Thomson Reuters Corporation
Del
Thomson Reuters Reports Full-Year and Fourth-Quarter 2010 Results
Consumer ServicesMediaMedia
* Returned to revenue growth as new products gain momentum and our markets
improve
* Ongoing revenue growth, before currency, was 4% in the fourth quarter and
1% for the full year
* Full-year underlying operating profit margin was 19.6% (20.0% before
currency and acquisitions)
* Final year of Reuters integration - savings target raised $100 million to
$1.7 billion in 2011
* On the back of strong free cash flow generation and improving outlook, Board
approves $0.08 annual dividend increase to $1.24 per share
* Full-year adjusted earnings per share were $1.76 ($1.78 before currency) and
$0.43 for the fourth quarter
NEW YORK, February 10, 2011 - Thomson Reuters (TSX / NYSE: TRI), the world's
leading source of intelligent information for businesses and professionals,
today reported results for the full year and fourth quarter ended December
31, 2010. The company reported revenues of $13.1 billion, up 1% from the prior-
year period, and underlying operating profit margin of 19.6% (20.0% before
currency and acquisitions). Underlying operating profit declined 7% compared to
the prior-year period due to investments in new product launches, acquisitions
and the impact of currency.
Full-year adjusted earnings per share (EPS) was $1.76 ($1.78 before currency),
compared to $1.85 in 2009. Adjusted EPS for the fourth quarter was $0.43 (no
currency impact), compared to $0.44 in the prior-year period.
Integration and legacy savings programs reached $1.4 billion in run-rate savings
in 2010 and are now expected to reach $1.7 billion (up $100 million) by the end
of 2011 when completed. Underlying free cash flow for the year was $2.0 billion,
substantially unchanged from the prior-year period, driven primarily by
operating profit flow-through and effective working capital management.
"2010 was a year of execution and delivery for us. We released new flagship
products, including WestlawNext, Thomson Reuters Eikon and Thomson Reuters
Elektron, and returned the company to growth," said Thomas H. Glocer, chief
executive officer of Thomson Reuters.
"With this period of heavy investment now successfully completed and our markets
improving, we have set our sights on accelerating growth and delivering strong
returns on our investments. We have targeted mid-single digit revenue growth for
2011, accompanied by strongly expanding margins and increasing levels of free
cash flow."
Consolidated Financial Highlights - Full-Year Results
Today, the company announced its intention to sell its BARBRI legal education
business and its Scandinavian Legal and Tax and Accounting businesses, both of
which are expected to close in the first half of 2011. As these businesses were
managed by the company for the full year 2010 and were included as part of the
2010 business outlook, they are included in the full-year and fourth-quarter
2010 results. Appendix A to this news release is a supplemental schedule of
2010 financial information which excludes the results of these planned
disposals.
Twelve Months Ended December 31,
(Millions of U.S. dollars, except EPS and profit
margin)
IFRS Financial Measures 2010 2009 Change
Revenues $13,070 $12,997 1%
Operating profit $1,419 $1,575 -10%
Diluted earnings per share
(EPS) $1.08 $1.01 7%
Cash flow from operations $2,655 $2,666 0%
Change Before
Non-IFRS Financial Measures[1] 2010 2009 Change Currency
Revenues from ongoing
businesses $13,069 $12,948 1% 1%
Underlying operating profit $2,560 $2,754 -7% -6%
Underlying operating profit
margin 19.6% 21.3% -170bp
Adjusted earnings per share
(EPS) $1.76 $1.85 -5%
Underlying free cash flow $2,013 $2,058 -2%
[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 $13.1 billion, up 1% from the prior
year.
* Underlying operating profit margin was 19.6%, and included a 130 basis point
impact from investments in new product launches and product mix and a 40
basis point impact from acquisitions and currency. Underlying operating
profit declined 7% compared to the prior-year period due to the
aforementioned items.
* Adjusted EPS was $1.76 ($1.78 before currency) compared to $1.85 in 2009,
including the results from planned disposals.
* Integration and legacy savings programs reached $1.4 billion in run-rate
savings, and are expected to reach $1.7 billion by the end of 2011.
* Underlying free cash flow for the year was $2.0 billion, substantially
unchanged from the prior-year period, driven primarily by operating profit
flow-through and effective working capital management.
Consolidated Financial Highlights - Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except EPS and profit
margin)
IFRS Financial Measures 2010 2009 Change
Revenues $3,458 $3,357 3%
Operating profit $307 $346 -11%
Diluted earnings per share
(EPS) $0.27 $0.21 29%
Cash flow from operations $1,083 $896 21%
Change Before
Non-IFRS Financial Measures[1] 2010 2009 Change Currency
Revenues from ongoing
businesses $3,458 $3,349 3% 4%
Underlying operating profit $669 $661 1% 3%
Underlying operating profit
margin 19.3% 19.7% -40bp
Adjusted earnings per share
(EPS) $0.43 $0.44 -2%
Underlying free cash flow $840 $675 24%
[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 $3.5 billion, a 4% increase before
currency. Strong growth across the Professional division, up 7%, and a 2%
increase in the Markets division revenues contributed to the overall
increase.
* Underlying operating profit increased 1%, and the corresponding margin was
19.3%, versus 19.7% in the same period in 2009. Flow-through from higher
revenues in Professional and synergy savings in Markets were partly offset
by investments in new products launched in 2010, acquisition dilution and
currency.
* Adjusted EPS was $0.43 compared to $0.44 in the prior-year period. The
decrease was largely attributable to higher interest expense and higher
integration costs, which more than offset the increase in underlying
operating profit.
Full-Year and Fourth-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 which were completed in 2010. The
Professional division's BARBRI legal education business and the Scandinavian
Legal and Tax & Accounting businesses are included in these results, as they
were announced for sale in 2011.
Professional Division - Full-Year Results
Twelve Months Ended December 31,
(Millions of U.S. dollars, except profit margin)
Change Before
2010 2009 Change Currency
Revenues
Legal $3,677 $3,586 3% 2%
Tax & Accounting $1,079 $1,006 7% 7%
Healthcare & Science $881 $829 6% 7%
Professional Division Total $5,637 $5,421 4% 4%
Operating Profit
Legal $1,058 $1,155 -8%
Tax & Accounting $216 $214 1%
Healthcare & Science $198 $185 7%
Professional Division Total $1,472 $1,554 -5% -5%
Operating Profit Margin %
Legal 28.8% 32.2%
Tax & Accounting 20.0% 21.3%
Healthcare & Science 22.5% 22.3%
Professional Division Total 26.1% 28.7%
Professional Division - Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except profit margin)
Change Before
2010 2009 Change Currency
Revenues
Legal $971 $903 8% 8%
Tax & Accounting $330 $311 6% 6%
Healthcare & Science $239 $224 7% 8%
Professional Division Total $1,540 $1,438 7% 7%
Operating Profit
Legal $255 $268 -5%
Tax & Accounting $110 $101 9%
Healthcare & Science $56 $52 8%
Professional Division Total $421 $421 0% 0%
Operating Profit Margin %
Legal 26.3% 29.7%
Tax & Accounting 33.3% 32.5%
Healthcare & Science 23.4% 23.2%
Professional Division Total 27.3% 29.3%
* Full-year revenues rose 4%, driven by growth from Legal subscriptions, Tax &
Accounting, Healthcare & Science and acquisitions, partially offset by
declines in Legal print and non-subscription products.
* Full-year operating profit declined 5%. The corresponding margin was 26.1%
compared to 28.7% for the prior year. This decline was due to business mix
(100 basis points); continued product investment (60 basis points);
acquisitions (80 basis points); and currency (20 basis points), which more
than offset savings from efficiency initiatives.
* The planned disposals of BARBRI and the Scandinavian Legal and Tax &
Accounting businesses are expected to negatively impact operating margins
from ongoing businesses by 50 basis points for the full year.
* Fourth-quarter revenues rose 7%, driven by solid growth from Legal
subscriptions, Tax & Accounting and Healthcare & Science products and
acquisitions.
* Fourth-quarter operating profit was flat compared to the prior-year period.
Continued product investment, acquisitions and the timing of expenses
resulted in a 200 basis point impact on operating margin, partially offset
by cost savings from efficiency initiatives.
Legal
* Full-year revenues were up 2% from the prior year. Subscription revenues
grew 6%, led by 18% growth in FindLaw and 8% growth in international
revenues. Non-subscription revenues declined 3% and print products declined
6% due to tightened customer budgets.
* Full-year operating profit declined 8% and the associated margin was 28.8%.
Lower revenues from high-margin print and non-subscription products and the
impact of acquisitions and investments in strategic growth initiatives more
than offset savings from efficiency initiatives.
* Fourth-quarter revenues were up 8% from the prior-year period. Subscription
revenues grew 9%, led by 17% growth in FindLaw and 14% growth in
international revenues, both helped by acquisitions. Non-subscription
revenues increased 4% and print products increased 7%, primarily due to
strong sales at our Elite law firm automation and Intellectual Property
units and timing benefits. Print attrition has slowed substantially from the
prior-year period and is near historical levels.
* Fourth-quarter operating profit declined 5% and the associated margin was
26.3%. The impact of acquisitions and investments in strategic growth
projects more than offset savings from efficiency initiatives.
* WestlawNext has been sold to over 15,000 customers since its launch in
February 2010 - representing 31% of Westlaw's revenue base. This is well
ahead of the company's initial expectations and customer feedback continues
to be extremely positive.
Tax & Accounting
* Full-year revenues grew 7%. Workflow & Service Solutions, which comprises
two-thirds of the segment's revenues, grew 12%, led by growth in income tax
software products and the global tax technology business and acquisitions.
Business Compliance & Knowledge Solutions revenues declined 1% from the
prior-year period, as Checkpoint growth of 9% was offset by a decline in
print, which comprised 9% of Tax & Accounting's full-year revenues.
* Full-year operating profit grew 1% and the related margin decreased 130
basis points to 20.0%. The increase in operating profit was due to revenue
flow-through, partly offset by the dilutive impact of acquisitions.
* Fourth-quarter revenues grew 6%. Workflow & Service Solutions grew 10%, led
by growth in income tax software products, property tax services and
acquisitions. Business Compliance & Knowledge revenues were flat from the
prior-year period, as Checkpoint growth of 10% was offset by a decline in
print, which comprised 10% of Tax & Accounting's fourth-quarter revenues.
* Fourth-quarter operating profit grew 9% and the related margin increased 80
basis points to 33.3%. Operating profit growth was driven by strong flow-
through from revenues.
Healthcare & Science
* Full-year revenues were up 7% from the prior year, driven by strong growth
from Healthcare & Science's two largest business units. The Payer unit grew
13% from Employer, Health Plan and Pharma, and the Scientific & Scholarly
Research unit grew 10%, driven by Web of Knowledge and Web of Science. North
America revenues grew 7% and Asia Pacific revenues grew 9%.
* Full-year operating profit grew 7% with a margin of 22.5%, up 20 basis
points from the prior year. Operating profit and margin growth was driven by
cost management and favorable revenue mix.
* Fourth-quarter revenues grew 8% from the prior-year period. Growth was
driven by continued demand for healthcare spending analytics in the Payer
business, which was up double-digit. Growth in Scientific & Scholarly
Research, which was up 4%, was driven by core information offerings and
acquisitions.
* Fourth-quarter operating profit increased 8% with the corresponding margin
increasing to 23.4%. The improvement in operating margin was due to a
favorable revenue mix impact as a result of revenues in the Payer and
Scientific & Scholarly Research units, as well as timing benefits associated
with one-time costs incurred in the fourth quarter of 2009.
Markets Division - Full-Year Results
Twelve Months Ended December 31,
(Millions of U.S. dollars, except profit margin)
Change Before
2010 2009 Change Currency
Revenues
Sales & Trading $3,547 $3,637 -2% -2%
Investment & Advisory $2,214 $2,290 -3% -4%
Enterprise $1,356 $1,277 6% 7%
Media $324 $331 -2% -2%
Markets Division Total $7,441 $7,535 -1% -1%
Operating Profit $1,337 $1,453 -8% -7%
Operating Profit Margin % 18.0% 19.3%
Markets Division - Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except profit margin)
Change Before
2010 2009 Change Currency
Revenues
Sales & Trading $900 $896 0% 2%
Investment & Advisory $551 $572 -4% -3%
Enterprise $384 $361 6% 8%
Media $86 $85 1% 2%
Markets Division Total $1,921 $1,914 0% 2%
Operating Profit $336 $323 4% 6%
Operating Profit Margin % 17.5% 16.9%
* Full-year revenues were down 1% compared to the prior year, primarily due to
flow-through from negative net sales in 2009.
* Fourth-quarter revenue trends continued to improve, increasing 2%, compared
to 1% in the third quarter and a 3% decline in the second quarter. The 2%
increase in revenues was the best quarter since the fourth quarter of 2008.
* Fourth-quarter recurring subscription-related revenues increased 1%,
recoveries-related revenues declined 3%, transactions-related revenues
increased 13% and outright revenues increased 5%.
* By geography, revenues in the fourth quarter grew across all major regions
of the world, except in the Americas. Asia increased 5%, while Europe,
Middle East and Africa (EMEA) increased 2% with the Americas declining 1%.
* By segment, strong revenue growth in Enterprise, Commodities & Energy and
Emerging Markets was offset by weak performance in Investment Management and
Exchange Traded Instruments.
* Full-year operating profit of $1.3 billion declined 8% and the margin
decreased 130 basis points due to the decline in revenues and investments in
new product initiatives which more than offset integration savings and tight
cost controls.
* Fourth-quarter operating profit was $336 million, up 4%, with the related
margin increasing to 17.5% from the prior-year period.
* The company's new flagship desktop offering, Thomson Reuters Eikon, was
launched in September 2010. Customer feedback has been very positive and to
date, Markets has sold over 12,000 new and migrated Eikon desktops.
Sales & Trading
* Full-year revenues declined 2% over the prior year. A modest decline in
recurring revenues, attributable to desktop cancellations in 2009, was
further impacted by declines in low-margin recoveries revenues and outright
revenues. Transactions-related revenues increased 8%, due to strong foreign
exchange and fixed income volumes.
* Fourth-quarter revenues were up 2% over the prior-year period. Transactions-
related revenues were up 27%, driven by higher volumes at Tradeweb in
mortgage-backed securities and U.S. Treasuries. Commodities & Energy
revenues grew 12% boosted by the acquisition of Point Carbon in the second
quarter. Revenues from Fixed Income grew 7%, while Exchange Traded
Instruments declined 5%, due to planned shutdowns of low-margin products.
* The Treasury business grew 1% in the fourth quarter compared to the prior-
year period as the flow-through from 2009 subscription cancellations was
offset by a 5% increase in the quarter's transactions-related revenues
driven by growing foreign exchange volumes.
Investment & Advisory
* Full-year revenues declined 4% driven by weak performance in the Investment
Management business which offset good growth in Corporates. Wealth
Management declined 1% and Investment Banking was flat compared to the prior
year.
* Fourth-quarter revenues declined 3% and a 2% increase in both Wealth
Management and Corporates was not enough to offset weak performance in
Investment Management. Investment Management's performance has been affected
by competitive pressures but has seen an improvement in its sales
performance since September.
Enterprise
* Full-year revenues grew 7%, driven by continued strong customer demand for
Thomson Reuters Elektron, the innovative data distribution platform launched
by Enterprise in the second quarter of 2010.
* Fourth-quarter revenues grew 8%, driven by continued strong customer demand.
The Enterprise Real Time Solutions business grew 12%, as customers continued
to invest in low-latency data feeds and hosting solutions. The Risk
Management business grew 3%, aided by strong outright sales. The Platform
business (formerly Information Management Systems) grew 9%, driven by strong
sales of recurring products and outright revenues. The Content business grew
11%, driven by growth in pricing and reference data. Omgeo's revenues
increased 1% in the fourth quarter, returning to growth as a result of
stronger equity volumes.
* Thomson Reuters Elektron continued to gain momentum as customers in
established and emerging markets adopted its combination of hosted and
deployed information and trading solutions. In total, eleven data hosting
centers are up and running, nine of which were brought online in 2010.
Media
* Full-year revenues declined 2% from the prior year due to cancellations and
softness in the syndication and health businesses. The Consumer business
grew 8% from the prior year with 8% growth in US online advertising.
* Fourth-quarter revenues increased 2%, driven by strong sales. Despite tight
customer budgets, the News Agency business grew 1%, driven by recurring TV
revenues.
* The Consumer business grew 11% in the fourth quarter, due to a pickup in
online advertising sales across all global properties.
* Reuters America for Publishers was launched in December 2010, helping to
position the Reuters News Agency as a one-stop shop for content and
capabilities.
Corporate & Other
Full-year corporate costs were $829 million, comprised of core corporate costs
of $249 million, fair-value currency-related adjustments (non-cash) of $117
million and integration program costs of $463 million. Compared to the prior
year, corporate costs declined $100 million primarily from lower fair-value
adjustments and lower integration program expenses.
Fourth-quarter corporate costs were $303 million, compared to $281 million in
the prior-year period, and were comprised of core corporate costs of $88
million, fair-value currency-related adjustments (non-cash) of $42 million and
integration program costs of $173 million. Compared to the prior-year period,
corporate costs increased by $22 million primarily from higher integration
program expenses and timing of core corporate expenses.
Integration Programs
At the end of 2010, Thomson Reuters had achieved combined run-rate savings of
$1.4 billion from the Reuters integration, as well as legacy savings programs.
An incremental $70 million in run-rate savings achieved during the fourth
quarter was largely attributable to retirement of legacy products and execution
of our sales and customer service transformation programs.
Integration-related costs totaled $173 million in the fourth quarter and $463
million for the full year.
For 2011, the company expects integration-related costs to total $200 million
($75 million higher than the prior estimate) and expects run-rate savings of
$1.7 billion by year-end, $100 million higher than the prior estimate of $1.6
billion.
Business Outlook (Before Currency)
Based on new products gaining momentum and our markets recovering, Thomson
Reuters expects our revenues to grow mid-single digits in 2011.
Thomson Reuters expects our adjusted EBITDA margin to increase by at least 300
basis points in 2011 reflecting our revenue growth and the completion of
integration programs.
Thomson Reuters expects our underlying operating profit margin to increase by at
least 100 basis points in 2011. This increase comes after absorbing a 70 basis
point impact from higher depreciation and amortization related to prior years'
investments in recently launched products.
The company expects that strong adjusted EBITDA growth in 2011 will contribute
to a 20% - 25% increase in reported free cash flow.
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
The board of directors approved a $0.08 per share increase in the annual
dividend to $1.24 per share. A quarterly dividend of $0.31 per share is payable
on March 15, 2011 to shareholders of record as of February 22, 2011. This
dividend increase marks the 18th consecutive annual dividend increase by the
company.
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
which include Appendices A and B.
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 2011. 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 2011 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 ongoing product release
programs, globalization strategy, other growth initiatives and efficiency
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 and similar financial services laws around the world;
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 J. Golden
Senior Vice President, Corporate Senior Vice President, Investor
Affairs Relations
+1 646 223 5285 +1 646 223 5288
calvin.mitchell@thomsonreuters.com frank.golden@thomsonreuters.com
Thomson Reuters will webcast a discussion of its full-year and fourth-quarter
2010 results today beginning at 9:00 a.m. Eastern Standard Time (EST). 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 Full-Year
and Fourth-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
Includes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
within Ongoing Businesses
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
--------------------------------- --------------------------------
2010 2009 Change Organic 2010 2009 Change Organic
Revenues
Legal $971 $903 8% 3% $3,677 $3,586 3% 0%
Tax & 6% 4% 7% 3%
Accounting 330 311 1,079 1,006
Healthcare 7% 5% 6% 4%
& Science 239 224 881 829
---------------- -----------------
Professional 7% 4% 4% 1%
Division 1,540 1,438 5,637 5,421
Sales & 0% 0% -2% -3%
Trading (1) 900 896 3,547 3,637
-4% -3% -3% -5%
Investment &
Advisory (1) 551 572 2,214 2,290
6% 8% 6% 7%
Enterprise (1) 384 361 1,356 1,277
Media (1) 86 85 1% 2% 324 331 -2% -3%
---------------- -----------------
Markets 0% 1% -1% -2%
Division 1,921 1,914 7,441 7,535
Eliminations (3) (3) (9) (8)
---------------- -----------------
Revenues from
ongoing
businesses (2) 3,458 3,349 3% 2% 13,069 12,948 1% -1%
Before
currency 4% 1%
Disposals (2) - 8 1 49
---------------- -----------------
Revenues $3,458 $3,357 3% $13,070 $12,997 1%
Operating
Profit
Legal $255 $268 -5% $1,058 $1,155 -8%
Tax
& Accounting 110 101 9% 216 214 1%
Healthcare &
Science 56 52 8% 198 185 7%
---------------- -----------------
Professional
Division 421 421 0% 1,472 1,554 -5%
Markets
Division 336 323 4% 1,337 1,453 -8%
Corporate &
Other (303) (281) (829) (929)
Amortization
of other
identifiable
intangible
assets (146) (132) (545) (499)
---------------- -----------------
Operating
profit from
ongoing
businesses (2) 308 331 -7% 1,435 1,579 -9%
Disposals (2) - (1) - (13)
Other
operating
(losses)
gains, net (1) 16 (16) 9
---------------- -----------------
Operating
profit $307 $346 -11% $1,419 $1,575 -10%
Thomson Reuters Corporation
Reconciliation of Operating Profit to Underlying Operating Profit (3)(
)Includes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------------------- -------------------------
2010 2009 Change 2010( ) 2009 Change
Operating profit $307 $346 -11% $1,419 $1,575 -10%
Adjustments:
Amortization of other
identifiable intangible
assets 146 132 545 499
Integration programs
expenses 173 163 463 506
Fair value adjustments 42 35 117 170
Other operating losses
(gains), net 1 (16) 16 (9)
Disposals - 1 - 13
------------------ -------------------
Underlying operating profit $669 $661 1% $2,560 $2,754 -7%
Underlying operating profit
margin 19.3% 19.7% 19.6% 21.3%
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings from Continuing Operations (4)(
)Includes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
(millions of U.S. dollars, except as otherwise indicated and except for per
share data)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -----------------
2010( ) 2009 2010( ) 2009
Earnings attributable to common shareholders $224 $177 $909 $844
Adjustments:
Disposals - 1 - 13
Fair value adjustments 42 35 117 170
Other operating losses (gains), net 1 (16) 16 (9)
Other finance (income) costs (8) 178 (28) 242
Other non-operating charge - 59 - 385
Share of post tax earnings in equity
method investees (2) (5) (8) (7)
Tax on above items (13) (8) (32) (40)
Interim period effective tax rate
normalization (5) 22 (9) - -
Amortization of other identifiable intangible
assets 146 132 545 499
Discrete tax items (47) (175) (47) (531)
Discontinued operations - (6) - (23)
Dividends declared on preference shares (1) - (3) (2)
--------- ------- --------- -------
Adjusted earnings from continuing operations $364 $363 $1,469 $1,541
Adjusted earnings per share from continuing
operations $0.43 $0.44 $1.76 $1.85
Diluted weighted average common shares (in
millions) 837.7 834.2 836.4 832.9
Thomson Reuters Corporation
Division and Business Segment Depreciation and Amortization of Computer Software
Includes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
within Ongoing Businesses
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -------------------
Depreciation and amortization of computer
software 2010 2009 2010 2009
Legal $(75) $(68) $(288) $(262)
Tax & Accounting (25) (21) (96) (78)
Healthcare & Science (15) (15) (67) (67)
----------------- --------------------
Professional Division (115) (104) (451) (407)
Markets Division (141) (170) (553) (619)
Corporate & Other (9) (9) (25) (27)
----------------- --------------------
Ongoing businesses (265) (283) (1,029) (1,053)
Disposals - - - (4)
----------------- --------------------
Total depreciation and amortization of
computer software $(265) $(283) $(1,029) $(1,057)
(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, which are defined as businesses sold or held for sale that do not
qualify as discontinued operations. To facilitate comparison of actual
results to the 2010 business outlook, these results include the Professional
division's BARBRI legal education business and Scandinavian Legal and Tax &
Accounting businesses, which were announced for sale in 2011, within ongoing
operations. As our 2011 business outlook is based on expectations excluding
these businesses, we have included supplemental 2010 financial information
in Appendix A which excludes the results of these businesses.
(3) Underlying operating profit excludes amortization of other identifiable
intangible assets, certain 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 identifiable intangible assets as well as the post-tax
impacts of fair value adjustments, other operating gains and losses, certain
impairment charges, the results of disposals (see note (2) above), other net
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 Twelve Months Ended
December 31, December 31,
---------------------------- ------------------------------
2010 2009 2010 2009
Revenues $3,458 $3,357 $13,070 $12,997
Operating expenses (2,739) (2,612) (10,061) (9,875)
Depreciation (110) (139) (457) (509)
Amortization of
computer software (155) (144) (572) (548)
Amortization of other
identifiable
intangible assets (146) (132) (545) (499)
Other operating
(losses) gains, net (1) 16 (16) 9
---------------------------- ------------------------------
Operating profit 307 346 1,419 1,575
Finance costs, net:
Net interest
expense (96) (88) (383) (410)
Other finance
income (costs) 8 (178) 28 (242)
Other non-operating
charge - (59) - (385)
---------------------------- ------------------------------
Income before tax and
equity method
investees 219 21 1,064 538
Share of post tax
earnings in equity
method investees 2 5 8 7
Tax benefit (expense) 4 150 (139) 299
---------------------------- ------------------------------
Earnings from
continuing operations 225 176 933 844
Earnings from
discontinued
operations, net of
tax - 6 - 23
---------------------------- ------------------------------
Net earnings $225 $182 $933 $867
Earnings attributable
to:
Common
shareholders 224 177 909 844
Non-controlling
interests 1 5 24 23
Basic earnings per
share $0.27 $0.21 $1.09 $1.01
Diluted earnings per
share $0.27 $0.21 $1.08 $1.01
Basic weighted
average common shares 833,535,077 830,822,775 832,307,705 829,998,907
Diluted weighted
average common shares 837,745,433 834,151,200 836,447,414 832,942,338
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
December 31, December 31,
2010 2009
---------------- ---------------
Assets
Cash and cash equivalents $864 $1,111
Trade and other receivables 1,809 1,742
Other financial assets 74 76
Prepaid expenses and other current assets 912 734
---------------- ---------------
Current assets 3,659 3,663
Computer hardware and other property, net 1,567 1,546
Computer software, net 1,613 1,495
Other identifiable intangible assets, net 8,714 8,694
Goodwill 18,892 18,130
Other financial assets 460 383
Other non-current assets 558 649
Deferred tax 68 13
---------------- ---------------
Total assets $35,531 $34,573
Liabilities and equity
Liabilities
Current indebtedness $645 $782
Payables, accruals and provisions 2,924 2,651
Deferred revenue 1,300 1,187
Other financial liabilities 142 92
---------------- ---------------
Current liabilities 5,011 4,712
Long-term indebtedness 6,873 6,821
Provisions and other non-current liabilities 2,217 1,878
Other financial liabilities 71 42
Deferred tax 1,684 1,785
---------------- ---------------
Total liabilities 15,856 15,238
Equity
Capital 10,284 10,177
Retained earnings 10,518 10,561
Accumulated other comprehensive loss (1,480) (1,471)
---------------- ---------------
Total shareholders' equity 19,322 19,267
Non-controlling interests 353 68
---------------- ---------------
Total equity 19,675 19,335
---------------- ---------------
Total liabilities and equity $35,531 $34,573
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------------ ------------------
2010 2009 2010 2009
Cash provided by (used in):
Operating activities
Net earnings $225 $182 $933 $867
Adjustments for:
Depreciation 110 139 457 509
Amortization of computer software 155 144 572 548
Amortization of other identifiable
intangible assets 146 132 545 499
Deferred tax (137) (98) (205) (544)
Embedded derivatives fair value
adjustments 22 29 72 147
Net (gains) losses on foreign exchange
and
derivative financial instruments (5) 167 (91) 182
Other non-operating charge - 59 - 385
Other 92 35 433 290
Changes in working capital and other items 475 112 (55) (219)
------------------ ------------------
Operating cash flows from continuing
operations 1,083 901 2,661 2,664
Operating cash flows from discontinued
operations - (5) (6) 2
------------------ ------------------
Net cash provided by operating activities 1,083 896 2,655 2,666
------------------ ------------------
Investing activities
Acquisitions, less cash acquired (34) (251) (612) (349)
Proceeds from other disposals, net of taxes
paid (4) 41 26 56
Capital expenditures, less proceeds from
disposals (377) (377) (1,097) (1,097)
Other investing activities 6 2 8 3
------------------ ------------------
Investing cash flows from continuing
operations (409) (585) (1,675) (1,387)
Investing cash flows from discontinued
operations - - - 22
------------------ ------------------
Net cash used in investing activities (409) (585) (1,675) (1,365)
------------------ ------------------
Financing activities
Proceeds from debt - - 1,367 1,107
Repayments of debt (765) (851) (1,683) (1,249)
Net borrowings under short-term loan
facilities 6 11 5 4
Dividends paid on preference shares (1) - (3) (2)
Dividends paid on common shares (203) (223) (898) (905)
Other financing activities (2) - (7) (6)
------------------ ------------------
Net cash used in financing activities (965) (1,063) (1,219) (1,051)
------------------ ------------------
Translation adjustments on cash and cash
equivalents (3) 3 (8) 20
------------------ ------------------
(Decrease) increase in cash and cash
equivalents (294) (749) (247) 270
Cash and cash equivalents at beginning of
period 1,158 1,860 1,111 841
------------------ ------------------
Cash and cash equivalents at end of period $864 $1,111 $864 $1,111
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Underlying Free Cash Flow (1) (2)(
)(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------------ ------------------
2010 2009 2010 2009
Net cash provided by operating activities $1,083 $896 $2,655 $2,666
Capital expenditures, less proceeds from
disposals (377) (377) (1,097) (1,097)
Other investing activities 6 2 8 3
Dividends paid on preference shares (1) - (3) (2)
------------------ ------------------
Free cash flow (1) $711 $521 $1,563 $1,570
Integration programs costs 129 154 450 488
------------------ ------------------
Underlying free cash flow (2) $840 $675 $2,013 $2,058
(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.
Appendix A
Thomson Reuters Corporation
Division and Business Segment Information
Excludes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
from Ongoing Businesses
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
--------------------------------- ---------------------------------
2010 2009 Change Organic 2010 2009 Change Organic
Revenues
Legal 8% 3% 3% 0%
(1) $955 $888 $3,526 $3,425
Tax & 7% 4% 8% 3%
Accounting
(1) 329 308 1,072 997
7% 5% 6% 4%
Healthcare &
Science 239 224 881 829
---------------- -----------------
Professional 7% 4% 4% 1%
Division 1,523 1,420 5,479 5,251
Sales & 0% 0% -2% -3%
Trading (1) 900 896 3,547 3,637
-4% -3% -3% -5%
Investment &
Advisory (1) 551 572 2,214 2,290
6% 8% 6% 7%
Enterprise
(1) 384 361 1,356 1,277
Media 1% 2% -2% -3%
(1) 86 85 324 331
---------------- -----------------
Markets 0% 1% -1% -2%
Division 1,921 1,914 7,441 7,535
Eliminations (3) (3) (9) (8)
---------------- -----------------
Revenues from
ongoing
businesses
(2) 3,441 3,331 3% 2% 12,911 12,778 1% -1%
Before
currency 4% 1%
Disposals
(1), (2) 17 26 159 219
---------------- -----------------
Revenues $3,458 $3,357 3% $13,070 $12,997 1%
Operating
Profit
Legal
(1) $255 $267 -4% $992 $1,070 -7%
Tax
& Accounting
(1) 109 101 8% 214 212 1%
Healthcare &
Science 56 52 8% 198 185 7%
---------------- -----------------
Professional
Division 420 420 0% 1,404 1,467 -4%
Markets
Division 336 323 4% 1,337 1,453 -8%
Corporate &
Other (303) (281) (829) (929)
Amortization
of other
identifiable
intangible
assets (146) (132) (545) (499)
---------------- -----------------
Operating
profit from
ongoing
businesses
(2) 307 330 -7% 1,367 1,492 -8%
Disposals
(1), (2) 1 - 68 74
Other
operating
(losses)
gains, net (1) 16 (16) 9
---------------- -----------------
Operating
profit $307 $346 -11% $1,419 $1,575 -10%
Thomson Reuters Corporation
Reconciliation of Operating Profit to Underlying Operating Profit (3)(
)Excludes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------------------- -------------------------
2010 2009 Change 2010( ) 2009 Change
Operating profit $307 $346 -11% $1,419 $1,575 -10%
Adjustments:
Amortization of other
identifiable intangible
assets 146 132 545 499
Integration programs
expenses 173 163 463 506
Fair value adjustments 42 35 117 170
Other operating losses
(gains), net 1 (16) 16 (9)
Disposals (1) (1) - (68) (74)
------------------ -------------------
Underlying operating profit $668 $660 1% $2,492 $2,667 -7%
Underlying operating profit
margin 19.4% 19.8% 19.3% 20.9%
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings from Continuing Operations (4)(
)Excludes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
(millions of U.S. dollars, except as otherwise indicated and except for per
share data)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -----------------
2010( ) 2009 2010( ) 2009
Earnings attributable to common shareholders $224 $177 $909 $844
Adjustments:
Disposals (1) (1) - (68) (74)
Fair value adjustments 42 35 117 170
Other operating losses (gains), net 1 (16) 16 (9)
Other finance (income) costs (8) 178 (28) 242
Other non-operating charge - 59 - 385
Share of post tax earnings in equity
method investees (2) (5) (8) (7)
Tax on above items (1) (13) (7) (9) (9)
Interim period effective tax rate
normalization (5) 22 (9) - -
Amortization of other identifiable intangible
assets 146 132 545 499
Discrete tax items (47) (175) (47) (531)
Discontinued operations - (6) - (23)
Dividends declared on preference shares (1) - (3) (2)
--------- ------- --------- -------
Adjusted earnings from continuing operations $363 $363 $1,424 $1,485
Adjusted earnings per share from continuing
operations $0.43 $0.44 $1.70 $1.78
Diluted weighted average common shares (in
millions) 837.7 834.2 836.4 832.9
Thomson Reuters Corporation
Division and Business Segment Depreciation and Amortization of Computer Software
Excludes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
from Ongoing Businesses
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -------------------
Depreciation and amortization of computer
software 2010 2009 2010 2009
Legal (1) $(74) $(66) $(285) $(258)
Tax & Accounting (1) (25) (21) (96) (78)
Healthcare & Science (15) (15) (67) (67)
----------------- --------------------
Professional Division (114) (102) (448) (403)
Markets Division (141) (170) (553) (619)
Corporate & Other (9) (9) (25) (27)
----------------- --------------------
Ongoing businesses (264) (281) (1,026) (1,049)
Disposals (1) (1) (2) (3) (8)
----------------- --------------------
Total depreciation and amortization of
computer software $(265) $(283) $(1,029) $(1,057)
(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, which are defined as businesses sold or held for sale that do not
qualify as discontinued operations. This appendix excludes the Professional
division's BARBRI legal education business and Scandinavian Legal and Tax &
Accounting businesses, which were announced for sale in 2011, from ongoing
operations.
(3) Underlying operating profit excludes amortization of other identifiable
intangible assets, certain 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 identifiable intangible assets as well as the post-tax
impacts of fair value adjustments, other operating gains and losses, certain
impairment charges, the results of disposals (see note (2) above), other net
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.
Appendix B
Thomson Reuters Corporation
Reconciliation of Underlying Operating Profit to Adjusted EBITDA (1)(
)Excludes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
(millions of U.S. dollars)
(unaudited)
Twelve Months Ended
December 31, 2010
--------------------
Underlying operating profit $2,492
Adjustments:
Integration programs expenses (463)
Depreciation and amortization of computer software from
ongoing businesses 1,026
--------------------
Adjusted EBITDA $3,055
Adjusted EBITDA margin 23.7%
Thomson Reuters Corporation
Reconciliation of Net Earnings to Adjusted EBITDA
Excludes the Professional division's BARBRI and Scandinavian Legal and Tax &
Accounting Businesses
(millions of U.S. dollars)
(unaudited)
Twelve Months Ended
December 31, 2010
--------------------
Net Earnings $933
Adjustments:
Tax expense 139
Other finance (income), net (28)
Net interest expense 383
Amortization of other identifiable intangible assets 545
Amortization of computer software 572
Depreciation 457
--------------------
EBITDA $3,001
Adjustments:
Share of post tax earnings in equity method investees (8)
Other operating losses, net 16
Fair value adjustments 117
EBITDA from disposals (2) (71)
--------------------
Adjusted EBITDA $3,055
(1) Thomson Reuters 2011 business outlook contained in this news release
includes adjusted EBITDA margin, which is a non-IFRS financial measure. We
disclose adjusted EBITDA, and the related margin, because it is a measure
commonly reported and widely used by investors as an indicator of a
company's operating performance and ability to incur and service debt, and
as a valuation metric. Thomson Reuters defines adjusted EBITDA as underlying
operating profit excluding depreciation and amortization of computer
software from ongoing businesses but including integration programs
expenses. Adjusted EBITDA margin is adjusted EBITDA expressed as a
percentage of revenues from ongoing businesses.
(2) Operating profit from disposals (See $68
Appendix A)
Depreciation and amortization of computer 3
software from disposals (See Appendix A)
EBITDA from disposals $71
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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