no immediate requirement on the Practice to deal with Euro
transactions.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
20. SIGNIFICANT DIFFERENCES BETWEEN IRISH/UK GAAP AND US GAAP
The combined financial statements are prepared in accordance with
Irish/UK GAAP which differs in certain significant respects from US GAAP.
Ireland and the UK adopt common accounting standards. The principal
differences that affect the combined profit for the years and the partners'
funds are explained below and the approximate effect is shown below the
explanations.
PENSIONS
Under Irish/UK GAAP, pension costs are accounted for in accordance
with the rules set out in Standard Statement of Accounting Practice No. 24,
where the expected cost of providing pensions, as calculated by actuaries,
is charged to the profit and loss so as to spread the cost of pensions over
the service lives of the employees under the scheme. The differences
between Irish/UK GAAP and US GAAP occur primarily in the way the actuarial
assumptions are made and the methods used to calculate market values for
the pension plan assets. The adjustment under US GAAP relates to the
recognition of the pension surplus over the expected working lifetime of
active members after taking account of the transition asset arising upon
adoption of the U.S. Financial Accounting Standards Board's Statement of
Financial Accounting Standard No. 87.
REVALUATION OF ASSETS
Irish/UK GAAP permits tangible fixed assets to be recorded at a
valuation, with depreciation charged to the profit and loss account based
on revalued amounts. Under US GAAP, there is a specific requirement for
tangible fixed assets to be recorded at cost.
DEFERRED TAXATION
Under Irish/UK GAAP, taxation is provided for at the anticipated tax
rates on timing differences arising from the inclusion of income and
expenditure in tax computations in periods different from those in which
they are included in financial statements to the extent that it is probable
that a liability or asset will crystallise in the future. Under US GAAP,
deferred taxation is provided for on all temporary differences under the
liability method subject to a valuation allowance on deferred tax assets
where applicable.
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
20. SIGNIFICANT DIFFERENCES BETWEEN IRISH/UK GAAP AND US GAAP - CONTINUED
EFFECT ON DIFFERENCES
The effect on profit in the combined financial statements of
significant differences between Irish/UK GAAP and US GAAP is as follows:
1998 1997 1996 1995
------- ------- ------- -------
Profit after taxation
under Irish/UK GAAP. . 5,451 3,830 3,980 1,679
Adjustments:
Employee pension costs . 242 209 175 151
Depreciation . . . . . . 19 -- -- --
Deferred taxation. . . . (77) (76) (65) (55)
------- ------- ------- -------
Net earnings as
reported in
accordance with
US GAAP. . . . . . . . 5,635 3,963 4,090 1,775
======= ======= ======= =======
The effect on partners' funds of significant differences between
Irish/UK GAAP and US GAAP is as follows:
1998 1997 1996
------- ------- -------
Partners' funds in accordance
with Irish/UK GAAP . . . . . . . 3,695 3,195 2,879
Adjustments:
Unrealised surplus on revalua-
tion of leasehold interest
and amortisation . . . . . . . . (276) (285) --
Employee pension costs . . . . . . 1,065 784 694
Deferred taxation. . . . . . . . . (364) (273) (239)
------- ------- -------
Partners' funds as reported in
accordance with US GAAP. . . . . 4,120 3,421 3,334
------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
20. SIGNIFICANT DIFFERENCES BETWEEN IRISH/UK GAAP AND US GAAP - CONTINUED
COMBINED STATEMENTS OF CASH FLOWS
The combined statements of cash flows prepared under Irish/UK GAAP
differ in certain presentational respects from the format required under
Statement of Cash Flows ("SFAS") 95. Under Irish/UK GAAP, a reconciliation
of operating profit to cash flows from operating activities is presented in
a note, and cash paid for interest and income taxes are presented
separately from cash flows from operating activities.
Under SFAS 95, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
Summary combined cash flow information as presented in accordance
with SFAS 95:
1998 1997 1996 1995
------- ------- ------- -------
Cash was provided by
(used in):
Operating activities . . 6,750 3,542 4,795 2,358
Investing activities . . (106) (477) (88) (392)
Financing activities . . (4,370) (3,425) (3,568) (1,956)
------- ------- ------- -------
Net increase/(decrease)
in cash. . . . . . . . 2,274 (360) 1,139 10
Exchange movement. . . . 103 (175) 55 --
Cash at the beginning
of the period. . . . . 676 1,211 17 7
------- ------- ------- -------
Cash at the end
of the period. . . . . 3,053 676 1,211 17
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
20. SIGNIFICANT DIFFERENCES BETWEEN IRISH/UK GAAP AND US GAAP - CONTINUED
A reconciliation between the combined statement of cash flows
presented in accordance with Irish/UK GAAP and US GAAP is set out below:
1998 1997 1996 1995
------- ------- ------- -------
Operating activities:
Net cash inflow from
operating activities
(Irish/UK GAAP). . . . 6,737 3,531 4,856 2,379
Interest received. . . . 56 78 21 --
Interest paid. . . . . . (16) (18) (18) (18)
Interest element
of finance lease
rentals. . . . . . . . (27) (42) (64) (3)
Tax paid . . . . . . . . -- (7) -- --
------- ------- ------- -------
Net cash provided by
operating activities
(US GAAP). . . . . . . 6,750 3,542 4,795 2,358
------- ------- ------- -------
Investing activities:
Net cash outflow from
capital expenditure
(Irish/UK GAAP). . . . (106) (477) (88) (392)
------- ------- ------- -------
Net cash used in
investing activities
(US GAAP). . . . . . . (106) (477) (88) (392)
------- ------- ------- -------
Financing activities:
Net cash outflow from
financing
(Irish/UK GAAP). . . . (125) (118) (114) (76)
Partners drawings. . . . (5,090) (3,320) (2,540) (2,053)
Increase/(decrease)
in overdraft . . . . . 845 13 (914) 173
------- ------- ------- -------
Net cash used in
financing activities
(US GAAP). . . . . . . (4,370) (3,425) (3,568) (1,956)
------- ------- ------- -------
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
21. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP
The following combined balance sheet and profit and loss accounts
have been prepared in accordance with US GAAP and reflect the adjustments
detailed in Note 20:
BALANCE SHEET
1998 1997 1996
------- ------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . 3,054 676 1,211
Trade receivables, net . . . . . . 1,827 2,387 2,265
Prepaid expenses . . . . . . . . . 395 154 120
------- ------- -------
TOTAL CURRENT ASSETS . . . . . . . 5,276 3,217 3,596
Property and equipment, at cost,
less accumulated depreciation of
US$1,561, US$1,185 and
US$1,179 in 1998, 1997 and 1996,
respectively . . . . . . . . . . . 973 1,158 1,220
Other non current assets . . . . . 1,138 853 746
------- ------- -------
TOTAL ASSETS . . . . . . . . . . . 7,387 5,228 5,563
------- ------- -------
LIABILITIES AND PARTNERS' FUNDS
CURRENT LIABILITIES
Accounts payable and accrued
liabilities. . . . . . . . . . . . 1,888 702 912
Taxation . . . . . . . . . . . . . -- -- 4
Other liabilities. . . . . . . . . -- 61 51
Employee entitlements. . . . . . . -- 505 574
Borrowings . . . . . . . . . . . . 894 20 8
------- ------- -------
TOTAL CURRENT LIABILITIES. . . . . 2,782 1,288 1,549
Deferred tax liability . . . . . . 364 273 238
Other long-term liabilities. . . . 121 246 441
------- ------- -------
TOTAL LIABILITIES. . . . . . . . . 3,267 1,807 2,228
------- ------- -------
Partners balances. . . . . . . . . 3,288 3,743 3,099
Foreign exchange translation
reserve. . . . . . . . . . . . . . (168) (322) 235
Provision for annuitants . . . . . 1,000 -- --
------- ------- -------
TOTAL PARTNERS FUNDS . . . . . . . 4,120 3,421 3,334
------- ------- -------
TOTAL LIABILITIES AND
PARTNERS FUNDS . . . . . . . . . . 7,387 5,228 5,562
======= ======= =======
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
21. BALANCE SHEET AND INCOME STATEMENT UNDER US GAAP - CONTINUED
INCOME STATEMENT
1998 1997 1996 1995
------- ------- ------- -------
REVENUE
Operating revenue. . . . 12,107 9,223 9,466 6,953
Interest revenue . . . . 56 78 21 --
------- ------- ------- -------
TOTAL REVENUE. . . . . . 12,163 9,301 9,487 6,953
------- ------- ------- -------
OPERATING EXPENSES
Compensation and
benefits . . . . . . . 3,303 3,110 3,230 3,144
Operating, administra-
tive . . . . . . . . . 1,703 1,735 1,750 1,769
Depreciation . . . . . . 329 353 266 189
Merger related non-
recurring expenditure. 1,073 -- -- --
------- ------- ------- -------
TOTAL OPERATING
EXPENSES . . . . . . . 6,408 5,198 5,246 5,102
------- ------- ------- -------
OPERATING INCOME . . . . 5,755 4,103 4,241 1,851
Interest expense . . . . 43 60 82 21
------- ------- ------- -------
EARNINGS BEFORE PROVI-
SION FOR TAXATION. . . 5,712 4,043 4,159 1,830
Provision for income
tax. . . . . . . . . . -- 4 4 --
Deferred taxation
expense. . . . . . . . 77 76 65 55
------- ------- ------- -------
NET EARNINGS . . . . . . 5,635 3,963 4,090 1,775
======= ======= ======= =======
<PAGE>
JONES LANG WOOTTON - IRISH PRACTICE
NOTES TO THE COMBINED FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997, 1996 AND 1995
(US$ in thousands, except where stated otherwise)
21. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP - CONTINUED
In addition to the adjustments made as presented in Note 19, the
following reclassifications have been made between the Irish/UK GAAP
balance sheet and the US GAAP balance sheet in note 20 to the accounts.
TRADE RECEIVABLES:
Included in trade receivables are the following balances:
1998 1997 1996
------- ------- -------
Trade debtors. . . . . . . . . . . 1,763 1,481 1,455
Unbilled fee income. . . . . . . . 64 906 810
Work in progress . . . . . . . . . -- -- --
------- ------- -------
Trade receivables reported in
accordance with US GAAP. . . . . 1,827 2,387 2,265
------- ------- -------
Unbilled fee income is included in prepayments and accrued income in
the Irish/UK GAAP balance sheet.
OTHER NON-CURRENT ASSETS:
Other non-current assets in the US GAAP balance sheet comprises the
pension scheme asset under US GAAP.
OTHER CURRENT LIABILITIES:
1998 1997 1996
------- ------- -------
Other current liabilities comprise:
Obligations under finance leases . 136 125 134
Other creditors. . . . . . . . . . 1,225 249 325
Other taxes. . . . . . . . . . . . 527 328 453
------- ------- -------
Other current liabilities
reported in accordance
with US GAAP . . . . . . . . . . 1,888 702 912
------- ------- -------
Other taxes include social security, payroll taxes, value added tax,
which under Irish/UK GAAP are included in taxation and social security.
Under US GAAP, taxation includes only the corporate tax liabilities.
<PAGE>
JLW ASIA HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS OF JLW ASIA HOLDINGS LIMITED
We have audited the accompanying Group balance sheets of JLW Asia Holdings
Limited and subsidiaries as of 31 December 1998 and 1997, and the related
Group profit and loss accounts, Group statements of total recognised gains
and losses, reconciliations of shareholders' funds and cash flows for each
of the years in the three-year period ended 31 December 1998. These Group
financial statements are the responsibility of the Group's management. Our
responsibility is to express an opinion on these Group financial statements
based on our audits. We did not audit the financial statements of JLW
Property Consultants Pte Ltd and its subsidiaries, a wholly-owned
subsidiary, which statements reflect total assets constituting 24 percent
and 20 percent in 1998 and 1997, respectively, and total turnover
constituting 22 percent, 21 percent and 25 percent in 1998, 1997 and 1996,
respectively of the related Group totals. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for JLW Property Consultants
Pte Ltd and its subsidiaries, is based solely on the report of the other
auditors.
We conducted our audits in accordance with auditing standards generally
accepted in Hong Kong, which are substantially equivalent to auditing
standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, based on our audits and the report of the other auditors,
the Group financial statements referred to above present fairly, in all
material respects, the financial position of JLW Asia Holdings Limited and
subsidiaries as of 31 December 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year
period ended 31 December 1998, in conformity with generally accepted
accounting principles in the United Kingdom as explained in note 1 to the
financial statements.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States. Application of accounting principles generally
accepted in the United States would have affected results of operations for
each of the years in the three-year period ended 31 December 1998, and
shareholders' funds as of 31 December 1998 and 1997, to the extent
summarized in note 22 to the Group financial statements.
KPMG
Certified Public Accountants
Hong Kong, 19 February 1999
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
GROUP PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
Note 1998 1997 1996
----- ------- ------- -------
FEE INCOME . . . . . . . . . . . . 2 60,997 76,796 65,371
Administrative expenses. . . . . . . (51,956) (61,821) (54,157)
Merger-related non-recurring
charges . . . . . . . . . . . . (7,080) -- --
Fees, salaries and allowances
in respect of profit sharing
arrangements . . . . . . . . . . . 6 (3,421) (4,430) (3,383)
Other operating income . . . . . . . 2,413 2,087 2,190
(Loss)/income from interest in
associated undertaking . . . . . . 8 (35) 369 752
------- ------- -------
OPERATING PROFIT . . . . . . . . . . 3 918 13,001 10,773
Profit on sale of fixed assets . . . 24 62 207
Bank interest receivable . . . . . . 113 293 192
Interest payable . . . . . . . . . . (226) (225) (482)
------- ------- -------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION. . . . . . . . . . 829 13,131 10,690
Tax on profit on ordinary
activities . . . . . . . . . . . . 5 (1,287) (2,162) (1,467)
------- ------- -------
(LOSS)/PROFIT FOR THE YEAR . . . . . (458) 10,969 9,223
RETAINED PROFIT AS AT
BEGINNING OF YEAR. . . . . . . . . 16 12,716 16,554 14,971
DISTRIBUTIONS IN RESPECT
OF PROFIT SHARING ARRANGEMENTS . . 6 (3,885) (14,807) (7,640)
------- ------- -------
RETAINED PROFIT AS AT
END OF YEAR. . . . . . . . . . . . 16 8,373 12,716 16,554
======= ======= =======
All activities derive from continuing operations.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
GROUP BALANCE SHEETS AT 31 DECEMBER 1998 AND 1997
(United States dollars in thousands, unless where stated otherwise)
Note 1998 1997
---- ------- -------
FIXED ASSETS
Tangible assets. . . . . . . . . . . . . . . 7 5,219 5,111
Interest in associated undertaking . . . . . 8 -- 597
------- -------
5,219 5,708
------- -------
CURRENT ASSETS
Debtors . . . . . . . . . . . . . . . . 9 24,374 20,194
Cash at bank and in hand . . . . . . . . . . 4,966 8,743
------- -------
29,340 28,937
CREDITORS: amounts falling due
within one year. . . . . . . . . . . . . . 10 24,099 20,072
------- -------
NET CURRENT ASSETS . . . . . . . . . . . . . 5,241 8,865
======= =======
TOTAL ASSETS LESS CURRENT LIABILITIES. . . . 10,460 14,573
CREDITORS: amounts falling due after
more than one year . . . . . . . . . . . . 11 1,889 1,649
DEFERRED TAXATION. . . . . . . . . . . . . . 14 198 193
------- -------
8,373 12,731
------- -------
CAPITAL AND RESERVES
Called up share capital. . . . . . . . . . . 15 -- --
Exchange fluctuation reserve . . . . . . . . 16 -- 15
Profit and loss account. . . . . . . . . . . 16 8,373 12,716
------- -------
Equity shareholders' funds . . . . . . . . . 8,373 12,731
======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
GROUP CASH FLOW STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
Note 1998 1997 1996
----- ------- ------- -------
NET CASH INFLOW FROM
OPERATING ACTIVITIES . . . . . . .17(a) 3,822 20,694 8,929
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Finance lease charges. . . . . . . . (153) (107) (349)
Interest received. . . . . . . . . . 113 293 192
Interest paid. . . . . . . . . . . . (226) (225) (482)
------- ------- -------
3,556 20,655 8,290
TAXATION
Tax paid . . . . . . . . . . . . (1,865) (877) (1,060)
------- ------- -------
1,691 19,778 7,230
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire fixed assets . . (408) (744) (2,563)
Receipts from sales of
fixed assets . . . . . . . . . . . 218 320 1,478
------- ------- -------
1,501 19,354 6,145
EQUITY DIVIDENDS PAID
Distributions in respect of profit
sharing arrangements paid. . . . . (3,418) (14,807) (7,640)
MANAGEMENT OF LIQUID RESOURCES
Decrease/(increase) in short
term deposits. . . . . . . . . . .17(b) 5,497 (2,684) 2,048
------- ------- -------
NET CASH FLOW BEFORE FINANCING . . . 3,580 1,863 553
FINANCING
New long-term loans. . . . . . . . .17(b) -- -- 1,220
Repayment of long-term loans . . . .17(b) (413) (820) --
Repayment of capital elements
of finance lease rentals . . . . .17(b) (1,604) (1,494) (1,574)
------- ------- -------
INCREASE/(DECREASE) IN CASH. . . . .17(c) 1,563 (451) 199
======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
GROUP STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
Note 1998 1997 1996
----- ------- ------- -------
(Loss)/profit for the year . . . . . (458) 10,969 9,223
Exchange difference on
retranslation of net assets. . . . 16 (15) 15 (15)
------- ------- -------
Total recognised gains and
losses relating to the year. . . . (473) 10,984 9,208
======= ======= =======
RECONCILIATION OF SHAREHOLDERS' FUNDS
FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
Note 1998 1997 1996
----- ------- ------- -------
Total recognised gains and losses. . (473) 10,984 9,208
Distributions in respect of
profit sharing arrangements. . . . 6 (3,885) (14,807) (7,640)
------- ------- -------
Total movements during the year. . . (4,358) (3,823) 1,568
Shareholders' funds at
beginning of year. . . . . . . . . 16 12,731 16,554 14,986
------- ------- -------
Shareholders' funds at end of year . 16 8,373 12,731 16,554
======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
JLW Asia Holdings Limited, through its operational subsidiaries,
provides a full range of advisory, transactional and asset management
services to a wide variety of local and international clients in almost
every industry and service sector for all types of real estate. The
Group's main geographical markets are Hong Kong, Singapore and Thailand,
where a full range of services are provided. The Group also operates in
Philippines, PRC, Vietnam and Myanmar, and earns significant income in the
form of a technical service fee providing a full range of services in
Indonesia.
BASIS OF PREPARATION
The accounts are prepared under the historical cost convention.
The accounts are prepared in accordance with accounting principles
generally accepted in the United Kingdom and comply with applicable United
Kingdom accounting standards. The accounts do not necessarily contain all
disclosures required by the Companies Acts.
The accounts were approved by the Board of Directors on 19 February
1999.
BASIS OF CONSOLIDATION
The Group accounts consolidate the accounts of JLW Asia Holdings
Limited and all its subsidiary undertakings as at 31 December 1998 and
1997, and for the years ended 31 December 1998, 1997 and 1996. The Group's
financial statements include the accounts of all majority-owned and
controlled subsidiaries in which the Group has more than a 50% voting
equity interest.
JLW Australia Pty. Limited, a member of the JLW Holdings Pty. Limited
Group owns 10% of the voting shares of Jones Lang Wootton Limited and JLW
Property Consultants Pte Limited. It also owns one "E" share in Jones Lang
Wootton Limited. Although JLW Australia Pty. Limited owns these shares any
participation in the profits of either Jones Lang Wootton Limited and JLW
Property Consultants Pte Limited are totally at the discretion of JLW Asia
Holdings Limited management. These accounts are under the common control
and management of JLW Asia Holdings Limited and therefore consolidate 100%
of the results and net assets of these subsidiary undertakings and do not
recognise any minority interest. Management of JLW Australia Pty. Limited
have confirmed that this minority interest will be excluded from the
consolidated accounts of JLW Holdings Pty. Limited for the years ended 31
December 1998, 1997 and 1996.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
The Group has a dominant influence over the control and voting rights
in the board of JLW (Thailand) Limited. For this reason, the company is
accounted for as a subsidiary company of JLW Asia Holdings Limited. The
Group's Legal shareholding in this company is 49%. The Group has full
control over the company.
The Group accounts include the Group's in substance beneficial
ownership share of the profits and net assets of the JLW Transact Group on
an equity accounting basis.
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the Group's share of
net tangible assets. Where the cost of acquisition differs from the values
attributable to such net assets, the difference is treated as purchased
goodwill and is written off directly to reserves in the year of
acquisition.
The profit or loss on the disposal of previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business.
FEE INCOME
Revenue is recognised upon substantial completion of the underlying
contract, excluding VAT where applicable. All trading arise from the
provision by the Group companies of advice on all aspects of commercial
real estate and other services, including property management and related
services.
DEPRECIATION
Depreciation is provided annually on the cost less residual value of
various categories of fixed assets on a straight-line basis using the
following rates:
Motor vehicles 20%
Office furniture and equipment 20%
Computer equipment 25% - 33 1/3%
Leasehold improvements Over the term of the lease
TAXATION
Taxation is provided on the taxable profits of the companies within
the Group.
DEFERRED TAXATION
Deferred taxation is provided on timing differences, arising from the
different treatment of items for accounts and taxation purposes, which are
expected to reverse in the future and give rise to a tax liability,
calculated at rates at which it is estimated that tax will arise.
INVESTMENTS
Investments are stated at cost less provision for any permanent
diminution in value.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
LEASES
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to income in equal amounts over
the least term.
FOREIGN EXCHANGE
Transactions denominated in foreign currencies are translated into
the reporting currency at the rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the rates ruling at
that date. These translation differences are dealt with in the profit and
loss account.
The functional currencies of JLW Asia Holdings Limited and its
subsidiaries and associate undertaking are each of their respective local
currencies. For purposes of preparing the Group financial statements,
gains or losses that result from translating each of these financial
statements expressed in their functional currency to United States dollars,
the reporting currency of the Group, are included as a separate component
of capital and reserves and entitled "Exchange fluctuation reserve".
PROFIT SHARING ARRANGEMENTS
The entitlement to cash distributions in respect of profit sharing
arrangements are recognised as and when they become payable (note 6).
2. TURNOVER AND SEGMENTAL ANALYSIS
Turnover represents letting and sales commissions, valuation,
project, management and other consulting fees. The directors are of the
opinion that these activities are closely linked and not subject to
significantly different risks or rates of growth. As a result it would not
be meaningful to analyse the Group's results into classes of business.
The Group operates within different geographical markets and turnover
and Group profit/(loss) and net assets are analysed as follows:
31 DECEMBER 1998
Hong Kong Singapore Others Total
---------- --------- ------- -------
Turnover . . . . . . . . 47,431 10,691 2,875 60,997
======= ======= ======= =======
Profit/(loss) on
ordinary activities
before taxation . . . . 3,448 97 (2,716) 829
======= ======= ======= =======
Net assets . . . . . . . 6,609 772 992 8,373
======= ======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
2. TURNOVER AND SEGMENTAL ANALYSIS - CONTINUED
31 DECEMBER 1997
Hong Kong Singapore Others Total
---------- --------- ------- -------
Turnover . . . . . . . . 51,864 16,545 8,387 76,796
======= ======= ======= =======
Profit on ordinary
activities before
taxation. . . . . . . . 8,754 1,459 2,918 13,131
======= ======= ======= =======
Net assets . . . . . . . 5,832 1,184 5,715 12,731
======= ======= ======= =======
31 DECEMBER 1996
Hong Kong Singapore Others Total
---------- --------- ------- -------
Turnover . . . . . . . . 37,325 16,142 11,904 65,371
======= ======= ======= =======
Profit on ordinary
activities before
taxation. . . . . . . . 3,614 1,063 6,013 10,690
======= ======= ======= =======
Net assets . . . . . . . 6,150 1,788 8,616 16,554
======= ======= ======= =======
3. OPERATING PROFIT
Operating profit is stated after charging:
1998 1997 1996
------- ------- -------
Depreciation of owned assets . . . 512 593 513
Depreciation of assets held
under finance leases and
hire purchase contracts. . . . . 1,473 1,331 1,350
Finance lease charges. . . . . . . 153 107 349
Operating lease rentals
- land and buildings . . . . . . . 6,559 6,816 6,501
- plan and machinery . . . . . . . 283 287 31
======= ======= =======
4. DIRECTORS' REMUNERATION
Emoluments of the directors were as follows:
1998 1997 1996
------- ------- -------
Fees, salaries and allowances in
respect of profit sharing
arrangements . . . . . . . . . . 1,260 2,412 1,624
Benefits . . . . . . . . . . . . . 751 772 881
------- ------- -------
2,011 3,184 2,505
======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
The taxation charge is made up as follows:
1998 1997 1996
------- ------- -------
Provision for tax on profits . . . 1,311 2,012 1,165
Over-provision in respect of
prior year . . . . . . . . . . . (28) (47) (1)
------- ------- -------
1,283 1,965 1,164
Deferred taxation (note 14). . . . -- 77 125
------- ------- -------
1,283 2,042 1,289
Associated undertaking (note 8). . 4 120 178
------- ------- -------
1,287 2,162 1,467
======= ======= =======
The Group has no liability to UK corporation tax.
6. PROFIT SHARING ARRANGEMENTS
The profits of the Group are the subject of a profit sharing
arrangement whereby management participate in those profits. Cash
distributions are made in respect of these arrangements in the following
forms:
(a) Fees, salaries and allowances
These are paid to management in agreed amounts and in substance are
advances in respect of the relevant person's ultimate profit share.
(b) Distributions
In substance, the distribution totalling US$3,885, US$14,807 and
US$7,640 for the years ended 31 December 1998, 1997 and 1996, respectively,
represents cash distributions of profit sharing arrangements for the senior
management of the Group. In general these arrangements take the form of a
dividend payment by the relevant subsidiary undertaking to the holding
company, which pays a corresponding dividend to its "B" shareholder (note
15) who in turn pays a dividend to one of its shareholders who acts as a
trustee in respect of the profit sharing arrangements with senior
management of the relevant entities and others. These profit sharing
arrangements set out the extent to which each relevant member of management
will participate in the profits of each relevant entity.
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
<CAPTION>
7. TANGIBLE FIXED ASSETS
31 DECEMBER 1998
Office
Leasehold furniture
improve- and Computer Motor
ment equipment equipment vehicles Total
------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Cost:
At 1 January 1998. . . . . 4,726 2,350 2,725 1,218 11,019
Exchange adjustments . . . 2 131 61 17 211
Additions. . . . . . . . . 495 311 1,015 396 2,217
Disposals. . . . . . . . . -- (118) (114) (281) (513)
------- ------- ------- ------- -------
At 31 December 1998. . . . 5,223 2,674 3,687 1,350 12,934
------- ------- ------- ------- -------
ACCUMULATED DEPRECIATION:
At 1 January 1998. . . . . 2,640 1,071 1,881 316 5,908
Exchange adjustments . . . 2 94 41 4 141
Provided during the
year . . . . . . . . . . 792 413 596 184 1,985
Disposals. . . . . . . . . -- (103) (114) (102) (319)
------- ------- ------- ------- -------
At 31 December 1998. . . . 3,434 1,475 2,404 402 7,715
======= ======= ======= ======= =======
NET BOOK VALUE:
31 December 1998 . . . . . 1,789 1,199 1,283 948 5,219
======= ======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
<CAPTION>
7. TANGIBLE FIXED ASSETS
31 DECEMBER 1997
Office
Leasehold furniture
improve- and Computer Motor
ment equipment equipment vehicles Total
------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Cost:
At 1 January 1997. . . . . 4,578 2,769 2,145 1,572 11,064
Exchange adjustments . . . (160) (585) (98) (212) (1,055)
Additions. . . . . . . . . 308 167 720 525 1,720
Disposals. . . . . . . . . -- (1) (42) (667) (710)
------- ------- ------- ------- -------
At 31 December 1997. . . . 4,726 2,350 2,725 1,218 11,019
------- ------- ------- ------- -------
ACCUMULATED DEPRECIATION:
At 1 January 1997. . . . . 1,800 992 1,578 590 4,960
Exchange adjustments . . . (88) (334) (67) (35) (524)
Provided during the
year . . . . . . . . . . 928 414 412 170 1,924
Disposals. . . . . . . . . -- (1) (42) (409) (452)
------- ------- ------- ------- -------
At 31 December 1997. . . . 2,640 1,071 1,881 316 5,908
======= ======= ======= ======= =======
NET BOOK VALUE:
31 December 1997 . . . . . 2,086 1,279 844 902 5,111
======= ======= ======= ======= =======
<FN>
The net book value of the Group's fixed assets amounted to US$4.0 million and US$3.5 million at 31 December
1998 and 1997, respectively in respect of assets held under finance leases and hire purchase contracts.
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
8. INTEREST IN ASSOCIATED UNDERTAKING
These accounts include a share of (loss)/profits of the JLW Transact
Group for the years ended 31 December 1998 and 1997 as follows.
1998 1997
------- -------
Percentage held. . . . . . . . . . 35% 35%
Share of net assets brought
forward. . . . . . . . . . . . . 597 567
Share of (loss)/profits before
tax . . . . . . . . . . . . . . (35) 369
Share of taxation. . . . . . . . . (4) (120)
Dividends received . . . . . . . . (507) (218)
Exchange difference. . . . . . . . (87) (1)
------- -------
(36) 597
======= =======
It should be noted that the above shareholdings of the JLW Transact
Group were legally owned by five companies in trust for the proprietors of
the JLW Asia Holdings Limited Group. These five companies are owned by the
beneficial owners of JLW Asia Holdings Limited. These owners have
confirmed that they consider that their shareholdings in the JLW Transact
Group are in substance beneficially owned by JLW Asia Holdings Limited and
it is therefore appropriate to equity account for the above profits of the
JLW Transact Group in the accounts of JLW Asia Holdings Limited.
The entities which have been combined to calculate the profits and
net assets of the JLW Transact Group are as follows
Place of
Company incorporation
------- -------------
Jones Lang Wootton Transact Pty Limited Australia
Jones Lang Wootton Transact (VIC) Pty Limited Australia
Jones Lang Wootton Transact (QLD) Pty Limited Australia
JLW Transact Limited New Zealand
JLW Transact Limited Hong Kong
JLW Transact Pte Limited Singapore
JLW Transact (Thailand) Co. Limited Thailand
The business of the JLW Transact Group is consultancy and agency
services in respect of hotels.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
9. DEBTORS
1998 1997
------- -------
Trade debtors. . . . . . . . . . . . . . . . . 15,422 10,116
Investments in transferable corporate
club memberships . . . . . . . . . . . . . . 455 365
Amounts owed by related parties. . . . . . . . 5,342 6,807
Amounts due from directors . . . . . . . . . . 92 --
Other debtors. . . . . . . . . . . . . . . . . 2,653 2,703
Prepayments and accrued income . . . . . . . . 410 203
------- -------
24,374 20,194
======= =======
The amounts due from directors do not constitute directors' loans and
are of the nature of current accounts.
There is no amount included above which is due after more than one
year from the balance sheet date.
10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Note 1998 1997
---- ------- -------
Current installments
due on loans . . . . . . . . . . 12 207 405
Bank overdraft . . . . . . . . . . 74 10
Obligations under finance
leases and hire purchase
contracts. . . . . . . . . . . . 13 1,871 2,086
Trade creditors. . . . . . . . . . 1,368 1,035
Amounts owed to related parties. . 11,413 2,534
Amounts due to directors . . . . . 145 1,971
Taxation . . . . . . . . . . . . . 1,517 2,099
Other creditors. . . . . . . . . . 5,228 4,291
Accruals and deferred income . . . 1,809 5,641
Dividend payable . . . . . . . . . 467 --
------- -------
24,099 20,072
======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
11. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR - CONTINUED
Note 1998 1997
---- ------- -------
Interest in associated
undertaking. . . . . . . . . . . 8 36 --
Loans. . . . . . . . . . . . . . . 12 -- 202
Obligations under finance
leases and hire purchase
contracts. . . . . . . . . . . . 13 1,853 1,447
------- -------
1,889 1,649
======= =======
12. LOANS
Note 1998 1997
---- ------- -------
Amounts falling due in one
year or less or on demand. . . . 10 207 405
------- -------
Amounts falling due:
Between one and two years. . . . -- 202
Between two and five years . . . -- --
In five years or more. . . . . . -- --
------- -------
11 -- 202
======= =======
207 607
======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
13. OBLIGATIONS UNDER LEASES AND HIRE PURCHASE CONTRACTS
Net amounts due under finance leases and hire purchase contracts:
Note 1998 1997
---- ------- -------
Amounts payable:
Within one year. . . . . . . . . 10 1,871 2,086
Between two and five years . . . 11 1,853 1,447
------- -------
3,724 3,533
======= =======
Annual commitments under non-cancellable operating leases are as
follows:
1998 1997
------- -------
Operating leases which expire:
Within one year. . . . . . . . . . . . . . 1,847 1,546
Between two and five years . . . . . . . . 11,000 11,673
Over five years. . . . . . . . . . . . . . -- --
------- -------
12,847 13,219
======= =======
14. DEFERRED TAXATION
1998 1997
------- -------
At beginning of year . . . . . . . . . . . . 193 151
Exchange adjustment. . . . . . . . . . . . . 5 (35)
Arising during the year. . . . . . . . . . . -- 77
------- -------
At end of year . . . . . . . . . . . . . . . 198 193
======= =======
Deferred taxation provided in the accounts represents tax on the
excess of depreciation or capital allowances over depreciation. There is
no significant unprovided deferred tax.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
15. SHARE CAPITAL
1998 and
1997
$
--------
AUTHORISED:
100 'A' class ordinary shares of US$1. . . . 100
100 'B' class ordinary shares of US$1. . . . 100
100 'C' class ordinary shares of US$1. . . . 100
100 'D' class ordinary shares of US$1. . . . 100
100 'E' class ordinary shares of US$1. . . . 100
100 'F' class ordinary shares of US$1. . . . 100
100 'G' class ordinary shares of US$1. . . . 100
100 'H' class ordinary shares of US$1. . . . 100
100 'I' class ordinary shares of US$1. . . . 100
100 'J' class ordinary shares of US$1. . . . 100
100 'K' class ordinary shares of US$1. . . . 100
100 'L' class ordinary shares of US$1. . . . 100
100 'M' class ordinary shares of US$1. . . . 100
100 'N' class ordinary shares of US$1. . . . 100
100 'O' class ordinary shares of US$1. . . . 100
100 'P' class ordinary shares of US$1. . . . 100
100 'Q' class ordinary shares of US$1. . . . 100
100 'R' class ordinary shares of US$1. . . . 100
100 'S' class ordinary shares of US$1. . . . 100
100 'T' class ordinary shares of US$1. . . . 100
100 'U' class ordinary shares of US$1. . . . 100
100 'V' class ordinary shares of US$1. . . . 100
100 'W' class ordinary shares of US$1. . . . 100
100 'X' class ordinary shares of US$1. . . . 100
100 'Y' class ordinary shares of US$1. . . . 100
100 'Z' class ordinary shares of US$1. . . . 100
400 unclassified ordinary shares of US$1 . . 400
-------
3,000
=======
ALLOTTED, CALLED UP AND FULLY PAID:
4 "A" class ordinary shares of US$1. . . . . 4
1 "B" class ordinary shares of US$1. . . . . 1
-------
5
=======
The "A" shares are the only shares in the capital of the company
which confer on the holders a right to vote at any general meeting of the
company, and any such holders are entitled to one vote for each share held.
"A" shares carry no right to any dividend declared or payable. "A" shares
carry no right to any participation, over and above repayment of capital,
in surplus assets or profits of the company upon a reduction of capital or
on a winding up.
The "B" share carries no voting rights, but is the only share in
issue which carries the right to dividend and to the participation in
surplus assets or profits upon reduction of capital or on a winding up.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
16. RESERVES
Exchange Profit
fluctuation and loss
reserve account Total
----------- -------- ---------
At 31 December 1995. . . . . . 15 14,971 14,986
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . . . (15) -- (15)
Retained profits for the
year . . . . . . . . . . . . -- 1,583 1,583
------- ------- -------
At 31 December 1996. . . . . . -- 16,554 16,554
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . . . 15 -- 15
Accumulated loss for the
year . . . . . . . . . . . . -- (3,838) (3,838)
------- ------- -------
At 31 December 1997. . . . . . 15 12,716 12,731
Exchange differences on
translation of net assets
and results of Group
companies. . . . . . . . . . (15) -- (15)
Accumulated loss for the
year . . . . . . . . . . . . -- (4,343) (4,343)
------- ------- -------
At 31 December 1998. . . . . . -- 8,373 8,373
======= ======= =======
17. NOTES TO THE STATEMENT OF CASH FLOWS
(a) RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
1998 1997 1996
------- ------- -------
Operating profit . . . . . . . . . 918 13,001 10,773
Finance lease charges. . . . . . . 153 107 349
Depreciation . . . . . . . . . . . 1,985 1,924 1,863
Loss/(income) from interest in
associated undertaking . . . . . 35 (369) (752)
Dividend received from
associated undertaking . . . . . 507 218 --
(Increase)/decrease in debtors . . (4,282) 7,506 (3,513)
Increase/(decrease) in creditors . 8,323 (1,638) (1,609)
(Decrease)/increase in accrued
expenses and deferred income . . (3,832) (472) 1,802
Exchange difference. . . . . . . . 15 417 16
------- ------- -------
Net cash inflow from operating
activities . . . . . . . . . . . 3,822 20,694 8,929
======= ======= =======
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
<CAPTION>
17. NOTES TO THE STATEMENT OF CASH FLOWS - CONTINUED
(b) ANALYSIS OF NET DEBT
31 DECEMBER 1998
At Other At 31
1 January Cash Exchange non-cash December
1998 Flow differences movements 1998
--------- ------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand . 3,176 1,625 67 -- 4,868
Bank overdrafts. . . . . . (10) (62) (2) -- (74)
------- ------- ------- ------- -------
Cash . . . . . . . . . . 3,166 1,563 65 -- 4,794
Short-term deposits* . . . 5,567 (5,497) 28 -- 98
Loans . . . . . . . . . . (607) 413 (13) -- (207)
Finance leases . . . . . . (3,533) 1,604 (88) (1,707) (3,724)
------- ------- ------- ------- -------
4,593 (1,917) (8) (1,707) 961
======= ======= ======= ======= =======
31 DECEMBER 1997
At Other At 31
1 January Cash Exchange non-cash December
1997 Flow differences movements 1997
--------- ------- ----------- --------- --------
Cash at bank and in hand . 3,388 (639) 427 -- 3,176
Bank overdrafts. . . . . . (198) 188 -- -- (10)
------- ------- ------- ------- -------
Cash . . . . . . . . . . 3,190 (451) 427 -- 3,166
Short-term deposits* . . . 2,784 2,684 99 -- 5,567
Loans . . . . . . . . . . (1,220) 820 (207) -- (607)
Finance leases . . . . . . (3,827) 1,494 (224) (976) (3,533)
------- ------- ------- ------- -------
927 4,547 95 (976) 4,593
======= ======= ======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
17. NOTES TO THE STATEMENT OF CASH FLOWS - CONTINUED
31 DECEMBER 1996
At Other At 31
1 January Cash Exchange non-cash December
1996 Flow differences movements 1996
--------- ------- ----------- --------- --------
Cash at bank and in hand . 3,490 (98) (4) -- 3,388
Bank overdrafts. . . . . . (490) 297 (5) -- (198)
------- ------- ------- ------- -------
Cash . . . . . . . . . . 3,000 199 (9) -- 3,190
Short-term deposits* . . . 4,851 (2,048) (19) -- 2,784
Loans . . . . . . . . . . -- (1,220) -- -- (1,220)
Finance leases . . . . . . (4,437) 1,574 (6) (958) (3,827)
------- ------- ------- ------- -------
3,414 (1,495) (34) (958) 927
======= ======= ======= ======= =======
<FN>
* Short term deposits are included within cash at bank and in hand in the balance sheet.
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
17. NOTES TO THE STATEMENT OF CASH FLOWS - CONTINUED
(c) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Note 1998 1997 1996
----- ------- ------- -------
INCREASE/(DECREASE) IN CASH. . 1,563 (451) 199
Cash inflow from increase
in loans . . . . . . . . . . -- -- (1,220)
Repayment of long-term
loans. . . . . . . . . . . . 413 820 --
Repayment of capital
elements of finance
lease rentals. . . . . . . . 1,604 1,494 1,574
Cash (inflow)/outflow
from short term deposits . . (5,497) 2,684 (2,048)
------- ------- -------
Change in net debt resulting
from cash flows. . . . . . .17(b) (1,917) 4,547 (1,495)
Other. . . . . . . . . . . . . (1,707) (976) (958)
Exchange differences . . . . . (8) 95 (34)
------- ------- -------
MOVEMENT IN NET DEBT . . . . . (3,632) 3,666 (2,487)
NET DEBT AT BEGINNING
OF YEAR. . . . . . . . . . .17(b) 4,593 927 3,414
------- ------- -------
NET DEBT AT END OF YEAR. . . .17(b) 961 4,593 927
======= ======= =======
(d) MAJOR NON-CASH TRANSACTIONS
The Group entered into finance lease arrangements in respect of
assets with a total capital value at the inception of the leases of
US$1,707, US$976 and US$958 in the years ended 31 December 1998, 1997 and
1996, respectively.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
18. CAPITAL COMMITMENTS
The Group had no significant capital commitments as at 31 December
1998, 1997 and 1996.
19. CONTINGENT LIABILITIES
In 1996, a legal action has been taken by a customer of JLW
(Thailand) Limited in connection with lease agreement and wrongful acts. A
compensation of US$890 is being claimed by the customer. The case is still
under consideration of the court. The company's management considered that
no material liabilities are likely to arise as a result of the legal action
and no provision has therefore been made in the accounts.
In 1997 and in 1998, the Group has given an indemnity of US$77 and
US$71, respectively, in respect of a guarantee given by a shareholder
relating to banking facilities extended to a related company.
At 31 December 1998, the group had a number of Hong Kong employees
who have completed the required number of years of service under the
Employment Ordinance in Hong Kong (the "ordinance") to be eligible for long
service payments on termination of their employment. The group is only
liable to make such payments if the termination of employment meets the
circumstances which are specified in the ordinance. Had the employment of
all eligible Hong Kong employees been terminated on 31 December 1998 and
long service payments been paid under the ordinance, the maximum potential
exposure would have been approximately US$1,593. No provision has been
made in the financial statements, as at 31 December 1998. Prior to 1 July
1998 full provision had been made in the financial statements. During the
year ended 31 December 1998, US$901 was credited to the profit and loss
account to write it back.
20. OTHER RELATED PARTY TRANSACTIONS
The Group is part of an international organisation of entities
operating under the JLW umbrella. It entered into material transactions
with related parties as follows:
JLW PACIFIC LIMITED
During the years ended 31 December 1998, 1997 and 1996, name license
fee of US$41, US$2,436 and US$1,920, respectively, were payable by the
Group to JLW Pacific Limited based on annual percentage of Group's turnover
charged to respective Group companies' turnover. The amounts of US$2,153
and US$2,202 remained payable as at 31 December 1998 and 1997,
respectively.
JLW LONDON
There is an International Board Development Fund ("IBDF") established
in and held by JLW London for the purposes of financing international
projects. Contributions made by the Group during the years ended 31
December 1998, 1997 and 1996 were US$1,505, US$436 and US$180,
respectively.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
20. OTHER RELATED PARTY TRANSACTIONS - CONTINUED
A merger-related project was carried out by the JLW Group during the
year, the worldwide costs related to this project were accumulated by JLW
London and allocated to each JLW entity on an agreed basis. The JLWAH
Group's share for the year ended 31 December 1998 was US$7,080. These
costs and those relating to IBDF were included in a current account with
JLW London. The balance on this account as at 31 December 1998 was
US$6,105.
PT PROCON INDAH
The Group provides technical advisory services to the PT Procon Indah
Group in Indonesia. Under a technical advisory services agreement fees
were due from PT Procon Indah amounting to US$63, US$4,808 and US$5,836 for
the years 1998, 1997 and 1996, respectively. The amount of the fees is
calculated as a percentage of the net profit after tax of PT Procon Indah
and its subsidiaries. The amounts outstanding in respect of such fees as
at 31 December 1998 and 1997 were US$4,148 and US$5,486, respectively.
JONES LANG WOOTTON INTERNATIONAL LIMITED
In 1998, the company earned a fee of US$1,099 from JLW International
Limited in respect of services rendered in connection with an investment in
GRA (Bermuda) Limited. As at 31 December 1998, US$650 of this balance had
not been settled.
<PAGE>
<TABLE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
<CAPTION>
21. SUBSIDIARY UNDERTAKINGS
The following is a list of JLW Asia Holdings Limited's principal subsidiary undertakings throughout the year
covered by the financial statements:
Particulars Percentage of Shareholding
of issued ---------------------------------
Name of Place of and paid Legal Effective Rights to Principal
Company Incorporation up capital holding holding dividend activities
- ------- ------------- ----------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
JLW Property Singapore 100 "A" 90% 100% No Property
Consultants shares of S$1 consulting,
Pte Ltd. each valuation,
100 "B" -- -- Yes property
shares of S$1 management and
each agency services
300 "C" 100% 100% Yes
shares of S$1
each
400 "D" -- -- Yes
shares of S$1
each
100 "E" -- -- Yes
shares of S$1
each
JLW (Thailand) Thailand 1,000 "A" 100% 100% Yes-99% Real estate
Limited preference agency, property
shares of Baht consulting and
100 each valuation
18,600 "A" 100% 100% Yes-0.5%
ordinary
shares of Baht
100 Each
20,400 "B" -- 100% Yes-0.5%
ordinary
shares of Baht
100 each
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
21. SUBSIDIARY UNDERTAKINGS - CONTINUED
Particulars Percentage of Shareholding
of issued ---------------------------------
Name of Place of and paid Legal Effective Rights to Principal
Company Incorporation up capital holding holding dividend activities
- ------- ------------- ----------- ------- --------- --------- ----------
Jones Lang Hong Kong 100 "A" 90% 100% No Real Estate
Wootton shares of agency, property
Limited HK$1 each consulting and
1 "E" share 100% 100% Yes valuation
of HK$1 each
1 "Y" share 100% 100% Yes
of HK$1 each
</TABLE>
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The Group's accounting policies conform with UK GAAP which differ in
certain material respects from US GAAP. Differences that have a
significant effect on net profit/(loss) and shareholders' funds are set out
below.
GOODWILL ARISING ON CONSOLIDATION
Under UK GAAP, positive or negative goodwill arising on acquisition
of subsidiaries or associated companies are reflected in reserves in the
year of acquisition.
Under US GAAP, an entity is required to record all purchased
identifiable intangible assets prior to allocating any residual difference
between purchase consideration and the fair value of net assets acquired to
goodwill. Negative goodwill is required to be first applied to reduce the
carrying value of long term assets acquired. Any remaining positive or
negative goodwill is amortised over its estimated useful life, generally
not to exceed 40 years. The effect of this difference was not material to
the years presented.
DEFERRED INCOME TAXES
Under UK GAAP, deferred taxation is calculated under the liability
method in respect of the taxation effect arising from all timing
differences that are expected with reasonable probability to crystallize in
the foreseeable future. Tax deferred or accelerated by the effect of
timing differences is accounted for to the extent that it is probable that
a liability or asset will crystallize. Net deferred tax debits are not
carried forward as assets, except to the extent that recoverability is
assured beyond reasonable doubt.
US GAAP generally requires that deferred taxation be provided for all
future taxable temporary differences regardless of when reversal is
anticipated. The recognition of deferred tax assets on future deductible
temporary differences, including tax loss carry forwards, is required if
realization of such future benefits is more likely than not. There is no
material difference between the Group's treatment of deferred income taxes
in accordance with UK GAAP for the years presented.
LONG SERVICE PAYMENTS
Under UK GAAP, the Group accrued a liability for severance payments
payable upon the involuntary termination of eligible employees in
compliance with the local statutory requirements related to its
subsidiaries in Hong Kong. This accrual was made for years ending on or
before 30 June 1998.
Under US GAAP, accrual for involuntary termination benefits may only
be recorded as a liability when management commits the Group to a specific
plan of termination, such plan is communicated to employees and changes to
the plan are unlikely. The tax effect of this difference was not material.
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
CONSOLIDATION OF FINANCIAL STATEMENTS OF INVESTEE COMPANIES
Under UK GAAP, a company is considered a subsidiary if its parent
controls the composition of its board of directors, controls more than half
of the company's voting power or holds more than half of its share capital.
Additionally, an entity is allowed to consolidate the financial statements
of a subsidiary company, where the parent company's ability to control the
subsidiary's assets and operations is by contract.
Under US GAAP, consolidation of the financial statements of a
subsidiary company into the consolidated financial statements of its parent
company is generally required if the parent company has a controlling
financial interest in the subsidiary. Ownership of more than 50% of the
company's voting shares is normally required to evidence control although
in limited circumstances consolidation may be required where the parent
owns less than 50% of the company's voting share in accordance with EITF
Issue No. 97-2. As such, JLW (Thailand) Limited would not be consolidated
under US GAAP. However, as the investee is in a net loss position and the
Company has provided for operating losses in excess of its investment and
has recognised as an expense 100% of such amounts for both UK GAAP and
US GAAP, there is no difference in net income/(loss) or shareholders' funds
in accordance with US GAAP for the periods presented.
PRESENTATION OF COMPREHENSIVE INCOME
Effective January 1, 1998, the Group adopted the provisions of
Statement of Financial Standards ("SFAS") No. 130, "Comprehensive Income".
The standard requires the reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) for each period
presented. Such a presentation is similar to Group Statements of Total
Recognised Gains and Losses required under UK GAAP.
Other comprehensive (loss)/income in accordance with US GAAP would
have been comprised of exchange difference on retranslation of net assets
of (US$15), US$15 and (US$15) for each of the years ended December 31,
1998, 1997 and 1996, respectively, and total comprehensive (loss)/income in
accordance with US GAAP would have been (US$1,374), US$11,153 and US$9,338,
respectively.
EFFECT ON (LOSS)/PROFIT FOR THE YEAR OF SIGNIFICANT DIFFERENCES
BETWEEN UK GAAP AND US GAAP IS AS FOLLOWS:
1998 1997 1996
------- ------- -------
(Loss)/profit for the year in
accordance with UK GAAP. . . . . (458) 10,969 9,223
Adjustments:
Provision for long service
payments . . . . . . . . . . . . (901) 169 130
------- ------- -------
Approximate net (loss)/income
for the year in accordance
with US GAAP . . . . . . . . . . (1,359) 11,138 9,353
======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
EFFECT ON SHAREHOLDERS' FUNDS OF SIGNIFICANT DIFFERENCES BETWEEN
UK GAAP AND US GAAP IS AS FOLLOWS:
1998 1997 1996
------- ------- -------
Shareholders' funds in accordance
with UK GAAP . . . . . . . . . . 8,373 12,731 16,554
Adjustments:
Provision for long service
payments . . . . . . . . . . . . -- 901 732
------- ------- -------
Approximate shareholders' funds
in accordance with US GAAP . . . 8,373 13,632 17,286
======= ======= =======
CONSOLIDATED STATEMENTS OF CASH FLOWS
The consolidated statements of cash flows prepared under UK GAAP
differ in certain presentational respects from the format required under
SFAS No. 95. Under UK GAAP, a reconciliation of operating profit to cash
flows from operating activities is presented in a note, and cash paid for
interest and income taxes are presented separately from cash flows from
operating activities.
Under SFAS No. 95, cash flows from operating activities are based on
net profit, include interest and income taxes, and are presented on the
face of the statement.
Summary consolidated cash flow information as presented in accordance
with SFAS No. 95 is as follows:
1998 1997 1996
------- ------- -------
Cash was provided by/(used in):
Operating activities . . . . . . . 1,739 20,021 7,347
Investing activities . . . . . . . (190) (424) (1,085)
Financing activities . . . . . . . (5,371) (17,309) (8,286)
------- ------- -------
Net (decrease)/increase in cash. . (3,822) 2,288 (2,024)
Exchange movement. . . . . . . . . 93 526 (28)
Cash and cash equivalents at
the beginning of the year. . . . 8,544 5,730 7,782
------- ------- -------
Cash and cash equivalents at
the end of the year. . . . . . . 4,815 8,544 5,730
======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
A reconciliation between the statement of cash flows presented in
accordance with UK GAAP and US GAAP is set out below:
1998 1997 1996
------- ------- -------
OPERATING ACTIVITIES
Net cash inflow from operating
activities (UK GAAP) . . . . . . 3,822 20,694 8,929
Interest received. . . . . . . . . 113 293 192
Interest paid. . . . . . . . . . . (226) (225) (482)
Interest element of finance
lease rentals. . . . . . . . . . (153) (107) (349)
Other US GAAP adjustments. . . . . 48 243 117
Tax paid . . . . . . . . . . . . . (1,865) (877) (1,060)
------- ------- -------
Net cash provided by operating
activities (US GAAP) . . . . . . 1,739 20,021 7,347
======= ======= =======
INVESTING ACTIVITIES
Net cash inflow from capital
expenditure, financial
investment and acquisitions
(UK GAAP). . . . . . . . . . . . (190) (424) (1,085)
------- ------- -------
Net cash used in investment
activities (US GAAP) . . . . . . (190) (424) (1,085)
======= ======= =======
FINANCING ACTIVITIES
Net cash outflow from financing
(UK GAAP). . . . . . . . . . . . (2,017) (2,314) (354)
Dividend paid. . . . . . . . . . . (3,418) (14,807) (7,640)
Increase/(decrease) in
overdraft. . . . . . . . . . . . 64 (188) (292)
------- ------- -------
Net cash used in financing
activities (US GAAP) . . . . . . (5,371) (17,309) (8,286)
======= ======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP
The following balance sheets and profit and loss accounts have been
prepared in accordance with US GAAP and reflect the adjustments detailed in
note 22 to the financial statements and certain other reclassifications.
BALANCE SHEET
1998 1997
------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . 4,815 8,544
Trade receivables, net . . . . . . . . . . . 14,973 9,518
Other receivables. . . . . . . . . . . . . . 9,835 10,657
Prepaid expenses . . . . . . . . . . . . . . 408 203
------- -------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . 30,031 28,922
Property and equipment, at cost, less
accumulated depreciation of $7,224 and
$5,546 at 31 December 1998 and 1997,
respectively . . . . . . . . . . . . . . . . 5,096 4,977
Investments. . . . . . . . . . . . . . . . . . 428 346
------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . 35,555 34,245
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities . . . 3,141 5,742
Taxation . . . . . . . . . . . . . . . . . . . 1,352 2,132
Other liabilities. . . . . . . . . . . . . . . 17,192 8,569
Borrowings . . . . . . . . . . . . . . . . . . 1,960 2,392
------- -------
TOTAL CURRENT LIABILITIES. . . . . . . . . . . 23,645 18,835
Deferred tax liability . . . . . . . . . . . . 198 193
Other long term liabilities. . . . . . . . . . 3,339 1,585
------- -------
TOTAL LIABILITIES. . . . . . . . . . . . . . . 27,182 20,613
------- -------
STOCKHOLDERS' EQUITY
Issued share capital . . . . . . . . . . . . . -- --
Retained earnings. . . . . . . . . . . . . . . 8,373 13,617
Effects of cumulative translation
adjustments. . . . . . . . . . . . . . . . . -- 15
------- -------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . 8,373 13,632
======= =======
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . . . . . . . . . . 35,555 34,245
======= =======
<PAGE>
JLW ASIA HOLDINGS LIMITED
ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
NOTES TO THE GROUP FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(United States dollars in thousands, unless where stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS UNDER US GAAP - CONTINUED
PROFIT AND LOSS ACCOUNTS
1998 1997 1996
------- ------- -------
Operating revenue. . . . . . . . . . 58,912 73,843 59,753
Other income . . . . . . . . . . . . 2,259 1,874 1,856
Interest revenue . . . . . . . . . . 97 293 192
Income from interest in
associated undertakings. . . . . . -- -- 480
------- ------- -------
TOTAL REVENUE. . . . . . . . . . . . 61,268 76,010 62,281
------- ------- -------
OPERATING EXPENSES
Compensation and benefits. . . . . 32,593 35,872 29,411
Operating, administrative and
other. . . . . . . . . . . . . . 18,921 24,135 19,915
Merger-related non-recurring
charges. . . . . . . . . . . . . 7,080 -- --
Depreciation and amortisation. . . 1,899 1,841 1,683
Loss from interest in associated
undertakings . . . . . . . . . . 704 604 --
------- ------- -------
TOTAL OPERATING EXPENSES . . . . . . 61,197 62,452 51,009
======= ======= =======
OPERATING INCOME . . . . . . . . . . 71 13,558 11,272
Interest expense . . . . . . . . . . (226) (225) (426)
------- ------- -------
(LOSS)/EARNINGS BEFORE PROVISION
FOR INCOME TAX . . . . . . . . . . (155) 13,333 10,846
Provision for income taxes . . . . . (1,204) (2,118) (1,368)
Deferred tax expense . . . . . . . . -- (77) (125)
------- ------- -------
NET (LOSS)/INCOME. . . . . . . . . . (1,359) 11,138 9,353
======= ======= =======
<PAGE>
The Board of Directors
JLW Property Consultants Pte Ltd
9 Raffles Place
#39-00 Republic Plaza
Singapore 048619
Dear Sirs
JLW PROPERTY CONSULTANTS PTE LTD & ITS SUBSIDIARY COMPANIES
YEARS ENDED 31 DECEMBER 1998 AND 31 DECEMBER 1997
INDEPENDENT AUDITORS' REPORT
We have audited the consolidated financial statements of JLW Property
Consultants Pte Ltd and its subsidiary companies ("the Company") as of
December 31, 1998 and 1997 and the related profit and loss accounts and
cash flow statements for each of the years in the three-year period ended
December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in Singapore, the Company's local standards, that are
substantially equivalent to auditing standards generally accepted in the
United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the overall financial
statements presentation.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of JLW
Property Consultants Pte Ltd and its subsidiary companies as of December
31, 1997 and 1998, and the results of their operations and their cash flows
for each of the years in the three-years period ended December 31, 1998, in
conformity with generally accepted accounting principles in Singapore.
COOPERS & LYBRAND
Certified Public Accountants
Singapore, 28 January 1999
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
INDEPENDENT AUDITORS' REPORT
TO THE DIRECTORS OF JLW HOLDINGS PTY LIMITED
We have audited the combined balance sheets of the "JLW Australasia group"
as at 31 December 1996, 1997 and 1998, and the related combined profit and
loss accounts, combined statements of movements in reserves, total
recognised gains and losses and cash flows for each of the years in the
three year period ended 31 December 1998 as set out on pages 4 to 35.
These combined financial statements are the responsibility of the group's
management. Our responsibility is to express an opinion on these combined
financial statements.
We conducted our audits in accordance with auditing standards generally
accepted in Australia and in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, these combined financial statements referred to above
present fairly, in all material respects, the combined financial position
of the "JLW Australasia group" as of 31 December 1996, 1997 and 1998, and
the combined results of its operations and its cash flows for each of the
years in the three year period ended 31 December 1998, in conformity with
generally accepted accounting principles in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted
in the United States. Application of accounting principles generally
accepted in the United States would have affected results of operations and
shareholders' equity for each of the years in the year ended 31 December
1998, to the extent summarised in Note 22 and Note 23 to the combined
financial statements.
ERNST & YOUNG
Sydney, Australia, 12 February 1999
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
COMBINED PROFIT AND LOSS ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
FEE INCOME . . . . . . . . . 1 56,093 60,522 60,281
Administrative expenses. . . (48,164) (52,833) (56,485)
Merger-related non-
recurring charges. . . . . (2,660) -- --
------- ------- -------
OPERATING PROFIT . . . . . . 2 5,269 7,689 3,796
Investment income. . . . . . 3 545 1,895 1,688
Interest payable and
similar charges. . . . . . 4 (97) (340) (674)
------- ------- -------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION . . . . . . . . . 5,717 9,244 4,810
Tax on profit on ordinary
activities . . . . . . . . 5 (3,193) (2,933) (1,691)
------- ------- -------
PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION . . . . . . . . . 2,524 6,311 3,119
------- ------- -------
PROFIT FOR THE PERIOD. . . . 2,524 6,311 3,119
DIVIDENDS. . . . . . . . . . (1,317) (5,290) (944)
PROFIT FOR THE YEAR,
ATTRIBUTABLE TO
JLW AUSTRALASIA. . . . . . 1,207 1,021 2,175
======= ======= =======
All activities derive from continuing operations.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
COMBINED STATEMENTS OF MOVEMENT ON RESERVES
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Foreign
Exchange Profit
Translation and Loss
Reserve Account Total
----------- -------- -------
BALANCE AT 1 JANUARY 1996. . . (137) 3,649 3,512
Profit for the year. . . . . . -- 2,175 2,175
Foreign exchange translation
differences. . . . . . . . . 269 -- 269
------- ------- -------
BALANCE AT 31 DECEMBER 1996. . 132 5,824 5,956
Profit for the year. . . . . . -- 1,021 1,021
Foreign exchange translation
differences. . . . . . . . . (1,198) -- (1,198)
------- ------- -------
BALANCE AT 31 DECEMBER 1997. . (1,066) 6,845 5,779
Profit for the year. . . . . . -- 1,207 1,207
Foreign exchange translation
differences. . . . . . . . . (325) -- (325)
------- ------- -------
BALANCE AT 31 DECEMBER 1998. . (1,391) 8,052 6,661
======= ======= =======
Corporate profit and loss account reserves represent the amounts retained
within the corporate entities combined in these accounts.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
COMBINED BALANCE SHEETS
31 DECEMBER 1998 AND 1997
(US$ in thousands, except where stated otherwise)
Note 1998 1997
---- ------- -------
FIXED ASSETS
Tangible assets. . . . . . . . . . . . 6 2,311 2,127
Investments. . . . . . . . . . . . . . 7 538 1,061
------- -------
2,849 3,188
------- -------
CURRENT ASSETS
Debtors. . . . . . . . . . . . . . . . 8 16,816 12,363
Cash at bank and in hand . . . . . . . 2,097 3,719
------- -------
18,913 16,082
CREDITORS: amounts falling
due within one year. . . . . . . . . 9 (11,458) (10,950)
------- -------
NET CURRENT ASSETS . . . . . . . . . . 7,455 5,132
------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES. . . . . . . . . . . . . 10,304 8,320
CREDITORS: amounts falling due
after more than one year . . . . . . 10 (858) (544)
PROVISIONS FOR LIABILITIES
AND CHARGES. . . . . . . . . . . . . 12 (2,704) (1,916)
------- -------
6,742 5,860
======= =======
CAPITAL AND RESERVES
Called up share capital. . . . . . . . 19 81 81
Foreign exchange translation
reserve. . . . . . . . . . . . . . . (1,391) (1,066)
Profit and loss account. . . . . . . . 8,052 6,845
------- -------
Shareholders' Funds - Equity . . . . . 6,742 5,860
======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
COMBINED STATEMENT OF CASH FLOWS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
Note 1998 1997 1996
---- ------- ------- -------
Net cash inflow from
operating activities . . . 13 3,272 10,151 5,980
------- ------- -------
RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE
Dividends received . . . . . 725 1,325 855
Interest received. . . . . . 41 150 94
Interest paid. . . . . . . . (15) (144) (436)
Interest element of
finance lease rental
payments . . . . . . . . . (82) (196) (238)
Ordinary dividends paid. . . (1,317) (5,290) (944)
------- ------- -------
Net cash outflow from
returns on investments
and servicing of finance . (648) (4,155) (669)
------- ------- -------
TAXATION
Tax paid . . . . . . . . . (3,213) (2,017) (926)
------- ------- -------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire
tangible fixed assets. . . (1,393) (1,055) (1,185)
Receipts from sales of
tangible fixed assets. . . 386 426 555
Payments to acquire
investments. . . . . . . . -- (34) (48)
------- ------- -------
Net cash outflow from
capital expenditure and
financial investment . . . (1,007) (663) (678)
------- ------- -------
Net cash inflow/(outflow)
before financing . . . . . (1,596) 3,316 3,707
------- ------- -------
FINANCING
Capital element of
finance lease rental
payments . . . . . . . . . (26) (1,166) (279)
Bank bills drawn/(repaid). . -- (2,383) 2,383
Funds (to)/from deposit. . . -- 1,009 (773)
------- ------- -------
NET CASH INFLOW/(OUTFLOW)
FROM FINANCING . . . . . . (26) (2,540) 1,331
------- ------- -------
INCREASE/(DECREASE)
IN CASH. . . . . . . . . . 14,15 (1,622) 776 5,038
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
COMBINED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1998 1997 1996
------- ------- -------
Profit for the period. . . . . . . 2,524 6,311 3,119
Currency translation differences
on foreign currency net
investments. . . . . . . . . . . (325) (1,198) 269
------- ------- -------
TOTAL RECOGNISED GAINS AND
LOSSES RELATING TO THE YEAR. . . 2,199 5,113 3,388
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
RECONCILIATION OF MOVEMENTS IN COMBINED SHAREHOLDERS' FUNDS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1998 1997 1996
------- ------- -------
Profit for the period. . . . . . . 2,524 6,311 3,119
Dividends. . . . . . . . . . . . . (1,317) (5,290) (944)
------- ------- -------
1,207 1,021 2,175
Other recognised gains and
losses relating to the period. . (325) (1,198) 269
------- ------- -------
NET ADDITION TO SHAREHOLDERS'
FUNDS. . . . . . . . . . . . . . 882 (177) 2,444
OPENING SHAREHOLDERS' FUNDS. . . . 5,860 6,037 3,593
------- ------- -------
CLOSING SHAREHOLDERS' FUNDS. . . . 6,742 5,860 6,037
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The "JLW Australasia Group", through its operational subsidiaries,
provides a full range of advisory, transactional and asset management
services to a wide variety of local and international clients in almost
every industry and service sector for all types of real estate. The main
geographical markets are Australia and New Zealand.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
convention and in accordance with accounting standards applicable in the
United Kingdom.
BASIS OF COMPILATION
These accounts have been prepared in order to provide the directors
of JLW Holdings Pty Limited ("the Directors") with the results for the
three financial years ended 31 December 1998 and financial position of the
combined "JLW Australasia Group" as at 31 December 1997 and 1998.
The "JLW Australasia Group" is defined in note 21. The entities that
have been combined are those entities that are subject to common control.
BASIS OF COMBINATION
The financial information has been compiled from the audited
financial statements of Jones Lang Wootton Holdings Pty Limited
"Australia", the audited financial statements of Jones Lang Wootton
Holdings Pty Limited "New Zealand" and the combined JLW Transact group
"Transact Group". The companies which from part of these three groups are
disclosed in note 21. This information has bene compiled as detailed
below.
The results and financial position of Australia and New Zealand have
been combined. In doing so, no adjustments have been made to eliminate the
share capital of either company. In translating the results and financial
positions from foreign currencies, exchange rate movements have been taken
to the foreign exchange translation reserve assuming the group commenced
operations on 1 January 1995.
The extent to which companies included in the Transact group have
been included varies from year to year. The basis for inclusion is
disclosed in note 21.
JLW Australia Pty Limited, owns 10% of the voting shares of Jones
Lang Wootton Limited and JLW Property Consultants Pte Limited. It also
owns one "E" share in Jones Lang Wootton Limited. Although JLW Australia
Pty Limited own these shares any participation in the profits of either
Jones Lang Wootton Limited and JLW Property Consultants Pte Limited are
totally at the discretion of JLW Asia Holdings Limited Management.
Therefore, these accounts exclude 100% of the results of these
undertakings.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
ACQUISITIONS AND DISPOSALS
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the group's share of
net tangible assets. Where the cost of acquisition exceeds the values
attributable to such net assets, the difference is treated as purchased
goodwill and is written off directly to reserves in the year of
acquisition.
The profit or loss on the disposal of a previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business.
CASH
For the purposes of the statement of cash flows, cash includes cash
on hand and in banks, and money market investments readily convertible to
cash within 2 working days, net of outstanding bank overdraft.
RECOVERABLE AMOUNT
Non-current assets are not revalued to an amount above their
recoverable amount, and where carrying values exceed this recoverable
amount assets are written down. In determining recoverable amount the
expected net cash flows have not been discounted to their present values.
NON-CURRENT ASSETS
COST AND VALUATION
PROPERTY, PLANT AND EQUIPMENT CARRIED AT COST
Where assets have been revalued, the potential effect of the capital
gains tax on disposal has not been taken into account in the termination of
the revalued carrying amount. Where it is expected that a liability for
capital gains tax will arise, this expected amount is disclosed by way of
note.
The economic entity does not have a policy for regular revaluation of
non-current assets.
DEPRECIATION
Depreciation is provided on a straight-line basis on all property,
plant and equipment, at rates calculated to allocate the cost less
estimated residual value at the end of the useful lives of the assets
against revenue over those estimated useful lives.
EMPLOYEE ENTITLEMENTS
Provision is made for annual leave entitlements on the portion of the
cumulative balance due that exceeds the annual entitlement of 20 days.
Long Service Leave is provided based on amounts vested at balance date.
The contributions made to superannuation funds are charged against profits.
The economic entity has no legal obligation to provide benefits to
employees on retirement.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
INCOME RECOGNITION
PROPERTY SALES
Fee income is recognised on exchange of an unconditional contract of
sale.
LEASING
Fee income is recognised on the earlier of signing of lease agreement
or date of occupation.
VALUATION/CONSULTANCY INCOME
Fee income is recognised on issue of the report.
MANAGEMENT FEES
Fee income is recognised based on the date agreed in signed
Management Agreements.
FOREIGN EXCHANGE
Transactions of companies within the group denominated in foreign
currencies are translated at the rates ruling at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the rates ruling at
that date. These translation differences are dealt with in the profit and
loss account.
The balance sheets of foreign entities are translated at the closing
rates of exchange and the profit and loss accounts and cash flow statements
at average rates. The differences arising from the translation of the
opening net investment in subsidiaries at the closing rates and the profit
and loss accounts are average rates are taken direct to reserves.
The functional currency of the group is the local currency,
accordingly, its transactions are measured in the local currency and the
results are translated upon combination according to the above accounting
policy. The reporting currency for the purposes of these financial
statements is the Untied States dollar and the combined financial
statements have been translated using the closing rate of exchange for the
balance sheet and the weighted average rate of exchange for the profit and
loss account. The opening capital and reserves have been translated using
the rate at 1 January 1995. All differences arising as a result of this
translation have been taken directly to the foreign exchange translation
reserve.
TAXATION
Taxation is provided on the taxable profits of the corporate entities
within the group.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
1. ACCOUNTING POLICIES - CONTINUED
DEFERRED TAXATION
Deferred taxation is provided using the liability method on all
timing differences, including those relating to pensions to the extent that
they are expected to reverse in the future without being replaced,
calculated at the rate at which it is anticipated the timing differences
will reverse.
LEASES
Assets held under finance leases are capitalised at their fair value
on the inception of the leases and depreciated over their estimated useful
lives. The finance charges are allocated over the period of the lease in
proportion to the capital element outstanding.
Operating lease rentals are charged to profit and loss in equal
amounts over the lease term.
INVESTMENTS
In the combined accounts, shares in associated undertakings are
accounted for using the equity method of accounting. The combined profit
and loss account includes the group's share of pre-tax profits and losses
and the attributable taxation of the associated undertakings. In the
combined balance sheet, the investment in associated undertakings is shown
as the group's share of the separable net assets.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
2. OPERATING PROFIT
1998 1997 1996
------- ------- -------
Operating profit is stated
after including:
(a) Other operating income:
Profit on sale of tangible
fixed assets . . . . . . . . . . . 147 317 193
Other revenue. . . . . . . . . . . . 1,268 129 104
------- ------- -------
1,415 446 297
======= ======= =======
(b) Staff costs:
Wages and salaries . . . . . . . . . 20,997 21,796 23,290
Superannuation . . . . . . . . . . . 1,478 1,541 1,997
------- ------- -------
22,475 23,337 25,287
======= ======= =======
No. No. No.
Average number of persons
employed:
Technical and administration . . . . 675 636 630
======= ======= =======
(c) Other operating charges:
Other operating charges include
the following:
Auditor's remuneration . . . . . . 136 153 154
Other payments to auditors . . . . 89 118 130
Rentals under operating leases
Other operating leases . . . . . 2,386 2,931 5,271
======= ======= =======
(d) Depreciation and other amounts
written off tangible fixed assets:
Owned assets . . . . . . . . . . . 300 337 361
Assets held under finance leases . 522 1,108 1,032
======= ======= =======
3. INVESTMENT INCOME
1998 1997 1996
------- ------- -------
(Loss)/Income from interests in
associated companies
Transaction Group. . . . . . . . . (36) 420 739
Global Property Solutions. . . . . (185) -- --
Income from related body corporates. 725 1,325 855
Other interest receivable and
similar income . . . . . . . . . . 41 150 94
------- ------- -------
545 1,895 1,688
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
4. INTEREST PAYABLE AND SIMILAR CHARGES
1998 1997 1996
------- ------- -------
Bank loans, overdrafts and
other loans. . . . . . . . . . . . 15 144 436
Finance charges - finance leases . . 82 196 238
------- ------- -------
97 340 674
======= ======= =======
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
The taxation charge is made up of the following:
Based on the profit for the year . . 1998 1997 1996
Corporate Tax - Australia and
New Zealand. . . . . . . . . . . . 3,180 2,818 1,392
Corporation tax (over)/under
provided in previous year. . . . . 9 (20) 124
Associated undertakings. . . . . . . 4 135 175
------- ------- -------
Income tax expense attributable
to operating profit. . . . . . . . 3,193 2,933 1,691
======= ======= =======
The corporation tax charge is high due to the incidence of
expenditure which does not qualify for tax relief, and due to the non
recognition of deferred tax assets. If full provision had been made for
deferred tax for the year, the tax charge would have been
increased/(decreased) by:
Deferred tax liability . . . . . . . 11 331 (81)
Deferred tax asset . . . . . . . . . (619) (69) 21
------- ------- -------
(608) 262 (60)
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
6. TANGIBLE FIXED ASSETS
Office
machinery,
computer
equipment
Motor and
vehicles fixtures Total
-------- ---------- -------
COST
At 1 January 1997. . . . . . . . 1,440 5,718 7,158
Foreign exchange translation
differences. . . . . . . . . . (213) (1,093) (1,306)
Additions. . . . . . . . . . . . 452 603 1,055
Disposals. . . . . . . . . . . . (903) (638) (1,541)
------- ------- -------
At 31 December 1997. . . . . . . 776 4,590 5,366
Foreign exchange translation
differences. . . . . . . . . . (10) (309) (319)
Additions. . . . . . . . . . . . 73 1,320 1,393
Disposals. . . . . . . . . . . . (535) (1,038) (1,573)
------- ------- -------
At 31 December 1998. . . . . . . 304 4,563 4,867
------- ------- -------
ACCUMULATED DEPRECIATION/AMORTISATION
At 1 January 1997. . . . . . . . 864 3,131 3,995
Foreign exchange translation
differences. . . . . . . . . . (103) (666) (769)
Charge for the year. . . . . . . 293 1,152 1,445
Disposals. . . . . . . . . . . . (795) (637) (1,432)
------- ------- -------
At 31 December 1997. . . . . . . 259 2,980 3,239
Foreign exchange translation
differences. . . . . . . . . . 62 (233) (171)
Charge for the year. . . . . . . 94 728 822
Disposals. . . . . . . . . . . . (298) (1,036) (1,334)
------- ------- -------
At 31 December 1998. . . . . . . 117 2,439 2,556
Net book value
At 31 December 1998. . . . . . . 187 2,124 2,311
======= ======= =======
At 31 December 1997. . . . . . . 517 1,610 2,127
======= ======= =======
The net book value of the group's fixed assets includes motor
vehicles amounting to $1,229 (31 December 1997 $1,088) in respect of assets
held under finance leases.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
7. INVESTMENTS
1998 1997
------- -------
Net book value
Associates . . . . . . . . . . . . . . . . . . 456 979
Other investments. . . . . . . . . . . . . . . 82 82
------- -------
538 1,061
======= =======
INVESTMENT IN ASSOCIATES
1998 1997
------- -------
JLW Transact Group . . . . . . . . . . . . . . 456 979
Global Property Solutions Pty Ltd. . . . . . . -- --
------- -------
456 979
======= =======
Share of
post
acquisition
Cost reserves Total
------- ----------- -------
At 1 January 1997. . . . . . . . 320 568 888
Profit for the year. . . . . . . -- 280 280
Foreign exchange translation . . -- (189) (189)
------- ------- -------
At 31 December 1997. . . . . . . 320 659 979
------- ------- -------
Loss for the year. . . . . . . . -- (40) (40)
Profits distributed. . . . . . . -- (432) (432)
Foreign exchange translation . . -- (51) (51)
------- ------- -------
At 31 December 1998. . . . . . . 320 136 456
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
8. DEBTORS
1998 1997
------- -------
Trade debtors. . . . . . . . . . . . . . . . . 14,048 11,023
Other debtors:
Due within one year. . . . . . . . . . . . . 2,525 1,118
Prepayments and accrued income . . . . . . . . 243 222
------- -------
16,816 12,363
======= =======
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1998 1997
------- -------
Obligations under finance leases . . . . . . . 430 770
Corporation taxation . . . . . . . . . . . . . 1,795 1,819
Other creditors and accruals . . . . . . . . . 7,777 7,400
Amounts owed to related entities . . . . . . . 1,456 961
------- -------
11,458 10,950
======= =======
10. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
1998 1997
------- -------
Obligation under finance leases. . . . . . . . 858 544
======= =======
11. BORROWINGS
JLW Australia Pty Limited had a bank overdraft facility available of
$2,500 (1997: $1,951). The bank overdraft in the prior year was subject to
certain covenants being met. This is secured by a registered mortgage
debenture over all assets of the wholly-owned controlled entities in the
JLW Holdings Pty Limited "Australia" economic entity.
12. PROVISIONS FOR LIABILITIES AND CHARGES
1998 1997
------- -------
Employee entitlements. . . . . . . . . . 2,704 1,916
Deferred tax liability cumulative effect
Provided:
======= =======
Not Provided:
Deferred tax asset . . . . . . . . . . . 2,065 871
Deferred tax liability . . . . . . . . . (86) (80)
======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
13. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
1998 1997 1996
------- ------- -------
Operating profit . . . . . . . . . 5,269 7,689 3,796
Depreciation and amortisation
charges. . . . . . . . . . . . . 822 1,445 1,393
Profit on sale of tangible
fixed assets . . . . . . . . . . (147) (317) (193)
Increase/(decrease) in
provisions for liabilities
and charges. . . . . . . . . . . 740 (84) 152
(Increase)/decrease in debtors . . (4,452) 926 2,249
Increase/(decrease) in creditors . 734 1,153 (1,155)
Dividends received from
associates . . . . . . . . . . . 432 -- --
Foreign exchange transaction
differences. . . . . . . . . . . (126) (661) (262)
------- ------- -------
Net cash inflow from
operating activities . . . . . . 3,272 10,151 5,980
======= ======= =======
14. ANALYSIS OF NET FUNDS
Cash
1997 Flow 1996
------- ------- -------
Cash in hand and at bank . . . . . 3,719 776 2,943
------- ------- -------
3,719 776 2,943
Bank bills . . . . . . . . . . . . -- 2,383 (2,383)
Finance leases . . . . . . . . . . (1,314) 1,166 (2,480)
Short term deposits. . . . . . . . -- (1,009) 1,009
------- ------- -------
Total. . . . . . . . . . . . . . . 2,405 3,316 (911)
======= ======= =======
Cash
1998 Flow 1997
------- ------- -------
Cash in hand and at bank . . . . . 2,097 (1,622) 3,719
------- ------- -------
Finance lease. . . . . . . . . . . (1,288) 26 (1,314)
------- ------- -------
Total. . . . . . . . . . . . . . . 809 (1,596) 2,405
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
15. RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
1998 1997 1996
------- ------- -------
Increase/(decrease) in cash in
the year . . . . . . . . . . . . (1,622) 776 5,038
Cash (outflow)/inflow from
decrease in debt and lease
financing. . . . . . . . . . . . 26 2,540 (1,331)
------- ------- -------
Change in net funds resulting
from cash flows. . . . . . . . . (1,596) 3,316 3,707
------- ------- -------
Movement in net funds
in the year. . . . . . . . . . . (1,596) 3,316 3,707
Net funds at start of year . . . . 2,405 (911) (4,618)
------- ------- -------
Net funds at end of year . . . . . 809 2,405 (911)
======= ======= =======
16. SUPERANNUATION COMMITMENTS
All employees in Australia are entitled after serving qualifying
periods to benefits on retirement, disability or death from the JLW Staff
Superannuation Fund or the JLW Executive Superannuation Fund or other
complying superannuation funds. The Superannuation plans are accumulation
funds and provide benefits based on contributions and interest. Employees
may contribute to plans. These plans do not operate in New Zealand.
17. OPERATING LEASE COMMITMENTS
At 31 December 1998 and 1997, the group was committed to making the
following payments during the next year in respect of operating leases:
1998 1997
Buildings Buildings
--------- ---------
Lease which expire:
Within one year. . . . . . . . . . . . . . . . 33 --
Within two to five years . . . . . . . . . . . 3,777 15,759
After five years . . . . . . . . . . . . . . . 9,008 --
------- -------
12,818 15,759
======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
18. OBLIGATIONS UNDER FINANCE LEASES
1998 1997
------- -------
The minimum lease payments to which
the group was committed at 31 December
were as follows:
Due within one year. . . . . . . . . . . . . . 513 856
Due within two to five years . . . . . . . . . 962 591
------- -------
1,475 1,447
Less: interest allocated to future periods. . 187 133
------- -------
1,288 1,314
======= =======
Due within one year. . . . . . . . . . . . . . 430 770
Due after more than one year . . . . . . . . . 858 544
------- -------
1,288 1,314
======= =======
19. CALLED UP SHARE CAPITAL
1998 1997
------- -------
AUTHORISED CAPITAL
JLW Holdings Pty Ltd (Australia) . . . . . . . 777 777
Jones Lang Wootton Holdings Pty Ltd
(New Zealand). . . . . . . . . . . . . . . . 3 3
------- -------
780 780
======= =======
ISSUED CAPITAL
JLW Holdings Pty Ltd (Australia) . . . . . . . 78 78
Jones Lang Wootton Holdings Pty Ltd
(New Zealand). . . . . . . . . . . . . . . . 3 3
------- -------
81 81
======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
20. RELATED PARTY TRANSACTIONS
JLW HOLDINGS PTY LIMITED
The following related party transactions occurred during the
financial year:
31 December
-----------------------------
1998 1997 1996
------- ------- -------
1) Related party dividends and income
i) JLW Australia Pty Limited
received from JLW (Hong Kong) Ltd:
- dividend . . . . . . . . . 133 138 243
- income . . . . . . . . . . 38 -- --
------- ------- -------
ii) JLW Australia Pty Limited
received from JLW Property
Construction (Singapore)
Pte Limited:
- dividend . . . . . . . . . 469 999 427
------- ------- -------
iii) JLW Australia Pty Limited
received from JLW Transact
Pty Limited:
- dividend . . . . . . . . . -- 188 185
------- ------- -------
iv) JLW Australia Pty Limited
received from JLW
International
- income . . . . . . . . . . 694 -- --
------- ------- -------
2) Interest paid on subordinated loans was at commercial rates of
interest and amounted to:
$000's
------
1998 6
1997 99
1996 168
These loans were subordinated in favor of the National Australia
Bank's financial accommodation only. These loans were repaid during 1998.
JONES LANG WOOTTON HOLDINGS LIMITED (NEW ZEALAND)
No related party debts have been written off or forgiven during the
year.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
21. ADDITIONAL INFORMATION ON COMPANIES WITHIN THE JLW AUSTRALASIA GROUP
(i) JLW Holdings Pty Limited ("Australia") and its controlled
entities
Country of
incorporation/ Proportion
registration of Owner-
Company and operation Activity ship held
------- -------------- -------- ----------
JLW Holdings Pty Limited Australia Holding Company 100%
JLW Australia Pty Limited Australia Holding Company 100%
JLW (NSW) Pty Limited Australia Property, sales, 100%
leasing and
management
company
JLW (ACT) Pty Limited Australia Property, sales, 100%
leasing and
management
company
JLW (VIC) Pty Limited Australia Property, sales, 100%
leasing and
management
company
JLW (QLD) Pty Limited Australia Property, sales, 100%
leasing and
management
company
JLW (SA) Pty Limited Australia Property, sales, 100%
leasing and
management
company
JLW (WA) Pty Limited Australia Property, sales, 100%
leasing and
management
company
JLW Strata Management
Pty Limited Australia Property 100%
management
services
JLW Management Services
Pty Limited Australia Property 100%
management
services
JLW Property Fund Advisors
Pty Limited Australia Property 100%
licensing
company
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
21. ADDITIONAL INFORMATION ON COMPANIES WITHIN THE JLW AUSTRALASIA GROUP
- - CONTINUED
(i) JLW Holdings Pty Limited ("Australia") and its controlled
entities - Continued
Country of
incorporation/ Proportion
registration of Owner-
Company and operation Activity ship held
------- -------------- -------- ----------
JLW Corporate Property Australia Dormant 100%
(VIC) Pty Limited Company
JLW Property Financial Australia Property 100%
Services Ltd. licensing
company
JLW Advisory Services Australia Property 100%
Pty Limited advisory
services
JLW Corporate Facilities Australia Dormant 100%
Management Pty Limited company
JLW Superannuation Australia Superannuation 100%
Pty Limited fund trustee
JLW Nominees Pty Limited Australia Dormant 100%
company
JLW Advisory Corporate Australia Property 100%
Property Pty Limited advisory
services
JLW Executive Superannua- Australia Superannuation 100%
tion Pty Limited fund trustee
JLW (TAS) Pty Limited Australia Dormant 100%
company
JLW Fund Management Australia Dormant 100%
Pty Limited company
Caylott Pty Limited Australia Dormant 100%
company
Jones Lang Wootton Fund Australia Dormant 100%
Management Pty Limited company
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
21. ADDITIONAL INFORMATION ON COMPANIES WITHIN THE JLW AUSTRALASIA GROUP
- - CONTINUED
(ii) Jones Lang Wootton Holdings Pty Limited ("New Zealand") and its
controlled entities.
Country of
incorporation/ Proportion
registration of Owner-
Company and operation Activity ship held
------- -------------- -------- ----------
Jones Lang Wootton New Zealand Property, sales, 100%
Holdings Limited leasing and
management
company
JLW Advisory Limited New Zealand Property advisory 100%
services
Jones Lang Wootton New Zealand Property, sales, 100%
Limited leasing and
management
company
(iii) Combined JLW "Transact Group"
Country of
incorporation/ Proportion
registration of Owner-
Company and operation Activity ship held
------- -------------- -------- ----------
JLW Transact Pty Ltd Australia Hotel sales, Note 1
Australia leasing and
management
JLW Transact Ltd New Zealand Hotel sales Note 1
New Zealand leasing and
management
JLW Transact Ltd Hong Kong Hotel sales Note 1
Hong Kong leasing and
management
JLW Administration Australia Hotel sales Note 1
Pty Ltd leasing and
management
Transact Hotel & Tourism Singapore Hotel sales Note 1
Property (Singapore) leasing and
Pte Limited management
JLW Transact Pte Limited Indonesia Hotel sales, Note 1
Indonesia leasing and
management
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
21. ADDITIONAL INFORMATION ON COMPANIES WITHIN THE JLW AUSTRALASIA GROUP
- - CONTINUED
(iii) Combined JLW "Transact Group" - Continued
NOTE 1
------
JLW Administration Pty Limited and JLW Transact (New Zealand) are
included as subsidiaries in the 1995 Australasia accounts. From 1st
January 1996, the combined JLW "Transact Group" is included in the
Australasia accounts as an equity investment on the basis of percentage
ownership (1996 - 37.75%; 1998 - 35%).
(iv) Other Associates
Country of
incorporation/ Proportion
registration of Owner-
Company and operation Activity ship held
------- -------------- -------- ----------
Global Property Solutions Australia Property 50%
Pty Limited management
company
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
The combined financial statements are prepared in accordance with
UK GAAP which differs in certain significant respects from US GAAP. The
principal differences that affect the combined profit for the year and
Shareholders' equity are explained below and the approximate effect is
shown below the explanations.
GOODWILL
Under UK GAAP, on the acquisition of a business, including an
interest in an associated undertaking, fair values are attributed to the
group's share of net tangible assets. Where the cost of acquisition
exceeds the values attributable to such net assets, the difference is
treated as purchased goodwill and is written off directly to reserves in
the year of acquisition. Under US GAAP, goodwill may not be written-off to
retain profits and must be capitalised and amortised over its expected
useful life but not in excess of 40 years. Accordingly, the adjustments to
reflect this differing treatment in these financial statements is to
amortise goodwill over a period of ten years, the expected useful life.
DEFERRED TAXATION
Under UK GAAP, taxation is provided for at the anticipated tax rates
on timing differences arising from the inclusion of income and expenditure
in tax computations in periods different from those in which they are
included in financial statements to the extent that it is probable that a
liability or asset will crystallise in the future. Under US GAAP, deferred
taxation is provided for on all temporary differences under the liability
method subject to a valuation allowance on deferred tax assets where
applicable.
EMPLOYEE ENTITLEMENTS
Under UK GAAP, provision is made for annual leave entitlements on the
portion of the cumulative balance due that exceeds the annual entitlement
of 20 days. Long Service Leave is provided based on amounts payable at
balance date. Under US GAAP, provision is made for long service leave and
annual leave estimated to be payable to employees on the basis of statutory
and contractual requirements.
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
COMBINED INCOME STATEMENTS
1998 1997 1996
------- ------- -------
Profit for the period attributable
to JLW Australasia as reported
in accordance with UK GAAP . . . 1,207 1,021 2,175
Adjustments:
Deferred income tax. . . . . . . . 608 14 130
Goodwill . . . . . . . . . . . . . (47) (55) (58)
Employee entitlements. . . . . . . (694) (196) (161)
------- ------- -------
Subtotal . . . . . . . . . . . . . 1,074 784 2,086
Add dividends paid . . . . . . . . 1,317 5,290 944
------- ------- -------
Profit for the period attributable
to JLW Australasia as reported
in accordance with US GAAP . . . 2,391 6,074 3,030
======= ======= =======
COMBINED BALANCE SHEETS
1998 1997 1996
------- ------- -------
Shareholders funds as reported
in accordance with UK GAAP . . . 6,742 5,860 6,037
Deferred income tax. . . . . . . . 2,042 1,541 1,866
Goodwill . . . . . . . . . . . . . -- 49 119
Employee entitlements. . . . . . . (2,406) (1,840) (2,033)
------- ------- -------
Shareholders' funds as reported
with US GAAP . . . . . . . . . . 6,378 5,610 5,989
======= ======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
COMBINED STATEMENTS OF CASH FLOWS
The combined statements of cash flows prepared under UK GAAP differ
in certain presentational respects from the format required under Statement
of Cash Flows ("SFAS") 95. Under UK GAAP, a reconciliation of operating
profit to cash flows from operating activities is presented in a note, and
cash paid for interest and income taxes are presented separately from cash
flows from operating activities.
Under SFAS 95, cash flows from operating activities are based on net
profit, include interest and income taxes, and are presented on the face of
the statement.
Summary consolidated cash flow information as presented in accordance
with SFAS 95:
1998 1997 1996
------- ------- -------
Cash was provided by/(used in):
Operating activities . . . . . . . 728 9,269 5,329
Investing activities . . . . . . . (1,007) (663) (678)
Financing activities . . . . . . . (1,343) (7,830) (1,708)
------- ------- -------
Net increase/(decrease) in cash. . (1,622) 776 2,943
Cash at the beginning of the
period . . . . . . . . . . . . . 3,719 2,943 --
------- ------- -------
Cash at the end of the period. . . 2,097 3,719 2,943
======= ======= =======
A reconciliation between the consolidated statement of cash flows
presented in accordance with UK GAAP and US GAAP is set out below:
1998 1997 1996
------- ------- -------
OPERATING ACTIVITIES
Net cash inflow from operating
activities (UK GAAP) . . . . . . 3,272 10,151 5,980
Dividends received . . . . . . . . 725 1,325 855
Interest received. . . . . . . . . 41 150 94
Interest paid. . . . . . . . . . . (15) (144) (436)
Interest element of finance
lease rentals. . . . . . . . . . (82) (196) (238)
Tax paid . . . . . . . . . . . . . (3,213) (2,017) (926)
------- ------- -------
Net cash provided by
operating activities . . . . . . 728 9,269 5,329
------- ------- -------
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
22. SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP - CONTINUED
1998 1997 1996
------- ------- -------
FINANCING ACTIVITIES
Net cash inflow/(outflow)
from operating activities
(UK GAAP). . . . . . . . . . . . (26) (2,540) 1,331
Bank overdraft utilised/unpaid . . -- -- (2,095)
Dividends paid . . . . . . . . . . (1,317) (5,290) (944)
------- ------- -------
Net cash provided by
financing activities . . . . . . (1,343) (7,830) (1,708)
======= ======= =======
No difference exist between UK GAAP and US GAAP for investing
activities.
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP
The following balance sheet and profit and loss account have been
prepared in accordance with US GAAP and reflect the adjustments detailed in
note 22 to the accounts.
BALANCE SHEET
1998 1997
------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . 2,097 3,719
Trade receivables, net . . . . . . . . . . . 14,048 11,022
Other receivables. . . . . . . . . . . . . . 2,525 1,121
Prepaid expenses . . . . . . . . . . . . . . 243 221
Deferred tax asset . . . . . . . . . . . . . 97 56
------- -------
TOTAL CURRENT ASSETS`. . . . . . . . . . . . . 19,010 16,139
Property and equipment (net) . . . . . . . . . 2,311 2,127
Intangibles resulting from business
acquisitions . . . . . . . . . . . . . . . . -- 49
Investments. . . . . . . . . . . . . . . . . . 601 1,128
Deferred tax asset . . . . . . . . . . . . . . 1,968 1,497
------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . 23,890 20,940
======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP - CONTINUED
BALANCE SHEET
1998 1997
------- -------
LIABILITIES AND SHAREHOLDERS' FUNDS
CURRENT LIABILITIES
Accounts payable and accrued liabilities . . . 9,663 9,131
Taxation . . . . . . . . . . . . . . . . . . . 1,795 1,819
Other liabilities. . . . . . . . . . . . . . . 4,460 3,070
------- -------
TOTAL CURRENT LIABILITIES. . . . . . . . . . . 15,918 14,020
Deferred tax liability . . . . . . . . . . . . 86 80
Other long term liabilities. . . . . . . . . . 1,508 1,230
------- -------
TOTAL LIABILITIES. . . . . . . . . . . . . . . 17,512 15,330
MINORITY INTERESTS . . . . . . . . . . . . . . -- --
SHAREHOLDERS' FUNDS
Issued capital . . . . . . . . . . . . . . . . 81 81
Retained earnings. . . . . . . . . . . . . . . 7,612 6,538
Effects of cumulative translation
adjustments. . . . . . . . . . . . . . . . . (1,315) (1,009)
------- -------
TOTAL SHAREHOLDERS' FUNDS. . . . . . . . . . . 6,378 5,610
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' FUNDS. . . . . . . . . . . . . . 23,890 20,940
======= =======
<PAGE>
COMBINED FINANCIAL STATEMENTS OF THE
JLW AUSTRALASIA GROUP
NOTES TO THE ACCOUNTS - CONTINUED
YEARS ENDED 31 DECEMBER 1998, 1997 AND 1996
(US$ in thousands, except where stated otherwise)
23. BALANCE SHEET AND PROFIT AND LOSS ACCOUNT UNDER US GAAP - CONTINUED
PROFIT AND LOSS ACCOUNT
1998 1997 1996
------- ------- -------
REVENUE
Operating revenue. . . . . . . . 56,093 60,522 60,281
Interest revenue . . . . . . . . 41 150 94
Other income . . . . . . . . . . 2,136 1,777 1,229
------- ------- -------
TOTAL REVENUE. . . . . . . . . . . 58,270 62,449 61,604
OPERATING EXPENSES
Compensation and benefits. . . . 22,475 23,337 25,287
Operating, administrative
and other. . . . . . . . . . . 27,170 28,440 29,648
Merger related non-recurring
costs. . . . . . . . . . . . . 2,660 -- --
Depreciation and amortisation. . 892 1,340 1,405
------- ------- -------
TOTAL OPERATING EXPENSES . . . . . 53,197 53,117 56,340
------- ------- -------
OPERATING INCOME . . . . . . . . . 5,073 9,332 5,264
Interest expense . . . . . . . . . (97) (340) (674)
------- ------- -------
EARNINGS BEFORE PROVISION
FOR INCOME TAX . . . . . . . . . 4,976 8,992 4,590
Provision for income taxes . . . . (2,585) (2,918) (1,560)
------- ------- -------
2,391 6,074 3,030
======= ======= =======
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS - CONTINUED
(b) Pro Forma Financial Information:
The following pro forma financial information gives effect to
the merger with JLW, the Integration of the JLW entities, and the
acquisition of Compass as submitted herewith:
1. Unaudited Pro Forma Combined Balance Sheet for Jones Lang
LaSalle as of December 31, 1998 and notes thereto.
2. Unaudited Pro Forma Combined Statements of Earnings for Jones
Lang LaSalle for the year ended December 31, 1998 and notes thereto.
3. Unaudited Pro Forma Combined Balance Sheet for the JLW
companies as of December 31, 1998 and notes thereto.
4. Unaudited Pro Forma Combined Statement of Earnings for the JLW
companies for the year ended December 31, 1998 and notes thereto.
The pro forma adjustments are based upon available information
and certain assumptions that management believes are reasonable under the
circumstances. The pro forma consolidated financial statements are not
necessarily indicative of what the actual financial position and results of
operations would have been as of December 31, 1998 and for the year ended
December 31, 1998 had LaSalle completed the Compass acquisition and the JLW
merger as of the dates indicated nor does it purport to represent the
future financial position or results of operations of LaSalle.
JONES LANG LASALLE
The following Unaudited Pro Forma Consolidated Financial Statements
are derived from the historical financial statements of LaSalle, Compass
and the JLW entities. The Unaudited Pro Forma Jones Lang LaSalle
Consolidated Statement of Earnings for the year ended December 31, 1998
gives effect to the acquisition of Compass and the merger with JLW, after
giving effect to the Integration, as if they had occurred on January 1,
1998. The Unaudited Pro Forma Jones Lang LaSalle Consolidated Balance
Sheet as of December 31, 1998 combines the historical consolidated and
combined statements of LaSalle and JLW as if the merger with JLW, after
giving effect to the Integration, had occurred on that date after giving
effect to pro forma adjustments described in the accompanying notes. The
Unaudited Pro Forma Consolidated Financial Statements should be read in
conjunction with the historical financial statements of LaSalle and the JLW
entities and the notes thereto.
<PAGE>
<TABLE>
The anticipated accounting treatment for the JLW Merger is guided by both APB Opinion NO. 16 and APB Opinion
NO. 25 as illustrated in the table below (in thousands, except share data).
<CAPTION>
TOTAL SHARE CURRENT NEW JLW
SHARE TYPE CONSIDERATION JLW OWNERS OWNERS ESOT
- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NUMBER OF SHARES--
Non-restricted (1) . . . . . . . . . . $ 7,657,211 5,961,761 A 649,341 B 1,046,109 B
Shares subject to forfeiture or
vesting (2):
Issued to JLW Asia Shareholders (3). 1,187,479 891,706 C 295,773 C --
All others . . . . . . . . . . . . . 3,417,743 2,613,892 B 278,519 B 525,332 B
Adjustment (4) . . . . . . . . . . . . 1,241,683 1,031,908 A 100,880 C 108,895 C
Indemnification (5). . . . . . . . . . 750,000 584,716 A 73,296 C 91,988 C
----------- ---------- ---------- ----------
Total shares (6) . . . . . . . . 14,254,116 11,083,983 1,397,809 1,772,324
Pro forma net worth adjustment (7) . . (149,565) (126,204)A (20,475)C (2,886)C
----------- ---------- ---------- ----------
Pro forma total shares . . . . . 14,104,551 10,957,779 1,377,334 C 1,769,438
=========== ========== ========== ==========
Cash share equivalent. . . . . . 111,084 96,949 A 14,135 B --
=========== ========== ========== ==========
ACCOUNTING VALUE-
Non-restricted (8) . . . . . . . . . . $ 270,874 210,897 A 22,971 B 37,006 B
Shares subject to forfeiture or
vesting (2):
Issued to JLW Asia Shareholders (3). 42,007 31,544 C 10,463 C --
All others . . . . . . . . . . . . . 120,903 92,466 B 9,853 B 18,584 B
Adjustments (8). . . . . . . . . . . . 43,925 36,504 A 3,569 C 3,852 C
Indemnification (8). . . . . . . . . . 26,531 20,684 A 2,593 C 3,254 C
----------- ---------- ---------- ----------
Total shares (6) . . . . . . . . 504,240 392,095 49,449 62,696
Pro forma net worth adjustment (7) . . (5,291) (4,464)A (724)C (103)C
Difference as a result of
purchase accounting (9). . . . . . . (116,589) (116,589)A -- --
----------- ---------- ---------- ----------
Pro forma total shares . . . . . $ 382,360 271,042 48,725 62,593
=========== ========== ========== ==========
Cash shares. . . . . . . . . . . . . . $ 3,466 3,025 A 441 B --
Cash payment to JLW Australia. . . . . 2,700 2,700 A -- --
----------- ---------- ---------- ----------
Cash consideration . . . . . . . $ 6,166 5,725 441 --
=========== ========== ========== ==========
Total consideration. . . . . . . $ 388,526 276,767 49,166 62,593
=========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Compensation Expense
Recognition Period
-------------------------------
Shares Shares Cash Total Closing 1999 2000
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACCOUNTING TREATMENT
APB Opinion No. 16-
Business Combination
(A) . . . . . . . 7,452,181 53% $147,032 5,725 152,757
APB Opinion No. 25-
Stock Issued to
Employees:
FIXED PLAN (B)
ISSUE DATE:
Closing. . . . . 4,366,294 154,458 441 154,899 36,653 59,586 58,660
December 31,
1999 . . . . . 215,375 7,619 -- 7,619 -- 4,036 3,583
December 31,
2000 . . . . . 531,524 18,803 -- 18,803 -- -- 18,803
---------- ------- ------- ------- ------- ------- -------
5,113,193 36% 180,880 441 181,321 36,653 63,622 81,046
VARIABLE PLAN (C)
ISSUE DATE:
Closing. . . . . 1,432,180 50,663 -- 50,663 8,337 21,323 21,003
December 31,
1999. . . . . . 28,154 996 -- 996 -- 996 --
December 31,
2000 . . . . . 78,843 2,789 -- 2,789 -- -- 2,789
---------- ------- ------- ------- ------- ------- -------
1,539,177 11% 54,448 -- 54,448 8,337 22,319 23,792
---------- ------- ------- ------- ------- ------- -------
14,104,551 382,360 6,166 388,526 44,990 85,941 104,838
========== ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
NOTE: As noted in the following unaudited pro forma consolidated
statement of earnings for the year ended December 31, 1998, Jones Lang
LaSalle anticipates that it will incur compensation expense of $130.9 which
represents the sum of the compensation expense recognized at Closing ($45.0
million) and during 1999 ($85.9 million) reflected above.
- --------------
(A) Accounted for using purchase accounting under APB Opinion No. 16.
(B) Accounted for using fixed plan compensation accounting under APB
Opinion No. 25.
(C) Accounted for using variable plan compensation accounting under APB
Opinion No. 25.
(1) Represents shares that are not subject to indemnification, forfeiture
or vesting provisions or to closing net worth requirements.
(2) Includes the Forfeiture Shares and ESOT Shares which are subject to
vesting.
(3) Includes Forfeiture Shares to be issued to Current JLW Owners and New
JLW Owners of the JLW Asia companies which will be deposited with the
indemnity escrow agent at closing and are thereby subject to
indemnification provisions.
(4) Includes Adjustment Shares.
(5) Includes Indemnification Shares.
(6) Assumes the closing net worth requirements are met.
(7) Represents Adjustment Shares to be returned to Jones Lang LaSalle
based on the net worth adjustment calculated on a pro forma basis as of
December 31, 1998.
(8) Represents the value of these shares at $35.375 which was the closing
price on March 10, 1999.
(9) Represents the difference between the value of the shares reflected
in the table above compared to the value used under APB Opinion No. 16
which represents the average price of Jones Lang LaSalle (formerly LaSalle)
common stock of $24.66 per 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.
<PAGE>
All Consideration issued to Current JLW Owners, excluding Forfeiture
Shares, in connection with the JLW merger were accounted for using the
purchase method of accounting in accordance with APB Opinion No. 16. The
purchase price was calculated based on (i) the aggregate of the fair market
value of such shares, valued at the five-day average closing stock price
surrounding the date the terms of the merger were substantially complete,
discounted at a rate of 20% for transferability restrictions, (ii) the cash
consideration paid, and (iii) capitalizable transaction costs. Such
aggregate value of consideration was compared to the fair value of the
identifiable net assets acquired and the difference was allocated to
goodwill and is being amortized on a straight-line basis over an estimated
useful life of 40 years.
The Forfeiture Shares issued to Current JLW Owners, the ESOT Shares
and the cash consideration, Non-restricted Shares, Indemnification Shares,
Adjustment Shares and Forfeiture Shares issued to the New JLW Owners in
connection with the merger will be accounted for as compensation expense in
accordance with APB Opinion No. 25 at the date of issuance to New JLW
Owners or the date that ESOT Shares are specifically allocated to
employees. Non-restricted Shares and Indemnification Shares not subject to
vesting restrictions that were issued to New JLW Owners or allocated from
the ESOT were treated as compensation expense at closing or as allocated in
the ESOT. Compensation expense related to Forfeiture Shares or to Non-
restricted Shares and Indemnification Shares which are subject to vesting
provisions were recorded as deferred compensation at the time of issuance
to New JLW Owners or allocation from the ESOT and are being amortized on a
straight-line basis over the forfeiture or vesting period.
For purposes of the pro forma financial statements included herein,
all compensation expense has been calculated based on the closing price of
$35.375 per share of Jones Lang LaSalle common stock on March 10, 1999.
For purposes of the pro forma financial statements included herein,
all shares anticipated to be allocated from the ESOT during 1999 are
assumed to have been allocated during 1998 based on the same timing of
allocation and based on a closing price of $35.375 per share of Jones Lang
LaSalle common stock. Accordingly, only those shares assumed to have been
allocated from the ESOT through December 31, 1999 and the related
amortization of compensation expense under the forfeiture or vesting
provisions have been included in the pro forma financial statements. The
actual amount of compensation expense will vary depending on the price per
share of Jones Lang LaSalle common stock at each allocation date.
For purposes of the pro forma financial statements included herein,
the following principal assumptions have been made:
. No claims exist which may be made against the Indemnification
Shares. Accordingly, Indemnification Shares are accounted for in the
purchase price or as compensation expense as of their issuance or
allocation date.
. Based on the JLW companies' balance sheets for each reporting
group at December 31, 1998, included elsewhere herein, the Adjustment
Shares to be returned to LaSalle Partners pursuant to the net worth
adjustments total approximately 149,565 shares with the remaining 1,092,118
Adjustment Shares being distributed to the Current JLW Owners, New JLW
Owners and the ESOT in accordance with their original allocation. These
shares have been included in the calculation of the purchase price and
compensation expense in the attached pro forma financial statements.
<PAGE>
. Under the forfeiture restrictions, Forfeiture Shares and ESOT
Shares subject to vesting deemed to be related to a "Bad Leaver" will be
reallocated among the remaining former JLW Shareholders or from the ESOT.
Under APB Opinion No. 25, the compensation expense associated with
reallocated shares will need to be remeasured based on the closing stock
price on the date of reallocation. As the forfeiture status will not be
determined and the related shares will be not be reallocated until December
31, 2000, the Forfeiture Shares and ESOT Shares subject to vesting related
to all employees that leave Jones Lang LaSalle will continue to be
amortized over their original amortization schedule through December 31,
2000 and compensation expense will be adjusted at that date. The pro forma
financial statements do not assume any reallocation of shares or changes in
stock price through December 31, 2000.
. The Indemnification Shares and Adjustment Shares which are
deposited with the Indemnity Escrow Agent at closing on behalf of the New
JLW Owners and the ESOT reflect shares of Jones Lang LaSalle common stock
which are contingently returnable and accounted for as a variable stock
aware plan. Accordingly, the compensation expense associated with those
shares will be adjusted quarterly to reflect changes in the price per share
of Jones Lang LaSalle common stock until such shares are released from the
escrow. The value of the 750,000 Indemnification Shares is anticipated to
be adjusted quarterly from the closing date through the 450th day following
closing. The 1,241,683 Adjustment Shares are subject to the closing
balance sheet net worth requirement and will be adjusted quarterly through
the date the closing balance sheet is agreed upon by the parties. For
purposes of the pro forma financial statements included herein, the closing
price per share of Jones Lang LaSalle common stock on March 10, 1999 has
been used and held constant; therefore, no adjustments to compensation
expense have been assumed.
. The Forfeiture Shares of the JLW Asia shareholders are being
deposited with the Indemnity Escrow Agent in lieu of the Forfeiture Shares
Escrow Agent and will also be contingently returnable, and accordingly,
accounted for as a variable award stock plan. The compensation expense
related to the Forfeiture Shares will continue to be amortized through
December 31, 2000 for accounting purposes, pending any claim against those
shares, and the deferred compensation balance will be adjusted on a
quarterly basis to reflect changes in the price per share of Jones Lang
LaSalle common stock. The pro forma financial statements included herein
assume that no claims will be made against these Forfeiture Shares and that
the stock price throughout the pro forma period is equal to the closing
stock price on March 10, 1999. Accordingly, no adjustments have been made
for changes in stock price for the pro forma period.
The total shares subject to variable plan accounting aggregated
1,539,177 or approximately 11% of the total shares issued and approximately
23% of the total shares subject to compensation accounting.
<PAGE>
On a pro forma basis for Jones Lang LaSalle, the basic and diluted
loss per common share was $(4.47) for the year ended December 31, 1998. No
Forfeiture Shares, Indemnification Shares, unallocated ESOT Shares or
options on Jones Lang LaSalle common stock issuable in connection with the
acquisition of Compass were included in the pro forma Jones Lang LaSalle
diluted weighted average shares outstanding because, due to the operating
loss, inclusion of such common stock equivalents would be anti-dilutive.
In accordance with the accounting policies discussed in the following
paragraphs, merger-related nonrecurring compensation expense totaling
$130.9 million has been reflected in the Pro Forma Jones Lang LaSalle
Consolidated Statement of Earnings for the year ended December 31, 1998.
In addition, the results of the JLW companies for the year ended December
31, 1998 include approximately $22.6 million in merger related nonrecurring
costs related to the merger with LaSalle and their Integration. Excluding
these merger related nonrecurring costs, pro forma diluted earnings per
share of Jones Lang LaSalle would have been $1.45 for the year ended
December 31, 1998, based on diluted weighted average shares outstanding
giving effect to (i) outstanding shares of Jones Lang LaSalle common stock;
(ii) dilutive options outstanding issued to Jones Lang LaSalle employees,
including options issued to former employees of Compass; and (iii)
14,254,116 shares of LaSalle Partners common stock issued in connection
with the JLW merger as adjusted for the 149,565 Adjustment Shares
anticipated to be returned to Jones Lang LaSalle based on the closing net
worth at December 31, 1998.
On a pro forma basis for LaSalle Partners and Compass combined,
diluted earnings per common share was $.82 for the year ended December 31,
1998, compared to LaSalle's results of $1.25. The regional infrastructures
for LaSalle's former Management Services segment and the Compass businesses
were highly duplicative. Costs savings, the extent of which will be
dependent on the successful integration of the two businesses, have not
been reflected in the following pro forma statements of earnings.
<PAGE>
<TABLE>
JONES LANG LASALLE
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(in thousands)
<CAPTION>
JLW Pro Forma
---------------------------- Jones Lang
Historical Pro Forma Acquisition LaSalle
LaSalle (1) Combined (2) Adjustments Combined
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . $ 16,941 5,820 (5,725)(3) 16,595
(441)(4)
Trade receivables, net . . . . . . . . . . 116,965 114,233 231,198
Due from affiliate . . . . . . . . . . . . -- -- --
Notes receivable and advances to
real estate ventures . . . . . . . . . . 17,042 -- 17,042
Other receivables. . . . . . . . . . . . . 3,385 31,248 34,633
Prepaid expenses . . . . . . . . . . . . . 2,185 6,633 8,818
Other assets . . . . . . . . . . . . . . . -- -- --
Deferred tax benefit . . . . . . . . . . . 9,926 1,568 11,494
---------- --------- --------- ---------
Total current assets . . . . . . . . . 166,444 159,502 (6,166) 319,780
Property and equipment, at cost,
less accumulated depreciation. . . . . . . 28,773 34,117 62,890
Goodwill and intangibles resulting
from business acquisitions,
net of amortization. . . . . . . . . . . . 229,437 3,983 133,356 (5) 366,776
Investments in JLW Businesses. . . . . . . . 165,257 (3) --
(165,257)(5)
Investments in real estate ventures. . . . . 52,976 984 53,960
Long-term receivables, net . . . . . . . . . 10,950 6,104 17,054
Deferred income taxes. . . . . . . . . . . . 3,757 5,283 (5) 9,040
Deferred compensation. . . . . . . . . . . . 160,573 (4) 160,573
Prepaid pension assets . . . . . . . . . . . 8,451 13,600 (5) 22,051
Other assets, net. . . . . . . . . . . . . . 2,341 2,632 4,973
---------- --------- --------- ---------
Total assets . . . . . . . . . . . . . . $ 490,921 219,530 306,646 1,017,097
========== ========= ========= =========
<PAGE>
JONES LANG LASALLE
UNAUDITED PRO FORMA COMBINED BALANCE SHEET - CONTINUED
JLW Pro Forma
---------------------------- Jones Lang
Historical Pro Forma Acquisition LaSalle
LaSalle (1) Combined (2) Adjustments Combined
------------ ------------ ----------- ----------
Liabilities
Current liabilities:
Accounts payable and accrued
liabilities. . . . . . . . . . . . . . . $ 51,101 96,860 12,500 (3) 161,671
1,210 (5)
Accrued compensation . . . . . . . . . . . 58,398 620 10,192 (5) 69,210
Due to parent. . . . . . . . . . . . . . . --
Income taxes payable . . . . . . . . . . . 9,364 9,364
Other liabilities. . . . . . . . . . . . . 8,324 52,393 2,500 (5) 63,217
Current maturities of long-term debt . . . -- 14,092 14,092
---------- --------- --------- ---------
Total current liabilities. . . . . . . 117,823 173,329 26,402 317,554
Long-term credit facility. . . . . . . . . . 202,923 202,923
Deferred tax liability . . . . . . . . . . . 3,287 5,168 (5) 8,455
Other long-term liabilities. . . . . . . . . 603 11,508 12,111
Minority interest. . . . . . . . . . . . . . 689 689
---------- --------- --------- ---------
Total liabilities. . . . . . . . . . . 321,349 188,813 31,570 541,732
Stockholders' equity
Common stock . . . . . . . . . . . . . . . . 163 75 (3) 304
66 (4)
Additional paid-in capital . . . . . . . . . 123,543 146,957 (3) 475,564
205,064 (4)
Unallocated ESOT shares. . . . . . . . . . . (8)(4) (8)
Retained earnings. . . . . . . . . . . . . . 44,792 -- (44,990)(4) (198)
Foreign exchange translation reserve . . . . (1,371) 1,371 (5) --
Predecessor's partners' capital. . . . . . . 32,088 (32,088)(5) --
Accumulated other comprehensive income . . . 1,074 (1,371)(5) (297)
---------- --------- --------- ---------
Total stockholders' equity . . . . . . 169,572 30,717 275,076 475,365
---------- --------- --------- ---------
Total liabilities and
stockholders' equity . . . . . . . . $ 490,921 219,530 306,646 1,017,097
========== ========= ========= =========
<FN>
See Notes to Pro Forma Financial Data.
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(1) The "Historical" column represents the audited consolidated balance
sheet of LaSalle as of December 31, 1998.
(2) The JLW Pro Forma Combined column represents the combination of the
JLW companies giving effect to the elimination of intercompany transactions
and the Integration, but not the merger of JLW with LaSalle. See the
Unaudited Pro Forma JLW Combined Balance Sheet included elsewhere herein.
(3) These adjustments represent the aggregate value of the consideration
accounted for as purchase price under APB Opinion No. 16 ($165.3 million,
including transaction-related costs of $12.5 million). The value of the
aggregate consideration is comprised of $5.7 million in cash and 7,452,181
shares of Jones Lang LaSalle common stock, including 5,961,761 Initial
Distribution Shares, 584,716 Indemnification Shares and 905,704 Adjustment
Shares (assumed to be issued for purposes of the pro forma financial
statements). Management has estimated the fair value of the stock
consideration to be $147.0 million. Such estimated fair value was based
upon the average stock price of Jones Lang LaSalle common stock 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 Acquisition (October 9, 1998), discounted at a rate of 20% or
$36.8 million for transferability restrictions applicable to such shares.
(4) The adjustment gives effect to the issuance of shares of Jones Lang
LaSalle common stock and payment of cash, in accordance with the following
table, which are accounted for as compensation expense or deferred
compensation in accordance with APB Opinion No. 25 at closing (in
thousands, except share data):
Shares Value
--------- --------
Deferred compensation:
Shares subject to forfeiture
or vesting:
Current JLW Owners . . . . . . . . . 3,505,598 $124,010
New JLW Owners . . . . . . . . . . . 574,292 20,316
ESOT . . . . . . . . . . . . . . . . 424,046 15,001
ESOT Indemnification shares
subject to one year vesting. . . . . 3,653 129
ESOT Shares subject to one
year vesting . . . . . . . . . . . . 31,557 1,117
--------- --------
Deferred compensation shares . . . . . 4,539,146 $160,573
========= ========
<PAGE>
Shares Value
--------- --------
Compensation expense at closing:
Non-Restricted Shares:
New JLW Owners . . . . . . . . . . . 649,341 22,971
ESOT . . . . . . . . . . . . . . . . 412,424 14,588
Adjustment Shares:
New JLW Owners . . . . . . . . . . . 80,405 2,844
Indemnification Shares:
New JLW Owners . . . . . . . . . . . 73,296 2,593
ESOT . . . . . . . . . . . . . . . . 43,862 1,553
--------- --------
1,259,328 44,549
Cash shares - New JLW Owners . . . . . 14,135 441
--------- --------
Retained earnings. . . . . . . . . . . 1,273,463 $ 44,990
========= ========
Total capital. . . . . . . . . . . . . 5,798,474 $205,122
========= ========
Shares subject to forfeiture are amortized into compensation expense
from the date of issuance (i.e. Closing or December 31, 1999) through
December 31, 2000. Total ESOT Shares of 1,772,324 include 525,332 shares,
assuming the net worth requirements are met, to be allocated from the ESOT
at Closing or on December 31, 1999 which are subject to vesting through
December 31, 2000. For purposes of the pro forma financial statements,
only 424,046 shares are to be issued at Closing. The value of those shares
is amortized to compensation expense over the vesting period.
(5) These adjustments give effect to the allocation of the portion of the
consideration accounted for as purchase price under APB Opinion No. 16
($165.3 million, including transaction related costs of $12.5 million), and
to identifiable assets and liabilities at their estimated fair values. The
excess purchase price of $133.6 million was allocated to goodwill, which is
being amortized on a straight-line basis over 40 years based on
Management's estimate of its useful life. Management considered a number
of factors in estimating the useful life of goodwill, including the
substantial operating history of JLW, their global market presence, the
significance and duration of their client relationships, the significant
barriers to entry into the global real estate professional services
business and the uniqueness and geographic diversity of the JLW companies'
global infrastructure.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JONES LANG LASALLE COMBINED STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share data)
<CAPTION>
Compass
---------------------------- Pro Forma
Historical Historical Acquisition LaSalle
LaSalle (1) Combined (1) Adjustments Combined
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Revenue
Fee-based services . . . . . . . . . . . . . . $ 298,296 60,077 -- 358,373
Equity in net earnings from
unconsolidated ventures. . . . . . . . . . . 3,911 -- 3,911
Other income . . . . . . . . . . . . . . . . . 2,257 1,308 3,565
---------- ------- ------- ----------
Total revenue. . . . . . . . . . . . . . . 304,464 61,385 365,849
Operating expenses
Compensation and benefits. . . . . . . . . . . 172,982 36,282 -- 209,264
Operating, administrative and other. . . . . . 70,164 20,203 -- 90,367
Merger related and non-recurring charges . . . 10,021 -- 10,021
Depreciation and amortization. . . . . . . . . 13,455 13,813 (12,627)(4) 20,592
5,951 (6)
---------- ------- ------- ----------
Total operating expenses . . . . . . . . . 266,622 70,298 (6,676) 330,244
---------- ------- ------- ----------
Operating income (loss). . . . . . . . . . 37,842 (8,913) 6,676 35,605
Interest expense . . . . . . . . . . . . . . . . 4,153 5,700 (5,700)(7) 13,290
9,137 (8)
---------- ------- ------- ----------
Net earnings (loss) before provision
(benefit) for income taxes . . . . . . . 33,689 (14,613) 3,239 22,315
Provision (benefit) for income taxes . . . . . . 13,224 (3,970) (390)(9) 8,864
Minority interests . . . . . . . . . . . . . . .
---------- ------- ------- ----------
Net earnings (loss). . . . . . . . . . . . $ 20,465 (10,643) 3,629 13,451
========== ======= ======= ==========
Basic earnings (loss) per common share . . . . . $ 1.26 0.83
========== ==========
Weighted average shares outstanding. . . . . . . 16,215,478 16,215,478
========== ==========
Diluted earnings (loss) per common share . . . . $ 1.25 0.82
========== ==========
(11)
Diluted weighted average shares outstanding. . . 16,387,721 16,390,111
========== ==========
</TABLE>
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JONES LANG LASALLE COMBINED STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share data)
<CAPTION>
JLW Pro Forma
---------------------------- Jones Lang
Pro Forma Acquisition LaSalle
Combined (2) Adjustments Combined
------------ ----------- ----------
<S> <C> <C> <C>
Revenue
Fee-based services . . . . . . . . . . . . . . . . . . . . $ 471,961 830,334
Equity in net earnings from
unconsolidated ventures. . . . . . . . . . . . . . . . . -- 3,911
Other income . . . . . . . . . . . . . . . . . . . . . . . 10,515 14,080
---------- ------- -------
Total revenue. . . . . . . . . . . . . . . . . . . . . 482,476 -- 848,325
Operating expenses
Compensation and benefits. . . . . . . . . . . . . . . . . 262,998 472,262
Operating, administrative and other. . . . . . . . . . . . 161,238 251,605
Merger related and non-recurring charges . . . . . . . . . 22,553 130,930 (3) 163,504
Depreciation and amortization. . . . . . . . . . . . . . . 13,228 3,255 (5) 37,075
---------- ------- ----------
Total operating expenses . . . . . . . . . . . . . . . 460,017 134,185 924,446
---------- ------- ----------
Operating income (loss). . . . . . . . . . . . . . . . 22,459 (134,185) (76,121)
Interest expense . . . . . . . . . . . . . . . . . . . . . . 1,446 14,736
---------- ------- ----------
Net earnings (loss) before provision
(benefit) for income taxes . . . . . . . . . . . . . 21,013 (134,185) (90,857)
Provision (benefit) for income taxes . . . . . . . . . . . . 15,248 318 (10) 16,850
(7,580)(11)
Minority interests . . . . . . . . . . . . . . . . . . . . . 658 658
---------- ------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . $ 5,107 (126,923) (108,365)
========== ======= ==========
Basic earnings (loss) per common share . . . . . . . . . . . $ (4.47)
==========
(11)
Weighted average shares outstanding. . . . . . . . . . . . . 24,225,555
==========
Diluted earnings (loss) per common share . . . . . . . . . . $ (4.47)
==========
(11)
Diluted weighted average shares outstanding. . . . . . . . . 24,225,555
==========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JONES LANG LASALLE
COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1998
(1) The "Historical" columns represent the LaSalle statement of earnings
for the year ended December 31, 1998 and the combined unaudited statement
of earnings of Compass for the nine months ended September 30, 1998.
Historical results of operations of Compass have been included in LaSalle's
results of operations since the date of its acquisition.
(2) The JLW Pro Forma Combined column represents the combination of the
JLW companies giving effect to the elimination of intercompany transactions
and the Integration, but is prior to the merger with LaSalle. See the
Unaudited Pro Forma JLW companies Combined Statement of Earnings included
elsewhere herein.
(3) The adjustment gives effect to aggregate compensation expense
incurred in connection with the merger with JLW attributable to the Non-
restricted Shares, Indemnification Shares and Adjustment Shares (assumed to
be issued for purposes of the pro forma financial statements) of Jones Lang
LaSalle common stock and cash consideration issued or paid to New JLW
Owners and ESOT Shares allocated from the ESOT during the pro forma period
and the amortization of deferred compensation associated with shares of
Jones Lang LaSalle common stock issued to Current JLW Owners and New JLW
Owners or allocated from the ESOT during the pro forma period which are
subject to forfeiture or vesting provisions.
(4) The adjustment gives effect to the reversal of Compass' historical
amortization expense related to goodwill and other intangible assets (i.e.,
management contracts) resulting from the acquisition of Compass by Lend
Lease.
(5) The adjustment gives effect to the amortization of goodwill
associated with the combination of the JLW companies with LaSalle over the
expected useful life of 40 years. Management considers a number of factors
in estimating the useful life of goodwill, including the substantial
operating history of JLW, its global market presence, the significance and
duration of its client relationships, the significant barriers to entry
into the global real estate professional services business and the
uniqueness and geographic diversity of the JLW companies' global
infrastructure.
(6) The adjustment gives effect to the amortization of intangibles (i.e.,
management contracts) and goodwill associated with the acquisition of
Compass by LaSalle over the expected useful lives of 8 years and 40 years,
respectively.
(7) The adjustment gives effect to the elimination of interest expense
related to Compass' $102.0 million note payable to its parent which was
repaid in connection with the acquisition.
(8) The adjustment gives effect to borrowings on LaSalle's new long-term
and existing credit facilities of $180.0 million at an interest rate of
LIBOR plus .875% used to fund the acquisition of Compass.
(9) The adjustment gives effect to the provision (benefit) for income
taxes based on net earnings before provision for income taxes and the
merger related non-recurring charges as though LaSalle and Compass were
taxable entities as of January 1, 1998 with an estimated effective tax rate
of 39.2%.
<PAGE>
(10) The adjustment gives effect to the provision (benefit) for income
taxes based on net earnings before provision for income taxes and the
merger related non-recurring charges as though Jones Lang LaSalle was a
taxable entity as of January 1, 1998 at an effective tax rate of 38.0%.
(11) The adjustment gives effect to the benefit for income taxes
associated with the portion of the merger related non-recurring charges
which are expected to be deductible for tax purposes.
(12) Basic weighted average shares outstanding give effect to 6,917,959
weighted average Non-restricted Shares and 1,092,118 Adjustment Shares
assumed to be issued in connection with the Acquisition.
(13) Diluted weighted average shares outstanding give effect to options on
Jones Lang LaSalle common stock issued in connection with the acquisition
of Compass.
(14) Diluted weighted average shares outstanding do not give effect to any
issuances of Forfeiture Shares Indemnification Shares, unallocated ESOT
Shares or options on Jones Lang LaSalle common stock issued in connection
with the acquisition of Compass because, due to operating losses, the
inclusion of such shares as common stock equivalents would be anti-
dilutive.
<PAGE>
JLW
The following Unaudited Pro Forma JLW Combined Financial Statements
are derived from the historical financial statements of each of JLW Europe
(Jones Lang Wootton (The English Partnership and subsidiaries)), JLW
Scotland (Jones Lang Wootton-Scotland and its subsidiary undertaking), JLW
Ireland (Jones Lang Wootton-Irish Practice), the JLW Asia Group (JLW Asia
Holdings Limited), and the JLW Australasia Companies (the JLW Australasia
Group), which historically have had substantially independent ownership
structures. The Unaudited Pro Forma JLW Combined Financial Statements have
been presented in accordance with US GAAP.
The Unaudited Pro Forma JLW Combined Statements of Earnings for the
year ended December 31, 1998 gives effect to the Integration as if it had
occurred on January 1, 1998. The Unaudited Pro Forma JLW Combined Balance
Sheet as of December 31, 1998 combines the historical unaudited combined
statements of each of the JLW companies as if the Integration had occurred
on that date after giving effect to pro forma adjustments described in the
accompanying notes. The Unaudited Pro Forma JLW Combined Financial
Statements should be read in conjunction with the historical financial
statements of each of the JLW companies and the notes thereto included
elsewhere herein. In addition, the Unaudited Pro Forma JLW Combined
Financial Statements, after taking into consideration the combination and
integration adjustments, were utilized in preparing the Unaudited Pro Forma
Combined Financial Statements of Jones Lang LaSalle.
The pro forma adjustments are based upon available information and
certain assumptions that the Management of JLW believe are reasonable under
the circumstances. These pro forma statements may not be indicative of the
results of operations that actually would have occurred if the Integration
had been consummated on the date indicated and do not purport to represent
the future financial position or results of operations of the JLW
companies.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JLW COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(in thousands)
<CAPTION>
Historical JLW (1) Combination
-------------------------------------------------------------- and Pro Forma
Austral- Integration JLW
Europe asia Asia Scotland Ireland Total Adjustments Combined
-------- -------- -------- -------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents. . . . 24,097 2,097 4,815 3,499 3,054 37,562 5,820 (2) 5,820
(37,562)(4)
Trade receivables,
net. . . . . . . . 85,543 14,048 14,973 3,063 1,827 119,454 (1,439)(2) 114,233
(3,782)(3)
Other receivables. . 17,661 2,525 9,835 187 -- 30,208 1,040 (2) 31,248
Prepaid expenses . . 4,940 243 408 278 395 6,264 369 (2) 6,633
Deferred tax
benefit. . . . . . 1,471 97 -- -- -- 1,568 1,568
-------- -------- -------- -------- -------- -------- ------- -------
Total current
assets . . . . . 133,712 19,010 30,031 7,027 5,276 195,056 (35,554) 159,502
Property and
equipment, at
cost, less
accumulated
depreciation . . . . 23,695 2,311 5,096 1,047 973 33,122 995 (2) 34,117
Intangibles
resulting
from business
acquisitions,
net of amortiza-
tion . . . . . . . . 3,983 -- -- -- -- 3,983 3,983
Investments in
real estate
ventures . . . . . . 460 601 428 -- -- 1,489 (505)(2) 984
Long-term
receivables, net . . 6,104 -- -- -- -- 6,104 6,104
Deferred tax assets. . 1,789 1,968 -- -- -- 3,757 3,757
Prepaid pension asset. 8,451 -- -- -- -- 8,451 8,451
Other assets, net. . . 1,131 -- -- -- 1,138 2,269 363 (2) 2,632
-------- -------- -------- -------- -------- -------- ------- -------
Total assets . . . 179,325 23,890 35,555 8,074 7,387 254,231 (34,701) 219,530
======== ======== ======== ======== ======== ======== ======= =======
<PAGE>
UNAUDITED PRO FORMA JLW BALANCE SHEET - CONTINUED
Historical JLW (1) Combination
-------------------------------------------------------------- and Pro Forma
Austral- Integration JLW
Europe asia Asia Scotland Ireland Total Adjustments Combined
-------- -------- -------- -------- -------- -------- ----------- ---------
Liabilities
Current liabilities:
Accounts payable
and accrued
liabilities. . . . 65,412 9,663 3,141 875 1,888 80,979 4,621 (2) 96,860
(3,449)(3)
14,709 (4)
Accrued compen-
sation . . . . . . -- -- -- -- -- -- 620 (4) 620
Taxation . . . . . . 5,740 1,795 1,352 -- -- 8,887 477 (2) 9,364
Other liabilities. . 25,026 4,460 17,192 759 -- 47,437 459 (2) 52,393
4,497 (4)
Borrowings . . . . . 11,170 -- 1,960 68 894 14,092 4,497 (4) 14,092
-------- -------- -------- -------- -------- -------- ------- -------
Total current
liabilities. . . 107,348 15,918 23,645 1,702 2,782 151,395 21,934 173,329
Deferred tax
liability. . . . . . 2,620 86 198 -- 364 3,268 19 (2) 3,287
Other long-term
liabilities. . . . . 6,177 1,508 3,339 -- 121 11,145 363 (2) 11,508
Minority interest. . . 1,990 -- -- -- -- 1,990 (1,301)(3) 689
-------- -------- -------- -------- -------- -------- ------- -------
Total liabilities. 118,135 17,512 27,182 1,702 3,267 167,798 21,015 188,813
Partners' Capital
JLW predecessor
capital. . . . . . 61,157 7,693 8,373 6,343 4,288 87,854 34 (2) 32,088
968 (3)
(56,768)(4)
JLW foreign
exchange trans-
lation reserve . . 33 (1,315) -- 29 (168) (1,421) 50 (2) (1,371)
-------- -------- -------- -------- -------- -------- ------- -------
Total stock-
holders' equity/
partners'
capital. . . . . 61,190 6,378 8,373 6,372 4,120 86,433 (55,716) 30,717
-------- -------- -------- -------- -------- -------- ------- -------
Total liabilities
and partners'
capital. . . . . 179,325 23,890 35,555 8,074 7,387 254,231 (34,701) 219,530
======== ======== ======== ======== ======== ======== ======= =======
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JLW
COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(1) Represents the consolidated or combined balance sheets of each of the
JLW companies as of December 31, 1998.
(2) These adjustments give effect to the gross assets and liabilities of
certain businesses which will be wholly-owned on a combined basis
subsequent to the Integration, which were historically accounted for under
either the equity or cost method of accounting.
(3) These adjustments give effect to the elimination of intercompany
balances by and among each of the groups.
(4) These adjustments give effect to accrued compensation and partner
distributions which will be paid prior to the closing, and the
reclassification of cash overdrafts to current liabilities which result
from such pro forma payments.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA JLW COMBINED STATEMENT OF EARNINGS
AS OF DECEMBER 31, 1998
(in thousands)
<CAPTION>
Historical JLW (1) Combination
-------------------------------------------------------------- and Pro Forma
Austral- Integration JLW
Europe asia Asia Scotland Ireland Total Adjustments Combined
-------- -------- -------- -------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Fee-based services . $320,312 56,093 58,912 9,873 12,107 457,297 14,664 (2) 471,961
Interest income. . . 2,619 41 97 207 56 3,020 616 (2) 3,636
Other income . . . . 5,569 2,136 2,259 96 -- 10,060 270 (2) 6,899
(3,451)(3)
-------- -------- -------- -------- -------- -------- ------- -------
Total revenue. . . 328,500 58,270 61,268 10,176 12,163 470,377 12,099 482,476
Operating expenses
Compensation and
benefits . . . . . 160,613 22,475 32,593 2,874 3,303 221,858 3,700 (2) 262,998
37,440 (4)
Operating, adminis-
trative and
other. . . . . . . 99,951 27,170 19,625 2,064 1,703 150,513 10,766 (2) 161,238
(41)(3)
Merger related
non-recurring
charges (6). . . . 12,345 2,660 7,080 326 1,073 23,484 (931)(3) 22,553
Depreciation and
amortization . . . 9,275 892 1,899 295 329 12,690 538 (2) 13,228
-------- -------- -------- -------- -------- -------- ------- -------
Total operating
expenses . . . . 282,184 53,197 61,197 5,559 6,408 408,545 51,472 460,017
-------- -------- -------- -------- -------- -------- ------- -------
Operating income . 46,316 5,073 71 4,617 5,755 61,832 (39,373) 22,459
Interest expense . . . 946 97 226 8 43 1,320 126 (2) 1,446
-------- -------- -------- -------- -------- -------- ------- -------
<PAGE>
UNAUDITED PRO FORMA JLW COMBINED STATEMENT OF EARNINGS - CONTINUED
AS OF DECEMBER 31, 1998
(in thousands)
Historical JLW (1) Combination
-------------------------------------------------------------- and Pro Forma
Austral- Integration JLW
Europe asia Asia Scotland Ireland Total Adjustments Combined
-------- -------- -------- -------- -------- -------- ----------- ---------
Earnings (loss)
before provision
(benefit) for
income taxes . . 45,370 4,976 (155) 4,609 5,712 60,512 (39,499) 21,013
Provision (benefit)
for income taxes . . 6,230 2,585 1,204 (61) 77 10,035 482 (2) 15,248
4,731 (5)
Minority interest. . . 1,090 -- -- -- -- 1,090 (432) (2) 658
-------- ------- ------- ------- ------- ------- ------- -------
Net earnings
(loss) . . . . . $ 38,050 2,391 (1,359) 4,670 5,635 49,387 (44,280) 5,107
======== ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA JLW
COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1998
(1) Represents the consolidated or combined statement of earnings of each
of the JLW companies for the year ended December 31, 1998.
(2) These adjustments give effect to the gross revenue and expenses of
certain businesses which will be wholly-owned on a combined basis
subsequent to the Integration, which were historically accounted for under
either the cost or equity method of accounting.
(3) These adjustments give effect to the elimination of intercompany
activity by and among each of the groups.
(4) The adjustment gives effect to new market-based compensation packages
which will be implemented in accordance with the Integration and merger
with LaSalle. These packages are represented by agreements with certain
senior executives that previously received their compensation in the form
of profits distributions and/or dividends and provide for a base salary and
discretionary bonus based on individual and company performance. Included
in the pro forma adjustment is approximately $16.3 million and $21.2
million, respectively, for salary and target bonuses under the new
agreements.
(5) The adjustment gives effect to the provision for income taxes as
though the JLW companies were taxable entities as of January 1, 1998 with
an estimated effective tax rate of 35.0%.
(6) Represents the costs incurred by the JLW companies related to the
Integration and the merger with LaSalle.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS - CONTINUED
(c) EXHIBITS
A list of exhibits is set forth on the Exhibit Index which
immediately precedes the exhibits and which is incorporated by reference
herein.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
JONES LANG LASALLE INCORPORATED
Date: March 24, 1999 By: /s/ WILLIAM E. SULLIVAN
----------------------------
William E. Sullivan
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
2.1 Purchase and Sale Agreement, dated as of October 21, 1998, as
amended, with respect to the acquisition by LaSalle Partners of the JLW
Parent Companies operating in Europe and the U.S.A. (the "Europe/USA
Agreement") (incorporated by reference to Exhibit 10.1 to the Current
Report of the Company, dated October 22, 1998 (filed December 9, 1998)).
2.2 Purchase and Sale Agreement, dated as of October 21, 1998, as
amended, with respect to the acquisition by LaSalle Partners of the JLW
Parent Companies operating in Australia and New Zealand (the "Australasia
Agreement") (incorporated by reference to Exhibit 10.2 to the Current
Report of the Company, dated October 22, 1998 (filed December 9, 1998)).
2.3 Purchase and Sale Agreement, dated as of October 21, 1998, as
amended, with respect to the acquisition by LaSalle Partners of the JLW
Parent Companies operating in Asia (the "Asia Agreement") (incorporated by
reference to Exhibit 10.3 to the Current Report of the Company, dated
October 22, 1998 (filed December 9, 1998)).
2.4 Form of Purchase and Sale Joinder Agreement, dated as of
October 21, 1998, by and among LaSalle Partners and each of the
shareholders selling equity interests in the JLW Parent Companies under the
Europe/USA Agreement (incorporated by reference to Exhibit 10.4 to the
Current Report of the Company, dated October 22, 1998 (filed December 9,
1998)).
2.5 Form of Purchase and Sale Joinder Agreement, dated as of
October 21, 1998, by and among LaSalle Partners and each of the
shareholders selling equity interests in the JLW Parent Companies under the
Australasia Agreement (incorporated by reference to Exhibit 10.5 to the
Current Report of the Company, dated October 22, 1998 (filed December 9,
1998)).
2.6 Form of Purchase and Sale Joinder Agreement, dated as of
October 21, 1998, by and among LaSalle Partners and each of the
shareholders selling equity interests in the JLW Parent Companies under the
Asia Agreement (incorporated by reference to Exhibit 10.6 to the Current
Report of the Company, dated October 22, 1998 (filed December 9, 1998)).
2.7 Form of Indemnity and Escrow Agreement, dated as of October 21,
1998, by and among LaSalle Partners, certain subsidiaries of LaSalle
Partners and each of the shareholders selling equity interests in the JLW
Parent Companies under the Europe/USA Agreement, the Australasia Agreement
and the Asia Agreement (incorporated by reference to Exhibit 10.7 to the
Current Report of the Company, dated October 22, 1998 (filed December 9,
1998)).
2.8 Form of Stockholder Agreement, dated as of October 21, 1998, by
and among LaSalle Partners and each of the persons receiving shares of
LaSalle Partners common stock under the Europe/USA Agreement, the
Australasia Agreement and the Asia Agreement (incorporated by reference to
Exhibit 10.8 to the Current Report of the Company, dated October 22, 1998
(filed December 9, 1998)).
<PAGE>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
2.9 Form of Stockholder Agreement, dated as of October 21, 1998, by
and among LaSalle Partners and each of the partners of DEL-LPL Limited
Partnership and DEL-LPAML Limited Partnership who is an employee of LaSalle
Partners and who will be receiving shares of LaSalle Partners Common Stock
in connection with the dissolution of DEL-LPL Limited Partnership and DEL-
LPAML Limited Partnership (incorporated by reference to Exhibit 10.9 to the
Current Report of the Company, dated October 22, 1998 (filed December 9,
1998)).
2.10 Letter Agreement, dated as of March 1, 1999, by and among
LaSalle Partners, the Sellers' Representatives and Shareholders'
Representatives.
2.11 Letter Agreement, dated as of February 28, 1999, by and among
LaSalle Partners, the Sellers' Representative and the Shareholders'
Representatives.
2.12 Trust Agreement, dated as of March 9, 1999, by and among
LaSalle Partners Incorporated, Harris Trust and Savings Bank and the
Persons Named as Shareholder Representatives on the Signature Pages
Thereto.
4.1 Articles of Amendment and Restatement of LaSalle Partners
Incorporated.
4.2 Amended and Restated Bylaws of Jones Lang LaSalle Incorporated.
4.3 Form of certificate representing shares of Jones Lang LaSalle
Incorporated common stock.
23.1 Consent of Deloitte & Touche, independent auditors (with
respect to Jones Lang Wootton (the English Partnership and Subsidiaries)).
23.2 Consent of Deloitte & Touche, independent auditors (with
respect to Jones Lang Wootton - Irish Practice).
23.3 Consent of Ernst & Young, independent auditors (with respect to
Jones Lang Wootton - Scotland).
23.4 Consent of KPMG, independent auditors (with respect to JLW Asia
Holdings Limited and subsidiaries).
23.5 Consent of Coopers & Lybrand, independent auditors (with
respect to JLW Property Consultants Pte Ltd.).
23.6 Consent of Ernst & Young, independent auditors (with respect to
JLW Australia Group).
EXHIBIT 2.10
- ------------
LASALLE PARTNERS INCORPORATED
March 1, 1999
VIA FACSIMILE
Chris Peacock Ken Winterschladen
Mike Smith c/o Jones Lang Wootton
Robert Orr Grosvenor Place
c/o Jones Lang Wootton 225 George Street
22 Hanover Square Sydney NSW 2000
London WIA 2BN Australia
England Fax: 61-2-9232-8120
Fax: 44-171-408-0220
Gerry Kipling
c/o Jones Lang Wootton Ltd.
16th & 17th floors
Dorses House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Fax: 852-2968-1008
Gentlemen:
Reference is made to that certain Purchase and Sale Agreement
(Europe/USA), dated as of October 21, 1998, as amended, by and among
LaSalle Partners Incorporated ("LaSalle Partners"), the Jones Lang Wootton
entities listed therein and the other parties named therein (the
"Europe/USA Purchase Agreement"), that certain Purchase and Sale Agreement
(Australasia), dated as of October 21, 1998, as amended, by and among
LaSalle Partners, the Jones Lang Wootton entities listed therein and the
other parties named therein (the "Australasia Purchase Agreement") and that
certain Purchase and Sale Agreement (Asia), dated as of October 21, 1998,
as amended, by and among LaSalle Partners, the Jones Lang Wootton entities
listed therein and the other parties named therein (the "Asia Purchase
Agreement" and together with the Australasia Purchase Agreement and the
Europe/USA Purchase Agreement, the "Purchase Agreements"). All capitalized
terms used herein shall, unless otherwise defined herein, have the
respective meanings set forth in the Purchase Agreements. The parties
hereto agree as follows:
A. Notwithstanding anything to the contrary contained in the
Purchase Agreements, the undersigned each agrees that each Purchase
Agreement shall be amended as follows:
1. The number US$22,476,000 in the first sentence of Clause (e) of
Section 1.4 in the case of the Europe/USA Purchase Agreement and the Asia
Purchase Agreement and Clause (f) of Section 1.4 in the case of the
Australasia Purchase Agreement shall be deleted in its entirety and the
number US$19,226,000 shall be inserted in lieu thereof.
<PAGE>
2. The number US$4,736,000 in the first sentence of Clause (i) of
Section 1.4 in the case of the Europe/USA Purchase Agreement and the Asia
Purchase Agreement and Clause (e) of Section 1.4 in the case of the
Australasia Purchase Agreement shall be deleted in its entirety and the
number US$4,236,000 shall be inserted in lieu thereof.
B. Notwithstanding anything to the contrary contained in the
Purchase Agreements, in the event that an individual listed on Schedule 1
attached hereto does not waive their rights to the portion of the unpaid
bonuses for the fiscal years ending 1997 and 1998 specified on Schedule 1
hereto on or prior to the Closing Date, the number of ESOT Shares
(excluding ESOT Escrow Shares and ESOT Adjustment Shares) issuable pursuant
to the Purchase Agreements, shall be reduced by an amount equal to fifty
percent of the ESOT Shares (including any ESOT Escrow Shares) proposed to
be allocated to such person under the ESOT as specified on Schedule 1
hereto. The remaining ESOT Shares proposed to be allocated to any such
person shall be available for allocation in accordance with the terms of
the ESOT by the Shareholders' Representatives.
B. Notwithstanding anything to the contrary contained in the
Europe/USA Purchase Agreement, the undersigned each agrees that the
Europe/USA Purchase Agreement shall be amended as follows:
1. The related information applicable to Mr. A.G. Spooner shall be
deleted from Schedule A to the Company Disclosure Schedule and inserted in
lieu thereof shall be the related information on Exhibit B hereto.
C. This agreement may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
In accordance with Section 13.5 of each of the Purchase Agreements,
please indicate your agreement with the above by signing below and faxing
this letter to me at 171-533-7404 with the original via overnight courier.
Very truly yours,
LASALLE PARTNERS INCORPORATED
/s/ WILLIAM E. SULLIVAN
- ------------------------------
William E. Sullivan,
Executive Vice President and
Chief Financial Officer
<PAGE>
Agreed and accepted as of this 1st day of March, 1999.
SELLERS' REPRESENTATIVES:
/S/ CHRIS PEACOCK
- ------------------------------
Chris Peacock
/S/ MIKE SMITH
- ------------------------------
Mike Smith
SHAREHOLDERS' REPRESENTATIVES:
/S/ ROBERT ORR
- ------------------------------
Robert Orr
/S/ KEN WINTERSCHLADEN
- ------------------------------
Ken Winterschladen
/S/ GERRY KIPLING
- ------------------------------
Gerry Kipling
EXHIBIT 2.11
- ------------
LASALLE PARTNERS INCORPORATED
As of February 28, 1999
VIA FACSIMILE
Chris Peacock Ken Winterschladen
Mike Smith c/o Jones Lang Wootton
Robert Orr Grosvenor Place
c/o Jones Lang Wootton 225 George Street
22 Hanover Square Sydney NSW 2000
London WIA 2BN Australia
England Fax: 61-2-9232-8120
Fax: 44-171-408-0220
Gerry Kipling
c/o Jones Lang Wootton Ltd.
16th & 17th floors
Dorses House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Fax: 852-2968-1008
Gentlemen:
Reference is made to that certain Purchase and Sale Agreement
(Europe/USA), dated as of October 21, 1998, as amended, by and among
LaSalle Partners Incorporated ("LaSalle Partners"), the Jones Lang Wootton
entities listed therein and the other parties named therein (the
"Europe/USA Purchase Agreement"), that certain Purchase and Sale Agreement
(Australasia), dated as of October 21, 1998, as amended, by and among
LaSalle Partners, the Jones Lang Wootton entities listed therein and the
other parties named therein (the "Australasia Purchase Agreement") and that
certain Purchase and Sale Agreement (Asia), dated as of October 21, 1998,
as amended, by and among LaSalle Partners, the Jones Lang Wootton entities
listed therein and the other parties named therein (the "Asia Purchase
Agreement" and together with the Australasia Purchase Agreement and the
Europe/USA Purchase Agreement, the "Purchase Agreements"). All capitalized
terms used herein shall, unless otherwise defined herein, have the
respective meanings set forth in the Purchase Agreements. The parties
hereto agree as follows:
A. Notwithstanding anything to the contrary contained in the
Purchase Agreements, each of the undersigned agrees that each Purchase
Agreement shall be amended as follows:
1. The consolidated or combined balance sheet, as applicable,
referenced in clause (i) of subsection (b) of Section 1.4 of each Purchase
Agreement shall be, in each case as of the close of business on
February 28, 1999 (the "Cut-off Date").
2. The consolidated or combined (as applicable) profit and loss
accounts, statements of cash flows, statements of movement on reserves and
statements of total recognized gains and losses referenced in clause (ii)
of subsection (b) of Section 1.4 of each Purchase Agreement shall be, in
each case, for the period beginning on January 1, 1998 and ending on the
close of business on the Cut-off Date.
<PAGE>
3. The profit and loss account referenced in subclause (B) of
clause (i) of subsection (p) of Section 1.4 of each Purchase Agreement
shall be, in each case, for the period beginning on January 1, 1999 and
ending on the Cut-off Date.
4. The following shall be inserted as subsection (g) of
Section 5.1 of the Europe/USA Purchase Agreement and as subsection (f) of
Section 5.1 of each of the Australasia Purchase Agreement and the Asia
Purchase Agreement:
"Notwithstanding anything to the contrary contained in this Section
5.1 or in any section of the Company Disclosure Schedule related thereto,
from and after the Cut-off Date to the Closing (the "Closing Stub Period")
each JLW Seller and each Company shall not, and shall cause each Company
Subsidiary which is a direct or indirect Subsidiary thereof not to, take,
or authorize or enter into any obligation or commitment (or otherwise
agree) to take, any of the actions specified in any of clauses (i) through
(xvii) of Section 5.1(b) hereof, except in each case to the extent
expressly permitted by the terms of such clause or consented to in writing
by Parent (which consent may be given or withheld in Parent's sole
discretion)."
5. The accruals referenced in subclauses (i) through (v) of clause
(a) of the second sentence of the definition of "Closing Net Worth" set
forth in Article XIV of each Purchase Agreement shall be included in the
applicable Closing Balance Sheets or Final Closing Balance Sheets, even if
incurred or accrued after the Cut-off Date.
6. The following shall be inserted at the end of the sentence
immediately proceeding the penultimate sentence of the definition of
"Closing Net Worth" set forth in Article XIV of each Purchase Agreement:
"and (c) to the extent not otherwise reflected in any Closing Balance
Sheet or Final Closing Balance Sheet, as the case may be, in an aggregate
amount equal to any other payments, dividends or distributions in respect
of the partnership interests, issued share capital or capital stock or
other securities, as applicable, declared or made by any JLW Seller,
Company or Company Subsidiary during the Closing Stub Period that if
declared or made on the Cut-off Date would have been required under the
terms of this Agreement to be reflected in any Closing Balance Sheet or
Final Closing Balance Sheet, as the case may be"
B. The fifth sentence of Section 3.3(a) of the Europe/USA Purchase
Agreement shall be amended to read as follows:
"The authorized capital stock of JLW USA consists of (i) 10,000
shares of common stock, no par value per share, of which as of the date
hereof (and as of the Closing Date) 3,437.09 shares are (and will be)
issued and outstanding and no shares are (or will be) held in its treasury,
and (ii) 10,000 shares of preferred stock, of which 5,000 shares have been
designated as Series A Preferred Stock, $1,000 par value per share, of
which as of the date hereof (and as of the Closing Date) 3,845.4 shares of
such Series are (and will be) issued and held in its treasury, and no other
shares of such preferred stock are (or will be) issued."
C. Section 3.4 of the Company Disclosure Schedule shall be amended
to add the information set forth on Exhibit A attached hereto.
D. This agreement may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
(other than the provisions of paragraphs B and C above) shall automatically
terminate and be of no further force and effect in the event that the
Closing has not occurred on or prior to March 31, 1999.
<PAGE>
In accordance with Section 13.5 of each of the Purchase Agreements,
please indicate your agreement with the above by signing below and faxing
this letter to me at 171-533-7404 with the original via overnight courier.
Very truly yours,
LASALLE PARTNERS INCORPORATED
/s/ WILLIAM E. SULLIVAN
- ------------------------------
William E. Sullivan,
Executive Vice President and
Chief Financial Officer
<PAGE>
Agreed and accepted as of the 28th day of February, 1999.
SELLERS' REPRESENTATIVES:
/S/ CHRIS PEACOCK
- ------------------------------
Chris Peacock
/S/ MIKE SMITH
- ------------------------------
Mike Smith
SHAREHOLDERS' REPRESENTATIVES:
/S/ ROBERT ORR
- ------------------------------
Robert Orr
/S/ KEN WINTERSCHLADEN
- ------------------------------
Ken Winterschladen
/S/ GERRY KIPLING
- ------------------------------
Gerry Kipling
EXHIBIT 2.12
- ------------
TRUST AGREEMENT
Dated as of March 9, 1999
by and among
LASALLE PARTNERS INCORPORATED,
HARRIS TRUST AND SAVINGS BANK,
and
The Persons named as "Shareholders' Representatives"
on the Signature Pages hereto
<PAGE>
AGREEMENT made as of March 9, 1999 (the "Agreement"), by and
among LASALLE PARTNERS INCORPORATED, a Maryland corporation (the
"Company"), HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation
(the "Trustee"), and the persons named as "Shareholders' Representatives"
on the signature pages hereto.
W I T N E S S E T H:
WHEREAS, the Company, certain subsidiaries of the Company and
the Jones Lang Wootton entities (in the case of the Europe/USA Purchase and
Sale Agreement as specified on Schedule 1 attached hereto) and persons
identified therein have entered into three separate Purchase Agreements,
each dated as of October 21, 1998, as amended (the "Purchase Agreements"),
pursuant to which the Company will acquire all of the equity interests of
the companies that, following certain reorganization transactions, will own
substantially all of the assets of and be engaged in the worldwide property
and asset management, advisory and other real estate related businesses
currently conducted under the name "Jones Lang Wootton" or "JLW"
(collectively, the "JLW Businesses") for consideration consisting of shares
of common stock of the Company, $.01 par value per share ("Company Common
Stock"), and cash.
WHEREAS, pursuant to the Purchase Agreements, the Company is
required to establish an irrevocable discretionary trust (the "Trust") for
the purpose of providing equity participation in the Company for current
and former employees of the JLW Businesses (and certain related persons)
and at Closing will issue 1,571,441 shares of Company Common Stock (the
"Initial ESOT Shares") to the Trust (or such lesser number as is agreed to
by the parties to the Purchase Agreements). Moreover, the Company will
issue on behalf of the Trust 91,988 shares of Company Common Stock and
108,895 shares of Company Common Stock to the Escrow Agent as
indemnification shares (the "ESOT Escrow Shares") and Adjustment Shares
(the "ESOT Adjustment Shares" and, together with the ESOT Escrow Shares and
the Initial ESOT Shares, the "ESOT Shares") respectively, pursuant to the
terms of the Purchase Agreements and the Escrow Agreement.
WHEREAS, pursuant to the terms of the Sellers' Contribution and
Coordination Agreement (the "SCCA"), dated as of November 24, 1998, among
the JLW entities identified therein, the Europe/USA Region Shareholders,
Asia Region Shareholders and the Australasia Region Shareholders and the
other parties identified therein, a representative for each of the
Europe/USA Region Shareholders, Asia Region Shareholders and Australasia
Region Shareholders have been designated (the "European Region
Representative," "Asia Region Representative" and "Australasia Region
Representative," respectively) to take certain actions and make certain
determinations regarding their respective regions in connection with and
pursuant to the Purchase Agreements, SCCA, Escrow Agreement, this Agreement
and the other Ancillary Agreements; provided, that pursuant to an amendment
to the SCCA an individual has been appointed in lieu of the Australasia
Region Representative for all purposes under this Agreement (the
"Australasia Region ESOT Representative") (the European Region
Representative, Asia Region Representative and Australasia Region ESOT
Representative are collectively referred to herein as the "Shareholders'
Representatives").
WHEREAS, the Trustee is willing to serve as trustee and to hold
legal title to the assets of the Trust, in trust, for the purposes
hereinafter stated and in accordance with the terms hereof;
NOW, THEREFORE, effective as of the date hereof, the Company
hereby establishes the Trust with the Trustee, and the Trustee hereby
agrees to accept its appointment as trustee thereof, subject to the
following terms and conditions:
<PAGE>
ARTICLE I
GENERAL MATTERS AND DUTIES OF THE PARTIES
1.1 DEFINITIONS. Terms used but not defined herein shall have the
meanings ascribed to them in the Purchase Agreements.
1.2 GENERAL DUTIES OF TRUSTEE. The Trustee shall have no authority
over and shall have no responsibility for the administration of the Trust
Fund (as hereinafter defined), except as expressly provided for herein.
The Company and the Shareholders' Representatives shall furnish the Trustee
with such information relative to the Trust Fund as is necessary for the
proper administration of the Trust Fund. The Trustee shall not allocate,
distribute or dispose of any assets of the Trust Fund, including the ESOT
Shares, without the prior written instructions of the Shareholders'
Representatives and the Company, except as expressly provided for herein.
The Trustee shall hold on the terms set forth herein all payments and
property received by it hereunder, including the Initial ESOT Shares, the
ESOT Escrow Shares (to the extent received by the Trustee from the Escrow
Agent) and the ESOT Adjustment Shares (to the extent received by the
Trustee from the Escrow Agent) which, together with the income and gains
therefrom, shall constitute the trust fund (the "Trust Fund"). The Trustee
shall protect and conserve the Trust Fund, collect the income thereon and
make distributions therefrom, all as hereinafter provided. The Trustee
shall be responsible only for the property actually received by it
hereunder.
1.3 RIGHTS, OBLIGATIONS OR DISCRETIONS OF THE TRUSTEE UNDER THE
SCCA. In the event the Trustee, as a party to the SCCA, shall have any
rights, discretion or obligation thereunder, other than as described in
Section 3.12 hereof, (i) the Trustee shall exercise the relevant right or
discretion in accordance with the written instructions given to it by the
Shareholders' Representatives provided no later than five Business Days
prior to the required exercise of the relevant right or discretion; (ii)
the Trustee shall discharge the relevant obligation only to the extent that
it can do so by transferring ESOT Shares, or other property included within
the Trust, and only then in accordance with the written instructions given
to it by the Shareholders' Representatives; and (iii) pending receipt by
the Trustee of written instructions from the Shareholders' Representatives
as described in this Section 1.3, the Trustee shall take no action in
relation to the relevant right, discretion or obligation under the SCCA.
1.4 NONDIVERSION OF FUNDS. Notwithstanding anything to the
contrary contained in this Agreement, no part of the Trust Fund other than
expenses, fees, indemnities and taxes properly charged to the Trust Fund or
a Participant (as hereinafter defined) under this Agreement shall be used
for or diverted to purposes other than for distribution to Potential
Participants (as hereinafter defined).
1.5 REGIONAL SUB FUNDS, SUB FUNDS AND PARTICIPANT ACCOUNTS.
(1) The Trust Fund shall be segregated into separate sub
funds for (i) the current or former employees of the JLW Businesses
operated by the Europe/USA Region Companies (the "Europe/USA Sub Fund"),
(ii) the current or former employees of the JLW Businesses operated by the
Asia Region Companies (the "Asia Sub Fund") and (iii) the current or former
employees of the JLW Businesses operated by the Australasia Region
Companies (the "Australasia Sub Fund" and, collectively with the Europe/USA
Sub Fund and Asia Sub Fund, the "Regional Sub Funds"). At Closing, the
Initial ESOT Shares, ESOT Escrow Shares and ESOT Adjustment Shares shall be
credited to the Regional Sub Funds as follows: (i) Europe/USA Sub Fund -
1,377,830 Initial ESOT Shares (or such lesser number as is agreed to by the
parties to the Purchase Agreements), 80,505 ESOT Escrow Shares and 92,728
ESOT Adjustment Shares; (ii) Asia Sub Fund - 17,747 Initial ESOT Shares,
972 ESOT Escrow Shares and 0 ESOT Adjustment Shares; and (iii) Australasia
<PAGE>
- - 175,864 Initial ESOT Shares, 10,511 ESOT Escrow Shares and 16,167 ESOT
Adjustment Shares. In the case of ESOT Escrow Shares and ESOT Adjustment
Shares, the credits made to such Regional Sub Fund, and Sub Sub Fund (as
hereinafter defined), shall be conditional upon receipt of such shares by
the Trustee from the Escrow Agent. In the event the ESOT Shares credited
to the Europe/USA Sub Fund have been reduced by agreement of the parties to
the Purchase Agreements, the Company and the Shareholders' Representatives
shall provide written notice to the Trustee specifying the number of shares
to be credited to the Europe/USA Sub Fund and United States Sub Sub Funds
(as hereinafter defined).
(2) The Europe/USA Sub Fund shall be segregated into Sub Sub
Funds (each a "Sub Sub Fund" and collectively the "Sub Sub Funds") as set
forth on Schedule 2 hereto. At Closing, the Initial ESOT Shares, ESOT
Escrow Shares and ESOT Adjustment Shares credited to the Europe/USA Sub
Fund shall be credited to each Sub Sub Fund as set forth on Schedule 2;
provided, however, with the prior written consent of the Company (which
consent will not be unreasonably withheld), the Shareholders'
Representatives may direct the Trustee to transfer ESOT Shares which have
not been allocated to a Participant Account from one Sub Sub Fund to
another Sub Sub Fund; provided further, that no ESOT Shares may be
transferred from the Ireland Sub Sub Fund, the Scotland Sub Sub Fund, Pan
Euro Sub Sub Fund or the Germany Sub Sub Fund to another Sub Sub Fund,
except to reflect the transfer of employees between countries within the
Europe/USA region.
(3) After a Participant has been designated and an allocation
made pursuant to Article II of this Agreement, the Trustee shall maintain
an account for each such Participant within the appropriate Regional Sub
Fund or, if applicable, Sub Sub Fund (a "Participant Account").
(4) The Trustee shall maintain accurate records of all
allocations, distributions and dispositions with respect to the Regional
Sub Funds, the Sub Sub Funds and the Participant Accounts, and the number
of ESOT Shares which remain unallocated (in respect of each Regional Sub
Fund and Sub Sub Fund, the "Unallocated Regional Sub Fund" and the
"Unallocated Sub Sub Fund" respectively) within each Regional Sub Fund and
Sub Sub Fund, and the Trustee shall credit the Unallocated Regional Sub
Funds and the Unallocated Sub Sub Funds (with respect to unallocated
portions of the Trust Fund) and the Participant Accounts (with respect to
allocated portions of the Trust Fund), as applicable, periodically with all
dividends or distributions made and income earned with respect to ESOT
Shares credited to such funds or accounts. The establishment and
maintenance of the Regional Sub Funds, the Sub Sub Funds, the Unallocated
Regional Sub Funds and Unallocated Sub Sub Funds and the Participant
Accounts hereunder shall be for accounting and bookkeeping purposes only
and shall not require actual segregation of any part of the assets of the
Trust.
1.6 STOCKHOLDER AGREEMENT. In connection herewith, the
Trustee shall on or prior to the Closing Date have executed that certain
Stockholder Agreement, between the Company and the Trustee (the
"Stockholder Agreement"), a copy of which is attached as Exhibit A hereto,
and the Trustee shall comply with the terms thereof.
1.7 VOTING. The Trustee shall vote the Initial ESOT Shares,
and to the extent that any ESOT Escrow Shares or ESOT Adjustment Shares
have been provided to the Trustee by the Escrow Agent, such ESOT Escrow
Shares and ESOT Adjustment Shares, in accordance with the Stockholder
Agreement. In any voting matter for which the Stockholder Agreement does
not specifically prescribe how such shares shall be voted, the Trustee
shall vote such shares for, against or to abstain in the same proportions
as the shares of Company Common Stock are voted by all other stockholders
of the Company in respect of such matter. This Section 1.7 shall also
apply in the case of any action by stockholders' consent without a meeting.
<PAGE>
ARTICLE II
PARTICIPANTS, ALLOCATIONS AND VESTING CONDITIONS
2.8 ALLOCATION OF SHARES CREDITED TO REGIONAL SUB FUNDS AND SUB SUB
FUNDS. Except as provided in Sections 2.3(b), and 2.6 or otherwise agreed
to by the Company, ESOT Shares may be allocated only to persons who are
employees (and become employees of the Company or its subsidiaries or
affiliates after Closing) of the Europe/USA Region Companies or a
subsidiary or affiliate thereof with respect to the Europe/USA Sub Fund,
the Asia Region Companies, or a subsidiary or affiliate thereof with
respect to the Asia Sub Fund and the Australasia Region Companies, or a
subsidiary or affiliate thereof with respect to the Australasia Sub Fund;
provided that ESOT Shares credited to a specific country Sub Sub Fund may
only be allocated to current or former employees of JLW entities
incorporated or with their principal place of business within the relevant
country or who habitually reside or in the past have habitually resided in
the relevant country or who become so habitually resident or employees of
the Company or one of its subsidiaries or affiliates so incorporated or
with such principal place of business following the Closing (such persons
in relation to each Regional Sub Fund or Sub Sub Fund are hereinafter
referred to as "Potential Participants" of that Regional Sub Fund or, as
the case may be, Sub Sub Fund).
2.9 SELECTION OF PARTICIPANTS. Subject to the terms and conditions
of this Agreement, the European Region Representative, the Asia Region
Representative and the Australasia Region ESOT Representative,
respectively, shall recommend to the Shareholders' Representatives as a
group participants ("Participants") from among the applicable Potential
Participants (in accordance with the employee designations specified on
Schedule 3 attached hereto), recommend allocations of ESOT Shares,
recommend Vesting Conditions (as hereinafter defined) and recommend the
proposed distribution date (the "Distribution Date") of allocated ESOT
Shares ("Awards") with respect to the applicable Regional Sub Fund and,
with respect to the Europe/USA Sub Fund, the Sub Sub Funds and the
Shareholders' Representatives as a group shall make determinations based on
such recommendations; provided that all such determinations shall be made
in accordance with this Agreement. In the case of the Germany Sub Sub
Fund, the Europe/USA Region Representative may recommend, and the
Shareholders' Representatives shall have the right to grant, Awards to
Participants which consist of withdrawal rights, which withdrawal rights
may be exercised at the election of the Participant at any time after
December 31, 1999 but on or prior to December 27, 2000; provided that any
portion of an Award as to which withdrawal rights have not been exercised
on or prior to December 27, 2000 shall lapse on such date (subject to
Section 3.4(b) hereof). Notwithstanding any such recommendation, the
ultimate decision in relation to every Award shall be made by majority
decision of all of the Shareholders' Representatives (for the avoidance of
any doubt the provisions of clause 7 of the SCCA are not intended to be
incorporated hereunder) who need not follow the recommendation of the
applicable regional Shareholders' Representative.
2.10 ELIGIBILITY. (a) In recommending the persons to whom Awards
shall be made, the relevant regional Shareholders' Representative shall
take into account such factors, including but not limited to the duties and
the past, present and potential contributions to the success of the Company
and its subsidiaries, or of that of any of the JLW Businesses, of the
Potential Participants, as such Shareholders' Representative shall deem
relevant. The Company shall not be responsible, or have any liability to
any Participant or Potential Participant, for any determination of
eligibility made by the Shareholders' Representatives.
<PAGE>
(1) Without the written consent of the Company, which consent
shall not be unreasonably withheld, the Shareholders' Representatives shall
not allocate or distribute any of the ESOT Shares to any (i) person who
received Consideration Shares pursuant to the Purchase Agreements, if the
Company reasonably determines that such allocation or distribution would
adversely affect the Company's tax or accounting position, (ii) former
employee of the JLW Businesses who does not become an employee of the
Company or of one or more of its subsidiaries or affiliates at Closing or
(iii) Shareholders' Representative.
(2) In the event of the death of a Potential Participant, the
term "Potential Participant" in such case shall include such Potential
Participant's spouse, dependents and legatees as such rights shall be
governed by the applicable laws of inheritance.
1.11 TIMING AND ALLOCATIONS.
(1) The ESOT Shares, including ESOT Escrow Shares and ESOT
Adjustment Shares, credited to each Regional Sub Fund or, if applicable,
Sub Sub Fund, shall be allocated on the dates (each an "Allocation Date")
and in the amounts set forth on Schedule 3 attached hereto. Except with
the prior written consent of the Company (which may be withheld for any
reason or no reason) , no allocations may be made after December 31, 2000
(the "Final Allocation Date") or on any date other than an Allocation Date.
(2) With respect to each Allocation Date, the Shareholders'
Representatives shall give the Trustee and the Company written notice (the
"Company Allocation Notice") specifying the names, addresses, habitual
residence and employer of the Participants, the Regional Sub Fund or, if
applicable, Sub Sub Fund from which ESOT Shares will be allocated, the
number of shares subject to Vesting Conditions ("Unvested Shares") and the
nature of the Vesting Conditions, the number of shares not subject to
Vesting Conditions ("Vested Shares"), the number of ESOT Escrow Shares and
ESOT Adjustment Shares, the proposed Distribution Date of the Vested
Shares, the proposed Distribution Date for Unvested Shares subject to a
required term of employment and the withdrawal rights, if any, applicable
to the Award; provided that no Distribution Date shall be later than
January 31, 2001. Each such notice shall be given at least 90 days prior
to the applicable Allocation Date, except with respect to the ESOT Shares
allocated on the Closing Date (the "Closing Allocation Date"), in which
case such notice shall be delivered at least five Business Days prior to
the Closing Allocation Date. During the 30 days following the Company
Allocation Notice (two Business Days in the case of the Closing Date) (the
"Review Period"), the Company and the Shareholders' Representatives shall
review the allocations included in the Company Allocation Notice to confirm
that such allocations have been made in compliance with the terms of this
Agreement. Within five (5) Business Days, following each Review Period,
the Company and the Shareholders' Representatives shall provide the Trustee
with written notice instructing the Trustee to provide written notice to
each Participant (the "Participant Notice") specified in the Company
Allocation Notice whose proposed allocation complies with the terms of this
Agreement; provided that with respect to the Closing Allocation Date,
Participants shall be notified within 10 Business Days after the Closing
Allocation Date and in respect of the other two Allocations Dates,
Participants may not be notified earlier than 60 days prior to such
Allocation Date. No Award shall be effective until the applicable
Allocation Date and no allocation shall be effective unless the Participant
has satisfied the conditions set forth in Section 2.5 hereof (except with
respect to allocations on the Closing Allocation Date). Each such
Participant Notice shall be substantially in the form set out in Part IA
(Non-U.S. standard distribution), Part IB (U.S. standard distribution) or
Part II (withdrawal rights) of Schedule 4, or in relation to any Award of
ESOT Shares contained in any Regional Sub Fund, in such other form as may
<PAGE>
be approved by the Company and the Shareholders' Representatives. On or
prior to the applicable Allocation Date, the Company and the Shareholders'
Representatives shall be required to provide written notice to the Trustee
in the form attached hereto as Schedule 5 (the "Trustee Allocation Notice")
instructing the Trustee to make all allocations specified in the Trustee
Allocation Notice; provided that neither the Company nor the Shareholders'
Representatives shall have any obligation to execute a Trustee Allocation
Notice with respect to (i) any Award that does not comply with the terms of
this Agreement or (ii) any Participant who has failed to satisfy the
conditions set forth in Section 2.5 (except with respect to allocations on
the Closing Allocation Date). The Trustee shall make the allocations set
forth in the Trustee Allocation Notices on the applicable Allocation Date.
In the event that all shares required to be allocated on an Allocation Date
are not provided for in the Trustee Allocation Notices submitted to the
Trustee in respect of that Allocation Date, such non-allocated shares shall
be allocated by the Trustee pursuant to written instructions of the
compensation committee of the Company's Board of Directors, effective as of
the applicable Allocation Date.
(3) Except with respect to allocations on the Closing
Allocation Date, in the event any Participant specified in the Company
Allocation Notice does not satisfy the conditions set forth in Section 2.5
on or before the date 15 days before the applicable Allocation Date, the
Company and the Shareholders' Representatives shall, subject to the terms
of this Agreement, cause the ESOT Shares proposed to be allocated to such
Participant to be allocated to one or more Potential Participants or
Participants (in this instance, the Shareholders' Representatives shall
have the right to select additional Participants after the Review Period in
accordance with Section 2.2, subject to the Company's confirmation that
such allocation is in compliance with the Agreement) who have satisfied the
conditions set forth in Section 2.5 prior to the applicable Allocation
Date.
(d) The ESOT Escrow Shares and ESOT Adjustment Shares shall
be allocated by the Shareholders' Representatives to Participants on the
applicable Allocation Date in accordance with the amounts and dates
specified on Schedule 3; provided, that if such shares have not been
received by the Trustee from the Escrow Agent, such allocation shall be
conditional on receipt of such shares by the Trustee.
2.12 CONDITIONS TO ALLOCATIONS. Except with respect to allocations
on the Closing Allocation Date, no Participant shall have the right to be
allocated an Award hereunder unless such Participant shall have (i)
executed a stockholder agreement in the form attached as Exhibit B hereto;
and (ii) executed a recall acknowledgment relating to potential recall
obligations under the SCCA in the form attached as Exhibit C hereto (the
"SCCA Undertaking").
2.13 REALLOCATIONS. (a) In the event that the Vesting Conditions
applicable to ESOT Shares which have been allocated to a Participant's
Account are not satisfied or any Award, or portion thereof, in the form of
withdrawal rights shall lapse in accordance with its terms (including as a
result of the failure by the relevant Participant to exercise his or her
withdrawal rights in their entirety) or an Award has lapsed pursuant to
Section 2.6(b) below or Section 2.12 (such shares being referred to as
"Forfeited ESOT Shares"), the Forfeited ESOT Shares shall be reallocated by
the Shareholders' Representatives on the Final Allocation Date to one or
more Potential Participants or Participants who have satisfied the
conditions specified in Section 2.5 on or prior to the Final Allocation
Date irrespective (notwithstanding any other provision of this agreement)
of any such Potential Participant's or Participant's Regional Sub Fund or
Sub Sub Fund; provided, that ESOT Shares subject to Awards in the form of
withdrawal rights shall only be allocated to Participants or Potential
Participants of the Europe/USA Sub Fund; provided further, that any
reallocated Forfeiture ESOT Shares shall not be subject to any Vesting
Conditions.
<PAGE>
(b) In connection with ESOT Shares (including ESOT Shares
which are subject to withdrawal rights which have not been exercised)
allocated on the Closing Allocation Date, if any of the conditions
specified in Section 2.5 or Section 3.2 shall have not been fulfilled on or
prior to December 27, 2000, the Award shall lapse and the ESOT Shares which
are the subject thereof shall be available for reallocation in accordance
with Section 2.6(a) above.
2.14 VESTING CONDITIONS. (a) The Vesting Conditions applicable to
shares credited to each Regional Sub Fund and Sub Sub Fund shall be as set
forth on Schedule 3 attached hereto. The employment conditions of vesting
(but not the length of the vesting period) applicable to any ESOT Shares
may, at the election of the Shareholders' Representatives, in any Trustee
Allocation Notice, be made more restrictive to reflect local tax or other
relevant considerations. Any ESOT Shares specified on Schedule 3 as being
subject to vesting conditions may only be allocated subject to the vesting
conditions described in this Section 2.7 (the "Vesting Conditions" ).
(1) If the "Standard Forfeiture" Vesting Condition applies to
an Award to a Participant, the number of the Unvested Shares subject to
such Vesting Condition shall be equal to fifty percent of such Award (up to
35,700 shares) and twenty percent of any remaining entitlement; provided,
however, that if a Participant is allocated more than one Award subject to
Standard Forfeiture, the total number of Unvested Shares shall be
calculated by taking fifty percent (up to 35,700 shares) of the sum of all
Awards to the Participant subject to Standard Forfeiture and twenty percent
of any remaining allocation (the "Total Unvested Shares") and the amount
required to be withheld from an Award as Unvested Shares shall be the Total
Unvested Shares less any Unvested Shares already withheld pursuant to
previous Awards.
(1)
(2) In the event that any Participant who receives an Award
that is subject to the Standard Forfeiture Vesting Condition or other
Vesting Condition which imposes a required term of employment ceases for
any reason to be an employee, director or officer of the Company or of one
of its subsidiaries or affiliates (a "Departure") prior to the end of the
required term of employment or the Final Allocation Date, the Shareholders'
Representatives (or, in the case of beneficiaries of the United States Sub
Sub Fund who have waived bonuses in order to receive ESOT Shares, the U.S.
Shares Committee (the "U.S. Shares Committee") described in Schedule 8
hereto) shall make a determination whether such Departure is a Bad
Departure (as defined in Schedule 7 or Schedule 8, as applicable (a
Participant whose Departure is determined by the Shareholders'
Representatives (or the U.S. Shares Committee, if applicable) to be a Bad
Departure is referred to as a "Bad Leaver"). Determinations as to whether
a Participant shall be deemed to be a Bad Leaver and the number of Unvested
Shares with respect to which such classification shall apply shall be made
on the Final Allocation Date, except that in the case of a Participant
whose employment terminates prior to such date by reason of death or
disability such determination shall be made as soon as reasonably
practicable after the Shareholders' Representatives are notified of the
Departures.
(3) Except as provided on Schedule 8 attached hereto, the
Shareholders' Representatives (or the U.S. Shares Committee, if applicable)
shall have complete and absolute discretion as to the determination of
whether a Participant is a Bad Leaver and such determination shall be final
and binding on each Participant and on the Company. Neither the Company,
the Shareholders' Representatives, the members of the U.S. Shares Committee
nor the Trustee shall be liable to any Participant for any determination
that such Participant is a Bad Leaver. In determining whether a Departure
is a Bad Departure, the general guidelines set forth on Schedule 7 hereto
shall be applicable; provided, however, the guidelines set forth on
Schedule 8 shall apply in relation to beneficiaries of the United States
Sub Sub Fund who have waived bonuses in order to receive ESOT Shares.
<PAGE>
(4) No later than 45 days before the Final Allocation Date,
the Trustee shall notify the Shareholders' Representatives and the Company
of the number of ESOT Shares within each Participant's Account with
withdrawal rights and whether such Participant has exercised any withdrawal
rights and the amount of any withdrawal. No later than 30 days before the
Final Allocation Date, the Shareholders' Representatives shall provide to
the Company a written notice setting forth the Participants who have been
subject to a Departure (such information to be provided by the Company on
the request of the Shareholders' Representatives) and the Participants who
have not exercised their withdrawal rights or whose withdrawal rights have
lapsed, the number of Unvested Shares or ESOT Shares subject to withdrawal
rights applicable to such Participants and the Potential Participant or
Participants who would receive the related Forfeited ESOT Shares, if any,
on the Final Allocation Date. The Shareholders' Representatives shall on
the Final Allocation Date provide written notice to the Trustee and the
Company as to whether any Participant has been determined to be a Bad
Leaver or whose withdrawal rights have lapsed and the Potential
Participants or Participants who have been reallocated the Forfeited ESOT
Shares.
(5) The Shareholders' Representatives (or the U.S. Share
Committee, if applicable) shall provide written notice to any Participant
subject to a Departure who has been determined to be a Bad Leaver as soon
as reasonably practicable following the Final Allocation Date or the date
of the determination as to whether or not the relevant Participant is a Bad
Leaver in the case of any Participant's death or disability.
(6) Notwithstanding the foregoing and, to the extent
separately agreed in writing by the Shareholders' Representatives and the
Company, after the receipt of written instructions from the Shareholders'
Representatives and the Company, the Trustee shall distribute at or at any
time after Closing, in accordance with Articles III and IIIA below, the
ESOT Shares allocated to individuals upon the recommendation of the
European Shareholders' Representative free of any Vesting Conditions but,
in the case of any ESOT Escrow Shares or ESOT Adjustment Shares allocated,
conditional on the receipt of such shares by the Trustee.
2.15 ADJUSTMENT OF THE ALLOCATIONS OF THE ESOT ESCROW SHARES AND
ESOT ADJUSTMENT SHARES. If less than the entire number of ESOT Escrow
Shares or ESOT Adjustment Shares are returned to the Trustee by the Escrow
Agent, the Shareholders' Representatives shall notify the Trustee and the
Company in writing of the allocation of the returned shares among the
Regional Sub Funds, Sub Sub Funds and Participant Accounts and the Trustee
shall adjust the allocations to the Regional Sub Funds, Sub Sub Funds or
Participant Accounts as indicated in such notice.
2.16 ALLOCATIONS OF DISTRIBUTIONS AND DIVIDENDS. If the Trustee
receives dividends or distributions in respect of Initial ESOT Shares and,
to the extent that any ESOT Escrow Shares and ESOT Adjustment Shares are
deposited in the Trust Fund, in respect of such ESOT Escrow Shares and ESOT
Adjustment Shares, the Trustee shall credit the Regional Sub Funds and Sub
Sub Funds (with respect to unallocated ESOT Shares) or Participant Accounts
(with respect to allocated ESOT Shares), as applicable, with property
received in respect of the ESOT Shares credited to such fund or account.
All distributions, property and other rights distributed (including,
without limitation, upon a stock split, stock dividend or other
recapitalization of the Company) shall attach to and run with the
applicable ESOT Shares and shall be subject to the same conditions and
restrictions contained in this Agreement as are applicable to such ESOT
Shares.
<PAGE>
2.17 POTENTIAL BENEFICIARIES' AND BENEFICIARIES' RIGHTS. No
Potential Participant shall have any claim to be granted any Award under
this Agreement nor shall a Participant have any right to an Award prior to
the satisfaction of the conditions to allocation set forth in Section 2.5
and the conditions to distribution set forth in Section 3.2 hereof. There
is no obligation for uniformity of treatment of Participants or Potential
Participants. No Participants shall have any right to an Award that is
subject to Vesting Conditions until a determination shall have been made
pursuant to Section 3.2 below that such Vesting Conditions have been
satisfied. No Participant shall have any rights as a stockholder of the
Company with respect to any of the ESOT Shares covered by an Award until
the date of the issuance of a stock certificate to such person representing
such shares.
2.18 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement or
in any Award granted or other agreement entered into pursuant hereto shall
(i) confer upon any Potential Participant or Participant the right to
continue in the employ of the Company or any of its subsidiaries or
affiliates or to continue service as a director of the Company or any of
its subsidiaries or affiliates or to be entitled to any remuneration or
benefits not set forth in this Agreement or (ii) interfere with or limit in
any way any right of the Company or any of its subsidiaries or affiliates
to terminate such Potential Participant or Participant's employment or
service as a director.
2.19 ASSIGNMENTS AND TRANSFER OF AWARDS. The right to receive an
Award hereunder, including any withdrawal rights, is personal to each
Participant. The right to receive any Awards hereunder may not be
transferred or assigned and will lapse upon any purported transfer;
provided that the right to receive an Award, including the exercise of
withdrawal rights, shall extend to a Participant's heirs and legatees in
the event of a Participant's death.
ARTICLE III
DISTRIBUTIONS FROM THE TRUST
3.20 INCOME DISTRIBUTIONS FROM THE TRUST FUND. Subject to Article
IIIA, the Trustee shall distribute all income of the Trust in respect of
the Trust Fund within 180 days after the date that such income was earned
or received to the Participants in respect of ESOT Shares allocated to
their Participant Account (excluding ESOT Escrow Shares and ESOT Adjustment
Shares, which have not been received by the Trustee) or, to the extent the
ESOT Shares are not allocated to a Participant Account, as directed by the
Shareholders' Representatives.
3.21 CONDITIONS TO DISTRIBUTION. No Participant shall have the
right to receive a distribution or withdrawal of an Award unless such
Participant shall have (i) satisfied all applicable Vesting Conditions; and
(ii) satisfied any additional requirements (if any) set out in the
applicable Trustee Allocation Notice; provided, that in the case of
Participants who received allocations on the Closing Allocation Date, the
Participant must also have fulfilled the conditions set forth in Section
2.5 hereof. No distribution or initial withdrawal shall be made until the
Trustee shall have received written certification from the Shareholders'
Representatives and the Company that such conditions shall have been
satisfied ("Distribution Certification"). The Shareholders'
Representatives shall endeavor to deliver the Distribution Certification
five Business Days prior to any Distribution Date; provided that in
connection with distributions of allocations made on the Closing Allocation
Date, the Distribution Certification shall be given as soon as reasonably
practicable after the fulfillment of the conditions by the Participants set
forth in this Section 3.2.
<PAGE>
3.22 DISTRIBUTIONS OF ESOT SHARES AFTER THE FINAL ALLOCATION DATE.
(a) The Distribution Date for Unvested Shares, which shall become vested on
the Final Allocation Date, shall be January 31, 2001 (or such other date as
the Company and Shareholders' Representatives shall mutually agree), and in
the event that a Participant is subject to a Departure prior to the end of
a required term of employment or the Final Allocation Date, ESOT Shares
will be distributed to such Participant, only if the Trustee shall have
received written notice from the Shareholders' Representatives ("Leaver
Status Notice") that such Participant is not a Bad Leaver (as hereinafter
defined).
(1) In the event any withdrawal rights granted to any
Participant shall not have been extended pursuant to 3.4(b) and such
Participant has not been determined to be a Bad Leaver, any Unvested Shares
subject to such withdrawal rights shall be deemed to have been the subject
of a Withdrawal Notice (as hereinafter defined) taking effect on the Final
Allocation Date. The ESOT Shares subject to such withdrawal rights will be
distributed to such Participant only after the Trustee shall have received
a Leaver Status Notice indicating such person is not a Bad Leaver.
3.23 NOTICE OF INTENT TO WITHDRAW. (a) Any Participant who has
been granted an Award subject to withdrawal rights shall give the Trustee,
the Company and the European Region Representative 30 days prior written
notice of such Participant's intent to exercise such withdrawal rights
substantially in the form provided in Schedule 4 attached hereto (a
"Withdrawal Notice"), which notice shall specify the number of ESOT Shares
subject to the Award that are being withdrawn and the date of such
withdrawal (the "Withdrawal Date"); provided no Withdrawal Date shall be
later than January 31, 2001. The Trustee shall promptly on receipt of a
Withdrawal Notice send a copy thereof to the Company. A Participant may
submit no more than three Withdrawal Notices to withdraw such Participant's
entire Award.
(b) If requested by the Shareholders' Representatives on or
prior to November 15, 2000, the Company shall consider and discuss in good
faith a proposal by the Shareholders' Representatives to permit the
exercise of withdrawal rights to be extended beyond December 27, 2000 and
shall reach such decision no later than 15 Business Days prior to December
27, 2000; provided that such extension shall not prevent the termination of
this Agreement or have any detrimental accounting, financial, tax or other
impact on the Company's business and financial condition or results of
operation. If the Company reaches such an agreement, the Company shall use
its reasonable efforts to cooperate in the implementation of such proposal
and in such case, notwithstanding anything to the contrary contained in
this Agreement, the Withdrawal Rights shall not lapse on December 27, 2000.
3.24 RIGHT TO ALTERNATIVE DISTRIBUTIONS. (a) Notwithstanding
anything to the contrary contained herein, prior to any Allocation Date,
Distribution Date or Withdrawal Date for any ESOT Shares specified in the
Withdrawal Notice for those ESOT Shares, the Company shall have the right
to (i) change the method by which a Participant receives an Award
("Alternative Award Method") from the Trust or to replace such Award with
an equivalent cash benefit ("Equivalent Benefit Awards"), in each case if
the Company reasonably determines that such Alternative Award Method or
Equivalent Benefit Award is more administratively attractive to the
Company. The Company shall provide written notice to the Trustee, the
Shareholders' Representatives and the Participant within 15 Business Days
prior to a Distribution Date or 15 Business Days following receipt of a
Company Allocation Notice or Withdrawal Notice, as applicable, of its
intent to elect an Alternative Award Method or provide an Equivalent
Benefit Award and directing the Trustee to take any actions necessary to
accomplish the Alternative Award Method. For the purposes of this
Agreement "Equivalent Benefit Award" shall mean an amount in cash equal to
the average Market Price for the five trading day period preceding the
applicable Distribution Date or Withdrawal Date, multiplied by the total
number of ESOT Shares (and other Company Common Stock) proposed to be
allocated or subject to the applicable Award, as the case may be (plus the
<PAGE>
fair market value of any other property subject to such Award as determined
in good faith by agreement of the Board of Directors of the Company and the
Shareholders' Representatives). "Market Price" shall mean on the date
specified, the last sale price of the Company Common Stock, on such date
or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially
reported on the principal national securities exchange on which the Company
Common Stock is then listed or admitted to trading, or (b) if the Company
Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security
by the National Association of Securities Dealers, Inc. ("NASD"), the last
trading price of the Company Common Stock on such date, or (c) if there
shall have been no trading on such date or if the Common Stock is not so
designated, the average of the closing bid and asked prices of the Company
Common Stock on such date as shown by the NASD automated quotation system,
or (d) if the Company Common Stock is not then listed or admitted to
trading on any national exchange or quoted in the over-the-counter market,
the fair value thereof determined in good faith by agreement of the Board
of Directors of the Company and the Shareholders' Representatives. In the
event that the Alternative Award Method or Equivalent Benefit Award
selected by the Company would be less tax advantageous to a Participant
than the anticipated tax treatment applicable to the original Award, in
addition to such Alternative Award Method or Equivalent Benefit Award, as
soon as practicable following the applicable Distribution Date or
Withdrawal Date, the Company shall pay to such Participant an additional
amount equal to the difference between the actual taxes (including any
social security, contribution or similar employment tax imposed in respect
of compensation) incurred by the Participant in connection with such
Alternative Award Method or Equivalent Benefit Award (including any income
tax incurred by the Participant with respect to the receipt of the
additional amount) and the taxes (including any social security,
contribution or similar employment tax imposed in respect of compensation)
that would have been incurred by such Participant if the Alternative Award
Method had not been used or the Equivalent Benefit Award had not been paid
(the "Tax Gross Up"). The determination as to whether the tax treatment of
an Alternative Award Method or Equivalent Benefit Award is more or less
advantageous to a Participant than the anticipated tax treatment applicable
to the original Award, and, if applicable, the amount of the Tax Gross Up
shall be determined by the mutual agreement of the Company and the
Shareholders' Representatives; provided, however, that if the Company and
the Shareholders' Representatives cannot reach an agreement as to the
foregoing matter prior to the applicable Distribution Date or Withdrawal
Date the matter or matters shall be submitted to the Company's outside
independent auditors (acting as an expert) for final determination;
provided that there shall be no distribution or withdrawal of such Award
until such determination(s) have been agreed to by the Shareholders'
Representatives and the Company or determined by the Company's independent
auditors. Any ESOT Shares or other property subject to an Award that is
provided by an Alternative Award Method or with an Equivalent Benefit Award
shall be returned by the Trustee to the Company.
3.25 METHODS OF PAYMENTS AND DISTRIBUTIONS. All distributions
hereunder shall be made on the Distribution Date or Withdrawal Date or, if
a Distribution Certification has not been received by the Trustee, promptly
after the receipt of such Distribution Certification. Payments of money by
the Trustee may be made by its check payable to the order of the payee
designated by the Shareholders' Representatives and mailed to the payee at
the address specified by the Shareholders' Representatives. Distributions
of the ESOT Shares by the Trustee shall be made by requesting the Company,
or its transfer agent, to issue to the Participant a stock certificate
evidencing ownership of the designated number of ESOT Shares. In the case
of an Equivalent Benefit Award, all distributions from the Trust shall be
made as soon as reasonably practicable after any given Distribution Date or
Withdrawal Date or, if a Distribution Certification has not been received
by the Trustee, promptly after receipt of such Distribution Certification.
<PAGE>
3.26 REQUIRED REGISTRATIONS AND FILINGS. (a) No allocation of ESOT
Shares or distribution or withdrawal of Awards shall be made to any
Participant in any jurisdiction in which such allocation, distribution or
withdrawal is prohibited or illegal. In the event that any filings or
registrations shall be necessary in order to permit allocations,
distributions or withdrawals of ESOT Shares out of the Trust, the Company
shall use commercially reasonable efforts to make such filings or
registrations and where it is not appropriate for such registrations or
filings to be made by the Company, the Company shall direct the Trustee in
effecting such registrations or filings. The cost of such filings or
registrations, including reasonable advisers' fees, shall be paid by the
Company; provided, however, that if any such filings or registrations are
required to be made as a result of the distribution of Awards by the
Trustee to a larger number of individuals in the relevant jurisdictions
than are specified in Schedule 3 hereto, the costs of such filings or
registrations shall be paid out of the Trust Fund. Notwithstanding the
foregoing, if the Company reasonably determines that compliance with the
securities laws of a particular jurisdiction other than the United States
would be impractical, including as a result of associated costs, the
Company shall not be required to complete such registrations or filings and
the Trustee shall not be liable for such decision nor required to take any
action inconsistent with the Company's decision. The Company shall provide
written notice of such determination to the Trustee and the Shareholders'
Representatives not less than five days before the applicable Allocation
Date, Distribution Date or Withdrawal Date, as the case may be (the "Non-
Compliance Notice"). Upon receipt of a Non-Compliance Notice, the
Shareholders' Representatives and the Company shall instruct the Trustee to
sell the related ESOT Shares and remit to each Participant an amount equal
to the net proceeds from such sale, less the amount of taxes and costs
specified in Section 3.8 and Article III A hereof.
(1) The Company shall use its reasonable best efforts to file
(at its sole cost and expense) with the Securities and Exchange Commission
of the United States a registration statement on Form S-3 (if the Company
so qualifies) to permit the resale of ESOT Shares in an amount not to
exceed the withholding and other tax obligations (including taxes actually
imposed directly on and due and payable by a Participant) relating to the
Participants who were allocated ESOT Shares on the Closing Allocation Date
and December 31, 1999 in respect of such shares; provided that the Company
shall not be required to effect a registration covering the ESOT Shares to
be sold by the Trustee to the extent that the Company purchases or arranges
for the purchase of such ESOT Shares pursuant to Section 3.10. The Company
shall cause such registration statement to be effective for 180 days after
December 31, 1999. In addition, the Company shall use its reasonable best
efforts to file (at its sole cost and expense) with the Securities and
Exchange Commission of the United States a second registration statement on
Form S-3 (if the Company so qualifies) permitting the resale of ESOT Shares
in an amount not to exceed the withholding and other tax obligations
(including taxes actually imposed directly on and due and payable by a
Participant) relating to the Participants in respect of ESOT Shares
allocated to such Participants which first becomes due after December 31,
2000; provided that the Company shall not be required to effect a
registration covering the ESOT Shares to be sold by the Trustee to the
extent that the Company purchases or arranges for the purchase of such ESOT
Shares pursuant to Section 3.10. The Company shall cause such registration
<PAGE>
statement to be effective for 120 days after December 31, 2000.
Notwithstanding the foregoing, the Company has the right, in its sole and
absolute discretion, to delay filing either registration statement or to
suspend the effectiveness of such filed registration statement; provided,
that no delay in filing or suspension of effectiveness shall reduce the
minimum number of days that such registration statement is required to be
effective hereunder; provided, further, that unless the Board of Directors
shall determine that such delay or suspension is in the best interests of
the Company, the Company shall not delay filing nor suspend the
effectiveness of either registration statement for a period exceeding 90
days without the prior written consent of the Shareholders' Representatives
(such consent not to be unreasonably withheld). Each Participant shall
provide notice of required tax sales by such Participant under this Section
3.7 in accordance with the procedures prescribed by the Company and the
Shareholders' Representatives.
(2) In the event during the period commencing on the Closing
Date and ending on the fourth anniversary thereof, the Company offers the
holders of JLW Registrable Securities (as defined in the Stockholder
Agreement entered into by the Company and each Shareholder under the
Purchase Agreements (the "JLW Stockholder Agreement")) registration
pursuant to Section 6.1 of the JLW Stockholder Agreement, the Company shall
notify the Shareholders' Representatives at least 20 days before the
anticipated filing date. The Shareholders' Representatives shall notify
the Company promptly (and in no event later than 10 days after such notice)
of their election to include ESOT Shares which have been distributed to
Participants in such registration statement. If the Shareholders'
Representatives so elect, the Participants shall be allowed, to the extent
permitted by any applicable agreements to which the Company or any of its
subsidiaries is bound, to participate in any such registration statement on
the same basis as the other holders of the JLW Registrable Securities;
provided that if such participation is not so permitted, the Company will
in good faith attempt to obtain the necessary consents.
3.27 WITHHOLDING AND PAYMENT OF TAXES. Upon the direction of the
Company, the Trustee shall withhold, require withholding, or otherwise
satisfy any withholding obligations, (including both the withholding
obligation of the Company, any subsidiary or any affiliate and of the
relevant Participant), in respect of any allocation or distribution which
it is directed to make pursuant to this Agreement, such amount as the
Company may reasonably estimate to be necessary to comply with applicable
federal, state, local and foreign withholding requirements (including any
employer portion of any social security, contribution or similar employment
tax imposed in respect of compensation to the relevant Participant arising
out of the applicable Award). Upon the written request of a Participant
and to the extent permitted by applicable law, the Trustee shall withhold
additional amounts in excess of the amount required to satisfy withholding
obligations under this provision. The Company shall direct the Trustee to
take such other actions as the Company may deem advisable to enable the
Trustee, the employer of the relevant Participants and the relevant
Participants to satisfy their respective obligations for the payment of
withholding taxes and other tax obligations referred to herein. This
direction shall include authority to receive cash from the Participant and
to make payments in respect thereof in satisfaction of any Trustee,
Company, subsidiary, affiliate or Participant withholding tax obligation
referred to herein or, to the extent that the Participant fails to arrange
for such cash payments, to sell ESOT Shares on behalf of the relevant
Participant which sale may be made to the Company (at the Company's
election), to a designee of the Company or in the public market (subject to
3.10 below). In connection with any sale in the public market under this
Section 3.8, the Company shall be entitled to direct the Trustee to sell
the ESOT Shares of a Participant over any period of time not to exceed 15
Business Days following the day taxes are due in respect of such
Participant. Any taxes withheld and any additional amounts withheld by the
<PAGE>
Trustee shall be paid to the relevant taxing authority; provided that if
the Company, its subsidiaries or its affiliates have paid such taxes prior
to the sale by the Trustee, the Trustee shall remit the proceeds from such
sale to the Company. Upon settlement of such tax liability and any related
sale of ESOT Shares hereunder, the Trustee shall, to the extent the
conditions to distribution or withdrawal hereunder have been satisfied,
distribute the balance of the ESOT Shares then subject to distribution or
withdrawal to the relevant Participant on the applicable Distribution Date
or Withdrawal Date. To the extent that shares are sold to meet such tax
liability, the number of shares shall be rounded up to the nearest whole
number and any excess cash shall be distributed to the relevant
Participant.
3.28 NO FRACTIONAL SHARES. No fractional shares shall be allocated
pursuant to any Award.
3.29 SALES OF THE TRUST SHARES. In any case under this Agreement
where the Trustee is directed to sell any ESOT Shares and the ESOT Shares
cannot be sold by the Trustee without registration, if the Company elects
not to register such shares to allow for such sale, the Company agrees to
purchase or arrange for the purchase of such shares pursuant to an
applicable exemption from registration at a per share price equal to the
average Market Price for the five trading day period preceding the
applicable date on which the related tax is due or that the Trustee is
otherwise required to sell such ESOT Shares.
3.30 DISTRIBUTIONS SUBJECT TO RECALL UNDER THE PURCHASE AGREEMENTS.
(a) In the event any Initial ESOT Shares are required to be returned by the
Trustee to the Company pursuant to Section 1.4 of each of the Purchase
Agreements (a "Deficit"), the Company and the Shareholders' Representatives
shall provide written notice (the "Initial ESOT Shares Return Notice") to
the Trustee specifying the number of Initial ESOT Shares to return. Within
five Business Days after receipt of the Initial ESOT Shares Return Notice,
the Trustee shall return to the Company such Initial ESOT Shares as are in
its possession subject, in respect of ESOT Shares required to be recalled
from Participants pursuant to Section 3.11(b), to receipt of such shares by
the Trustee. The Trustee shall return to the Company any additional
Initial ESOT Shares received from Participants within five Business Days
after receipt thereof. The Shareholders' Representatives shall have the
discretion to determine the Regional Sub Fund(s) or Sub Sub Fund(s) in
respect of which the shares subject to such notice shall be deducted or
recalled. The Shareholders' Representatives shall provide written notice
to the Trustee within five Business Days following receipt by the Trustee
of the Initial ESOT Shares Return Notice specifying the number of Initial
ESOT Shares and Regional Sub Fund(s) and, if applicable, Sub Sub Fund(s) in
respect of which such shares will be deducted or recalled. To the extent
that Initial ESOT Shares are withdrawn from Participant Accounts or
recalled pursuant to Section 3.11(b), the number of shares withdrawn or
recalled in respect of a specified Regional Sub Fund or, if applicable, Sub
Sub Fund shall be determined on a pro rata basis (on the basis of the
number of ESOT Shares subject to an Award made to a Participant).
(1) In the event that a Participant is required pursuant to
paragraph (a) above to return ESOT Shares distributed to such Participant
hereunder, the Trustee as directed by the Company and the Shareholders'
Representatives shall notify such Participant and such Participant so
notified shall return, or cause to be returned, to the transfer agent
specified in such notice for cancellation, certificates representing the
shares received by such Participant no later than five Business Days after
receipt of such notice. The transfer agent shall cancel each returned
certificate and issue to such Participant a new certificate representing
such Participant's shares, less the number of ESOT Shares required to be
returned pursuant to paragraph (a) above. To assist in effectuating the
provisions of this Section 3.11, the Company may enter stop transfer orders
<PAGE>
with the transfer agent against the transfer of any Initial ESOT Shares
held by such Participant that are required to be returned for cancellation
pursuant to this section, which stop transfer orders shall be withdrawn by
the Company, in each case, once the applicable Initial ESOT Shares are so
returned.
3.31 DISTRIBUTIONS SUBJECT TO RECALL UNDER THE SCCA. (a) In the
event any ESOT Shares are required to be returned by the Trustee under the
SCCA (a "SCCA Reallocation"), the Shareholders' Representatives shall
provide written notice (the "SCCA Return Notice") to the Trustee specifying
the number of ESOT Shares to be returned and the Regional Sub Fund(s), Sub
Sub Fund(s), if applicable, and Participant Accounts in respect of which
such shares will be deducted or recalled. Within five Business Days after
receipt of the SCCA Return Notice, the Trustee shall return such ESOT
Shares as are in its possession subject, in respect of ESOT Shares required
to be recalled from Participants pursuant to the SCCA Undertaking, to
receipt of such shares by the Trustee. The Trustee shall return in
accordance with the SCCA Return Notice any ESOT Shares received from
Participants within five Business Days after receipt thereof.
(1) In connection with obtaining such ESOT Shares from
Participants, the Shareholders' Representatives may take such steps as they
consider appropriate to enforce any or all SCCA Undertakings. The Trustee
shall not take any action to enforce any SCCA Undertaking.
(2) In connection with any SCCA Return Notice, the Trustee
shall only be required to return ESOT Shares in its possession or received
by it from Participants after any efforts by the Shareholders'
Representatives pursuant to subsections (b) or (c) above.
3.32 ALLOCATION OF CAPITAL GAINS; VALUE OF DISTRIBUTED SHARES FOR
TAX PURPOSES. Gains from the sale of capital assets held by the Trust
shall be allocated to income. In determining the "Distributable Net
Income" for a Participant's account pursuant to section 643(a) of the
Internal Revenue Code, such Participant's Distributable Net Income shall
include gains on the sale of ESOT Shares (and any other capital assets)
allocated to such Participant's Account. Any sale of ESOT Shares allocated
to a Participant's Account by the Trustee to satisfy any tax or tax
withholding obligations relating to such Participant shall be deemed to be
a distribution to such Participant from his or her Participant Account
equal to the amount of the disbursement from the Trust. Unless applicable
law would require a date other than the date of the taxable event for
determining the ESOT Shares' value, for purposes of determining a
Participant's taxable income with respect to ESOT Shares by reason of a
taxable event such as an Allocation Date, Distribution Date or Withdrawal
Date of ESOT Shares (or such other taxable event as occurs or is deemed to
occur under applicable law), as the case may be, the per share value of the
ESOT Shares shall be the actual price per share realized by the Trustee on
a sale of ESOT Shares sold by the Trustee on the date of the taxable event.
If the Trustee did not sell any ESOT Shares on such date, the per share
price shall equal the average Market Price for the five trading day period
preceding the date of the taxable event. If the Trustee realizes more than
one sales price on the date of a taxable event, the per share value of the
ESOT Shares shall equal the weighted average of the per share sales prices
realized on such taxable event date.
<PAGE>
ARTICLE III A
TAXES
3A.1 Except with respect to withholding taxes pursuant to
Section 3.8, tax obligations of the Trust shall be paid to the appropriate
taxing authority by the Trustee exclusively from the assets of or income
and proceeds from the Trust Fund. Such taxes shall be allocable to each
Participant in accordance with such Participant's pro rata interest in the
Trust Fund. Upon the direction of the Company, the Trustee shall take all
actions as the Company may deem advisable to enable the Trustee to satisfy
obligations for the payment of taxes imposed on the Trust. This authority
shall include authority to sell ESOT Shares and to make payments in
satisfaction of any tax obligation.
ARTICLE IV
INVESTMENT AND ADMINISTRATION OF THE TRUST FUND
4.33 INVESTMENT POWERS OF TRUSTEE. The Trustee shall hold only the
ESOT Shares. The Trustee shall temporarily invest any cash included in the
Trust Fund pending distribution or payment of expenses, taxes or
indemnities hereunder, in (i) investments in United States Government
obligations with maturities of less than six months, (ii) interest-bearing
accounts, including but not limited to time deposits, saving accounts and
certificates of deposit, with maturities of less than six months in any
bank, including the Trustee's, with aggregate capital in excess of
$1,000,000,00 and a Moody's Investor Services rating of at least P1, or an
equivalent rating from a nationally recognized ratings agency, which
accounts are insured by the Federal Deposit Insurance Corporation or other
similar federal agency, (iii) obligations issued or guaranteed by any
agency or instrumentality of the United States of America with maturities
of less than six months, (iv) money market funds authorized to invest in
short term securities issued or guaranteed as to principal and interest by
the United States Government and repurchase agreements with respect to such
securities. The parties acknowledge that the Trustee shall not be
responsible for any diminution in the Trust Fund due to losses resulting
from investments. The Trustee may use its own Bond Department in executing
purchase and sales of permissible investments. Subject to the preceding
sentence, the Trustee shall have the powers described below.
(1) The Trustee may collect and receive any and all money and
other property due to the Trust and give full discharge therefor.
(2) The Trustee may deposit cash into interest bearing
accounts in the banking department of the Trustee or an affiliated banking
organization.
(3) The Trustee may appoint custodians or subcustodians
(including affiliates of the Trustee), as to part or all of the Trust,
provided, however, that any such custodian or subcustodian must also be a
United States domestic corporation incorporated in a jurisdiction agreed to
by the Company and the Shareholders' Representatives and agree to be bound
by the Stockholder Agreement executed by the Trustee in accordance with
Section 1.4 hereof.
(4) The Trustee may make, execute and deliver all
conveyances, proxies, releases or instrumentations in writing necessary or
proper for the exercise of its obligations under this Agreement.
(5) The Trustee may generally do all acts, whether or not
expressly authorized, which the Trustee may reasonably deem necessary or
desirable for the protection of the Trust; provided, however, prior to such
act (or where not practicable promptly following) the Trustee shall provide
notice to the Company and the Shareholders' Representatives of all such
actions, if not expressly authorized pursuant to this Agreement. No
implied covenant or obligations shall be read into this Agreement.
<PAGE>
4.34 ADMINISTRATIVE POWERS OF TRUSTEE. The Trustee shall have the
power in its discretion:
(1) subject to Section 4.1(c) above, to cause any shares of
stock to be registered and held in the name of one or more of its nominees,
or one or more nominees of any system for the central handling of
securities, without increase or decrease of the liability of the Trustee
hereunder;
(2) with the prior written consent of the Company and the
Shareholders' Representatives to settle, compromise or submit to
arbitration any claims, debts or damages due or owing to or from the Trust;
to commence or defend suits or legal proceedings to protect any interest of
the Trust; and to represent the Trust in all suits or legal proceedings in
any court or before any other body or tribunal;
(3) with the prior written consent of the Company and the
Shareholders' Representatives and subject to Section 4.1(c) above, to
organize under the laws of any state a corporation for the purpose of
acquiring and holding title to any property which it is authorized to
acquire under this Agreement and to exercise with respect thereto any or
all of the powers set forth in this Agreement;
(4) subject to Section 1.6 hereof, to vote or to give any
consent with respect to any securities, including the ESOT Shares, held by
the Trust either in person or by proxy for any purpose.
(5) generally to do all acts, whether or not expressly
authorized, which the Trustee may in good faith deem reasonably necessary
or desirable for the protection of the Trust Fund.
1.35 DEALINGS WITH TRUSTEE. Persons dealing with the Trustee shall
be under no obligation to see to the proper application of any money paid
or property delivered to the Trustee or to inquire into the Trustee's
authority as to any transaction.
ARTICLE V
SETTLEMENT OF ACCOUNTS,
ENFORCEMENT OF TRUST AND LEGAL PROCEEDINGS
5.36 SETTLEMENT OF ACCOUNTS OF TRUSTEE. (a) The Trustee or its
agent shall maintain such books, records and accounts as may be necessary
for the proper administration of the Trust. The Trustee's financial
statements, books and records with respect to the Trust Fund shall be open
to inspection by the Company or the Shareholders' Representatives or their
representatives upon reasonable notice at all reasonable times during
business hours of the Trustee.
(1) The Trustee shall render to the Company and to the
Shareholders' Representatives monthly statements of its receipts and
disbursements as Trustee hereunder. Within 30 days after the close of each
year or any termination of the duties of the Trustee, the Trustee shall
prepare and mail in duplicate to the Company and the Shareholders'
Representatives an account of its acts and transactions as Trustee
hereunder including allocations, disbursements and dispositions of Awards.
If the Company and the Shareholders' Representatives find the annual
accounts to be correct, the Company and the Shareholders' Representatives
shall each sign the instrument of settlement annexed to one counterpart of
the account and return such counterpart to the Trustee, whereupon the
account shall become an account stated as among the Trustee, the Company
and the Shareholders' Representatives. If within one year after receipt of
the account or any amended account the Company or the Shareholders'
Representatives have not signed and returned a counterpart to the Trustee,
or filed with the Trustee notice of any objection to any act or transaction
<PAGE>
of the Trustee, the account or amended account shall become an account
stated as between the Trustee and such party. If any objection has been
filed, and if the Company or the Shareholders' Representatives are
satisfied that it should be withdrawn or if the account is adjusted to its
satisfaction, the Company or the Shareholders' Representatives, as the case
may be, shall in a writing filed with the Trustee signify its approval of
the account, and it shall become an account stated as between the Trustee
and such party.
(2) When an account becomes an account stated, such account
shall be finally settled, and the Trustee shall be completely discharged
and released, as if such account had been settled and allowed by a judgment
or decree of a court of competent jurisdiction in an action or proceeding
in which the Trustee, the Company, the Shareholders' Representatives and
all persons having or claiming to have any interest in the Trust Fund were
parties.
(3) The Trustee, the Company or the Shareholders'
Representatives shall have the right to apply at any time to a court of
competent jurisdiction for judicial settlement of any account of the
Trustee not previously settled as hereinabove provided. In any such action
or proceeding it shall be necessary to join as parties only the Trustee,
the Shareholders' Representatives and the Company (although the Trustee may
also join other parties as it deems appropriate), and any judgment or
decree entered therein shall be conclusive.
5.37 DETERMINATION OF INTERESTS IN THE TRUST FUND, ENFORCEMENT OF
TRUST AND LEGAL PROCEEDINGS. The Trustee shall have no duty to question
any direction given by the Company or Shareholders' Representatives to the
Trustee, including any direction advising the Trustee as to the designation
of Participants, the allocation of ESOT Shares, the distribution of Awards
and the satisfaction of Vesting Conditions. The Company and the
Shareholders' Representatives shall have authority, either jointly or
severally, to enforce this Agreement on behalf of or all persons claiming
an interest in the Trust Fund. In any action or proceeding affecting the
Trust Fund the only necessary parties shall be the Company, the
Shareholders' Representatives and the Trustee, and no other person shall be
entitled to any notice or process.
ARTICLE VI
EXPENSES AND COMPENSATION OF TRUSTEE
6.38 EXPENSES AND COMPENSATION. During the term of this Agreement,
the Company shall pay all administrative costs and the Trustee's fees,
costs and expenses hereunder, excluding any fees, costs, or expenses
relating to or arising out of any claims, actions or proceedings arising
out of or relating to this Agreement which shall be paid as provided in
Section 7.7(c) hereof. The Trustee shall be entitled to fees for services
as mutually agreed. To the extent the Trustee advances funds to the Trust
for disbursements, the Trustee shall be entitled to collect from the Trust
the disbursement and an amount equal to what would have been earned on the
sums advanced (based on the "federal funds" interest rate).
<PAGE>
ARTICLE VII
FOR PROTECTION OF THE TRUSTEE
7.39 COMPOSITION OF THE SHAREHOLDERS' REPRESENTATIVES. The initial
European Region Representative, Asia Region Representative and Australasia
Region ESOT Representative shall be Robert Orr, Gerry Kipling and Donald
Leslie Harrington, respectively. In the event Donald Leslie Harrington
cannot continue to serve as the Australasia Region ESOT Representative and
subject to the prior written consent of the Company and the European Region
Representative and Asia Region Representative (such consents not to be
unreasonably withheld), the Australasia Region Representative under the
SCCA shall be entitled to select a replacement. The Shareholders'
Representatives shall jointly notify both the Trustee and the replacement
in writing of such replacement. Each Shareholders' Representative shall,
and any other Shareholders' Representative may, provide the Trustee with
written notice of any changes in their respective positions as
Shareholders' Representatives pursuant to the SCCA. Until notified in
writing that any Shareholders' Representative has ceased to act in such
capacity, the Trustee may continue to rely on the authority of such
representative. Unless otherwise indicated, all actions required to be
taken by the Shareholders' Representatives shall require the consent of
each Shareholders' Representative.
7.40 SHAREHOLDERS' REPRESENTATIVES MEETINGS. No meetings of the
Shareholders' Representatives may be held within Australia or the United
Kingdom.
7.41 EVIDENCE OF ACTION BY THE SHAREHOLDERS' REPRESENTATIVES. (a)
Each Shareholders' Representative shall certify to the Trustee the name or
names of any person or persons authorized to act for such Shareholders'
Representative. Until any Shareholders' Representative notifies the
Trustee that any such person is no longer authorized to act for such
Shareholders' Representative, the Trustee may continue to rely on the
authority of such person.
(1) The Trustee may rely upon any certificate, notice or
direction purporting to have been signed on behalf of the Shareholders'
Representatives if the Trustee reasonably believes it to have been signed
by such Shareholders' Representatives or the person or persons authorized
to act for such Shareholders' Representatives. The Trustee may rely upon
any certificate, notice or direction of the Company if the Trustee believes
it to have been signed by a duly authorized officer or agent of the
Company.
7.42 NOTICES. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand-delivery, air courier, or
telecopier (with a copy also sent by hand-delivery or air courier, which
shall not alter the time at which the telecopier notice is deemed received)
to the parties at the addresses set forth below (or to such other addresses
or, in the case of copies, to such other Persons as shall be set forth in
notices given in accordance with the provisions hereof). Such notices
shall be deemed given: at the time personally delivered, if delivered by
hand with receipt acknowledged; upon transmission thereof by the sender
and issuance by the transmitting machine of a confirmation slip that the
number of pages constituting the notice have been transmitted without
error, if telecopied, and the second Business Day after timely delivery to
the courier, if sent by air courier.
<PAGE>
(1) If to the Shareholders' Representatives, to:
Robert Orr
c/o Jones Lang LaSalle
22 Hanover Square
London WIA 2BN
England
Telephone: 44-171-493-6040
Fax: 44-171-408-0220
and to:
Gerry Kipling
c/o Jones Lang LaSalle
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
and to:
Donald Leslie Harrington
c/o Jones Lang LaSalle
Level 23
ASB Bank Centre
135 Albert Street
Auckland
New Zealand
Telephone: 64-9-499-1666
Fax: 64-9-309-7504
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Richard Jones
c/o Jones Lang LaSalle
9 Queen Victoria Street
London EC4N 4YY
England
Telephone: 44-171-248 6040
Fax: 44-171-454-8888
and to:
Christopher Radford
c/o Jones Lang LaSalle
16th & 17th Floors
Dorset House
Taikoo Place
979 King's Road
Quarry Bay
Hong Kong
Telephone: 852-2846-5000
Fax: 852-2968-1008
<PAGE>
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Slaughter and May
35 Basinghall Street
London EC2V
Attn: Andrew McClean, Esq.
Telephone: (0171) 600-1200
Fax: (0171) 600-0289
and to:
Sidley & Austin
875 Third Avenue
New York, NY 10022
Attn: James D. Johnson, Esq,
Telephone: (212) 906-2000
Fax: (212) 906-2021
(2) If to the Company, to:
Jones Lang LaSalle Incorporated
200 East Randolph Street
Chicago, Illinois 60601
Attn: Chief Financial Officer
Telephone: (312) 782-5800
Fax: (312) 228-0980
With a copy (which shall not constitute notice) given in the
manner prescribed above, to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Rodd M. Schreiber, Esq.
Telephone: (312) 407-0700
Fax: (312) 407-0411
and to:
Hagan & Associates
200 East Randolph Street, Suite 4322
Chicago, Illinois 60601
Attn: Robert K. Hagan
Telephone: (312) 228-2994
Fax: (312) 228-0982
(3) If to the Trustee, to:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Escrow Division/Marianne Tinerella
Telephone: (312) 461-2420
Fax: (312) 461-3525
<PAGE>
7.43 ADVICE OF COUNSEL. The Trustee may consult with any legal
counsel, including counsel to the Company or the Shareholders'
Representatives, with respect to the construction of this Agreement, its
duties hereunder or any act which it proposes to take or omit to take and
shall not be liable for any action taken or omitted in good faith pursuant
to such advice. If at any time the Trustee is in doubt concerning the
course which it should follow in administering this Agreement, it may
request the Shareholders' Representatives and the Company to advise it and
may rely upon any joint advice or direction of the Shareholders'
Representatives and the Company. The Trustee may also consult with legal
counsel (who may also be counsel to the Company generally) with respect to
its duties or obligations under the Stockholder Agreement. The Trustee
shall not be liable for any action taken or omitted to be taken in good
faith pursuant to such advice. All reasonable fees and expenses of counsel
shall be an expense of the Trustee and reimbursed as provided in Section
6.1 hereof.
7.44 FIDUCIARY RESPONSIBILITY. (a) The Trustee shall act with the
care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and
with like aims, provided, however, that the Trustee shall incur no
liability to any person for any action taken pursuant to a direction,
request or approval which is given by the Company or the Shareholders'
Representatives in accordance with this Agreement, or is given in writing
by the Company or the Shareholders' Representatives in accordance herewith.
In the event of a dispute between the Company and Shareholders'
Representatives, the Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
(1) The Trustee may hire legal counsel, agents, accountants,
actuaries, investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or obligations
hereunder or under the Stockholder Agreement and such reasonable costs
shall be reimbursed pursuant to Section 6.1 hereof.
(2) Notwithstanding anything in this Agreement to the
contrary and except as provided in Section 7.7 hereof, the Trustee shall
not be responsible or liable for its failure to perform under this
Agreement or for any losses to the Trust in each case to the extent that
the same results from any event beyond the reasonable control of the
Trustee, its agents or custodians, including but not limited to
nationalization, strikes, expropriation, devaluation, seizure, or similar
action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority
of currency restrictions, exchange controls, levies or other changes
affecting the Trust's property; or the breakdown, failure or malfunction of
any utilities or telecommunications systems; or any order or regulation of
any banking or securities industry including changes in market rules and
market conditions affecting the execution or settlement of transactions; or
acts of war, terrorism, insurrection or revolution; or acts of God; or any
other similar event. This Section shall survive the termination of this
Agreement.
(3) The Trustee shall not be liable for any act or omission
of any other person in carrying out any responsibility imposed upon such
person, and under no circumstances shall the Trustee be liable for any
indirect, consequential or special damages with respect to its role as
Trustee.
<PAGE>
7.45 INDEMNIFICATION. (a) Without prejudice to the Trustee's right
to compensation and reimbursement from the Company provided in Section 6.1,
the Trustee, its parent, subsidiaries and affiliates, and each of their
respective officers, directors, employees and agents (the "Indemnified
Parties") shall be indemnified and held harmless by the Company from and
against all liability, loss and expense, including reasonable attorneys'
fees and expenses ("Losses"), incurred by the Trustee or any of the
Indemnified Parties arising out of or in connection with this Trust and
Stockholder Agreement, except as a result of the Trustee's own gross
negligence or willful misconduct as determined by a final and non-
appealable judgment by a court of competent jurisdiction. If the Trustee
is successful in enforcing its rights to indemnification hereunder (as
determined by a final non-appealable judgment by a court of competent
jurisdiction), the costs and expenses of enforcing its right of
indemnification shall also be payable as provided in Section 7.7(c). This
indemnification shall survive the termination of this Trust.
(1) The Indemnified Parties shall be indemnified and held
harmless from and against all Losses incurred by the Indemnified Parties
arising out of or in connection with the payment of Federal or State income
taxes and any interest or penalties associated therewith that may be
assessed on the Company, the Participants or the Trust Fund on account of
the documentation or operation of the Trust.
(2) Without prejudice to the Trustee's right to compensation
and reimbursement from the Company provided in Section 6.1, the
indemnification provided in this Section 7.7 shall be the Company's
obligation, and shall be satisfied first out of the Trust Fund (both
allocated and unallocated shares) prior to any demand on the Company;
provided, that if the Trust Fund is insufficient to satisfy the indemnity
obligations to the Trustee or if the Trustee is prohibited by law from
satisfying its obligations out of the Trust Fund, the Company shall assume
such obligations to the extent of such insufficiency. Claims made against
the Trust Fund shall first be made against unallocated ESOT Shares and, if
such shares are insufficient to fulfill the indemnity obligations, against
Awards allocated to Participant's Accounts (but not distributed) on a pro
rata basis. No distribution of ESOT Shares and other property held in the
Trust Fund that are necessary to satisfy the foregoing indemnity
obligations shall be made until resolution of the Trustee's claim to
indemnification.
(3) If the Trustee undertakes, in good faith, or defends any
litigation arising in connection with this Trust or the Stockholder
Agreement, except for any litigation arising as a result of Trustee's own
gross negligence or willful misconduct, the Trustee shall be indemnified
against the Trustee's reasonable costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses) relating
thereto. The Trustee with respect to any such litigation shall have a
right to in good faith and after consultation with the Company and the
Shareholders' Representatives choose an appropriate counsel to handle any
such litigation. The Trustee may not settle or otherwise compromise any
such litigation, or any portion thereof, in a manner that would give rise
to any liability hereunder for an indemnity without the Shareholders'
Representatives prior written consent, which consent shall not be
unreasonably withheld; provided, that if the Trust Fund will not be
sufficient to satisfy such indemnity obligations, the Company's prior
written consent shall also be required, which consent shall not be
unreasonably withheld.
<PAGE>
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
8.46 RESIGNATION OF TRUSTEE. The Trustee may resign at any time by
filing with the Shareholders' Representatives and the Company its written
resignation. Such resignation shall take effect 60 days from the date of
such filing or upon appointment of a successor pursuant to Section 8.3,
whichever shall first occur.
8.47 REMOVAL OF TRUSTEE. The Company and the Shareholders'
Representatives may remove the Trustee at any time by delivering to the
Trustee a joint written notice of its removal and an appointment of a
successor pursuant to Section 8.3. Such removal shall not take effect
prior to 30 days from such delivery unless the Trustee agrees to an earlier
effective date.
8.48 APPOINTMENT OF SUCCESSOR TRUSTEE. (a) The appointment of a
successor to the Trustee shall take effect upon delivery to the Trustee of
(i) a joint written notice appointing such successor, executed by the
Company and the Shareholders' Representatives, and (ii) an acceptance in
writing, executed by such successor, both acknowledged in the same form as
this Agreement.
(1) All of the provisions set forth herein with respect to
the Trustee shall relate to each successor with the same force and effect
as if such successor had been originally named as a Trustee hereunder.
(2) If a successor is not appointed within 60 days after the
Trustee gives notice of its resignation pursuant to Section 8.1, the
Trustee may apply to any court of competent jurisdiction for appointment of
a successor.
8.49 TRANSFER OF FUND TO SUCCESSOR. Upon the resignation or removal
of the Trustee and appointment of a successor and after the final account
of the Trustee has been settled as provided in Article V, the Trustee shall
transfer and deliver the Trust Fund to such successor.
ARTICLE IX
DURATION AND TERMINATION OR REVOCATION OF TRUST AND AMENDMENT
1.50 DURATION AND TERMINATION. This Trust shall not be revocable
and shall continue until all of the ESOT Shares and other property in the
Trust Fund are distributed and a final accounting is prepared in accordance
with Article V or such other time as agreed to by the Company and the
Shareholders' Representatives; but in no event later than 90 days after
December 31, 2000 (the "Termination Date"). All ESOT Shares and other
property held in the Trust on the Termination Date shall be distributed to
the applicable Participants pursuant to this Agreement. If any ESOT
Escrow Shares continue to be held by the Escrow Agent on the Termination
Date, the Shareholders' Representatives shall appoint a custodian for the
Participant Accounts and the Trustee shall assign to such custodian the
right to receive any such ESOT Escrow Shares upon release by the Escrow
Agent. Upon receipt of any such Escrow Shares, the custodian shall
distribute such shares to the Participants; provided, that any distribution
<PAGE>
shall be less any withholding tax or other obligations as provided in
Section 3.8 hereof. The Trust shall automatically terminate upon the
Company giving the Trustee and Shareholders' Representatives notice of a
Change of Control (as hereinafter defined). Notwithstanding any provision
hereof, upon such notice of a Change of Control (i) all ESOT Shares which
are allocated and subject to Vesting Conditions shall vest and be
distributed to the Participants; and (ii) the Shareholders' Representatives
shall direct the Trustee to sell all unallocated ESOT Shares and other non-
cash assets (if any) then held in the Trust Fund and shall in good faith
direct the Trustee to distribute the net proceeds less any taxes and other
costs payable pursuant to Section 3.8 or Article IIIA to such Potential
Participants as they may in their absolute discretion determine. As used
herein, the term "Change of Control" shall mean any of the following
events: (a) an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of
the combined voting power of the then outstanding voting securities of the
Company; provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) acquisition by or directly from the
Company, (ii) an acquisition by any employee benefit plan or trust
sponsored or maintained by the Company; and (iii) any acquisition described
in subclauses (A) or (B) of subsection (b) below; or (b) approval by the
stockholders of the Company of (i) a complete dissolution or liquidation of
the Company, (ii) a sale or other disposition of all or substantially all
of the Company's assets or (iii) a reorganization, merger, or consolidation
("Business Consolidation") unless either (A) all or substantially all of
the stockholders of the Company immediately prior to the Business
Combination own more than 50% of the voting securities of the entity
surviving the Business Combination, or the entity which directly or
indirectly controls such surviving entity, in substantially the same
proportion as they owned the voting securities of the Company immediately
prior thereto, or (B) the consideration (other than cash paid in lieu of
fractional shares or payment upon perfection of appraisal rights) issued to
stockholders of the Company in the Business Combination is solely common
stock which is publicly traded on an established securities exchange in the
United States. Upon making such distributions, the Trustee shall be
relieved from all further liability. The powers of the Trustee hereunder
shall continue so long as any assets of the Trust Fund remain in its hands.
8.51 AMENDMENT. The Company and the Shareholders' Representatives
shall have the right at any time and from time to time to amend this
Agreement in whole or in part, except that the duties, responsibilities,
indemnification and the right to compensation of the Trustee shall not be
increased or decreased without the Trustee's written consent. Any such
amendment shall become effective upon (a) delivery to the Trustee of the
written instrument of amendment, executed by the Company and the
Shareholders' Representatives, and (b) endorsement by the Trustee on such
instrument of its receipt thereof, together with its consent thereto, if
such consent is required. No such amendment shall adversely affect any
Award hereunder to a Participant or any Vesting Condition relating to any
such Award without the consent of such Participant. It is further agreed
that the preceding sentence may not be amended without the consent of each
Participant who is adversely affected.
ARTICLE X
MISCELLANEOUS
10.52 LAWS OF ILLINOIS TO GOVERN. This Agreement and the Trust
hereby created shall be construed and regulated by the laws of the State of
Illinois, except as otherwise provided by Federal law.
10.53 TITLES AND HEADINGS NOT TO CONTROL. The titles to articles and
headings of sections in this Agreement are placed herein for convenience of
reference only, and in case of any conflict the text of this Agreement,
rather than such titles or headings, shall control.
<PAGE>
10.54 RELIANCE ON REPRESENTATIONS. (a) Each of the parties hereto
each acknowledge that each will be relying, and shall be entitled to rely,
on the representations, undertakings and acknowledgments of the other as
set forth in this Agreement. Each of the parties hereto each agree to
notify the other promptly if any of its representations, undertakings or
acknowledgments set forth in this Agreement ceases to be true.
(1) Each of parties hereto each represent and warrant to the
others that it has full authority to enter into this Agreement upon the
terms and conditions hereof and that, in the case of the Company and the
Trustee, the individual executing this Agreement on its behalf has the
requisite authority to bind the Company and the Trustee to this Agreement.
10.55 MUTUAL COOPERATION. The Company and the Shareholders'
Representatives shall cooperate fully at such time and to the extent
reasonably requested by the other in connection with determining any
information necessary for any notices hereunder as well as for determining
whether any Participants are subject to a Departure.
10.56 TRUST FUND NOT SUBJECT TO THE CLAIMS OF CREDITORS. The Trust
Fund shall not be subject to the claims of the Company's creditors.
10.57 TRUST FISCAL AND TAX YEAR. The fiscal and tax year of Trust
shall be the calendar year.
10.58 COUNTERPARTS. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.59 ENTIRE AGREEMENT. This Agreement constitute the entire
understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or
implied, written or oral, between such parties.
10.60 JURISDICTION. Each of the parties hereto hereby expressly and
irrevocably submits to the non-exclusive personal jurisdiction of the
United States District Court for the Northern District of Illinois and to
the jurisdiction of any other competent court of the State of Illinois
located in the County of Cook (collectively, the "Illinois Courts"),
preserving, however, all rights of removal to such federal court under 28
U.S.C. Section 1441, and to the non-exclusive jurisdiction of the High
Court of England and Wales in London (the "English Courts"), in connection
with all disputes arising out of or in connection with this Agreement or
the transactions contemplated hereby and agrees not to commence any
litigation relating thereto except in such courts; provided that if the
aforementioned Illinois Courts do not have subject matter jurisdiction,
then the proceeding shall be brought in any other state or federal court
located in the State of Illinois, preserving, however, all rights of
removal to such federal court under 28 U.S.C. Section 1441.
Notwithstanding the foregoing, the parties hereto agree that no suit,
action or proceeding may be brought in any state court in the State of
Illinois unless jurisdiction is unavailable in any federal court in the
State of Illinois. Each party hereby waives the right to any other
jurisdiction or venue for any litigation arising out of or in connection
with this Agreement or the transactions contemplated hereby to which any of
them may be entitled by reason of its present or future domicile.
Notwithstanding the foregoing, each of the parties hereto agrees that each
of the other parties shall have the right to bring any action or proceeding
for enforcement of a judgment entered by the Illinois Courts or the English
Courts in any other court or jurisdiction.
<PAGE>
10.61 SERVICE OF PROCESS. Each party irrevocably consents to the
service of process outside the territorial jurisdiction of the courts
referred to in Section 10.9 hereof in any such action or proceeding by
giving copies thereof by hand-delivery or air courier to his, her or its
address as specified in or pursuant to Section 7.4 hereof. However, the
foregoing shall not limit the right of a party to effect service of process
on the other party by any other legally available method.
10.62 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES (TO THE
FULLEST EXTENT PERMITTED BY LAW) ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO THIS AGREEMENT. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each of the Shareholders' Representatives and the duly
authorized officers (including the affixing of their respective seals
hereto) of LaSalle Partners Incorporated and Harris Trust and Savings Bank
as of the day and year first above written.
LASALLE PARTNERS INCORPORATED
[Seal]
By: /s/ William E. Sullivan
Attest: Name: William E. Sullivan
Title: Executive Vice President and
Chief Financial Officer
/s/ Richard Graham Rosser
HARRIS TRUST AND SAVINGS BANK
[Seal]
By: /s/ D. G. Donovan
Attest: Name: D. G. Donovan
Title: Assistant Vice President
/s/ C. Patte
<PAGE>
SHAREHOLDERS' REPRESENTATIVES:
Attest: /s/ Robert Orr
European Region Representative
/s/ Richard Graham Rosser
Attest: /s/ Gerry Kipling
Asia Region Representative
/s/ George Forrai
Attest: /s/ Donald Leslie Harrington
Australasia Region ESOT Representative
/s/Anthony Francis Segedin
EXHIBIT 4.1
- -----------
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 charter 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: _______________________
Its: Vice President
ATTEST:
By: _______________________
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 certifi-
cate 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 Freidinger
- --------------------- ------------------------------
Robert Hagan Fritz Freidinger
Vice President Assistant Secretary
EXHIBIT 4.2
- -----------
SECOND AMENDED AND RESTATED BYLAWS
of
JONES LANG LASALLE INCORPORATED
A Maryland Corporation
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
JONES LANG LASALLE INCORPORATED
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-----------
SECTION 1. PRINCIPAL OFFICE. The principal office of the
Corporation within the State of Maryland shall be in the City of Baltimore,
State of Maryland.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
such other places, both within and without the State of Maryland, as the
Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time
and place, within the United States, as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders
shall be held on such date and at such time during the month of May as
shall be designated from time to time by the Board of Directors and stated
in the notice of the meeting, at which meetings the stockholders shall
elect directors, and transact such other business as may properly be
brought before the meeting. Written notice of the annual meeting stating
the place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting and each other stockholder entitled to
notice of such meeting not less than ten nor more than ninety days before
the date of the meeting. Failure to hold an annual meeting does not
invalidate the Corporation's existence or affect any otherwise valid
corporate acts.
SECTION 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or
by the Charter, special meetings of stockholders, for any purpose or
purposes, may be called by (i) the Chairman of the Board and Chief
Executive Officer, (ii) President, Deputy Chief Executive Officer and Chief
Operating Officer, or (iii) the Board of Directors and must be called by
the Secretary on the written request of stockholders entitled to cast at
least a majority of all the votes entitled to be cast at the meeting, which
request shall state the purpose or purposes of the proposed meeting and the
matters proposed to be acted upon at such meeting. At a special meeting of
the stockholders, only such business shall be conducted as shall be
specified in the notice of meeting (or any supplement thereto). Written
notice of a special meeting stating the place, date and hour of the meeting
as determined by the Board of Directors, the Chairman of the Board and
Chief Executive Officer or the President, Deputy Chief Executive Officer
and Chief Operating Officer and the purpose or purposes for which the
meeting is called shall be given by the Secretary not less than ten (10)
nor more than ninety (90) days before the date of the meeting to each
stockholder entitled to vote at such meeting and each stockholder entitled
to notice of such meeting.
<PAGE>
SECTION 4. QUORUM. Except as otherwise required by law or by the
Charter, the holders of a majority of the shares of stock issued and out-
standing and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for
the transaction of business. A quorum, once established, shall not be
broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is to a date more than one hundred twenty
(120) days after the original record date, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder entitled to vote at
the meeting not less than ten (10) nor more than ninety (90) days before
the date of the meeting.
SECTION 5. PROXIES. Any stockholder entitled to vote may do so in
person or by his or her proxy appointed by an instrument in writing signed
by such stockholder or by his or her agent hereunto authorized, delivered
to the Secretary of the meeting; provided, however, that no proxy shall be
voted or acted upon after eleven months from its date, unless said proxy
provides for a longer period.
SECTION 6. VOTING. At all meetings of the stockholders at which a
quorum is present, except as otherwise required by law, the Charter or
these Bylaws, any question brought before any meeting of stockholders shall
be decided by the affirmative vote of a majority of the total number of
votes cast by holders of stock entitled to vote on such question, voting as
a single class. The Board of Directors, in its discretion, or the officer
of the Corporation presiding at a meeting of stockholders, in his or her
discretion, may require that any votes cast at such meeting shall be cast
by written ballot.
SECTION 7. NATURE OF BUSINESS AT MEETINGS OF STOCKHOLDERS. No busi-
ness may be transacted at an annual meeting of stockholders, other than
business that is either (a) properly brought before the annual meeting by
or at the direction of the Board of Directors (or any duly authorized
committee thereof) or (b) otherwise properly brought before the annual
meeting by any stockholder of the Corporation (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section
7 and on the record date for the determination of stockholders entitled to
vote at such annual meeting and (ii) who complies with the notice proce-
dures set forth in this Section 7.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to
the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than ninety (90) days nor more than one hundred
twenty (120) days prior to the anniversary date of the immediately preced-
ing annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within thirty (30)
days before or after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the close of business
on the tenth (10th) day following the day on which notice of the date of
the annual meeting was mailed or public announcement of the date of the
annual meeting was made, whichever first occurs. In no event shall the
public announcement of an adjournment of an annual meeting commence a new
time period for the giving of a stockholder's notice as described above.
<PAGE>
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before
the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of such
stockholder, (iii) the class or series and number of shares of stock of the
Corporation which are owned beneficially or of record by such stockholder,
(iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of stockholders,
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 7, PROVIDED, HOWEVER, that, once
business has been properly brought before the annual meeting in accordance
with such procedures, nothing in this Section 7 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of an
annual meeting determines that business was not properly brought before the
annual meeting in accordance with the foregoing procedures, the Chairman
shall declare to the meeting that the business was not properly brought
before the meeting and such business shall not be transacted.
For purposes of this Section 7, "public announcement" shall mean an
announcement in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
SECTION 8. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive any
dividend or other distribution or any allotment of other rights, or
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board
of Directors may fix a record date, which record date shall not precede the
close of business on the day on which the record date is fixed and which
record date: (a) in the case of any meeting of stockholders or adjournment
thereof, shall not be more than ninety (90) nor less than ten (10) days
before the date of such meeting; and (b) in the case of any other action,
shall not be more than ninety days prior to such other action. If no
record date is fixed: (x) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
later of (i) the close of business on the day on which notice is mailed or
(ii) the thirtieth day before the meeting; and (y) the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; PROVIDED, HOWEVER, that the Board of Directors
may fix a new record date for the adjourned meeting.
SECTION 9. INFORMAL ACTION. Any action required or permitted to be
taken at a meeting of the stockholders may be taken without a meeting if
there is filed with the records of meetings of stockholders a unanimous
written consent which sets forth the action and is signed by each stock-
holder entitled to vote on the matter and a written waiver of any right to
dissent signed by each stockholder entitled to notice of the meeting but
not entitled to vote thereat.
<PAGE>
ARTICLE III
DIRECTORS
-----------
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. Subject to the
provisions of Article X, the Board of Directors shall consist of not less
than 3 nor more than 15 members, the exact number of which shall be
determined from time to time by resolution adopted by the Board of
Directors. Subject to the provisions of Article X and except as provided in
Section 3 of this Article III, directors shall be elected by the
stockholders at the annual meetings of stockholders, and each director so
elected shall hold office until such director's successor is duly elected
and qualifies, or until such director's earlier death, resignation or
removal. Directors need not be stockholders.
SECTION 2. NOMINATION OF DIRECTORS. Subject to the provisions of
Article X, only persons who are nominated in accordance with the following
procedures shall be eligible for election and qualified to serve as
directors of the Corporation, except as may be otherwise provided in the
Charter (with respect to the right of holders of common stock or preferred
stock of the Corporation to nominate and elect a specified number of
directors in certain circumstances). Subject to the provisions of Article
X, nominations of persons for election to the Board of Directors may be
made at any annual meeting of stockholders, or at any special meeting of
stockholders called for the purpose of electing directors, (a) by or at the
direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for
in this Section 2 and on the record date for the determination of
stockholders entitled to vote at such meeting and (ii) who complies with
the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely notice
thereof in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Corporation (a) in the case of an annual meeting, not less than ninety
(90) days nor more than one hundred twenty (120) days prior to the anniver-
sary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for
a date that is not within thirty (30) days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received
not later than the close of business on the tenth (10th) day following the
day on which notice of the date of the annual meeting was mailed or public
announcement of the date of the annual meeting was made, whichever first
occurs; and (b) in the case of a special meeting of stockholders called for
the purpose of electing directors, not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the
special meeting was mailed or public announcement of the date of the
special meeting was made, whichever first occurs. In no event shall the
public announcement of an adjournment of an annual or special meeting
commence a new time period for the giving of a stockholder's notice as
described above.
<PAGE>
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to
nominate for election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of shares of
stock of the Corporation which are owned beneficially or of record by the
person and (iv) any other information relating to the person that would be
required to be disclosed in a proxy statement or other filings required to
be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act, and the rules and
regulations promulgated thereunder; and (b) as to the stockholder giving
the notice (i) the name and record address of such stockholder, (ii) the
class or series and number of shares of stock of the Corporation which are
owned beneficially or of record by such stockholder, (iii) a description of
all arrangements or understandings between such stockholder and each
proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder,
(iv) a representation that such stockholder intends to appear in person or
by proxy at the meeting to nominate the persons named in its notice and (v)
any other information relating to such stockholder that would be required
to be disclosed in a proxy statement or other filings required to be made
in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee to being named as a nominee and to serve
as a director if elected.
If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall
declare to the meeting that the nomination was defective and such defective
nomination shall be disregarded.
For purposes of this Section 2, "public announcement" shall mean an
announcement in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
SECTION 3. VACANCIES. Subject to the provisions of Article X and to
the terms of any one or more classes or series of common stock or preferred
stock, any vacancy on the Board of Directors that results from an increase
in the number of directors may be filled by a majority of the entire Board
of Directors, and any other vacancy occurring on the Board of Directors may
be filled by a majority of the Board of Directors then in office, even if
less than a quorum, or by a sole remaining director. The stockholders may
elect to fill a vacancy on the Board of Directors which results from the
removal of a Director. Notwithstanding the foregoing, whenever the holders
of any one or more class or classes or series of preferred stock or common
stock of the Corporation shall have the right, voting separately as a
class, to elect directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other features of
such directorships shall be governed by the Charter.
SECTION 4. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Charter or by these
Bylaws required to be exercised or done by the stockholders.
<PAGE>
SECTION 5. ORGANIZATION. At each meeting of the Board of Directors,
the Chairman of the Board and Chief Executive Officer, or in the absence of
the Chairman of the Board and Chief Executive Officer, the President,
Deputy Chief Executive Officer and Chief Operating Officer, or in the
absence of the President, Deputy Chief Executive Officer and Chief
Operating Officer, the Deputy Chairman of the Board, if there be one, or in
the absence of the Deputy Chairman of the Board, a director chosen by a
majority of the directors present, shall act as Chairman of the meeting.
The Secretary of the Corporation shall act as Secretary of each meeting of
the Board of Directors. In case the Secretary shall be absent from any
meeting of the Board of Directors, an Assistant Secretary shall perform the
duties of Secretary at such meeting; and in the absence from any such
meeting of the Secretary and all the Assistant Secretaries, the Chairman of
the meeting may appoint any person to act as Secretary of the meeting.
SECTION 6. REMOVALS OF DIRECTORS. Any director or the entire Board
of Directors may be removed only in accordance with the provisions of the
Charter.
SECTION 7. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Maryland.
Regular meetings of the Board of Directors may be held at such time and at
such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman of the Board and Chief Executive Officer, the President, Deputy
Chief Executive Officer and Chief Operating Officer, or a majority of the
directors then in office. Notice of every regular or special meeting of
the Board stating the place, date and hour of the meeting shall be given to
each director either by mail not less than forty-eight (48) hours before
the date of the meeting, by telephone, facsimile or telegram on twenty-
four (24) hours' notice, or on such shorter notice as the person or persons
calling such meeting may deem necessary or appropriate in the
circumstances.
SECTION 8. QUORUM. Except as may be otherwise required by law and,
subject to the provisions of Article X, the Charter or these Bylaws, at
all meetings of the Board of Directors, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of business and the
action of a majority of the directors present at any meeting at which there
is a quorum shall be the action of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting of the time and place
of the adjourned meeting, until a quorum shall be present.
SECTION 9. ACTIONS OF BOARD. Unless otherwise provided by the
Charter or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
SECTION 10. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless other-
wise provided by the Charter or these Bylaws, members of the Board of
Directors, or any committee thereof, may (and, at the request of any such
member, shall be given an opportunity to) participate in a meeting of the
Board of Directors or such committee by means of a conference telephone or
similar communications equipment if all persons participating in the
meeting can hear each other at the same time, and participation in a
meeting pursuant to this Section 10 shall constitute presence in person at
such meeting.
<PAGE>
SECTION 11. COMMITTEES. Subject to the provisions of Article X: (i)
the Board of Directors may, by resolution passed by a majority of the
entire Board of Directors, appoint one or more committees of one or more of
the directors of the Corporation; (ii) the Board of Directors may designate
one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of any such
committee; and (iii) in the absence or disqualification of a member of a
committee, and in the absence of a designation by the Board of Directors of
an alternate member to replace the absent or disqualified member, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in
the place of any absent or disqualified member. Any committee, to the
extent permitted by law and provided in these Bylaws or in the resolution
establishing such committee, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation.
SECTION 12. COMPENSATION. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary, or such other emoluments as the Board of Directors
shall from time to time determine. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed compensation for attending committee meetings.
SECTION 13. ENTIRE BOARD OF DIRECTORS. As used in these Bylaws
generally, the term "entire Board of Directors" means the total number of
directors which the Corporation would have if there were no vacancies.
Notwithstanding anything to the contrary provided herein, if at any time
the number of directors actually holding office do not constitute the
requisite percentage of the entire Board of Directors necessary to take
action as provided in these Bylaws, then any action required to be taken on
such item shall be taken by an affirmative vote of 75% of the directors
then in office; provided, however, during the Transition Period at least
one JLW Director and one Parent Director must vote in favor of such action.
ARTICLE IV
OFFICERS
----------
SECTION 1. GENERAL. Subject in each case to the provisions of
Article X, the officers of the Corporation shall be elected by the Board of
Directors and shall be (i) a Chairman of the Board and Chief Executive
Officer (who must be a director) , (ii) a President, Deputy Chief Executive
Officer and Chief Operating Officer, (iii) a Secretary and (iv) a
Treasurer, each of whom shall be elected by the Board of Directors and
shall hold office for such term and shall exercise such powers and perform
such duties as set forth in these Bylaws and as shall be determined from
time to time by the Board of Directors. The Board of Directors or the
Chairman of the Board and Chief Executive Officer, in his or her
discretion, may also elect or appoint a Deputy Chairman of the Board, one
or more Executive Vice Presidents, Senior Vice Presidents, Managing
Directors, Principals, Vice Presidents, Assistant Secretaries, Assistant
Treasurers and other officers, and the President, Deputy Chief Executive
Officer and Chief Operating Officer may appoint one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers
of the Corporation below the level of Vice President, each of whom shall
hold office for such term and shall exercise such powers and perform such
duties as set forth in these Bylaws and as shall be determined from time to
<PAGE>
time (x) by the Board of Directors, if such officer was elected by the
Board of Directors, (y) by the Chairman of the Board and Chief Executive
Officer, if such officer was appointed by the Chairman of the Board and
Chief Executive Officer or (z) by the Chairman of the Board and Chief
Executive Officer or the President, Deputy Chief Executive Officer and
Chief Operating Officer, if such officer was appointed by the President,
Deputy Chief Executive Officer and Chief Operating Officer.
SECTION 2. REMOVAL. Subject in each case to the provisions of
Article X, all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal and any officer may be removed at any time (i) by the affirmative
vote of a majority of the entire Board of Directors, (ii) by the Chairman
and Chief Executive Officer, if such officer was appointed by the Chairman
and Chief Executive Officer, or (iii) by the Chairman of the Board and
Chief Executive Officer or President, Deputy Chief Executive Officer and
Chief Operating Officer, if such officer was appointed by the President,
Deputy Chief Executive Officer and Chief Operating Officer.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the Chairman of the
Board and Chief Executive Officer, the President, Deputy Chief Executive
Officer and Chief Operating Officer, the Deputy Chairman of the Board or
any Executive Vice President, and any such officer may in the name of and
on behalf of the Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting of security
holders of any corporation in which the Corporation may own securities, and
at any such meeting shall possess and may exercise any and all rights and
power incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like
powers upon any other person or persons. Shares of the Corporation's own
stock owned directly or indirectly by the Corporation shall not be voted at
any meeting and shall not be counted in determining the total number of
outstanding shares entitled to be voted at any given time unless such
shares are held by the Corporation in a fiduciary capacity.
SECTION 4. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. The
Chairman of the Board and Chief Executive Officer shall be the chief
executive officer of the Corporation and shall in general supervise and
control all of the business and affairs of the Corporation. The Chairman
of the Board and Chief Executive Officer shall preside at all meetings of
the stockholders of the Corporation. The Chairman of the Board and Chief
Executive Officer shall possess the power to execute all deeds, mortgages,
bonds, contracts, certificates and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except in cases where
the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed or signed.
The Chairman of the Board and Chief Executive Officer shall make reports to
the Board of Directors and the stockholders, and shall see that all orders
and resolutions of the Board of Directors and of any committee thereof are
carried into effect. The Chairman of the Board shall also perform such
other duties and may exercise such other powers as from time to time may be
assigned to him or her by these Bylaws or by the Board of Directors.
<PAGE>
SECTION 5. PRESIDENT, DEPUTY CHIEF EXECUTIVE OFFICER AND CHIEF
OPERATING OFFICER. The President, Deputy Chief Executive Officer and
Chief Operating Officer shall be the second most senior executive of the
Corporation and, subject to the direction and control of the Chairman of
the Board of Directors, shall be the deputy chief executive officer and
chief operating officer of the Corporation and shall assist the Chairman of
the Board and Chief Executive Officer in the administration and operation
of the Corporation's business and general supervision of its policies and
affairs. In the absence of the Chairman of the Board and Chief Executive
Officer, the President, Deputy Chief Executive Officer and Chief Operating
Officer shall preside at all meetings of the stockholders of the
Corporation. The President, Deputy Chief Executive Officer and Chief
Operating Officer shall possess the power to execute all deeds, mortgages,
bonds, contracts, certificates and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except in cases where
the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed or signed.
The President, Deputy Chief Executive Officer and Chief Operating Officer
shall also perform such other duties and may exercise such other powers as
from time to time may be assigned to him or her by these Bylaws, the
Chairman of the Board and Chief Executive Officer or by the Board of
Directors.
SECTION 6. DEPUTY CHAIRMAN OF THE BOARD. The Deputy Chairman of the
Board, if there be one, shall, in the absence of the Chairman of the Board
and Chief Executive Officer and the President, Deputy Chief Executive
Officer and Chief Operating Officer, preside at all meetings of the
stockholders of the Corporation and shall perform such other duties and may
exercise such other powers as from time to time may be assigned to him by
the Board of Directors or the Chairman of the Board and Chief Executive
Officer.
SECTION 7. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS,
MANAGING DIRECTORS, PRINCIPALS AND VICE PRESIDENTS. Each Executive Vice
President, Senior Vice President, Managing Director, Principal or other
Vice President shall perform such duties and have such powers as from time
to time may be assigned to him by the Board of Directors, the Chairman of
the Board and Chief Executive Officer or the President, Deputy Chief
Executive Officer and Chief Operating Officer, as provided in Section 1 of
this Article IV.
SECTION 8. SECRETARY. The Secretary shall attend all meetings of
the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Direc-
tors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board and Chief Executive Officer or the
President, Deputy Chief Executive Officer and Chief Operating Officer,
under whose supervision the Secretary shall act. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there
be no Assistant Secretary, then either the Board of Directors or the
Chairman of the Board and Chief Executive Officer or the President, Deputy
Chief Executive Officer and Chief Operating Officer may choose another
officer to cause such notice to be given. The Secretary shall have custody
of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by
his or her signature. The Secretary shall see that all books, reports,
statements, certificates and other documents and records required by law to
be kept or filed are properly kept or filed, as the case may be.
<PAGE>
SECTION 9. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Corporation in such depositories as may be designated by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and Chief
Executive Officer and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all transactions as
Treasurer and of the financial condition of the Corporation. If required
by the Board of Directors, the Treasurer shall give the Corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the
office of Treasurer and for the restoration to the Corporation, in case of
the Treasurer's death, resignation, retirement or removal from office, of
all books, papers, vouchers, money and other property of whatever kind in
the Treasurer's possession or under control of the Treasurer belonging to
the Corporation.
SECTION 10. ASSISTANT SECRETARIES. Except as may be otherwise
provided in these Bylaws, Assistant Secretaries, if there be any, shall
perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the Chairman of the Board and
Chief Executive Officer, the President, Deputy Chief Executive Officer and
Chief Operating Officer, any Executive Vice President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his
or her disability or refusal to act, shall perform the duties of the Secre-
tary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
SECTION 11. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors, the Chairman of the
Board and Chief Executive Officer, the President, Deputy Chief Executive
Officer and Chief Operating Officer, any Executive Vice President, if there
be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the
duties of the Treasurer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Treasurer. If required by
the Board of Directors, an Assistant Treasurer shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory
to the Board of Directors for the faithful performance of the duties of the
office of Assistant Treasurer and for the restoration to the Corporation,
in case of the Assistant Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other
property of whatever kind in the Assistant Treasurer's possession or under
control of the Assistant Treasurer belonging to the Corporation.
ARTICLE V
STOCK
----------
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have certificates which represent and
certify the shares of stock of the Corporation owned of record by such
stockholder. Each stock certificate shall include on its face the name of
the Corporation, the name of the stockholder to whom it is issued, the
class of stock and number of shares represented by the certificate and a
statement that the Corporation shall furnish on request and without charge
<PAGE>
a full statement of any designations, preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption, and, in the case of
preferred stock or a special class in a series, the differences in the
relative rights and preferences between the shares of each series to the
extent that they have been set and the authority of the Board of Directors
to set the relative rights and preferences of a subsequent series, and
shall otherwise be in such form, not inconsistent with the Maryland General
Corporation Law (the "MGCL") and the Charter, as shall be approved by the
Board of Directors or any officer or officers designated for such purpose
by resolution of the Board of Directors.
SECTION 2. SIGNATURES. Each such certificate shall be signed, in
the name of the Corporation, (i) by the Chairman of the Board and Chief
Executive Officer, the President, Deputy Chief Executive Officer and Chief
Operating Officer or an Executive Vice President and (ii) by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of
the Corporation, certifying the number of shares of stock in the
Corporation owned of record by such holder . Any or all of the signatures
on a certificate may be a facsimile. In case any officer, transfer agent
or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
SECTION 3. LOST, DESTROYED, STOLEN OR MUTILATED CERTIFICATES. The
Board of Directors or any officer of the Corporation may direct a new
certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a
new certificate, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate, or such person's legal
representative, to advertise the same in such manner as the Board of
Directors shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
SECTION 4. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these Bylaws.
Transfers of stock shall be made on the books of the Corporation only by
the person named in the certificate or by such person's attorney lawfully
constituted in writing and upon the surrender of the certificate therefor,
properly endorsed for transfer and payment of all necessary transfer taxes;
provided, however, that such surrender and endorsement or payment of taxes
shall not be required in any case in which the officers of the Corporation
shall determine to waive such requirement. Every certificate exchanged,
returned or surrendered to the Corporation shall be marked "Cancelled,"
with the date of cancellation, by the Secretary or Assistant Secretary of
the Corporation or the transfer agent thereof. No transfer of stock shall
be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing
from and to whom transferred.
SECTION 5. TRANSFER AND REGISTRY AGENTS. The Corporation may from
time to time maintain one or more transfer offices or agents and registry
offices or agents at such place or places as may be determined from time to
time by the Board of Directors.
<PAGE>
SECTION 6. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VI
NOTICES
----------
SECTION 1. NOTICES. Whenever written notice is required by law, the
Charter or these Bylaws to be given to any director, member of a committee
or stockholder, such notice may be given by hand-delivery, telecopier or
air courier, and in the case of a notice to a stockholder may be given by
hand-delivery or mail, addressed to such director, member of a committee or
stockholder, at such person's address or telecopy number as it appears on
the records of the Corporation, as the case may be, with any charges
therefor being prepaid, and such notice shall be deemed to be given at the
time personally delivered, if delivered by hand; upon transmission thereof
by the sender and issuance by the transmitting machine of a confirmation
slip relating thereto, if telecopied; on the third business day after
delivery to the air courier for courier delivery, if sent by air courier;
and at the time when the same shall be deposited with the United States
Mail, if sent by mail.
SECTION 2. WAIVERS OF NOTICE. (a) Whenever any notice is required
by law, the Charter or these Bylaws, to be given to any director, member of
a committee or stockholder, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting in person or represented by proxy, shall constitute a
waiver of notice of such meeting, except where the person attends the
meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not
lawfully called or convened.
(b) Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the stockholders, directors or members of
a committee of directors need be specified in any written waiver of notice
unless so required by law, the Charter or these Bylaws.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 1. DIVIDENDS. Subject to the requirements of the MGCL and
the provisions of the Charter, dividends upon the stock of the Corporation
may be authorized by the Board of Directors at any regular or special
meeting of the Board of Directors, and may be paid in cash, in property, or
in shares of the Corporation's capital stock.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
<PAGE>
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall
end on December 31st of each year.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal, Maryland." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS.
Subject to Section 2 of this Article VIII, the Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (collectively, a "Proceeding") by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such Proceeding unless it is
established that: (i) the act or omission of such person was material to
the matter giving rise to the Proceeding and (A) was committed in bad faith
or (B) was the result of active and deliberate dishonesty; (ii) such person
actually received an improper personal benefit in money, property or
services; or (iii) in the case of any criminal proceeding, such person had
reasonable cause to believe that the act or omission was unlawful ((i),
(ii) and (iii) collectively, "Improper Conduct"). The termination of any
Proceeding by judgment, order or settlement shall not, of itself, create a
presumption that such person committed Improper Conduct. The termination
of any Proceeding by conviction or upon a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment, shall
create a rebuttable presumption that such person committed Improper
Conduct.
SECTION 2. AUTHORIZATION OF INDEMNIFICATION. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination
that indemnification of the director or officer is proper in the
circumstances because such did not commit Improper Conduct. Such
determination shall be made (i) by a majority vote of a quorum consisting
of directors who are not parties to such Proceeding or, if a quorum cannot
be obtained, then by a majority vote of a committee of the Board of
Directors consisting solely of two or more directors who are not parties to
such Proceeding and who were duly designated to act in the matter by a
majority vote of the full Board of Directors in which the designated
directors who are parties to such Proceeding may participate, (ii) by
written opinion of special legal counsel selected by the Board of Directors
or a committee of the Board as set forth in (i) of this Section 2 or, if
the requisite quorum of the full Board of Directors cannot be obtained
therefor and the committee cannot be established, by a majority vote of the
full Board of Directors in which directors who are parties to such
proceedings may participate or (iii) by the stockholders. To the extent,
however, that a director or officer of the Corporation has been successful
on the merits or otherwise in defense of any Proceeding described above, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith, without the
necessity of authorization in the specific case.
<PAGE>
SECTION 3. DIRECTORS' RELIANCE ON REPORTS. For purposes of any
determination under Section 2 of this Article VIII, a director shall be
deemed not to have committed Improper Conduct if (i) in performing his or
her duties, such director relied on any information, opinion, report or
statement, including any financial statement or other financial data,
prepared or presented by (A) an officer or employee of the Corporation whom
such director reasonably believed to be reliable and competent on the
matters presented, (B) a lawyer, public accountant or other person, as to a
matter which such director reasonably believed to be within the person's
professional or expert competence or (C) a committee of the Board of
Directors on which such director did not serve, as to a matter within its
delegated authority, if such director reasonably believed the committee to
merit confidence; and (ii) such director did not have any knowledge
concerning the matter in question which would cause such reliance to be
unwarranted. The provisions of this Section 3 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a director may
be deemed to not have committed Improper Conduct.
SECTION 4. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 2 of this Article VIII,
and notwithstanding the absence of any determination thereunder, a court of
appropriate jurisdiction, upon application of an officer or director and
such notice as the court shall require, may order indemnification in the
following circumstances: (i) if it determines an officer or director has
not committed Improper Conduct, the court shall order indemnification, in
which case the officer or director shall be entitled to recover the
expenses of securing such reimbursement; or (ii) if it determines that the
officer or director is fairly and reasonably entitled to indemnification,
whether or not the officer or director has committed Improper Conduct or,
in a Proceeding charging improper personal benefit to the officer or
director, such officer or director has been adjudged to be liable on the
basis that the personal benefit was improperly received, the court may
order such indemnification as the court shall deem proper, provided,
however, that such indemnification shall be limited to expenses with
respect to (x) any Proceeding by or in the right of the Corporation or (y)
any Proceeding charging improper personal benefit to the officer or
director, where such officer or director has been adjudged to be liable on
the basis that the personal benefit was improperly received.
SECTION 5. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid or reimbursed by the Corporation
in advance of the final disposition of such action, suit or proceeding upon
receipt of (i) a written affirmation by the director or officer of such
director's or officer's good faith belief that the standard of conduct
necessary for indemnification by the Corporation has been met and (ii) a
written undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized in this Article
VIII.
SECTION 6. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Charter or any Bylaw, agreement,
contract, vote of stockholders or directors, an agreement or otherwise,
both as to action in such person's official capacity and as to action in
another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Section 1 of
this Article VIII shall be made to the fullest extent permitted by law.
The provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Section 1 of this
Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the MGCL, or otherwise.
<PAGE>
SECTION 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of
the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any
liability asserted against such person and incurred by such person in any
such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power or the obligation to indemnify
such person against such liability under the provisions of this Article
VIII.
SECTION 8. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify
its directors or officers, so that any person who is or was a director or
officer of such constituent corporation, or is or was a director or officer
of such constituent corporation serving at the request of such constituent
corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article VIII, references to "fines" shall include any excise taxes assessed
on a person with respect to an employee benefit plan; and references to
"serving at the request of the Corporation" shall include any service as a
director, officer, partner, trustee, employee or agent of the Corporation
which imposes duties on, or involves services by, such director or officer
with respect to an employee benefit plan, its participants or beneficia-
ries.
SECTION 9. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person.
SECTION 10. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 4
hereof), the Corporation shall not be obligated to indemnify any director
or officer (or his or her heirs, executors or personal or legal representa-
tives) or advance expenses in connection with a proceeding (or part there-
of) initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the Board of Directors of the Corporation.
SECTION 11. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
----------
SECTION 1. AMENDMENTS. Subject in each case to the provisions of
Article X, these Bylaws may be altered, amended or repealed, in whole or in
part, or new Bylaws may be adopted by the Board of Directors or by the
stockholders as provided in the Charter.
<PAGE>
ARTICLE X
TRANSITION PERIOD MATTERS
-------------------------
SECTION 1. GENERAL. Notwithstanding anything else contained in
these Bylaws to the contrary, the provisions of this Article X are intended
to reflect certain transitional matters set forth in the Purchase and Sale
Agreement (Europe/USA), dated as of October 21, 1998, the Purchase and Sale
Agreement (Asia), dated as of October 21, 1998 and the Purchase and Sale
Agreement (Australasia), dated as of October 21, 1998 (collectively the
"Purchase Agreements") by and among the Corporation, certain of the
Corporation's subsidiaries and the other parties named therein.
SECTION 2. DIRECTORS. Notwithstanding anything to the contrary set
forth in these Bylaws, during the period ending on the first to occur of
(i) the first Business Day following the fifth annual meeting of the
stockholders of Parent following the closing of the transactions
contemplated by the Purchase Agreements (the "Closing") and (ii) June 1,
2003 (the "Transition Period") the following provisions shall apply:
(1) The Board of Directors shall consist of fourteen members;
provided that the number of members constituting the Board of Directors may
at any time be increased to fifteen by a resolution approved by the Parent
Nominating Committee and the JLW Nominating Committee (as defined below)
and by a majority of the entire Board of Directors.
(2) Immediately following the Closing, the Board of Directors shall
consist of the following members appointed to the following classes of
directors (each of which members shall have been designated as set forth in
Section 1.9(a) of the Purchase Agreements): (i) Mr. Stuart L. Scott (class
II, term expires 1999), Mr. Robert C. Spoerri (class I, term expires 2001),
Mr. M.G. Rose (class III, term expires 2000) and Mr. Daniel W. Cummings
(class I, term expires 2001) (the "Parent Employee Directors," which term
shall also be deemed to refer to any replacement for a Parent Employee
Director elected in accordance with the applicable provisions of this
Article X); (ii) Mr. Darryl Hartley-Leonard (class I, expires 2001), Mr.
Thomas C. Theobald (class III, term expires 2000) and Mr. John R. Walter
(class II, term expires 1999) (the "Parent Independent Directors," which
term shall also be deemed to refer to any replacement for a Parent
Independent Director elected in accordance with the applicable provisions
of this Article X, who shall be an Independent Director); (iii) Mr.
Christopher A. Peacock (class II, term expires 1999), Mr. Michael J. Smith
(class III, term expires 2000), Mr. Peter H.T. Lee (class III, term expires
2000) and Mr. Clive J. Pickford (class II, term expires 1999) (the "JLW
Employee Directors," which term shall also be deemed to refer to any
replacement for a JLW Employee Director elected in accordance with the
applicable provisions of this Article X); and (iv) Professor Henri-Claude
de Bettignies (class I, term expires 2001), Mr. Derek A. Higgs (class III,
term expires 2000) and Dr. David K.P. Li (class II, term expires 1999) (the
"JLW Independent Directors," which term shall also be deemed to refer to
any replacement for a JLW Independent Director elected in accordance with
the applicable provisions of this Article X, who shall be an Independent
Director). The Parent Employee Directors and the Parent Independent
Directors are sometimes collectively referred to herein as the "Parent
Directors" and the JLW Employee Directors and the JLW Independent Directors
are sometimes collectively referred to herein as the "JLW Directors."
Notwithstanding any other provision hereof, (i) it shall be a qualification
for any director elected by the Board of Directors to replace any JLW
Director (whose term is expiring or has expired or who shall have been
removed or become disqualified or who shall have resigned, retired, died or
otherwise shall fail to continue to serve as a director of the Corporation)
that such replacement director shall have been nominated by the JLW
Nominating Committee, and (ii) it shall be a qualification for any director
<PAGE>
elected by the Board of Directors to replace any Parent Director (whose
term is expiring or has expired or who shall have been removed or become
disqualified or who shall have resigned, retired, died or otherwise shall
fail to continue to serve as a director of the Corporation) that such
replacement director shall have been nominated by the Parent Nominating
Committee.
(3) The Parent Employee Directors in office from time to time,
together with two or more Parent Independent Directors selected by such
Parent Employee Directors, shall constitute a committee of the Board of
Directors (the "Parent Nominating Committee") with the powers and duties
delegated to such committee in this Article X, and the JLW Employee
Directors in office from time to time, together with two or more JLW
Independent Directors selected by such JLW Employee Directors, shall
constitute a committee of the Board of Directors (the "JLW Nominating
Committee") with the powers and duties delegated to such committee in this
Article X. Except as otherwise set forth in this Article X, the Parent
Nominating Committee and the JLW Nominating Committee (collectively, the
"Nominating Committees") shall exercise all power and authority of the
Board of Directors with respect to designation of persons as the nominees
of the Board of Directors for election to, or designating persons to fill
vacancies on, the Board of Directors.
(4) Prior to each meeting of the stockholders at which the term of
office of any Parent Director is expiring or at which any replacement for a
Parent Director is to be elected, the Parent Nominating Committee may
designate a nominee for election to such position (which designee must be
reasonably acceptable to the JLW Nominating Committee), and prior to each
meeting of the stockholders at which the term of office of any JLW Director
is expiring or at which any replacement for a JLW Director is to be
elected, the JLW Nominating Committee may designate a nominee for election
to such position (which designee must be reasonably acceptable to the
Parent Nominating Committee); provided that at least three Parent Directors
and at least three JLW Directors shall at all times be Independent
Directors and that at least one JLW Independent Director shall at all times
have his primary place of business and residence outside of the United
Kingdom. At any meeting of the stockholders at which directors are to be
elected, the officer of the Corporation presiding at such meeting shall
nominate, before the nominations are closed and the vote taken, the
nominee(s) designated by the applicable Nominating Committees pursuant to
the foregoing. At any meeting of the stockholders at which directors are
to be elected, neither the Board of Directors nor any committee thereof
shall nominate (or cause there to be nominated) as a director any person
not designated as a nominee by one of the Nominating Committees pursuant to
the foregoing.
(5) If any Parent Director is removed from the Board of Directors,
becomes disqualified, resigns, retires, dies or otherwise cannot continue
to serve as a member of the Board of Directors, the Parent Nominating
Committee shall have the exclusive power on behalf of the entire Board of
Directors to designate a person to fill such vacancy, and if any JLW
Director is removed from the Board of Directors, becomes disqualified,
resigns, retires, dies, or otherwise cannot continue to serve as a member
of the Board of Directors, the JLW Nominating Committee shall have the
exclusive power on behalf of the entire Board of Directors to designate a
person to fill such vacancy, in each case, subject to the approval of a
majority of the directors then remaining in office; provided that at least
three Parent Directors and at least three JLW Directors shall at all times
be Independent Directors; and provided, further, that at least one JLW
Independent Director shall at all times have his primary place of business
and residence outside of the United Kingdom.
<PAGE>
(6) In the event that the number of members constituting the Board
of Directors is increased to fifteen as provided in (A) above, the Parent
Nominating Committee and the JLW Nominating Committee acting as a single
committee, shall elect an Independent Director to fill such vacancy (the
"Fifteenth Director"), which Independent Director must be approved by a
majority of the members of the Parent Nominating Committee, a majority of
the members of the JLW Nominating Committee and a majority of the entire
Board of Directors. Prior to any meeting of the stockholders at which the
term of office of such Fifteenth Director is expiring or at which a
replacement for such director is to be elected, the Nominating Committees
shall jointly acting as a single committee, designate a nominee for such
position, which nominee must be approved by a majority of the members of
the Parent Nominating Committee and a majority of the members of the JLW
Nominating Committee, and at such meeting of stockholders the nominations
shall not be closed or the vote taken until such nominee shall have been
nominated. Neither the Board of Directors nor any committee thereof shall
nominate (or cause there to be nominated) any person to replace such
Fifteenth Director who has not been so designated by the Nominating
Committees. In the event that such Fifteenth Director is removed from the
Board of Directors, becomes disqualified, resigns, retires, dies or
otherwise cannot continue to serve as a member of the Board of Directors,
the Parent Nominating Committee and the JLW Nominating Committee, acting as
a single committee, shall have exclusive power on behalf of the Board of
Directors to designate a person to fill such vacancy and shall jointly,
acting as a single committee, designate an Independent Director to serve in
such position, which Independent Director must be approved by a majority
of the members of the Parent Nominating Committee, a majority of the
members of the JLW Nominating Committee and by a majority of directors then
remaining in office.
For purposes of these Second Amended and Restated Bylaws,
"Independent Director" means any individual who is not a past or present
employee or officer of the Corporation or any Europe/USA Region Company,
Asia Region Company or Australasia Region Company (in each case as defined
in the Purchase Agreements), or any of their respective affiliates or an
affiliate of such an employee or officer, except as otherwise agreed by the
Nominating Committees of the Board of Directors.
SECTION 3. COMMITTEES. During the Transition Period, each standing
committee of the Board of Directors shall consist of an equal number of (i)
Parent Directors, who shall be selected by the Parent Nominating Committee,
and (ii) JLW Directors, who shall be selected by the JLW Nominating
Committee. Notwithstanding the foregoing, at any time when a Fifteenth
Director is in office, the Parent Nominating Committee and the JLW
Nominating Committee may, acting as a single committee, appoint the
Fifteenth Director as an additional member of any committee of the Board of
Directors, which appointment must be approved by both a majority of the
members of the Parent Nominating Committee and a majority of the members of
the JLW Nominating Committee. If any Parent Director who is a member of
any committee is removed from the Board of Directors, becomes disqualified,
resigns, retires, dies or otherwise cannot continue to serve in such
position, his replacement shall be selected by the Parent Nominating
Committee, and if any JLW Director who is a member of any such committee is
removed from the Board of Directors, becomes disqualified, resigns,
retires, dies or otherwise cannot continue to serve in such position, his
replacement shall be selected by the JLW Nominating Committee.
SECTION 4. OFFICERS. Stuart L. Scott shall hold the position of
Chairman of the Board and Chief Executive Officer for a period of at least
two years following the Closing, or until his earlier removal,
disqualification, resignation, retirement, death or incapacity.
Christopher Peacock shall hold the position of President, Deputy Chief
Executive Officer and Chief Operating Officer for a period of at least two
<PAGE>
years following the Closing, or until his earlier removal, disqualifica-
tion, resignation, retirement, death or incapacity. If at any time
following the Closing, the position of Chairman of the Board and Chief
Executive Officer or President, Deputy Chief Executive Officer and Chief
Operating Officer becomes vacant, such vacancy shall be filled by a
majority vote of the entire Board of Directors; provided that during the
two-year period immediately following the Closing, the Chairman of the
Board and Chief Executive Officer and President, Deputy Chief Executive
Officer and Chief Operating Officer shall be selected from the officers or
employees of the Corporation immediately prior to the Closing ("Parent
Employees") and the partners, officers or employees of the JLW Businesses
(as defined in the Purchase Agreements) immediately prior to the Closing
("JLW Employees"); provided, further, that during such period, (i) if the
office of the Chairman and Chief Executive Officer is held by a Parent
Employee, then the office of President, Deputy Chief Executive Officer and
Chief Operating Officer shall be held by a JLW Employee, and (ii) if the
office of Chairman of the Board and Chief Executive Officer is held by a
JLW Employee, then the office of President, Deputy Chief Executive Officer
and Chief Operating Officer shall be held by a Parent Employee. The
Chairman of the Board and Chief Executive Officer and the President, Deputy
Chief Executive Officer and Chief Operating Officer may only be removed
from office by a majority vote of the entire Board of Directors; provided
that neither Mr. Scott nor Mr. Peacock may be removed from such respective
positions with or without cause, prior to the second anniversary of the
Closing, unless such removal is approved by at least two-thirds of the
entire Board of Directors.
SECTION 5. AMENDMENTS. During the Transition Period, the
affirmative vote of at least 75% of the entire Board of Directors shall be
required to alter or amend, or adopt any provision inconsistent with, or
repeal, in whole or in part, Article III, Article IV or Article X of these
Bylaws.
SECTION 6. ACTIONS OF THE BOARD. During the Transition Period, the
affirmative vote of at least a majority of the entire Board of Directors
shall be required to constitute Board action, except as otherwise as
specifically provided in Section 2 of this Article X.
EXHIBIT 4.3
- -----------
Temporary Certificate - Exchangeable for Definitive
Engraved Certificate -
When Ready for Delivery
COMMON COMMON
NUMBER SHARES
JONES LANG LA SALLE
Incorporated
INCORPORATED UNDER THE LAWS OF
THE STATE OF MARYLAND SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS TRANSFERABLE IN
CHICAGO, ILLINOIS, OR NEW YORK, NEW YORK CUSIP 48020Q 107
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER
SHARE, OF
Jones Lang LaSalle Incorporated
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar Witness the facsimile seal
and the signatures of its duly authorized officers
S E A L
Dated
______________________ _____________________
______________________ _____________________
/s/ William E. Sullivan /s/ Stuart L. Scott
SECRETARY CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE
OFFICER
<PAGE>
Countersigned and Registered:
HARRIS Trust and Savings BANK
(CHICAGO)
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
JONES LANG LA SALLE INCORPORATED
--------------------------------
Jones Lang LaSalle Incorporated (the "Corporation") shall furnish on
request and without charge a full statement of any designations,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of
redemption of the stock of each class which the Corporation is authorized
to issue, and, in the case of preferred stock or a special class in a
series, the differences in the relative rights and preferences between the
shares of each series to the extent that they have been set and the
authority of the Board of Directors to set the relative rights and
preferences of a subsequent series.
---------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ________ Custodian
TEN ENT -- as tenants by the entireties (Cust)
JT TEN -- as joint tenants with
right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list.
For Value received, ___________________ hereby sell, assign and transfer
unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________
______________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
______________________________________________________________________
_________________________________________________________________Shares
of Common Stock represented by the within Certificate and do hereby
irrevocably constitute and appoint ____________________________________
_______________________________________________________ Attorney to
transfer the said Shares on the books of the within-named Corporation with
full power of substitution in the premises. Dated ___________________
X __________________________________________
X __________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.
<PAGE>
SIGNATURE(S) GUARANTEED: _______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION,
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
EXHIBIT 23.1
- ------------
The Board of Directors
Jones Lang LaSalle Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
United States of America
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of Jones Lang LaSalle Incorporated (formerly
LaSalle Partners Incorporated) of our report dated 23 March 1999 with
respect to the consolidated financial statements of Jones Lang Wootton (the
English partnership and subsidiaries) as of 31 December 1998 and 1997 and
for three year period ended 31 December 1998, which report appears in the
Current Report on Form 8-K of Jones Lang LaSalle Incorporated (formerly
LaSalle Partners Incorporated) dated 11 March 1999.
/s/ DELOITTE & TOUCHE
London, United Kingdom
23 March 1999
EXHIBIT 23.2
- ------------
The Board of Directors
Jones Lang LaSalle Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
United States of America
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the registration statement
(No. 333-42193) on Form S-8 of Jones Lang LaSalle Incorporated (formerly
LaSalle Partners Incorporated) of our report dated 5 March 1999 with
respect to the combined financial statements of Jones Lang Wootton - Irish
Practice as of 31 December 1998, 1997 and 1996 and for each of the years in
the four year period ended 31 December 1998, which report appears in the
Current Report on Form 8-K of Jones Lang LaSalle Incorporated (formerly
LaSalle Partners Incorporated) dated 11 March 1999.
/s/ DELOITTE & TOUCHE
Dublin Ireland
24 March 1999
EXHIBIT 23.3
- ------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
Form S-8, (No. 333-42193) pertaining to the Jones Lang LaSalle Incorporated
(formerly LaSalle Partners Incorporated) Employee Stock Purchase Plan,
Jones Lang LaSalle Incorporated (formerly LaSalle Partners Incorporated)
1997 Stock Award and Incentive Plan and Jones Lang LaSalle Incorporated
(formerly LaSalle Partners Incorporated) Stock Compensation Program of
Jones Lang LaSalle Incorporated (formerly LaSalle Partners Incorporated)
our report dated February 26, 1999 with respect to the consolidated
financial statements of Jones Lang Wootton - Scotland included in the
Current Report on Form 8-K of Jones Lang LaSalle Incorporated (formerly
LaSalle Partners Incorporated) dated March 11, 1999 with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG
GLASGOW, SCOTLAND
MARCH 23, 1999
EXHIBIT 23.4
- ------------
The Board of Directors
JLW Asia Holdings Limited
Hong Kong
We consent to the inclusion of our report dated 19 February 1999 with
respect to the Group balance sheets of JLW Asia Holdings Limited and
subsidiaries ("the Group") as of 31 December 1998 and 1997, and the related
Group profit and loss accounts, group statements of total recognised gains
and losses, reconciliations of shareholders' funds and cash flows for each
of the years in the three-year period ended 31 December 1998, in the
Current Report on Form 8-K of Jones Lang LaSalle Incorporated (formerly
LaSalle Partners Incorporated) dated 11 March 1999 (and filed on 24 March,
1999). Our report is based in part upon the report of other independent
auditors, with respect to JLW Property Consultants Pte Ltd and its
subsidiaries for the periods indicated in their report thereon.
/s/ KPMG
Certified Public Accountants
Hong Kong
24 March 1999
EXHIBIT 23.5
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The Board of Directors
JLW Property Consultants Pte Ltd
9 Raffles Place
#39-00 Republic Plaza
Singapore 048619
Dear Sirs
JLW Property Consultants Pte Ltd & Its Subsidiary Companies
Years Ended 31 December 1997 and 31 December 1998
Independent Auditors' Report
We consent to the inclusion of our report dated 28 January 1999 with
respect to consolidated financial statements of JLW Property Consultants
Pte Ltd and its subsidiary companies as of 31 December 1998 and 31 December
1997 and the related profit and loss accounts and cash flow statement for
each of the three-year periods ended 31 December 1998, which report appears
in the Current Report on Form 8-K of Jones Lang LaSalle Incorporated
(formerly LaSalle Partners Incorporated) dated 11 March 1999 (filed 24
March, 1999).
Yours truly
/S/ COOPERS & LYBRAND
Certified Public Accountants
Singapore, 24 March 1999
EXHIBIT 23.6
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23 March 1999
The Board of Directors
Jones Lang LaSalle Incorporated
Chicago, Illinois
The Board of Directors
Jones Lang Wootton Australia Pty Limited
Level 27, Northpoint
Miller Street
NORTH SYDNEY NSW 2060
Ladies and Gentlemen:
We consent to the inclusion of our Independent Auditors Report dated 12
February 1999 in respect to the combined financial statements of the JLW
Australasia group, which appears in the Current Report on Form 8-K of Jones
Lang LaSalle Incorporated (formerly LaSalle Partners Incorporated) dated 11
March 1999 (filed 24 March, 1999).
/S/ ERNST & YOUNG
Sydney, New South Wales, Australia
23 March, 1999
