Thomson Reuters Corporation
Del
Thomson Reuters Reports Third-Quarter 2010 Results
Consumer ServicesMediaMedia
* Business returns to growth as new products roll out
* Third-quarter ongoing revenues up 3% before currency
* Professional division revenues up 5%; Markets division revenues up 1%
* Underlying operating profit of $681 million, down 4%
* Adjusted EPS of $0.49 vs. $0.43 in prior-year period
* 2010 Outlook reaffirmed with full-year revenues now forecast to be flat to
slightly up
NEW YORK, October 28, 2010 - Thomson Reuters (TSX / NYSE: TRI), the world's
leading source of intelligent information for businesses and professionals,
today reported results for the third quarter ended September 30, 2010. The
company reported ongoing revenues of $3.3 billion, underlying operating profit
of $681 million, underlying operating profit margin of 20.9% and year-to-date
underlying free cash flow of $1.2 billion.
"I am pleased with the performance of the company in the third quarter. Our
revenue growth accelerated as the Markets division moved into growth and
revenues in the Professional division grew a solid 5%," said Thomas H. Glocer,
chief executive officer of Thomson Reuters.
"I am particularly pleased with the launch and early customer adoption of
Thomson Reuters Eikon, the innovative desktop platform for financial
professionals which we launched in September. Eikon now joins Thomson Reuters
Elektron and WestlawNext as powerful new platforms we have released in 2010."
"These innovative platforms, along with new products we expect to launch in the
fourth quarter in our Tax & Accounting and Healthcare & Science units, will arm
our sales force with the tools needed to drive revenue and profit growth in
2011 and beyond."
Consolidated Financial Highlights
Three Months Ended September 30,
(Millions of U.S. dollars, except EPS and profit
margin)
IFRS Financial Measures 2010 2009 Change
Revenues $3,256 $3,216 1%
Operating profit $356 $378 -6%
Diluted earnings per share $0.32 $0.19 68%
(EPS)
Cash flow from operations $475 $513 -7%
Non-IFRS Financial Measures
[1] 2010 2009 Change Change Before Currency
Revenues from ongoing $3,256 $3,205
businesses 2% 3%
Underlying operating profit $681 $711 -4% -4%
Underlying operating profit 20.9% 22.2% -130bp
margin
Adjusted earnings per share $0.49 $0.43 14%
(EPS)
Underlying free cash flow $315 $395 -20%
[1] These and other non-IFRS financial measures are defined and reconciled to
the most directly comparable IFRS measure in the tables appended to this news
release. Additional information is provided in the explanatory note at the end
of this news release.
* Revenues from ongoing businesses were $3.3 billion, an increase of 2% after
currency and an increase of 3% before currency. Strong growth in Tax &
Accounting, the Enterprise unit in Markets, Healthcare & Science and the
subscription businesses in Legal was partly offset by softness in Legal
print and non-subscription revenues and a decline in Investment Management
revenues in Markets.
* Underlying operating profit declined 4%, attributable to investments in new
products launched in 2010 and product mix. The impact from currency was not
significant in the quarter.
* Adjusted earnings per share were $0.49 compared to $0.43 in the prior-year
period. The increase was largely attributable to lower integration costs,
lower interest expense and a decline in income tax expense.
* Year-to-date underlying free cash flow was $1.2 billion, a decline of 15%
versus the prior-year period, driven primarily by operating profit flow-
through.
* Integration and legacy savings programs continue to progress well, achieving
run-rate savings of $1.35 billion towards a previously announced goal of
$1.6 billion by the end of 2011.
Third-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are
before the impact of foreign currency as Thomson Reuters believes this provides
the best basis to measure the performance of its business. All revenue growth
and operating profit comparisons are based upon results from ongoing businesses
and exclude the results of disposals.
Professional Division
Three Months Ended September 30,
(Millions of U.S. dollars, except profit
margin)
2010 2009 Change Change Before Currency
Revenues
Legal $945 $917 3% 3%
Tax & Accounting $244 $225 8% 9%
Healthcare & Science $220 $206 7% 7%
Professional Division Total $1,409 $1,348 5% 5%
Operating Profit
Legal $287 $305 -6%
Tax & Accounting $39 $36 8%
Healthcare & Science $50 $50 0%
Professional Division Total $376 $391 -4% -3%
Operating Profit Margin %
Legal 30.4% 33.3%
Tax & Accounting 16.0% 16.0%
Healthcare & Science 22.7% 24.3%
Professional Division Total 26.7% 29.0%
* Third-quarter revenues rose 5%, driven by solid growth from Legal
subscriptions, Tax & Accounting and Healthcare & Science products and
acquisitions, partially offset by declines in Legal print and non-
subscription products.
* Third-quarter operating profit declined 4%. Product mix, continued product
investment and acquisitions resulted in a 300 basis point impact on margin,
partially offset by efficiency initiatives. Operating profit declined 3%,
excluding currency.
Legal
* Third-quarter revenues were up 3% from the prior-year period. Subscription
revenues grew 8%, led by 14% growth in international revenues and 23% growth
in FindLaw both helped by acquisitions. Non-subscription revenues declined
4% and print products declined 4% due to tightened customer budgets and some
timing benefits compared to the third quarter of 2009. Print attrition has
slowed substantially from the prior-year period and is nearing historical
levels.
* Third-quarter operating profit declined 6% and the associated margin was
30.4%. Lower revenues from high-margin print and non-subscription products
and the impact of acquisitions and investments in strategic growth
initiatives more than offset efficiency savings.
* Since its launch in February 2010, WestlawNext has been sold to over 9,000
customers -representing 18% of Westlaw's revenue base. This is well ahead of
the company's initial expectations and customer feedback continues to be
very positive.
Tax & Accounting
* Third-quarter revenues grew 9%. Workflow & Service Solutions, which
comprises two-thirds of the overall segment's revenues, grew 15%, led by
income tax products, growth in the global tax technology businesses and
acquisitions. Business Compliance & Knowledge Solutions revenues were down
1% from the prior-year period, as Checkpoint growth of 9% was offset by a
decline in print, which comprised 9% of Tax & Accounting revenues.
* Third-quarter operating profit grew 8% and the related margin was flat at
16.0%. Operating profit growth was driven by revenue flow-through, partly
offset by the dilutive impact of higher depreciation and amortization from
2009 acquisitions. EBITDA increased 15% in the third quarter.
* Tax & Accounting is a seasonal business with nearly 50% of its operating
profit historically generated in the fourth quarter.
Healthcare & Science
* Third-quarter revenues grew 7%. Growth was driven by continued demand for
healthcare spending analytics in the Payer business, which was up 11%.
Growth in Scientific & Scholarly Research, which was up 14%, was driven by
acquisitions and core information offerings.
* Third-quarter operating profit was flat, and the corresponding margin
decreased to 22.7%. The decline in operating margin was primarily
attributable to timing, revenue flow-through and a difficult prior-year
comparison. Year-to-date, the margin is 22.1%, up 10 basis points versus
2009. Excluding currency, year-to-date, the margin is up 40 basis points
versus 2009.
Markets Division
Three Months Ended September 30,
(Millions of U.S. dollars, except profit margin)
2010 2009 Change Change Before Currency
Revenues
Sales & Trading $887 $903 -2% 0%
Investment & Advisory $552 $565 -2% -2%
Enterprise $331 $308 7% 10%
Media $79 $83 -5% -3%
Markets Division Total $1,849 $1,859 -1% 1%
Operating Profit $359 $369 -3% -2%
Operating Profit Margin % 19.4% 19.8%
* Revenue trends continued to improve with revenues up 1% compared to a 3%
decline in the second quarter, a 4% decline in the first quarter and a 5%
decline in the fourth quarter of 2009.
* The third quarter of 2010 marked the first quarter of revenue growth since
the fourth quarter of 2008.
* By geography, revenues grew across all major regions of the world, except
North America. Asia increased 4%, and Europe, Middle East and Africa (EMEA)
increased 3% while the Americas declined 2%.
* By market segment, strong growth in Enterprise, Commodities & Energy,
Tradeweb and Corporates was offset by soft performance in Exchange Traded
Instruments and Investment Management.
* Third-quarter operating profit was $359 million, down 3%, with a related
margin of 19.4%. Excluding the impact of currency, operating profit declined
2%. The margin decline was attributable to the development of Markets two
new product platforms, Thomson Reuters Eikon and Elektron, partially offset
by approximately $25 million in one-time benefits.
* The company's new flagship desktop offering in Markets, Thomson Reuters
Eikon, was launched in September 2010. Customer feedback has been very
positive with signed contracts for over 1,000 new desktops.
Sales & Trading
* Third-quarter revenues remained flat versus the prior-year period.
Transactions-related revenues were up 8%, driven by Tradeweb growth of 9%,
due to strong volumes from mortgage-backed securities and U.S. Treasuries.
Commodities & Energy revenues grew 13%, boosted 6% by the acquisition of
Point Carbon. Revenues from Exchange Traded Instruments and Fixed Income
declined, partially as a result of the retirement of low margin legacy
products.
* The Treasury business remained flat versus the prior-year period as the
flow-through from 2009 subscription cancellations offset a 2% increase in
the quarter's transaction revenues driven by growing foreign exchange
volumes.
Investment & Advisory
* Third-quarter revenues declined 2%, driven by soft performance in the
Investment Management business which offset good growth in Corporates and
Wealth Management.
* The Investment Management business declined 9% as a result of the flow-
through of cancellations from buy-side customers seeking to cut costs or
exit the business entirely.
* Wealth Management increased 4%, attributable to strong desktop growth which
more than offset the planned retirement of certain products.
* The Corporates business grew 6%, driven primarily by acquisitions.
* Overall, momentum in Investment & Advisory has continued to improve in 2010
with positive net sales in Corporates, Investment Banking and Wealth
Management.
Enterprise
* Third-quarter revenues grew 10%, driven by continued strong customer
demand. The Enterprise Real Time Solutions segment grew 10%, as customers
continued to invest in low-latency data feeds and hosting solutions. The
Risk Management business grew 15%, aided by a favorable comparison to the
third quarter of 2009. The Platform business (formerly Information
Management Systems) grew 17% driven by good sales of recurring products and
outright revenues. Omgeo's revenues declined 5% in the quarter as a result
of weak equity volumes.
* Thomson Reuters Elektron, the innovative data distribution platform launched
by Enterprise in the second quarter, continued to gain momentum as customers
in established and emerging markets adopted its combination of hosted and
deployed information and trading solutions.
Media
* Third-quarter revenues declined 3%, driven by 2009 cancellations in the
Agency business, which continues to be adversely affected by tight customer
budgets.
* The Consumer business was essentially flat compared to the prior-year
period; however, recent product introductions, including mobile and iPad
applications, are garnering new sources of advertising revenues.
Corporate & Other
Third-quarter corporate costs were $259 million compared to $244 million in the
prior-year period.
The $15 million increase was primarily due to a $55 million increase in fair
value adjustments (non-cash foreign exchange accounting adjustments), partially
offset by a $45 million decline in integration-related expenses. Core corporate
costs were $54 million, up $5 million from the prior-year period.
Year-to-date corporate costs were $526 million compared to $648 million in the
prior-year period. The $122 million decrease was primarily due to a $60 million
decrease in fair value adjustments (non-cash foreign exchange accounting
adjustments), a $53 million decrease in integration-related expenses and a $9
million decrease in core corporate costs.
Financial Highlights - Nine Months 2010
Nine Months Ended September 30,
(Millions of U.S. dollars, except EPS and profit
margin)
IFRS Financial Measures 2010 2009 Change
Revenues $9,612 $9,640 0%
Operating profit $1,112 $1,229 -10%
Diluted earnings per share
(EPS) $0.82 $0.80 3%
Cash flow from operations $1,572 $1,770 -11%
Non-IFRS Financial Measures
[1] 2010 2009 Change Change Before Currency
Revenues from ongoing
businesses $9,611 $9,599 0% 0%
Underlying operating profit $1,891 $2,093 -10% -9%
Underlying operating profit
margin 19.7% 21.8% -210bp
Adjusted earnings per share
(EPS) $1.32 $1.41 -6%
Underlying free cash flow $1,173 $1,383 -15%
* Revenues from ongoing businesses were $9.6 billion, unchanged from the
prior-year period.
* Underlying operating profit was $1.9 billion, down 10% compared to the
prior-year period, with a corresponding margin of 19.7%.
* Adjusted earnings per share were $1.32 compared to $1.41 in the prior-year
period.
* Year-to-date underlying free cash flow was $1.2 billion, a decline of 15%
versus the prior-year period, driven primarily by operating profit flow-
through.
Integration Programs
Thomson Reuters achieved combined run-rate savings of $1.35 billion at the end
of the third quarter of 2010 from the Reuters integration and legacy savings
programs. An incremental $75 million in run-rate savings achieved during the
quarter was largely attributable to additional communications, content and data
center consolidations in the Markets division, leveraging of the Thomson Reuters
global footprint by the Professional division and further vendor
rationalization.
Integration-related costs totaled $103 million in the quarter and $290 million
year-to-date. Full-year costs may come in slightly below the previously forecast
amount of $475 million with the balance shifted to 2011.
Business Outlook (Before Currency)
Thomson Reuters today reaffirmed its business outlook for 2010 that was first
communicated in February and raised its outlook for full-year revenue growth.
Based on the company's year-to-date performance and improving momentum, Thomson
Reuters now expects its revenues to be flat to slightly up in 2010 rather than
flat to slightly down, as previously forecast. The company continues to expect
net sales to be positive for the Professional and Markets divisions for the
full-year 2010.
The company expects its underlying operating profit margin to be comparable to
2009 before investments in the major new products and platforms launching this
year. These investments are expected to have an impact of approximately 100
basis points.
The company's plan to continue its aggressive investment focus to drive growth
and capture efficiencies is likely to result in 2010 underlying free cash flow
being slightly down on the prior year.
The information in this section is forward-looking and should be read in
conjunction with the section below entitled "Special Note Regarding Forward-
Looking Statements, Material Assumptions and Material Risks."
Dividend
As previously announced in February, Thomson Reuters increased its 2010 dividend
by $0.04 per share, resulting in a quarterly dividend of $0.29 per share and an
annualized dividend of $1.16 per share. Thomson Reuters will pay a quarterly
dividend on December 15, 2010 to shareholders of record as of November 18, 2010.
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for
businesses and professionals. We combine industry expertise with innovative
technology to deliver critical information to leading decision makers in the
financial, legal, tax and accounting, healthcare and science and media markets,
powered by the world's most trusted news organization. With headquarters in New
York and major operations in London and Eagan, Minnesota, Thomson Reuters
employs 55,000 people and operates in over 100 countries. Thomson Reuters shares
are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more
information, go to www.thomsonreuters.com.
NON-IFRS FINANCIAL MEASURES
Thomson Reuters prepares its financial statements in accordance with
International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board (IASB).
This news release includes certain non-IFRS financial measures. Thomson Reuters
uses these non-IFRS financial measures as supplemental indicators of its
operating performance and financial position. These measures do not have any
standardized meanings prescribed by IFRS and therefore are unlikely to be
comparable to the calculation of similar measures used by other companies, and
should not be viewed as alternatives to measures of financial performance
calculated in accordance with IFRS. Non-IFRS financial measures are defined and
reconciled to the most directly comparable IFRS measures in the appended tables.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND
MATERIAL RISKS
Certain statements in this news release, including, but not limited to,
statements in the "Integration Programs" and "Business Outlook (Before
Currency)" sections and Mr. Glocer's comments, are forward-looking. These
forward-looking statements are based on certain assumptions and reflect our
company's current expectations. As a result, forward-looking statements are
subject to a number of risks and uncertainties that could cause actual results
or events to differ materially from current expectations. There is no assurance
that the events described in any forward-looking statement will materialize. A
business outlook is provided for the purpose of presenting information about
current expectations for 2010. This information may not be appropriate for other
purposes. You are cautioned not to place undue reliance on forward-looking
statements which reflect expectations only as of the date of this news release.
Except as may be required by applicable law, Thomson Reuters disclaims any
obligation to update or revise any forward-looking statements.
The material assumptions underlying the company's 2010 business outlook are
based on various external and internal assumptions. Economic and market
assumptions include, but are not limited to, positive global GDP growth led by
rapidly developing economies and a continued increase in the number of
professionals around the world and their demand for high quality information and
services. Internal financial and operational assumptions include, but are not
limited to, the successful execution of the company's new product release
programs, globalization strategy, other growth initiatives and efficiency
programs, including the integration programs.
Some of the material risk factors that could cause actual results or events to
differ materially from those expressed in or implied by forward-looking
statements in this news release include, but are not limited to, changes in the
general economy; actions of competitors; increased accessibility to free or
relatively inexpensive information sources; failure to develop new products,
services, applications and functionalities to meet customers' needs, attract new
customers or expand into new geographic markets; failure to maintain a high
renewal rate for subscription-based services; failures or disruptions of network
systems or the Internet; detrimental reliance on third parties for information
and other services; changes to law and regulations, including the impact of the
Dodd-Frank legislation; failure to meet the challenges involved in operating
globally; failure to protect the reputation of Thomson Reuters; impairment of
goodwill and identifiable intangible assets; inadequate protection of
intellectual property rights; threat of legal actions and claims; downgrading of
credit ratings and adverse conditions in the credit markets; fluctuations in
foreign currency exchange and interest rates; failure to recruit and retain high
quality management and key employees; the effect of factors outside of the
control of Thomson Reuters on funding obligations in respect of pension and
post-retirement benefit arrangements; actions or potential actions that could be
taken by the company's principal shareholder, The Woodbridge Company Limited;
failure to fully derive anticipated benefits from future or existing
acquisitions, joint ventures, investments or dispositions; and failure to
achieve benefits from integration programs to the extent, or within the time
period, currently expected. These and other factors are discussed in materials
that Thomson Reuters from time to time files with, or furnishes to, the Canadian
securities regulatory authorities and the U.S. Securities and Exchange
Commission. Thomson Reuters annual and quarterly reports are also available in
the "Investor Relations" section of www.thomsonreuters.com.
CONTACT
MEDIA INVESTORS
Calvin Mitchell Frank Golden
Senior Vice President, Corporate Affairs Senior Vice President, Investor
+1 646 223 5285 Relations
calvin.mitchell@thomsonreuters.com +1 646 223 5288
frank.golden@thomsonreuters.com
Tom Gilbert
Manager, Corporate Communications, EMEA
+44 (0) 207 542 4214
tom.h.gilbert@thomsonreuters.com
Thomson Reuters will webcast a discussion of its third-quarter 2010 results
today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You can access the
webcast by visiting www.thomsonreuters.com and clicking on "Investor Relations"
at the top of the page and then "Thomson Reuters Reports Third-Quarter 2010
Results" on the right side of the page. An archive of the webcast will be
available in the "Investor Relations" section of the Thomson Reuters website.
Thomson Reuters Corporation
Division and Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------------------- ------------------------------
2010 2009 Change Organic 2010 2009 Change Organic
Revenues
Legal $945 $917 3% 0% $2,706 $2,683 1% -1%
Tax & 8% 4% 8% 3%
Accounting 244 225 749 695
Healthcare & 7% 4% 6% 3%
Science 220 206 642 605
---------------- ----------------
Professional 5% 1% 3% 0%
Division 1,409 1,348 4,097 3,983
Sales & -2% 0% -3% -4%
Trading ((1)) 887 903 2,647 2,741
Investment & -2% -3% -3% -5%
Advisory ((1)) 552 565 1,663 1,718
Enterprise 7% 10% 6% 6%
((1)) 331 308 972 916
Media ((1)) 79 83 -5% -3% 238 246 -3% -4%
---------------- ----------------
Markets Division 1,849 1,859 -1% 0% 5,520 5,621 -2% -3%
Eliminations (2) (2) (6) (5)
---------------- ----------------
Revenues from
ongoing
businesses((2)) 3,256 3,205 2% 1% 9,611 9,599 0% -2%
Before currency 3% 0%
Disposals((2)) - 11 1 41
---------------- ----------------
Revenues $3,256 $3,216 1% $9,612 $9,640 0%
Operating Profit
Legal $287 $305 -6% $803 $887 -9%
Tax & Accounting 39 36 8% 106 113 -6%
Healthcare &
Science 50 50 0% 142 133 7%
---------------- ----------------
Professional
Division 376 391 -4% 1,051 1,133 -7%
Markets Division 359 369 -3% 1,001 1,130 -11%
Corporate & Other (259) (244) (526) (648)
Amortization of
other intangible
assets (138) (124) (399) (367)
---------------- ----------------
Operating profit
from ongoing
businesses((2)) 338 392 -14% 1,127 1,248 -10%
Disposals((2)) - (7) - (12)
Other operating
gains (losses),
net 18 (7) (15) (7)
---------------- ----------------
Operating profit $356 $378 -6% $1,112 $1,229 -10%
Thomson Reuters Corporation
Reconciliation of Operating Profit to Underlying Operating Profit((3))
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------------- -----------------------
2010 2009 Change 2010( ) 2009 Change
Operating profit $356 $378 -6% $1,112 $1,229 -10%
Adjustments:
Amortization of other
intangible assets 138 124 399 367
Integration programs
expenses 103 148 290 343
Fair value adjustments 102 47 75 135
Other operating (gains)
losses, net (18) 7 15 7
Disposals - 7 - 12
------------------ -----------------
Underlying operating profit $681 $711 -4% $1,891 $2,093 -10%
Underlying operating profit
margin 20.9% 22.2% 19.7% 21.8%
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings from Continuing Operations((4))
(millions of U.S. dollars, except as otherwise indicated and except for per
share data)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- -----------------
2010( ) 2009 2010( ) 2009
Earnings attributable to common shareholders $268 $162 $685 $667
Adjustments:
Disposals - 7 - 12
Fair value adjustments 102 47 75 135
Other operating (gains) losses, net (18) 7 15 7
Other finance (income) costs (44) 7 (20) 64
Other non-operating charge - 326 - 326
Share of post tax earnings in equity
method investees (3) (1) (6) (2)
Tax on above items (19) 4 (19) (32)
Interim period effective tax rate
normalization((5)) (11) 44 (22) 9
Amortization of other intangible assets 138 124 399 367
Discrete tax items - (356) - (356)
Discontinued operations (6) (11) - (17)
Dividends declared on preference shares (1) (1) (2) (2)
--------- ------- --------- -------
Adjusted earnings from continuing operations $406 $359 $1,105 $1,178
Adjusted earnings per share from continuing
operations $0.49 $0.43 $1.32 $1.41
Diluted weighted average common shares (in
millions) 836.8 837.5 835.9 836.1
Thomson Reuters Corporation
Division and Business Segment Depreciation and Amortization of Computer Software
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- -----------------
Depreciation and amortization of computer
software 2010 2009 2010 2009
Legal $(74) $(66) $(213) $(194)
Tax & Accounting (24) (19) (71) (57)
Healthcare & Science (17) (17) (52) (52)
----------------- -----------------
Professional Division (115) (102) (336) (303)
Markets Division (128) (152) (412) (449)
Corporate & Other (4) (8) (16) (18)
----------------- -----------------
Ongoing businesses (247) (262) (764) (770)
Disposals - (1) - (4)
----------------- -----------------
Total depreciation and amortization of
computer software $(247) $(263) $(764) $(774)
(1) Results for 2009 have been restated to reflect the 2010 presentation.
(2) Revenues and operating profit from ongoing businesses exclude the
results of disposals. Disposals include the results of businesses sold or held
for sale that do not qualify as discontinued operations.
(3) Underlying operating profit excludes amortization of other intangible
assets, impairment charges, fair value adjustments, integration programs
expense, other operating gains and losses and the results of disposals.
Underlying operating profit margin is the underlying operating profit expressed
as a percentage of revenues from ongoing businesses.
(4) Adjusted earnings from continuing operations and adjusted earnings per
share from continuing operations include dividends declared on preference shares
and integration programs expense, but exclude the pre-tax impacts of
amortization of other intangible assets as well as the post-tax impacts of fair
value adjustments, other operating gains and losses, impairment charges, the
results of disposals (see note (2) above), other finance (income) costs, Thomson
Reuters share of post-tax (earnings) losses in equity method investees,
discontinued operations and other items affecting comparability. Adjusted
earnings per share from continuing operations is calculated using diluted
weighted average shares and does not represent actual earnings per share
attributable to shareholders.
(5) Adjustment to reflect income taxes based on estimated full-year
effective tax rate. Reported earnings for interim periods reflect income taxes
based on the estimated effective tax rates of each of the jurisdictions in which
Thomson Reuters operates. The adjustment reallocates estimated full-year income
taxes between interim periods, but has no effect on full-year income taxes.
Thomson Reuters Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ----------------------------
2010 2009 2010 2009
Revenues $3,256 $3,216 $9,612 $9,640
Operating
expenses (2,533) (2,444) (7,322) (7,263)
Depreciation (104) (128) (347) (370)
Amortization of
computer software (143) (135) (417) (404)
Amortization of
other intangible
assets (138) (124) (399) (367)
Other operating
gains (losses), net 18 (7) (15) (7)
------------------------------ ----------------------------
Operating
profit 356 378 1,112 1,229
Finance costs,
net:
Net
interest expense (99) (122) (287) (322)
Other
finance income
(costs) 44 (7) 20 (64)
Other non-
operating charge - (326) - (326)
------------------------------ ----------------------------
Income (loss)
before tax and
equity method
investees 301 (77) 845 517
Share of post
tax earnings in
equity method
investees 3 1 6 2
Tax (expense)
benefit (33) 232 (143) 149
------------------------------ ----------------------------
Earnings from
continuing
operations 271 156 708 668
Earnings from
discontinued
operations, net of
tax 6 11 - 17
------------------------------ ----------------------------
Net earnings $277 $167 $708 $685
Earnings
attributable to:
Common
shareholders 268 162 685 667
Non-
controlling
interests 9 5 23 18
Basic and
diluted earnings
per share $0.32 $0.19 $0.82 $0.80
Basic weighted
average common
shares 832,808,582 829,718,327 831,894,085 829,037,410
Diluted
weighted average
common shares 836,819,348 837,477,121 835,906,590 836,098,202
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
September 30, December 31,
2010 2009
--------------- -------------
Assets
Cash and cash equivalents $1,158 $1,111
Trade and other receivables 1,685 1,742
Other financial assets 61 76
Prepaid expenses and other current assets 835 734
--------------- -------------
Current assets 3,739 3,663
Computer hardware and other property, net 1,485 1,546
Computer software, net 1,552 1,495
Other identifiable intangible assets, net 8,493 8,694
Goodwill 18,515 18,130
Other financial assets 374 383
Other non-current assets 671 649
Deferred tax 14 13
--------------- -------------
Total assets $34,843 $34,573
Liabilities and equity
Liabilities
Current indebtedness $1,308 $782
Payables, accruals and provisions 2,384 2,651
Deferred revenue 1,103 1,187
Other financial liabilities 165 92
--------------- -------------
Current liabilities 4,960 4,712
Long-term indebtedness 6,792 6,821
Provisions and other non-current liabilities 2,151 1,878
Other financial liabilities 54 42
Deferred tax 1,672 1,785
--------------- -------------
Total liabilities 15,629 15,238
Equity
Capital 10,317 10,177
Retained earnings 10,403 10,561
Accumulated other comprehensive loss (1,573) (1,471)
--------------- -------------
Total shareholders' equity 19,147 19,267
Non-controlling interests 67 68
--------------- -------------
Total equity 19,214 19,335
--------------- -------------
Total liabilities and equity $34,843 $34,573
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended September
September 30, 30,
------------------------- -----------------------------
2010 2009 2010 2009
Cash provided by (used
in):
Operating activities
Net earnings 277 167 708 685
Adjustments for:
Depreciation 104 128 347 370
Amortization of
computer software 143 135 417 404
Amortization of other
intangible assets 138 124 399 367
Deferred tax (2) (380) (68) (446)
Embedded derivatives
fair value adjustments 77 47 50 118
Other non-operating
charge - 326 - 326
Other 4 82 255 270
Changes in working
capital and other items (266) (123) (530) (331)
------------------------- -----------------------------
Operating cash flows from
continuing operations 475 506 1,578 1,763
Operating cash flows from
discontinued operations - 7 (6) 7
------------------------- -----------------------------
Net cash provided by
operating activities 475 513 1,572 1,770
------------------------- -----------------------------
Investing activities
Acquisitions, less cash
acquired (100) (53) (578) (98)
Proceeds from other
disposals, net of taxes
paid 12 12 30 15
Capital expenditures,
less proceeds from
disposals (258) (254) (720) (720)
Other investing
activities (1) 2 2 1
------------------------- -----------------------------
Investing cash flows from
continuing operations (347) (293) (1,266) (802)
Investing cash flows from
discontinued operations - - - 22
------------------------- -----------------------------
Net cash used in
investing activities (347) (293) (1,266) (780)
------------------------- -----------------------------
Financing activities
Proceeds from debt 729 498 1,367 1,107
Repayments of debt (5) (206) (918) (398)
Net borrowings
(repayments) under short-
term loan facilities 13 1 (1) (7)
Dividends paid on
preference shares (1) (1) (2) (2)
Dividends paid on common
shares (232) (228) (695) (682)
Other financing
activities 1 (1) (5) (6)
------------------------- -----------------------------
Net cash provided by
(used in) financing
activities 505 63 (254) 12
------------------------- -----------------------------
Translation adjustments
on cash and cash
equivalents 17 5 (5) 17
------------------------- -----------------------------
Increase in cash and cash
equivalents 650 288 47 1,019
Cash and cash equivalents
at beginning of period 508 1,572 1,111 841
------------------------- -----------------------------
Cash and cash equivalents
at end of period 1,158 1,860 1,158 1,860
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Underlying Free Cash Flow((1))
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------ ----------------
2010 2009 2010 2009
Net cash provided by operating activities $475 $513 $1,572 $1,770
Capital expenditures, less proceeds from
disposals (258) (254) (720) (720)
Other investing activities (1) 2 2 1
Dividends paid on preference shares (1) (1) (2) (2)
------------------ ----------------
Free cash flow ((1)) 215 260 852 1,049
Integration programs costs 100 135 321 334
------------------ ----------------
Underlying free cash flow ((2)) $315 $395 $1,173 $1,383
(1) Free cash flow is net cash provided by operating activities less capital
expenditures, other investing activities, investing activities of discontinued
operations and dividends paid on our preference shares. Thomson Reuters uses
free cash flow as a performance measure because it represents cash available to
repay debt, pay dividends and fund share repurchases and new acquisitions.
(2) Underlying free cash flow is free cash flow excluding one-time cash costs
associated with integration programs.
[HUG#1456319]
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Thomson Reuters Corporation via Thomson Reuters ONE
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