|JONES LANG LASALLE INC filed this Form S-1/A on 07/11/1997|
Operating Expenses. The Company's operating expenses increased $17.4 million,
or 13.2%, to $149.1 million in 1996 from $131.7 million in 1995. The increase
in operating expenses generally reflected higher levels of compensation and
benefits associated with increased staffing and higher incentive compensation
associated with the Company's increased revenue. In addition, depreciation and
amortization expenses increased $1.2 million, or 27.7%, primarily as a result
of amortization of goodwill and other intangibles associated with the
acquisition of CIN Property Management in October 1996 (which are being
amortized over five to 20 years) and depreciation expense associated with the
Company's investment in technology-related assets and the relocation of its
corporate headquarters. As a percentage of total revenue, operating expenses
declined to 84.7% in 1996 from 86.8% in 1995, primarily reflecting the
relatively fixed nature of certain administrative expenses as well as the
impact in 1995 of the $1.9 million provision for the estimated uncollectible
portion of a receivable from Diverse Real Estate Holdings Limited Partnership
("Diverse"). See "Certain Relationships and Related Transactions."
Operating Income. Based on the factors noted above, the Company's operating
income increased $6.8 million, or 33.7%, to $26.9 million in 1996 from $20.1
million in 1995. As a percentage of total revenue, operating income increased
to 15.3% in 1996 from 13.2% in 1995.
Interest Expense. Interest expense increased $1.9 million, or 50.6%, to $5.7
million in 1996 from $3.8 million in 1995, principally as a result of increased
borrowings under the Long-Term Facility to fund the CIN Property Management
acquisition, technology and infrastructure investments and co-investments.
Provision for Income Taxes. Provision for income taxes increased $.7 million,
or 139%, to $1.2 million in 1996 from $.5 million in 1995, due to an increased
volume of transactions performed in jurisdictions with higher state taxes and
increased foreign taxes paid in connection with international operations.
Net Earnings. Net earnings increased $4.2 million, or 26.3%, to $20.0 million
in 1996 from $15.8 million in 1995. Net earnings in 1996 represented 11.3% of
total revenue, compared with 10.4% in the previous year.
SEGMENT OPERATING RESULTS
Management Services. The Management Services segment's revenue, which
represented approximately 40.7% of the Company's total revenue in 1996,
increased $8.7 million, or 13.8%, to $71.9 million in 1996 from $63.2 million
in 1995. This increase was primarily due to a $4.3 million increase in property
management and leasing fees and a $3.2 million increase in facility management
revenue. Property management and leasing fees increased as a result of the net
addition of approximately six million square feet of new property management
and leasing assignments in 1996 and, to a lesser extent, rising rental rates
for office buildings generally. The increase in facility management fees was
principally due to the initiation of a major new facility management assignment
and increased incentive-based fees related to cost savings achieved for
facility management accounts added in prior years. The Company's property
management and leasing revenue was impacted by a $.6 million decline in revenue
related to the sale of certain commingled fund properties. Total revenue from
property management and leasing services provided to commingled fund properties
in 1996 was $11.9 million compared to $12.5 million in 1995.
Operating expenses increased $9.1 million, or 17.4%, to $61.1 million in 1996
from $52.1 million in 1995 as a result of increased staffing levels to meet the
demands associated with an expansion of square feet under management. In
addition, the segment incurred approximately $2.0 million of incremental
expenses associated with an increased commitment of senior personnel to the
national leasing effort. This effort included an expansion in selected regional
markets resulting in approximately $1.0 million of relocation and recruiting
costs. The segment also incurred approximately $.7 million in consulting fees
to enhance client service and information reporting for property management
assignments and in training costs expended on new technology implemented in
1996 regarding tenant request and other systems. Operating income decreased by
$.4 million, or 3.2%, to $10.7 million in 1996 from $11.1 million in 1995. The
Management Services segment's operating income represented 39.9% of the
Company's total operating income in 1996. As a percentage of segment revenue,
operating income decreased to 14.9% in 1996 from 17.6% in 1995.
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