10-Q 1 cwk-20220331.htm 10-Q cwk-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
 
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______________ to _______________
Commission File Number 001-38611
Cushman & Wakefield plc
(Exact name of Registrant as specified in its charter)
 
 
England and Wales 98-1193584
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
125 Old Broad Street  
London, United Kingdom
EC2N 1AR
(Address of principal executive offices) (Zip Code)
   
 +44 20 3296 3000
Not applicable
(Registrant's telephone number, including area code) (Former name, former address and
former fiscal year, if changed since last report)
 Securities registered pursuant to section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Ordinary Shares, $0.10 nominal valueCWKNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x    No  ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
 Accelerated filer
Non-accelerated filer Smaller reporting company
   Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  x.

As of May 4, 2022, 225,530,707 of the Registrant's ordinary shares, $0.10 nominal value per share, were outstanding.



CUSHMAN & WAKEFIELD plc
QUARTERLY REPORT ON FORM 10-Q
March 31, 2022
TABLE OF CONTENTS
    Page
PART I
Item 1.  
 2
   
   
   
   
   
   
Item 2.  
Item 3.  
Item 4.  
 
  PART II 
Item 1.  
Item 1A.  
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.  
   


1

PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements

Cushman & Wakefield plc
Condensed Consolidated Balance Sheets
As of
(in millions, except per share data)
March 31, 2022December 31, 2021
Assets(unaudited)
Current assets:
Cash and cash equivalents$611.9 $770.7 
Trade and other receivables, net of allowance of $78.2 million and $72.2 million, as of March 31, 2022 and December 31, 2021, respectively
1,372.7 1,446.0 
Income tax receivable32.0 30.0 
Short-term contract assets, net360.6 318.9 
Prepaid expenses and other current assets295.7 264.7 
Total current assets2,672.9 2,830.3 
Property and equipment, net192.4 194.6 
Goodwill2,084.3 2,081.9 
Intangible assets, net908.1 922.2 
Equity method investments654.4 641.3 
Deferred tax assets65.0 65.5 
Non-current operating lease assets398.7 413.5 
Other non-current assets780.3 741.1 
Total assets$7,756.1 $7,890.4 
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current portion of long-term debt$43.3 $42.4 
Accounts payable and accrued expenses1,083.5 1,106.2 
Accrued compensation840.1 976.3 
Income tax payable136.9 105.1 
Other current liabilities215.5 204.5 
Total current liabilities2,319.3 2,434.5 
Long-term debt, net3,215.9 3,220.5 
Deferred tax liabilities36.3 48.7 
Non-current operating lease liabilities377.8 394.6 
Other non-current liabilities268.3 343.5 
Total liabilities6,217.6 6,441.8 
Commitments and contingencies (see Note 9)
Shareholders' equity:
Ordinary shares, nominal value $0.10 per share, 800,000,000 shares authorized; 225,445,522 and 223,709,308 shares issued and outstanding as of March 31, 2022 and at December 31, 2021, respectively
22.6 22.4 
Additional paid-in capital2,880.0 2,896.6 
Accumulated deficit(1,232.7)(1,278.2)
Accumulated other comprehensive loss(132.2)(193.0)
Total equity attributable to the Company1,537.7 1,447.8 
Non-controlling interests0.8 0.8 
Total equity1,538.5 1,448.6 
Total liabilities and shareholders' equity$7,756.1 $7,890.4 

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.
2

Cushman & Wakefield plc
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended March 31,
(in millions, except per share data)
20222021
Revenue$2,331.0 $1,923.8 
Costs and expenses:
Costs of services (exclusive of depreciation and amortization)1,860.5 1,589.5 
Operating, administrative and other293.4 280.8 
Depreciation and amortization40.6 43.1 
Restructuring, impairment and related charges1.2 17.6 
Total costs and expenses2,195.7 1,931.0 
Operating income (loss)135.3 (7.2)
Interest expense, net of interest income(43.2)(42.4)
Earnings from equity method investments16.9 2.4 
Other (expense) income, net(32.9)2.0 
Earnings (loss) before income taxes76.1 (45.2)
Provision for (benefit from) income taxes30.6 (28.0)
Net income (loss)$45.5 $(17.2)
Basic earnings (loss) per share:
Earnings (loss) per share attributable to common shareholders, basic$0.20 $(0.08)
Weighted average shares outstanding for basic earnings (loss) per share224.7 222.3 
Diluted earnings (loss) per share:
Earnings (loss) per share attributable to common shareholders, diluted$0.20 $(0.08)
Weighted average shares outstanding for diluted earnings (loss) per share229.1 222.3 

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.
3

Cushman & Wakefield plc
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended March 31,
(in millions)
20222021
Net income (loss)$45.5 $(17.2)
Other comprehensive income (loss), net of tax:
Designated hedge gains69.6 36.9 
Defined benefit plan actuarial losses(1.7) 
Foreign currency translation(7.1)(11.7)
Total other comprehensive income60.8 25.2 
Total comprehensive income$106.3 $8.0 
The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.
4

Cushman & Wakefield plc
Condensed Consolidated Statements of Equity
For the three months ended March 31, 2022 and 2021
(unaudited)
Accumulated Other Comprehensive Income (Loss)
(in millions)
Ordinary Shares
Ordinary Shares ($)
Additional Paid-in Capital
Accumulated Deficit
Unrealized Hedging (Losses) Gains
Foreign Currency Translation
Defined Benefit Plans
Total Accumulated Other Comprehensive Loss, net of tax
Total Equity Attributable to the Company
Non-Controlling Interests
Total Equity
Balance as of December 31, 2021223.7 $22.4 $2,896.6 $(1,278.2)$(83.6)$(104.5)$(4.9)$(193.0)$1,447.8 $0.8 $1,448.6 
Net income— — — 45.5 — — — — 45.5 — 45.5 
Stock-based compensation— 8.7 — — — — — 8.7 — 8.7 
Vesting of shares related to equity compensation plans, net of amounts withheld for payment of taxes1.8 0.2 (25.3)— — — — — (25.1)— (25.1)
Foreign currency translation— — — — — (7.1)(7.1)(7.1)— (7.1)
Defined benefit plans actuarial loss— — — — — — (1.7)(1.7)(1.7)— (1.7)
Unrealized gain on hedging instruments— — — — 60.7 — — 60.7 60.7 — 60.7 
Amounts reclassified from AOCI to the statement of operations— — — — 9.5 — — 9.5 9.5 — 9.5 
Other activity— — — — (0.6)— — (0.6)(0.6)— (0.6)
Balance as of March 31, 2022225.5 $22.6 $2,880.0 $(1,232.7)$(14.0)$(111.6)$(6.6)$(132.2)$1,537.7 $0.8 $1,538.5 
Accumulated Other Comprehensive Income (Loss)
(in millions)
Ordinary Shares
Ordinary Shares ($)
Additional Paid-in Capital
Accumulated Deficit
Unrealized Hedging (Losses) Gains
Foreign Currency Translation
Defined Benefit Plans
Total Accumulated Other Comprehensive Loss, net of tax
Total Equity Attributable to the Company
Non-Controlling Interests
Total Equity
Balance as of December 31, 2020222.0 $22.2 $2,843.4 $(1,528.2)$(158.3)$(69.4)$(15.0)$(242.7)$1,094.7 $0.9 $1,095.6 
Net loss— — — (17.2)— — — — (17.2)— (17.2)
Stock-based compensation— — 7.2 — — — — — 7.2 — 7.2 
Vesting of shares related to equity compensation plans, net of amounts withheld for payment of taxes0.9 0.1 (4.1)— — — — — (4.0)— (4.0)
Foreign currency translation— — — — — (11.7)— (11.7)(11.7)— (11.7)
Unrealized gain on hedging instruments— — — — 28.5 — — 28.5 28.5 — 28.5 
Amounts reclassified from AOCI to the statement of operations— — — — 8.4 — — 8.4 8.4 — 8.4 
Balance as of March 31, 2021222.9$22.3 $2,846.5 $(1,545.4)$(121.4)$(81.1)$(15.0)$(217.5)$1,105.9 $0.9 $1,106.8 

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.
5

Cushman & Wakefield plc
Condensed Consolidated Statements of Cash Flows
(unaudited)
 
Three Months Ended March 31,
(in millions)
20222021
Cash flows from operating activities
Net income (loss)$45.5 $(17.2)
Reconciliation of net income (loss) to net cash used in operating activities:
Depreciation and amortization40.6 43.1 
Impairment charges0.1 7.1 
Unrealized foreign exchange (gain) loss(5.6)1.5 
Stock-based compensation8.7 7.2 
Lease amortization25.1 27.0 
Amortization of debt issuance costs2.4 2.3 
Earnings from equity method investments, net of dividends received(12.5) 
Change in deferred taxes(12.4)(25.4)
Provision for loss on receivables and other assets4.9 12.5 
Loss on disposal of business13.8  
Other operating activities, net17.8 (6.1)
Changes in assets and liabilities:
Trade and other receivables16.4 114.2 
Income taxes payable30.4 (14.4)
Short-term contract assets and Prepaid expenses and other current assets(78.1)(39.7)
Other non-current assets(98.4)(14.8)
Accounts payable and accrued expenses(7.2)(12.6)
Accrued compensation(130.5)(64.5)
Other current and non-current liabilities(19.2)(36.6)
Net cash used in operating activities(158.2)(16.4)
Cash flows from investing activities
Payment for property and equipment(18.9)(12.9)
Acquisitions of businesses, net of cash acquired(3.9) 
Investments in equity securities and equity method joint ventures(11.6)(15.9)
Collection on beneficial interest in a securitization80.0  
Other investing activities(9.3) 
Net cash provided by (used in) investing activities36.3 (28.8)
Cash flows from financing activities 
Shares repurchased for payment of employee taxes on stock awards(26.2)(4.8)
Payment of contingent consideration(0.1) 
Repayment of borrowings(6.7)(6.7)
Payment of finance lease liabilities(3.9)(3.3)
Other financing activities, net1.0 1.2 
Net cash used in financing activities(35.9)(13.6)
Change in cash, cash equivalents and restricted cash(157.8)(58.8)
Cash, cash equivalents and restricted cash, beginning of the period890.3 1,164.1 
Effects of exchange rate fluctuations on cash, cash equivalents and restricted cash(4.3)(3.5)
Cash, cash equivalents and restricted cash, end of the period$728.2 $1,101.8 

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.
6

Cushman & Wakefield plc
Notes to the Condensed Consolidated Financial Statements
(unaudited)

Note 1: Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared under accounting principles generally accepted in the United States ("U.S. GAAP" or "GAAP") and in conformity with rules applicable to quarterly reports on Form 10-Q. The Condensed Consolidated Financial Statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are unaudited. All adjustments, consisting of normal recurring adjustments, except as otherwise noted, considered necessary for a fair presentation of the unaudited interim Condensed Consolidated Financial Statements for these interim periods have been included.
Readers of this unaudited condensed consolidated quarterly financial information should refer to the audited Consolidated Financial Statements and notes thereto of Cushman & Wakefield plc and its subsidiaries (“Cushman & Wakefield,” the "Company,” “we,” “our” and “us”) for the year ended December 31, 2021 included in our 2021 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and also available on our website (www.cushmanwakefield.com). Certain footnote disclosures that would substantially duplicate those contained in such audited financial statements or which are not required by the rules and regulations of the SEC for interim financial statement presentation have been condensed or omitted.
Refer to Note 2: Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in the Company's 2021 Annual Report on Form 10-K for further discussion of the Company's accounting policies and estimates.
Due to seasonality, the results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2022.
The Company provides for the effects of income taxes on interim financial statements based on estimates of the effective tax rate for the full year, which is based on forecasted income by country and enacted tax rates.

Note 2: New Accounting Standards
The Company has adopted the following new accounting standards that have been recently issued:
Business Combinations
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations: Accounting for Contract Asset and Contract Liabilities from Contracts with Customers, which requires that an acquirer in a business combination recognize and measure contract assets and liabilities acquired in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("Topic 606") as if the acquirer had originated the contracts. The Company early adopted the ASU effective January 1, 2022, with no impact to its financial statements and related disclosures.
Government Assistance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires certain disclosures when companies have received government assistance and use a grant or contribution accounting model by analogy to other accounting guidance. A company that has received government assistance must provide disclosures related to the nature of the transaction, accounting policies used to account for the transaction, and the amounts and financial statement line items that are affected by the transaction. The Company prospectively adopted the ASU effective January 1, 2022 with no impact to its financial statements and related disclosures.

Note 3: Segment Data
The Company reports its operations through the following segments: (1) Americas, (2) EMEA and (3) APAC. The Americas consists of operations located in the United States, Canada and key markets in Latin America. EMEA includes operations in the U.K., France, Netherlands and other markets in Europe and the Middle East. APAC includes operations in Australia, Singapore, China and other markets in the Asia Pacific region.

7

Adjusted EBITDA is the profitability metric reported to the chief operating decision maker (“CODM”) for purposes of making decisions about allocation of resources to each segment and assessing performance of each segment. The Company believes that investors find this measure useful in comparing our operating performance to that of other companies in our industry because this measure generally illustrates the underlying performance of the business before integration and other costs related to merger, pre-IPO stock-based compensation, unrealized (gains) / losses on investments, acquisition related costs and efficiency initiatives, and other items. Adjusted EBITDA also excludes the effects of financings, income tax and the non-cash accounting effects of depreciation and intangible asset amortization.
As segment assets are not reported to or used by the CODM to measure business performance or allocate resources, total segment assets and capital expenditures are not presented below.
Summarized financial information by segment is as follows (in millions):
Three Months Ended March 31,
20222021% Change
Total revenue
Americas$1,785.3 $1,424.9 25 %
EMEA237.7 223.9 6 %
APAC308.0 275.0 12 %
Total revenue$2,331.0 $1,923.8 21 %
Adjusted EBITDA
Americas$176.1 $77.8 126 %
EMEA16.7 2.4 n.m.
APAC21.6 19.5 11 %
Adjusted EBITDA is calculated as follows (in millions):
Three Months Ended March 31,
20222021
Adjusted EBITDA - Americas$176.1 $77.8 
Adjusted EBITDA - EMEA16.7 2.4 
Adjusted EBITDA - APAC21.6 19.5 
Add/(less):
Depreciation and amortization(40.6)(43.1)
Interest expense, net of interest income(43.2)(42.4)
(Provision for) benefit from income taxes(30.6)28.0 
Unrealized loss on investments, net(21.5) 
Integration and other costs related to merger(3.6)(16.2)
Pre-IPO stock-based compensation(0.7)(1.6)
Acquisition related costs and efficiency initiatives(17.2)(40.2)
Other(11.5)(1.4)
Net income (loss)$45.5 $(17.2)


8

Note 4: Earnings Per Share
Earnings (loss) per share ("EPS") is calculated by dividing Net income (loss) by the weighted average shares outstanding. As the Company was in a loss position for the three months ended March 31, 2021, the Company has determined all potentially dilutive shares would be anti-dilutive in this period and therefore they are excluded from the calculation of diluted weighted average shares outstanding. This results in the calculation of weighted average shares outstanding to be the same for basic and diluted EPS during periods of net loss. Potentially dilutive securities of approximately 1.6 million for the three months ended March 31, 2021 were excluded from the computation of diluted EPS because their effect would have been anti-dilutive in this period.
The following is a calculation of EPS (in millions, except per share amounts):
Three Months Ended March 31,
20222021
Basic EPS
Net income (loss)$45.5 $(17.2)
Weighted average shares outstanding for basic earnings (loss) per share224.7 222.3 
Basic earnings (loss) per share attributable to common shareholders$0.20 $(0.08)
Diluted EPS
Net income (loss)$45.5 $(17.2)
Weighted average shares outstanding for basic earnings (loss) per share:224.7 222.3 
Dilutive effect of restricted stock units3.3  
Dilutive effective of stock options1.1  
Weighted average shares outstanding for diluted earnings (loss) per share229.1 222.3 
Diluted earnings (loss) per share attributable to common shareholders$0.20 $(0.08)

Note 5: Revenue
Disaggregation of Revenue
The following tables disaggregate revenue by reportable segment and service line (in millions):
Three Months Ended March 31, 2022
Revenue recognition timingAmericasEMEAAPACTotal
Property, facilities and project managementOver time$1,122.7 $114.8 $222.7 $1,460.2 
LeasingAt a point in time372.9 49.7 37.2 459.8 
Capital marketsAt a point in time242.1 28.9 18.8 289.8 
Valuation and otherAt a point in time or over time47.6 44.3 29.3 121.2 
Total revenue$1,785.3 $237.7 $308.0 $2,331.0 
Three Months Ended March 31, 2021
Revenue recognition timingAmericasEMEAAPACTotal
Property, facilities and project managementOver time$1,030.9 $114.0 $205.3 $1,350.2 
LeasingAt a point in time222.8 42.6 29.4 294.8 
Capital marketsAt a point in time133.8 22.3 10.7 166.8 
Valuation and otherAt a point in time or over time37.4 45.0 29.6 112.0 
Total revenue$1,424.9 $223.9 $275.0 $1,923.8 
Contract Balances
The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to the contractual right to consideration for completed performance not yet invoiced or able to be invoiced. Contract liabilities are recorded when cash payments are received in advance of performance, including amounts which are refundable. The Company had no material asset impairment charges related to contract assets in the periods presented.
As of March 31, 2022 and December 31, 2021, the Company had contract assets of $380.9 million and $337.4 million, respectively, and $85.3 million and $71.1 million, respectively, which were recorded in Short-term contract

9

assets, net and Other non-current assets, respectively, in the Condensed Consolidated Balance Sheets. As of March 31, 2022 and December 31, 2021, the Company also recorded contract asset allowances of $20.3 million and $18.5 million, respectively, within Short-term contract assets, net.
As of March 31, 2022 and December 31, 2021, the Company had contract liabilities of $59.1 million and $62.8 million, respectively, which were recorded in Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets, respectively.
Exemptions
The Company incurs incremental costs to obtain new contracts across certain of its service lines. As the amortization period of those expenses is 12 months or less, the Company expenses those incremental costs of obtaining the contracts in accordance with Topic 606.
Remaining performance obligations represent the aggregate transaction prices for contracts where the performance obligations have not yet been satisfied. In accordance with Topic 606, the Company does not disclose unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) variable consideration for services performed as a series of daily performance obligations, such as those performed within the Property, facilities and project management service line. Performance obligations within these businesses represent a significant portion of the Company's contracts with customers not expected to be completed within 12 months.

Note 6: Goodwill and Other Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2022 (in millions):
AmericasEMEAAPACTotal
Balance as of December 31, 2021$1,511.2 $317.2 $253.5 $2,081.9 
Acquisitions3.0   3.0 
Disposals    
Measurement period adjustments    
Effect of movements in exchange rates and other0.5 (8.9)7.8 (0.6)
Balance as of March 31, 2022$1,514.7 $308.3 $261.3 $2,084.3 
Portions of goodwill are denominated in currencies other than the U.S. dollar; therefore, a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates.
The Company identified immaterial measurement period adjustments during the three months ended March 31, 2022 and 2021 and adjusted the provisional goodwill amounts recognized.
For the three months ended March 31, 2022 and 2021, no impairments of goodwill were recognized as the estimated fair value of each of the identified reporting units was in excess of its carrying value.

10

The following tables summarize the carrying amounts and accumulated amortization of intangible assets (in millions):
As of March 31, 2022
Useful Life
(in years)
Gross ValueAccumulated AmortizationNet Value
C&W trade nameIndefinite$546.0 $— $546.0 
Customer relationships
1 - 15
1,377.6 (1,019.7)357.9 
Other intangible assets
5 - 7
17.2 (13.0)4.2 
Total intangible assets$1,940.8 $(1,032.7)$908.1 
As of December 31, 2021
Useful Life
(in years)
Gross ValueAccumulated AmortizationNet Value
C&W trade nameIndefinite$546.0 $— $546.0 
Customer relationships
1 - 15
1,380.7 (1,009.0)371.7 
Other intangible assets
2 - 13
17.3 (12.8)4.5 
Total intangible assets$1,944.0 $(1,021.8)$922.2 
Amortization expense was $15.8 million and $16.5 million for the three months ended March 31, 2022 and 2021, respectively.
No impairments of intangible assets were recorded for the three months ended March 31, 2022 and 2021.

Note 7: Derivative Financial Instruments and Hedging Activities
The Company is exposed to certain risks arising from both business operations and economic conditions, including interest rate risk and foreign exchange risk. To mitigate the impact of interest rate and foreign exchange risk, the Company enters into derivative financial instruments. The Company maintains the majority of its overall interest rate exposure on floating rate borrowings to a fixed-rate basis, primarily with interest rate swap agreements. The Company manages exposure to foreign exchange fluctuations primarily through short-term forward contracts.
There have been no significant changes to the interest rate and foreign exchange risk management objectives from those disclosed in the Company’s audited Consolidated Financial Statements for the year ended December 31, 2021.
Interest Rate Derivative Instruments
As of March 31, 2022, the Company's active interest rate hedging instruments consist of five interest rate swap agreements designated as cash flow hedges. The Company's hedge instrument balances as of March 31, 2022 relate solely to these interest rate swaps. The hedge instruments expire in August 2025 and are further described below.
The Company records changes in the fair value of derivatives designated and qualifying as cash flow hedges in Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets and subsequently reclassifies the changes into earnings in the period that the hedged forecasted transaction affects earnings. As of March 31, 2022 and December 31, 2021, there were $14.0 million and $83.6 million in pre-tax losses, respectively, included in Accumulated other comprehensive loss related to these agreements, which will be reclassified to Interest expense as interest payments are made in accordance with the 2018 Credit Agreement; refer to Note 8: Long-Term Debt and Other Borrowings for discussion of this agreement. During the next twelve months, the Company estimates that $14.8 million will be reclassified to Interest expense in the Condensed Consolidated Statements of Operations.
Non-designated Foreign Exchange Derivative Instruments
Additionally, the Company enters into short-term forward contracts to mitigate the risk of fluctuations in foreign currency exchange rates that would adversely impact some of the Company’s foreign currency denominated transactions. Hedge accounting was not elected for any of these contracts. As such, changes in the fair value of these contracts are recorded directly in earnings. No material fair value gains or losses were recorded for the three months ended March 31, 2022 and 2021.

11

As of March 31, 2022 and December 31, 2021, the Company had 21 and 19 foreign currency exchange forward contracts outstanding covering a notional amount of $621.8 million and $642.7 million, respectively. As of March 31, 2022 and December 31, 2021, the Company has not posted and does not hold any collateral related to these agreements.
The following table presents the fair value of derivatives as of March 31, 2022 and December 31, 2021 (in millions):
March 31, 2022December 31, 2021
March 31, 2022AssetsLiabilitiesAssetsLiabilities
Derivative InstrumentNotionalFair ValueFair ValueFair ValueFair Value
Designated:
Cash flow hedges:
Interest rate swaps$1,423.6 $ $14.0 $ $84.0 
Non-designated:
Foreign currency forward contracts621.8 1.1 0.6 0.9 1.1 
The fair value of interest rate swaps is included within Other non-current liabilities in the Condensed Consolidated Balance Sheets. The fair value of foreign currency forward contracts is included in Prepaid expenses and other current assets and Other current liabilities in the Condensed Consolidated Balance Sheets. The Company does not net derivatives in the Condensed Consolidated Balance Sheets.
The following table presents the effect of derivatives designated as hedges, net of applicable income taxes, in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (in millions):
Beginning
Accumulated Other
Comprehensive
Loss (Gain)
Amount of Loss (Gain) Recognized in Other
Comprehensive
Loss on Derivatives
Amount of (Loss) Gain
Reclassified from
Accumulated Other
Comprehensive Loss
into Statement of Operations
(1)
Ending
Accumulated Other
Comprehensive
Loss (Gain)
Three Months Ended March 31, 2022
Interest rate cash flow hedges$84.2 $(60.7)$(9.5)$14.0 
Three Months Ended March 31, 2021
Interest rate cash flow hedges$158.9 $(28.5)$(9.0)$121.4 
(1) Amount is net of related income tax expense of $0.0 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively.
Losses of $9.5 million and $7.9 million were reclassified into earnings during the three months ended March 31, 2022 and 2021, respectively, related to interest rate hedges and were recognized in Interest expense in the Condensed Consolidated Statements of Operations.

Note 8: Long-Term Debt and Other Borrowings
Long-term debt consisted of the following (in millions):
As of
March 31, 2022December 31, 2021
Collateralized:
2018 First Lien Loan, net of unamortized discount and issuance costs of $24.1 million and $25.8 million, respectively
$2,588.8 $2,593.8 
2020 Senior Secured Notes, net of unamortized issuance costs of $8.8 million and $9.2 million, respectively
641.2 640.8 
Finance lease liability24.0 23.2 
Notes payable to former stockholders0.3 0.2 
Total3,254.3 3,258.0 
Less: current portion of long-term debt(38.4)(37.5)
Total Long-term debt, net$3,215.9 $3,220.5 

12

2018 Credit Agreement
On August 21, 2018, the Company entered into a $3.5 billion credit agreement (the "2018 Credit Agreement"), comprised of a $2.7 billion term loan (the "2018 First Lien Loan") and an $810.0 million revolving credit facility (the "Revolver"). Net proceeds from the 2018 First Lien Loan were $2.7 billion ($2.7 billion aggregate principal amount less $13.5 million stated discount and $20.6 million in debt transaction costs).
On January 20, 2020, the Company refinanced the 2018 First Lien Loan under materially the same terms, incurring an additional $11.1 million in debt transaction costs. The 2018 First Lien Loan matures on August 21, 2025.
The 2018 Credit Agreement bears interest at a variable interest rate that the Company may select per the terms of the 2018 Credit Agreement. As of March 31, 2022, the rate is equal to 1-month LIBOR plus 2.75%. As of March 31, 2022, the effective interest rate of the 2018 First Lien Loan was 3.50%.
The 2018 Credit Agreement requires quarterly principal payments equal to 0.25% of the aggregate principal amount of the 2018 First Lien Loan, including incremental borrowings.
Revolver
On December 20, 2019, the Company amended the Revolver to increase the aggregate principal amount by $210.0 million, incurring an additional $0.5 million in debt transaction costs. The Company’s $1.0 billion Revolver, which matures on August 21, 2023, was undrawn as of March 31, 2022 and December 31, 2021.
Borrowings under the Revolver, if any, bear interest at our option, at rates varying from 2.75% to 2.00% based on achievement of certain Net Leverage Ratios (as defined in the 2018 Credit Agreement).
Financial Covenant and Terms
The 2018 Credit Agreement has a springing financial covenant, tested on the last day of each fiscal quarter if the outstanding loans under the Revolver exceed an applicable threshold. If the financial covenant is triggered, the Net Leverage Ratio is tested for compliance not to exceed 5.80 to 1.00.
The Company was in compliance with all of the covenants under the 2018 Credit Agreement as of March 31, 2022 and December 31, 2021.
2020 Senior Secured Notes
On May 22, 2020, the Company issued $650.0 million of 6.75% senior secured notes due May 15, 2028 (the "2020 Notes"). Net proceeds from the 2020 Notes were $638.5 million, consisting of a $650.0 million aggregate principal amount less $11.5 million from issuance costs. The 2020 Notes were offered in a private placement exempt from registration under the U.S. Securities Act of 1933, as amended. The 2020 Notes bear interest at a fixed rate of 6.75% and yielded an effective interest rate of 6.80% as of March 31, 2022.

Note 9: Commitments and Contingencies
Guarantees
The Company’s guarantees primarily relate to requirements under certain client service contracts and have arisen through the normal course of business. These guarantees, with certain financial institutions, have both open and closed-ended terms, with remaining closed-ended terms up to 7.0 years and maximum potential future payments of approximately $52.9 million in the aggregate. None of these guarantees are individually material to the Company’s operating results, financial position or liquidity. The Company considers the future payment or performance related to non-performance under these guarantees to be remote.
Contingencies
In the normal course of business, the Company is subject to various claims and litigation. Many of these claims are covered under the Company’s current insurance programs, subject to self-insurance levels and deductibles. The Company is also subject to threatened or pending legal actions arising from activities of contractors. Such liabilities include the potential costs to settle litigation. A liability is recorded for the potential costs of carrying out further works based on known claims and previous claims history, and for losses from litigation that are probable and estimable. A liability is also recorded for the Company’s incurred but not reported ("IBNR") claims, based on assessment using prior claims history.

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Claims liabilities are presented as Other current liabilities and Other non-current liabilities in the Condensed Consolidated Balance Sheets. As of March 31, 2022 and December 31, 2021, contingent liabilities recorded within Other current liabilities were $125.4 million and $106.5 million, respectively, and contingent liabilities recorded within Other non-current liabilities were $19.7 million and $19.5 million, respectively. These contingent liabilities are made up of errors and omissions ("E&O") claims, workers’ compensation insurance liabilities and other claims and contingent liabilities. At March 31, 2022 and December 31, 2021, E&O and other claims were $45.8 million and $40.2 million, respectively, and workers’ compensation liabilities were $99.3 million and $85.8 million, respectively, included within Other current liabilities and Other non-current liabilities in the Condensed Consolidated Balance Sheets. The ultimate settlement of these matters may result in payments materially in excess of the amounts recorded due to their contingent nature and the inherent uncertainties of settlement proceedings.
The Company had insurance recoverable balances for E&O claims as of March 31, 2022 and December 31, 2021 totaling $6.9 million and $6.3 million, respectively.

Note 10: Related Party Transactions
As of March 31, 2022 and December 31, 2021, the Company had receivables from affiliates of $47.3 million and $42.5 million, respectively, that are included in Prepaid expenses and other current assets, and $283.8 million and $205.9 million, respectively, that are included in Other non-current assets in the Condensed Consolidated Balance Sheets. These amounts primarily represent prepaid commissions, retention and sign-on bonuses to brokers and other items such as travel and other advances to employees.

Note 11: Fair Value Measurements
The Company measures certain assets and liabilities in accordance with ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), which defines fair value as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants on the measurement date. In addition, ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3: inputs for the asset or liability that are based on unobservable inputs in which there is little or no market data.
There were no significant transfers between the three levels of the fair value hierarchy for the three months ended March 31, 2022 and or year ended December 31, 2021. There have been no significant changes to the valuation techniques and inputs used to develop the recurring fair value measurements from those disclosed in the Company's audited Consolidated Financial Statements for the year ended December 31, 2021.
Financial Instruments
The Company's financial instruments include cash and cash equivalents, trade and other receivables, deferred purchase price receivable ("DPP"), restricted cash, accounts payable and accrued expenses, short-term borrowings, long-term debt, interest rate swaps and foreign exchange contracts. The carrying amount of cash and cash equivalents approximates the fair value of these instruments. Certain money market funds in which the Company has invested are highly liquid and considered cash equivalents. These funds are valued at the per unit rate published as the basis for current transactions.
The estimated fair value of external debt was $3.4 billion and $3.3 billion as of March 31, 2022 and December 31, 2021, respectively. These instruments were valued using dealer quotes that are classified as Level 2 inputs in the fair value hierarchy. The gross carrying value of the debt was $3.3 billion and $3.3 billion as of March 31, 2022 and December 31, 2021, respectively, which excludes debt issuance costs. See Note 8: Long-Term Debt and Other Borrowings for additional information.
The estimated fair value of interest rate swaps and foreign currency forward contracts are determined based on the expected cash flows of each derivative. The valuation method reflects the contractual period and uses observable market-based inputs, including interest rate and foreign currency forward curves.

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Investments in Real Estate Ventures
The Company directly invests in early stage proptech companies, real estate venture capital funds, and other real estate companies across various sectors. The Company typically reports these investments at cost, less impairment charges, and adjusts to fair value if the Company identifies observable price changes in orderly transactions for identical or similar instruments of the same issuer.
Investments in early stage proptech companies or other real estate companies are typically fair valued as a result of pricing observed in subsequent funding rounds. These investments are not fair valued on a recurring basis and as such have been excluded from the fair value hierarchy table. As of March 31, 2022 and December 31, 2021, investments in early stage proptech companies had a fair value of approximately $31.5 million and $24.0 million, respectively, included in Other non-current assets in the Condensed Consolidated Balance Sheets.
In October 2021, the Company made a strategic investment of $150.0 million in WeWork, which is accounted for as an investment in equity securities reported at fair value. As quoted market prices for identical assets are available, this investment is classified as a Level 1 investment, and mark to market gains and losses are recognized on a recurring basis.
Investments in real estate venture capital funds are fair valued using the net asset value ("NAV") per share (or its equivalent) provided by investees. Critical inputs to NAV estimates include valuations of the underlying real estate assets and borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates, rental and expense growth rates, and asset-specific market borrowing rates. As these investments are not required to be classified in the fair value hierarchy, they have been excluded from the fair value hierarchy table. As of March 31, 2022 and December 31, 2021, investments in real estate venture capital funds had a fair value of approximately $62.1 million and $54.1 million, respectively, included in Other non-current assets in the Condensed Consolidated Balance Sheets.
The Company adjusts these investments to their fair values each reporting period, and the changes are reflected in Other (expense) income, net, in the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2022, we recognized an unrealized loss of $26.7 million related to our investment in WeWork, offset by unrealized gains of $5.2 million from other fair value investments. No unrealized gains or losses on investments were recorded in the three months ended March 31, 2021.

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Recurring Fair Value Measurements
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (in millions):
As of March 31, 2022
TotalLevel 1Level 2Level 3
Assets
Cash equivalents - money market funds$0.9 $0.9 $ $ 
Deferred compensation plan assets37.1 37.1   
Foreign currency forward contracts1.1  1.1  
Deferred purchase price receivable94.6   94.6 
Equity securities102.3 102.3   
Total$236.0 $140.3 $1.1 $94.6 
Liabilities
Deferred compensation plan liabilities$37.7 $37.7 $ $ 
Foreign currency forward contracts0.6  0.6  
Interest rate swap agreements14.0  14.0  
Earn-out liabilities22.8   22.8 
Total$75.1 $37.7 $14.6 $22.8 
As of December 31, 2021
TotalLevel 1Level 2Level 3
Assets
Cash equivalents - money market funds$45.2 $45.2 $ $ 
Deferred compensation plan assets47.2 47.2   
Foreign currency forward contracts0.9  0.9  
Deferred purchase price receivable142.3   142.3 
Equity securities129.0 129.0   
Total364.6 221.4 0.9 142.3 
Liabilities
Deferred compensation plan liabilities$47.4 $47.4 $ $ 
Foreign currency forward contracts1.1  1.1  
Interest rate swap agreements84.0  84.0  
Earn-out liabilities21.4   21.4 
Total$153.9 $47.4 $85.1 $21.4 
Deferred Compensation Plans
Prior to 2017, the Company provided deferred compensation plans to certain U.S. employees whereby the employee could defer a portion of employee compensation, which the Company would hold in trust, enabling the employees to defer tax on compensation until payment is made to them from the trust. These plans are frozen. The employees continue to be at risk for any investment fluctuations of the funds held in trust.
The Company adopted a new deferred compensation plan, which become effective on January 1, 2019. The plan allows highly-compensated employees to defer a portion of compensation, enabling the employee to defer tax on compensation until payment is made. Deferred compensation is credited into an account denominated in ordinary shares of the Company in a number determined based on the fair market value of the Company’s ordinary shares on the date of the deposit. All payments are made in ordinary shares.
The fair value of assets and liabilities of these plans is based on the value of the underlying investments using quoted prices in active markets at period end. Deferred compensation plan assets are presented within Prepaid expenses and other current assets and Other non-current assets in the Condensed Consolidated Balance Sheets. Deferred compensation liabilities are presented within Accrued compensation and Other non-current liabilities in the Condensed Consolidated Balance Sheets.

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Foreign Currency Forward Contracts and Interest Rate Swap Agreements
Refer to Note 7: Derivative Financial Instruments and Hedging Activities for discussion of the fair value associated with these derivative assets and liabilities.
Deferred Purchase Price Receivable
The Company recorded a DPP under its Accounts Receivable ("A/R") Securitization program upon the initial sale of trade receivables. The DPP represents the difference between the fair value of the trade receivables sold and the cash purchase price and is recognized at fair value as part of the sale transaction. The DPP is subsequently remeasured each reporting period in order to account for activity during the period, such as the seller’s interest in any newly transferred receivables, collections on previously transferred receivables attributable to the DPP and changes in estimates for credit losses. Changes in the DPP attributed to changes in estimates for credit losses are expected to be immaterial, as the underlying receivables are short-term and of high credit quality. The DPP is included in Other non-current assets in the Condensed Consolidated Balance Sheets and is valued using unobservable inputs (i.e., Level 3 inputs), primarily discounted cash flows. Refer to Note 12: Accounts Receivable Securitization for more information.
Earn-out Liabilities
The Company has various contractual obligations associated with the acquisition of several real estate service companies in the United States, Australia, Canada and Europe, including contingent consideration, comprised of earn-out payments to the sellers subject to achievement of certain performance criteria in accordance with the terms and conditions set forth in the purchase agreements. An increase to a probability of achievement would result in a higher fair value measurement.
The amounts disclosed in the table above are included in Other current liabilities and Other non-current liabilities in the Condensed Consolidated Balance Sheets. As of March 31, 2022, the Company had the potential to make a maximum of $28.3 million and a minimum of $0.0 million (undiscounted) in earn-out payments. Assuming the achievement of the applicable performance criteria, these earn-out payments will be made over the next five years.
Earn-out liabilities are classified within Level 3 in the fair value hierarchy because the methodology used to develop the estimated fair value includes significant unobservable inputs reflecting management’s own assumptions. The fair value of earn-out liabilities is based on the present value of probability-weighted expected return method related to the earn-out performance criteria on each reporting date. The probabilities of achievement assigned to the performance criteria are determined based on due diligence performed at the time of acquisition as well as actual performance achieved subsequent to acquisition. Adjustments to the earn-out liabilities in periods subsequent to the completion of acquisitions are reflected within Operating, administrative and other in the Condensed Consolidated Statements of Operations.
The table below presents a reconciliation of earn-out liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in millions):