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Jones Lang LaSalle Incorporated (NYSE: JLL - News), the leading global real estate services and money management firm, today reported record net income of $104 million, or $3.12 per diluted share of common stock, for the year ended December 31, 2005. The prior year's net income was $64 million, or $1.96 per diluted share. Included in the 2004 figures was a $0.26 per share expense related to the redemption of the firm's euro 165 million Senior Notes. Also included in the 2004 results were restructuring charges of $5.4 million, or $0.12 per share, compared with $1.4 million or $0.03 per share recorded in 2005. Revenues for the full year 2005 were $1.39 billion, an increase of 19 percent from the prior year that resulted from growth in all operating segments. Operating income for the current year was $132 million compared with $90 million for the prior year, which represented an increase of 47 percent.
For the fourth quarter of 2005, net income was $67 million, or $1.99 per diluted share, compared with net income of $50 million, or $1.52 per diluted share, for the same period in 2004. Restructuring charges of $4.3 million, or $0.10 per share, were included in the fourth quarter results of the prior year compared with $0.9 million, or $0.02 per share, recorded in the same period of this year. Revenue for the fourth quarter of 2005 was $499 million, an increase of 21 percent from 2004, with all segments showing healthy increases. Operating income for the fourth quarter increased 43 percent to $86 million from $60 million in the prior year.
Full Year 2005 Highlights:
-- Revenues increased 19 percent with growth in all business segments
-- Operating income increased 47 percent driven by LaSalle Investment
Management and the Asia Pacific region
-- Net income increased 61 percent
-- LaSalle Investment Management completed record capital raise,
$30 billion of assets currently under management
"We are extremely pleased with our record 2005 performance," said Colin Dyer, the firm's Chief Executive Officer. "Our results reflect both the quality of the products and services we deliver to clients and the commitment and client-service focus of our people. Working from this position of strength, we will continue to focus on growth in all our regions and in each of our major service lines," Dyer added.
Operating expenses were $413 million for the fourth quarter of 2005 compared with $353 million for the same period in 2004, an increase of 17 percent in U.S. dollars and 22 percent in local currencies. For the full year, operating expenses were $1.26 billion in 2005 and $1.08 billion in 2004, an increase of 17 percent in both U.S. dollars and local currencies from the prior year. The increase was driven by increases in compensation costs related to revenue generation activities in addition to strategic investments the firm made to strengthen positions in key local and regional markets and extend global service lines.
Prior to the third quarter of 2005, non-recurring and restructuring charges were presented as a separate line item in the consolidated statements of operations. Beginning in the third quarter of 2005, the firm refined its presentation policy to separately present only restructuring charges, which are costs to exit operations. The final payment from the litigation settlement of the 2003 abandonment of a property management software system in Asia Pacific of $0.6 million was received in the fourth quarter of 2005 and was recorded as a credit to "Operating, administrative and other" expenses. The settlement amounts received during the first half of 2005 and for the full year 2004 of $1.6 million and $2.8 million, respectively, were reclassified in the third quarter from "non-recurring and restructuring" to conform to the current presentation. Such reclassification had no impact on consolidated total operating expenses or operating income.
The current year's interest expense for the full year 2005 was $4.0 million compared with $20.9 million for 2004. The prior year's interest expense included an $11.6 million expense related to the redemption of the Senior Notes. The improved interest expense in 2005 was a result of significantly lower debt levels throughout the year and a lower effective interest rate compared with 2004. In 2005, the firm repurchased approximately 1.6 million shares of its common stock.
Business Segment Fourth Quarter and Full Year Performance Highlights
Investor and Occupier Services
-- The Americas region continued its momentum through the end of the
year. Revenues for the fourth quarter of 2005 were $164 million, an
increase of 15 percent over 2004, and $435 million for the full year,
an increase of 17 percent over the prior year. Management Services
revenues increased 27 percent for the quarter, 23 percent for the full
year, while Implementation Services grew six percent for the quarter
and 11 percent for the year compared with 2004. Capital Markets,
recorded as Implementation Services revenues, continued its strong
performance compared with the prior year, with full-year revenues
increasing 67 percent over 2004. The Real Estate Occupier Services
products, marketed as Corporate Solutions, continued to generate at
least 50 percent of the region's revenues for the full year. Compared
with 2004, Corporate Solutions revenues grew 19 percent for the
quarter and 15 percent for the year. Within Corporate Solutions,
Project and Development Services revenues increased 18 percent for the
quarter and 26 percent for the full year, while Public Institutions
revenues increased 86 percent for the quarter and 51 percent for the
full year. Partially offsetting these increases was Tenant
Representation, where lower existing client activity in the U.S.
resulted in a revenue decline. The Tenant Representation business did,
however, expand nine of its top 60 clients into multi-regional
accounts where activity was reported in the other geographic segments
and therefore benefited the firm's consolidated results. The Americas
Hotels business had a solid fourth quarter and full year, benefiting
from its leadership position in a strong market as well as the
acquisition during the year of ThompsonCalhounFair Hotel Brokerage, a
hotel real estate broker and advisory firm.
Total operating expenses increased 22 percent for the quarter and
21 percent for the full year compared with 2004. The increase reflects
strategic investments made to service new client wins and to expand
market coverage in both Agency Leasing and Capital Markets. In
addition, incentive compensation expenses increased as a result of the
growth in revenue-supporting staff and the underlying mix of business
profit contribution.
As previously announced, on January 3, 2006, the Americas completed
its merger transaction with Spaulding & Slye, a privately held real
estate services and investment company with offices in Boston and
Washington, DC.
-- Europe's year-over-year revenue growth was driven by strong
performances in Capital Markets, Agency Leasing and Advisory,
primarily in Germany, United Kingdom and Russia. The region's revenues
for the fourth quarter of 2005 were $177 million, an increase of
17 percent in U.S. dollars and 28 percent in local currencies over
2004. For the full year, revenues were $493 million, an increase of
11 percent in U.S. dollars and 13 percent in local currencies over the
prior year. Germany had significant growth compared to the prior year
as a result of an improving investment market that is increasingly
attracting international capital. Revenues in Germany grew 75 percent
in U.S. dollars for the quarter and 50 percent for the full year
compared with the prior year. The English business continued its
upward trend, with revenues up six percent in U.S. dollars and eight
percent in local currencies driven mainly by Capital Markets.
Approximately 75 percent of the Capital Markets business involved
cross-border transactions as a result of the firm's strong global
platform, and the client base. The Corporate Finance business, which
is included in Capital Markets, also achieved significant growth in
revenues for the full year over the prior year, where the focus
continues to be on developing structured financing activities and
private investor products. Russia had significant growth in its
business in 2005 compared with 2004. Revenues in Russia for the fourth
quarter increased over 100 percent and increased over 50 percent for
the full year in U.S. dollars compared with the prior year. Revenues
for the full year 2005 from the French business declined modestly
compared with 2004, a year in which several large Capital Markets and
Agency Leasing transactions were recorded.
Operating expenses increased by 11 percent in U.S. dollars for the
quarter year over year and 20 percent in local currencies, and grew
10 percent in U.S. dollars and 12 percent in local currencies on a
full-year basis. The increase was primarily due to incentive
compensation being higher due to the improved revenue and profit
performance.
-- Revenues for the Asia Pacific region were $92 million for the fourth
quarter, an increase of 26 percent in U.S. dollars and 29 percent in
local currencies from the prior year. On a full-year basis, revenues
were $273 million, an increase of 23 and 21 percent in U.S. dollars
and local currencies, respectively. Growth for the quarter and year to
date in U.S. dollars came from both Implementation Services revenues,
which grew 27 and 25 percent, respectively, and Management Services
revenues, which grew 25 and 22 percent, respectively. Revenues from
the growth markets of China and Japan increased over 60 percent in
U.S. dollars for the full year 2005 over the prior year. The core
markets of Hong Kong, Singapore and Australia continued the momentum
across all business lines with full-year 2005 revenues increasing 15
percent in U.S. dollars over the prior year. The Asian Hotels business
also had another very strong quarter as a result of increased
transaction volume and increased market share.
Total operating expenses for the Asia Pacific region for the fourth
quarter of 2005 increased 20 percent in U.S. dollars, 22 percent in
local currencies, over the prior year. On a full-year basis, operating
expenses were up 18 percent in U.S. dollars and 16 percent in local
currencies. Operating expenses include the reclassified benefits from
"non-recurring and restructuring" expenses, which are excluded from
segment reporting. Continued investment in people and technology in
the growth markets, as well as new office openings, contributed to the
increase in operating expenses. As a result of expansion during 2005,
the firm operates in 16 markets in China and in six markets in India.
LaSalle Investment Management
-- LaSalle Investment Management's fourth quarter revenues in 2005 were
$72 million, an increase of 34 percent in U.S. dollars and 38 percent
in local currencies. For the full year, revenues grew to $203 million,
up 35 percent in both U.S. dollars and local currencies over the prior
year. Incentive fees, resulting from strong performance of clients'
investments and the continued growth of the annuity-based business,
drove the increase in revenues.
In 2005, fourth quarter incentive fees were $26 million, an increase
of $11 million over the prior year, and $43 million for the full year
in 2005, an increase of $23 million over 2004. Incentive fees can vary
significantly from period to period due to both the performance of the
underlying funds' investments and the contractual timing of the
measurement period with different clients. For example, in 2005,
incentive fees of $2 million or greater were earned from eight
separate clients, double the number from the previous year.
The continued focus on the growth in annuity revenues led to a fourth
quarter increase in Advisory fees of 29 percent over 2004 and an
increase of 26 percent over 2004 for the full year. Advisory fees,
which were $35 million for the fourth quarter of 2005 and $128 million
for the full year in 2005, accounted for nearly two-thirds of LaSalle
Investment Management's full-year revenues.
Equity earnings were down for the full year, from $17 million to
$12 million, as several larger transactions closed in 2004.
LaSalle Investment Management raised over $3 billion of equity during
2005, as it launched six new private equity funds and secured nine
global securities mandates. Investments made on behalf of clients in
2005 were approximately $6 billion and assets under management grew to
$30 billion, a 24 percent increase over the prior year.
Summary
As the leading global real estate services provider and money manager, during 2005 the firm benefited from favorable market conditions and capitalized on the growth in cross-border capital flows into real estate. The firm's corporate clients continued increasingly to outsource their real estate management and to rely on the firm's advice and execution to manage their global real estate needs. In addition, LaSalle Investment Management's strong financial results were a reflection of its outstanding track record and its research-based approach that delivered performance for its clients. These favorable trends, combined with the overall positive environment for commercial real estate, are expected to continue into 2006.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE: JLL - News), the only real estate money management and services firm named to Forbes magazine's Platinum 400, has more than 100 offices worldwide and operates in more than 430 cities in 50 countries. With 2005 revenues of approximately $1.4 billion, the company provides comprehensive integrated real estate and investment management expertise on a local, regional and global level to owner, occupier and investor clients. Jones Lang LaSalle is an industry leader in property and corporate facility management services, with a portfolio of 923 million square feet worldwide. In 2005, the firm completed capital markets sales and acquisitions, debt financings, and equity placements on assets and portfolios valued at $43 billion. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse real estate money management firms, with approximately $30 billion of assets under management. For further information, please visit http://www.joneslanglasalle.com .
Statements in this press release regarding, among other things, future financial results and performance, achievements, plans and objectives, dividend payments and share repurchases may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance, achievements, plans and objectives of Jones Lang LaSalle to be materially different from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include those discussed under "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures about Market Risk," and elsewhere in Jones Lang LaSalle's Annual Report on Form 10-K for the year ended December 31, 2004 and in the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005, and September 30, 2005 and in other reports filed with the Securities and Exchange Commission. There can be no assurance that future dividends will be declared since the actual declaration of future dividends, and the establishment of record and payment dates, remains subject to final determination by the Company's Board of Directors. Statements speak only as of the date of this release. Jones Lang LaSalle expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in Jones Lang LaSalle's expectations or results, or any change in events.
Conference Call
The firm will conduct a conference call for shareholders, analysts and investment professionals on Wednesday, February 1, 2006 at 9:00 a.m. EST.
To participate in the teleconference, please dial into one of the following phone numbers five to ten minutes before the start time:
-- U.S. callers: +1 877 809 9540
-- International callers: +1 706 679 7364
-- Pass code: 4232602
Replay Information Available: (12:00 p.m. EST) Wednesday, February 1 through Midnight EST February 8 at the following numbers:
-- U.S. callers: +1 800 642 1687
-- International callers: +1 706 645 9291
-- Pass code: 4232602
Live web cast
Follow these steps to listen to the web cast:
1. You must have a minimum 14.4 Kbps Internet connection
2. Log on to http://www.joneslanglasalle.com/shareholders/index.asp and
follow instructions
3. Download free Windows Media Player software: (link located under
registration form)
4. If you experience problems listening, send an e-mail to
webcastsupport@tfprn.com
This information is also available on the company's website at http://www.joneslanglasalle.com .
If you have any questions, call Yvonne Peterson of Jones Lang LaSalle's Investor Relations department at +1 312 228 2919.
JONES LANG LASALLE INCORPORATED
Consolidated Statements of Earnings
For the Three and Twelve Months Ended December 31, 2005 and 2004
(in thousands, except share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Revenue:
Fee based services $492,251 $404,911 $1,366,805 $1,145,456
Other income 6,711 7,471 23,805 21,502
Total revenue 498,962 412,382 1,390,610 1,166,958
Operating expenses:
Compensation and
benefits 309,922 256,458 902,722 762,000
Operating,
administrative and
other 93,740 83,233 320,924 276,700
Depreciation and
amortization 8,869 8,703 33,836 33,381
Restructuring charges 906 4,272 1,377 5,356
Total Operating
Expenses 413,437 352,666 1,258,859 1,077,437
Operating Income 85,525 59,716 131,751 89,521
Interest and
other costs:
Interest expense,
net of interest
income 980 820 3,999 9,292
Loss on
extinguishment of
Euro Notes - - - 11,561
980 820 3,999 20,853
Equity in earnings
from unconsolidated
ventures 6,052 7,376 12,156 17,447
Income before
provision for
income taxes 90,597 66,272 139,908 86,115
Net provision for
income taxes 23,711 16,316 36,236 21,873
Net income $66,886 $49,956 $103,672 $64,242
EBITDA $100,446 $75,795 $177,743 $128,788
Net income available
to common
shareholders $66,886 $49,956 $103,287 $64,242
Basic income per
common share $2.11 $1.62 $3.29 $2.08
Basic weighted
average shares
outstanding 31,645,835 30,815,657 31,383,828 30,887,868
Diluted income per
common share $1.99 $1.52 $3.12 $1.96
Diluted weighted
average shares
outstanding 33,529,785 32,962,695 33,109,261 32,845,281
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Segment Operating Results
For the Three and Twelve Months Ended December 31, 2005 and 2004
(in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
INVESTOR & OCCUPIER
SERVICES
AMERICAS
Revenue:
Implementation
services 87,596 82,649 201,460 181,405
Management
services 73,384 57,708 223,604 181,778
Equity earnings 184 - 565 467
Other services 2,618 1,758 8,657 6,371
Intersegment
revenue 326 572 1,026 1,187
164,108 142,687 435,312 371,208
Operating expenses:
Compensation,
operating and
administrative 125,231 102,109 370,709 303,534
Depreciation and
amortization 3,708 3,642 14,788 14,161
Operating Income $35,169 $36,936 $49,815 $53,513
EUROPE
Revenue:
Implementation
services 149,148 119,752 385,869 334,141
Management
services 25,128 26,905 95,179 97,116
Equity earnings 5 - (221) -
Other services 2,907 4,170 12,006 11,361
177,188 150,827 492,833 442,618
Operating expenses:
Compensation,
operating and
administrative 151,135 135,885 458,756 413,587
Depreciation and
amortization 2,686 2,794 10,124 10,792
Operating Income $23,367 $12,148 $23,953 $18,239
ASIA PACIFIC
Revenue:
Implementation
services 60,901 47,891 162,574 130,362
Management
services 30,378 24,230 108,689 88,862
Equity earnings (66) - (66) -
Other services 938 907 1,716 2,133
92,151 73,028 272,913 221,357
Operating
expenses:
Compensation,
operating and
administrative 77,044 64,021 244,081 205,434
Depreciation and
amortization 2,131 1,920 7,545 7,167
Operating Income $12,976 $7,087 $21,287 $8,756
LASALLE INVESTMENT
MANAGEMENT
Revenue:
Implementation and
other services 4,980 4,015 19,593 12,027
Advisory fees 34,511 26,746 127,880 101,382
Incentive fees 26,473 15,651 43,383 20,020
Equity earnings 5,929 7,376 11,878 16,980
71,893 53,788 202,734 150,409
Operating expenses:
Compensation,
operating and
administrative 50,578 38,249 151,127 117,332
Depreciation and
amortization 344 346 1,378 1,261
Operating Income $20,971 $15,193 $50,229 $31,816
Total segment
revenue 505,340 420,330 1,403,792 1,185,592
Intersegment revenue
eliminations (326) (572) (1,026) (1,187)
Equity earnings (6,052) (7,376) (12,156) (17,447)
Total revenue $498,962 $412,382 $1,390,610 $1,166,958
Total segment
operating
expenses 412,857 348,966 1,258,508 1,073,268
Intersegment
operating expense
eliminations (326) (572) (1,026) (1,187)
Total operating
expenses before
restructuring
charges $412,531 $348,394 $1,257,482 $1,072,081
Operating income
before
restructuring
charges $86,431 $63,988 $133,128 $94,877
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Consolidated Balance Sheets
December 31, 2005 and December 31, 2004
(in thousands)
December 31,
2005 December 31,
(Unaudited) 2004
ASSETS
Current assets:
Cash and cash equivalents $28,658 $30,143
Trade receivables, net of allowances 415,087 328,876
Notes receivable 3,948 2,911
Other receivables 11,283 11,432
Prepaid expenses 22,442 22,279
Deferred tax assets 35,816 28,427
Other assets 13,864 12,189
Total current assets 531,098 436,257
Property and equipment, at cost, less
accumulated depreciation 82,186 75,531
Goodwill, with indefinite useful lives,
at cost, less accumulated amortization 335,272 343,314
Identified intangibles, with definite
useful lives, at cost, less accumulated
amortization 4,850 8,350
Investments in and loans to
real estate ventures 88,710 73,570
Long-term receivables, net 20,931 16,179
Prepaid pension asset 128 2,253
Deferred tax assets 59,262 43,202
Debt issuance costs, net 1,173 1,704
Other assets, net 21,159 12,017
$1,144,769 $1,012,377
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $155,741 $130,489
Accrued compensation 300,847 244,659
Short-term borrowings 18,011 18,326
Deferred tax liabilities 400 262
Deferred income 20,823 16,106
Other liabilities 26,813 17,221
Total current liabilities 522,635 427,063
Long-term liabilities:
Credit facilities 26,697 40,585
Deferred tax liabilities 3,079 671
Deferred compensation 15,988 8,948
Minimum pension liability 16,753 3,040
Other 23,614 24,090
Total liabilities 608,766 504,397
Stockholders' equity:
Common stock, $.01 par value per share,
100,000,000 shares authorized; 35,199,744 and
33,243,527 shares issued and outstanding as of
December 31, 2005 and December 31, 2004,
respectively 352 332
Additional paid-in capital 653,509 575,862
Deferred stock compensation (47,508) (34,064)
Retained earnings 100,141 4,896
Stock held by subsidiary (132,791) (58,898)
Stock held in trust (808) (530)
Accumulated other comprehensive
income (loss) (36,892) 20,382
Total stockholders' equity 536,003 507,980
$1,144,769 $1,012,377
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Summarized Consolidated Statements of Cash Flows
For the Twelve Months Ended December 31, 2005 and 2004
(in thousands)
(Unaudited)
Twelve Months Ended
December 31,
2005 2004
Cash provided by earnings $170,462 $120,038
Cash (used in) provided by working capital (49,826) 41,440
Cash provided by operating activities 120,636 161,478
Cash used in investing activities (61,034) (27,565)
Cash used in financing activities (61,087) (166,875)
Net decrease in cash and cash equivalents (1,485) (32,962)
Cash and cash equivalents, beginning of period 30,143 63,105
Cash and cash equivalents, end of period $28,658 $30,143
Please reference attached financial statement notes.
JONES LANG LASALLE INCORPORATED
Financial Statement Notes
1. EBITDA represents earnings before interest expense, net of interest
income, income taxes, depreciation and amortization. Although EBITDA
is a non-GAAP financial measure, it is used extensively by management
and is useful to investors as one of the primary metrics for
evaluating operating performance and liquidity. The firm believes that
an increase in EBITDA is an indicator of improved ability to service
existing debt, to sustain potential future increases in debt and to
satisfy capital requirements. EBITDA is also used in the calculations
of certain covenants related to the firm's revolving credit facility.
However, EBITDA should not be considered as an alternative either to
net income or net cash provided by operating activities, both of which
are determined in accordance with GAAP. Because EBITDA is not
calculated under GAAP, the firm's EBITDA may not be comparable to
similarly titled measures used by other companies.
Below is a reconciliation of net income to EBITDA (in thousands):
Years Ended December 31,
2005 2004
Net income $103,672 $64,242
Add:
Interest expense, net of interest income 3,999 9,292
Net provision for income taxes 36,236 21,873
Depreciation and amortization 33,836 33,381
EBITDA $177,743 $128,788
Below is a reconciliation of net cash provided by operating
activities, the most comparable cash flow measure on the consolidated
statements of cash flows, to EBITDA (in thousands):
Years Ended December 31,
2005 2004
Net cash provided by operating
activities $120,636 $161,478
Add:
Interest expense, net of interest income 3,999 9,292
Change in working capital and non-cash
expenses 16,872 (63,855)
Net provision for income taxes 36,236 21,873
EBITDA $177,743 $128,788
2. Effective the fourth quarter of 2004, 'Equity in earnings from
unconsolidated ventures' has been reclassified, for all periods
presented on the Consolidated Statement of Earnings, from 'Revenue' to
be presented as a separate line item between 'Total interest and other
costs' and 'Income before provision for income taxes,' in accordance
with Rule 5-03 of Regulation S-X. As a result, 'Operating income' has
been adjusted for the comparative year. Since equity earnings are an
integral part of the money management business, equity earnings have
been included within 'Revenue' in segment operating results for
discussion purposes only.
3. Net debt represents the aggregate of 'Short-term borrowings,' 'Credit
facilities,' and '9 percent Senior Euro Notes' less 'Cash and cash
equivalents.'
4. For purposes of segment operating results, the allocation of
restructuring charges to our segments has been determined to not be
meaningful to investors. Additionally, the performance of segment
results has been evaluated without these charges being allocated.
5. The consolidated statements of cash flows are presented in summarized
form. For complete consolidated statements of cash flows, please refer
to the firm's Annual Report on Form 10-K for the year ended
December 31, 2005, to be filed with the Securities and Exchange
Commission shortly.
6. Net income available to common shareholders is net income less
dividends declared on unvested common shares of $0.4 million.
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Source: Jones Lang LaSalle Incorporated
Source: PR Newswire
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