Thomson Reuters Reports Third-Quarter 2009 Results
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NEW YORK, Nov. 5 /PRNewswire/ -- 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, 2009. While net sales began to improve in the third quarter, revenue flow-through from weaker year-to-date net sales in Legal and Markets overshadowed strong performances in Tax & Accounting and Healthcare & Science. Underlying operating profit margin improvement was driven by the benefit of currency, continuing progress on the integration program and strong cost management.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090507/NY12658LOGO )
Three Months Ended September 30,
--------------------------------
(Millions of U.S. dollars, except EPS
and Profit Margin)
IFRS Financial Measures 2009 2008 Change
---- ---- ------
Revenues $3,216 $3,339 -4%
Operating profit $378 $553 -32%
Diluted earnings per share
(EPS) $0.19 $0.49 -61%
Cash flow from operations $513 $592 -13%
Change Before
Non-IFRS Financial Measures(1) 2009 2008 Currency Change
---- ---- -------- ------
Revenues from ongoing
businesses $3,212 $3,331 -2% -4%
Underlying operating profit $711 $690 3%
Underlying operating profit +140bps
margin 22.1% 20.7%
Adjusted earnings per share
(EPS) $0.43 $0.47 -9%
Free cash flow $260 $332 -22%
(1) These 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 $3.2 billion, a decrease of 2%
before currency and 4% after currency. IFRS revenues were down 4% after
currency against the prior year( )period.
-- Underlying operating profit was up 3% to $711 million, with the related
margin up 140 basis points, driven by the benefit of currency,
integration-related savings and a continued commitment to strong cost
management.
-- Adjusted earnings per share were $0.43 compared with $0.47 in the third
quarter of 2008. The decline was due to higher integration-related
spending, which is included in adjusted earnings but not underlying
operating profit.
-- Free cash flow remained strong in the third quarter, with net cash flow
provided by operations of $513 million and reported free cash flow of
$260 million, down versus the prior period reflecting planned
integration and interest costs.
-- During the quarter, the company further strengthened its capital
structure with the redemption of $600 million of outstanding debt,
financed through cash-on-hand and the issuance of $500 million of 4.70%
notes, due 2019. Year-to-date, the company has refinanced $1.1 billion
of long-term debt, reflecting its continued ability to access and take
advantage of favorable capital markets.
"Despite difficult market conditions, our businesses delivered solid results in the third quarter. Our Tax & Accounting and Healthcare & Science businesses continued to perform very strongly, and sales of subscription products in our Markets and Legal units improved in Q3 over what we expect were their bottom in Q2. While the weak year-to-date net sales experienced in recent quarters are now flowing through into revenues, we expect this dip to be shallow and limited to the next few quarters," said Thomas H. Glocer, chief executive officer of Thomson Reuters.
"Our ongoing focus on the Reuters integration and close cost management across the company has enabled us to continue to grow underlying operating profit. While we would welcome a quick return to revenue growth, we understand how to operate in challenging markets and we are confident that we are outperforming the competition," said Mr. Glocer.
Third-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency translation 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, unless otherwise indicated)
Change Before
Revenues 2009 2008 Change Currency
---- ---- ------ --------
Legal $917 $940 -2% -1%
Tax & Accounting $225 $210 7% 8%
Healthcare & Science $213 $200 7% 8%
---- ----
Professional
Division Total $1,355 $1,350 0.4% 2%
2008
Operating Profit 2009 2008 Change 2009 Margin Margin
---- ---- ------ ----------- ------
Legal $305 $322 -5% 33.3% 34.3%
Tax & Accounting $36 $40 -10% 16.0% 19.0%
Healthcare & Science $50 $38 32% 23.5% 19.0%
--- ---
Professional
Division Total $391 $400 -2% 28.9% 29.6%
-- Revenues were up 2% before currency, with strong growth in Tax &
Accounting, Healthcare & Science and Legal's recurring subscription
businesses.
-- Operating profit decreased 2% and the corresponding margin decreased 70
basis points due to slowing revenue growth, business mix and the
dilutive effect of acquisitions.
Legal
-- Revenues were down 1%. Solid growth in subscription businesses led by
Westlaw, FindLaw and international units was offset by continued
weakness in non-subscription services including Print, Ancillary,
Enterprise software, Consulting Services and Trademarks. As in the
second quarter, small law firms and government units were the fastest
growing customer segments.
-- Operating profit declined 5%, with the related margin decreasing 100
basis points, due primarily to the mix of revenues, partially offset by
cost controls and the benefits of efficiency initiatives.
Tax & Accounting
-- Revenue growth of 8% was driven by robust performances in both the
Corporate and Professional Software and Services businesses. Research &
Guidance revenues declined slightly as double-digit print declines more
than offset Checkpoint growth.
-- Operating profit declined 10% and the related margin decreased 300 basis
points. Flow-through on revenue was offset by acquisitions, changes in
the business mix and technology-related product investments. Tax &
Accounting is a seasonal business and close to half of its full year
operating profit is typically generated in the fourth quarter.
Healthcare & Science
-- Revenues increased 8%, driven by a 19% increase in the Payer business as
a result of significant demand for timely healthcare spending analytics
from both the Government and Employer segments. Scientific and Scholarly
Research, driven by Web of Knowledge / Web of Science, and the Life
Sciences business both contributed to growth.
-- Operating profit increased 32% with the corresponding margin increasing
450 basis points, driven by significant revenue flow-through, synergies
realized from combining legacy business units and the timing of certain
expenses.
Markets Division
Three Months Ended September 30,
--------------------------------
(Millions of U.S. dollars, unless otherwise indicated)
Change Before
Revenues 2009 2008 Change Currency
---- ---- ------ --------
Sales & Trading $881 $970 -9% -6%
Investment &
Advisory $570 $600 -5% -5%
Enterprise $318 $307 4% 8%
Media $90 $105 -14% -10%
--- ----
Markets Division
Total $1,859 $1,982 -6% -4%
2008
Operating Profit 2009 2008 Change 2009 Margin Margin
---- ---- ------ ----------- ------
Markets Division
Total $369 $336 10% 19.8% 17.0%
-- Revenues declined 4% due to flow-through from weaker year-to-date net
sales and strong prior period revenue growth of 5%.
-- Subscription revenues declined 0.7%, but remain up 2% year-to-date.
-- Revenues were impacted by softness in transaction, recoveries and
outright revenues.
-- Revenues in Asia were unchanged against the prior year period while
revenues in Europe, Middle East and Africa (EMEA) and the Americas were
down 3% and 6%, respectively.
-- Operating profit increased 10% with the related margin expanding 280
basis points. The margin improvement was driven by integration savings,
effective cost management and the benefit of currency.
Sales & Trading
-- Revenues decreased 6% despite good performances from Commodities &
Energy and Tradeweb. The decrease was due to lower third party
recoveries revenues, declines in transaction revenues (primarily spot
foreign exchange) against very strong prior year period results and
desktop cancellations driven by headcount reductions.
Investment & Advisory
-- Revenues declined 5% reflecting continued pressure on customer budgets
across Investment Management, Corporates and Wealth Management. The
Investment Banking business recovered well in the quarter, with revenues
broadly flat against the comparable 2008 quarter and the sector showing
lower cancellations and increased usage revenues.
Enterprise
-- Revenues increased 8% driven by the continued demand from customers for
risk management and data solutions. The fastest growing business in
Enterprise, Enterprise Information, grew 15%, driven by strong customer
demand for pricing and reference data and low latency feeds to power
trading systems.
Media
-- Revenues declined 10%, attributable to continued challenges in
Professional Publishing and the advertising-driven Consumer business.
The Agency business' revenues declined 6%, a result of consolidation in
traditional media outlets and softness in transactions.
Corporate & Other
Corporate & Other expenses increased $163 million to $244 million. The increase was comprised of a $108 million increase in non-cash fair-value currency-related adjustments and a planned $52 million increase in one-time integration costs. Core Corporate Costs were essentially flat.
Financial Highlights - Nine-Months 2009
Nine Months Ended September 30,
-------------------------------
(Millions of U.S. dollars, except EPS and Profit Margin)
2009 2008 Change
IFRS Financial Measures ---- ---- ------
Revenues $9,640 $8,312 16%
Operating profit $1,229 $1,035 19%
Diluted earnings per
share (EPS) $0.80 $0.98 -18%
Cash flow from
operations $1,770 $1,756 1%
Non-IFRS Financial Change Before
Measures 2009 2008(2) Currency Change
---- ------- -------- ------
Revenues from ongoing
businesses $9,621 $9,977 1% -4%
Underlying operating
profit $2,094 $1,992 5%
Underlying operating +180bps
profit margin 21.8% 20.0%
Adjusted earnings per
share (EPS) $1.41 $1.31 8%
Free cash flow $1,049 $1,123 -7%
(2) This 2008 financial information, other than free cash flow, has been
prepared on a pro forma basis and assumes that Thomson's acquisition of
Reuters closed on January 1, 2007. Thomson Reuters believes that pro
forma financial information provides more meaningful period-to-period
comparisons of its performance because Reuters results prior to the April
17, 2008 closing are not included in IFRS results. 2009 results include
the impact of the acquisition for the entire period. For more
information, see the explanatory note at the end of this news release.
-- Revenues from ongoing businesses increased 1% before currency to $9.6
billion.
-- IFRS revenues increased 16% after currency and include Reuters results
subsequent to its acquisition on April 17, 2008.
-- Underlying operating profit increased 5% to $2.1 billion and the related
margin increased 180 basis points.
-- Adjusted earnings per share increased 8% to $1.41.
-- Net cash provided by operations was $1.8 billion, unchanged from a year
ago. Free cash flow of $1.0 billion was down 7% from a year ago, as
higher cash profits and lower tax payments were offset by higher
interest payments and increased capital expenditures on platform and
product development initiatives.
Integration Programs
Thomson Reuters has achieved combined run-rate savings of $975 million as at September 30, 2009. Given the progress the company continues to make on its integration programs, Thomson Reuters continues to expect to achieve at least $1.0 billion of run-rate savings by year-end 2009. Savings were principally achieved through elimination of redundant positions and the retirement of legacy products.
Recent Developments
Thomson Reuters completed the unification of its dual listed company (DLC) structure on September 10, 2009, receiving strong support from shareholders as well as UK court approval. Specifically, each Thomson Reuters PLC ordinary share was exchanged for one Thomson Reuters Corporation common share, and each Thomson Reuters PLC American Depositary Share (ADS) was exchanged for six Thomson Reuters Corporation common shares. As a result, the company's common shares now have a primary listing on the Toronto Stock Exchange, and are also listed on the New York Stock Exchange (both, symbol: TRI). The last trading day for Thomson Reuters PLC ordinary shares on the London Stock Exchange and ADSs on Nasdaq was September 9, 2009.
In the third quarter, Thomson Reuters exercised its right to redeem approximately $600 million of outstanding debt securities and financed these redemptions through cash-on-hand and the issuance of $500 million of 4.70% notes due 2019. The redemptions were completed on October 22, 2009.
Business Outlook (Before Currency)
Thomson Reuters reaffirms its previous outlook that revenues are expected to grow in 2009 and underlying operating profit margin and free cash flow will be comparable with 2008. The revenue impact of weaker 2009 subscription net sales in Markets and Legal is expected to continue to be a drag on revenues through the first half of 2010; however, good growth in other units, continued focus on effective cost management and the benefits of the integration program are expected to reduce the impact on operating profit and maintain strong free cash flow.
Dividend
Thomson Reuters will pay a quarterly dividend of $0.28 per share on December 15, 2009 to shareholders of record as of November 20, 2009.
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 more than 50,000 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.
CONTACTS
MEDIA
Gus Carlson
Executive Vice President & Chief Marketing Officer
+1 646 223 8313
gus.carlson@thomsonreuters.com
Victoria Brough
Head of External Affairs, EMEA
+1 646 223 5285 / +44 (0)207 542 8763
victoria.brough@thomsonreuters.com
INVESTORS
Frank Golden
Senior Vice President, Investor Relations
+1 646 223 5288
frank.golden@thomsonreuters.com
Thomson Reuters will webcast a discussion of its third-quarter results today beginning at 8:30 a.m. U.S. 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 Third-Quarter 2009 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 currently prepares its financial statements under International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). Previously, Thomson Reuters prepared its financial statements in accordance with Canadian GAAP.
NON-IFRS FINANCIAL MEASURES
This news release includes certain non-IFRS financial measures, including pro forma financial information as described herein. 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 (other than pro forma financial information) are defined and reconciled to the most directly comparable IFRS measures in the tables below.
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information included in this news release is for information purposes only and is unaudited. Pro forma financial information was prepared in U.S. dollars in a manner consistent with accounting policies that applied to Thomson prior to the closing of the acquisition and which currently apply to Thomson Reuters as though Reuters was acquired on January 1, 2007. Pro forma financial information should not be considered indicative of actual balance sheet data or operating results that would have been achieved had Thomson acquired Reuters on January 1, 2007, or of results which may occur in the future. Pro forma financial information should be read in conjunction with historical financial results for Thomson and Reuters. Pro forma financial information reflects the impacts of purchase accounting but excludes deal-related expenses and an initial one-time purchase accounting adjustment related to deferred revenue.
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
This news release, in particular the sections under the headings "Integration Programs" and "Business Outlook (Before Currency)" includes forward-looking statements that are based on certain assumptions and reflect Thomson Reuters current expectations. Forward-looking statements are those that are not historical facts and also include Thomson Reuters expectations about its future prospects. 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. Some of the factors that could cause actual results to differ materially from current expectations include risks related to Thomson Reuters ability to achieve the anticipated benefits from the Reuters transaction and other integration program initiatives (including within the time periods currently expected), develop additional products and services to meet customers' needs, attract new customers, general economic conditions and actions of competitors. These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to, securities regulatory authorities. Thomson Reuters disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.
The material assumptions underlying the company's outlook are that the outlook is based on the current environment in the markets that the company serves and it excludes the impact of changes in foreign currency exchange rates.
IFRS and Pro Forma Results
Thomson Reuters Corporation
Division and Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Ended
September 30,
-------------
2009 2008(1) Change Organic
---- ------- ------ -------
Revenues
Legal $917 $940 -2% -2%
Tax & Accounting 225 210 7% 4%
Healthcare & Science 213 200 7% 8%
--- ---
Professional Division 1,355 1,350 0% 1%
Sales & Trading 881 970 -9% -6%
Investment & Advisory 570 600 -5% -5%
Enterprise 318 307 4% 8%
Media 90 105 -14% -10%
-- ---
Markets Division 1,859 1,982 -6% -4%
Eliminations (2) (1)
-- --
Revenues from ongoing
businesses(3) 3,212 3,331 -4% -2%
Before currency -2%
Disposals(3) 4 8
-- --
Revenues $3,216 $3,339 -4%
====== ======
Operating Profit
Legal $305 $322 -5%
Tax & Accounting 36 40 -10%
Healthcare & Science 50 38 32%
-- --
Professional Division 391 400 -2%
Markets Division 369 336 10%
Corporate & Other (244) (81)
Amortization of other
intangible assets (124) (126)
---- ----
Operating profit from
ongoing businesses(3) 392 529 -26%
Disposals(3) (7) (5)
Impairment of assets held
for sale - -
Other operating (losses)
gains, net (7) 29
-- --
Operating profit $378 $553 -32%
==== ====
Nine Months Ended
September 30,
-----------------
Pro
Forma
2008
2009 (1)(2) Change Organic
------ ------- ------ -------
Revenues
Legal $2,683 $2,727 -2% 0%
Tax & Accounting 695 646 8% 4%
Healthcare & Science 627 594 6% 8%
--- ---
Professional Division 4,005 3,967 1% 2%
Sales & Trading 2,674 2,959 -10% -3%
Investment & Advisory 1,731 1,789 -3% -1%
Enterprise 946 945 0% 8%
Media 270 325 -17% -8%
--- ---
Markets Division 5,621 6,018 -7% -1%
Eliminations (5) (8)
-- --
Revenues from ongoing
businesses(3) 9,621 9,977 -4% 0%
Before currency 1%
Disposals(3) 19 69
-- --
Revenues $9,640 $10,046 -4%
====== =======
Operating Profit
Legal $887 $895 -1%
Tax & Accounting 113 118 -4%
Healthcare & Science 134 109 23%
--- ---
Professional Division 1,134 1,122 1%
Markets Division 1,130 1,041 9%
Corporate & Other (648) (404)
Amortization of other
intangible assets (367) (386)
---- ----
Operating profit from
ongoing businesses(3) 1,249 1,373 -9%
Disposals(3) (13) (4)
Impairment of assets held
for sale - (89)
Other operating (losses)
gains, net (7) 29
-- --
Operating profit $1,229 $1,309 -6%
====== ======
Thomson Reuters Corporation
Reconciliation of Operating Profit to Underlying Operating Profit (4)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
Pro Forma
2009 2008 Change 2009 2008(2) Change
---- ---- ------ ---- ------- ------
Operating profit $378 $553 -32% $1,229 $1,309 -6%
Adjustments:
Amortization of
other intangible
assets 124 126 367 386
Integration
program costs 148 96 343 310
Fair value
adjustments 47 (61) 135 (77)
Disposals 7 5 13 4
Other operating
losses (gains),
net 7 (29) 7 (29)
Impairment of
assets held
for sale - - - 89
-- -- -- --
Underlying
operating
profit $711 $690 3% $2,094 $1,992 5%
==== ==== ====== ======
Underlying
operating
profit margin 22.1% 20.7% 21.8% 20.0%
==== ==== ==== ====
IFRS and Pro Forma Results
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings from Continuing Operations (5)
(millions of U.S. dollars, except as otherwise indicated and except for
per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008(6) 2009 2008(6)
---- ------- ---- -------
Earnings attributable to
common shareholders (7) $162 $667
Adjustments:
Disposals 7 13
Fair value adjustments 47 135
Other operating losses,
net 7 7
Other finance costs 7 64
Other non-operating
charge 326 326
Share of post tax
earnings in equity
method investees (1) (2)
Tax on above items 4 (32)
Interim period effective
tax rate normalization (8) 44 9
Amortization of other
intangible assets 124 367
Discrete tax items (356) (356)
Discontinued operations (11) (17)
Dividends declared on
preference shares (1) (2)
-- --
Adjusted earnings from
continuing operations $359 $392 $1,179 $1,095
==== ==== ====== ======
Adjusted earnings per
share from continuing
operations $0.43 $0.47 $1.41 $1.31
===== ===== ===== =====
Weighted average
shares (in millions) (7) 837.5 829.4 836.1 834.4
===== ===== ===== =====
IFRS and Pro Forma Results
Thomson Reuters Corporation
Division and Business Segment Depreciation and Amortization of Computer
Software
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
Depreciation and
amortization of Pro Forma
computer software 2009 2008(1) 2009 2008(1)(2)
---- ------- ---- ----------
Legal (66) (62) (194) (187)
Tax &
Accounting (19) (15) (57) (42)
Healthcare &
Science (18) (16) (55) (44)
--- --- --- ---
Professional Division (103) (93) (306) (273)
Markets Division (152) (160) (449) (474)
Corporate & Other (8) (9) (18) (13)
-- -- --- ---
Depreciation -
Ongoing Businesses (263) (262) (773) (760)
Disposals - - (1) (3)
-- -- -- --
Total Depreciation
and amortization
of computer
software (263) (262) (774) (763)
==== ==== ==== ====
(1) 2008 segment results have been restated to be comparable to the
presentation for 2009.
(2) The results for the nine months ended September 30, 2008 are shown on
a pro forma basis which assumes that Thomson acquired Reuters on
January 1, 2007. These amounts reflect the impacts of purchase
accounting, but exclude deal-related expenses and an initial one-time
purchase accounting adjustment related to deferred revenue.
(3) 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.
(4) Underlying operating profit excludes amortization of other intangible
assets, impairment charges, fair value adjustments, integration
program costs, 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.
(5) Adjusted earnings from continuing operations and adjusted earnings per
share from continuing operations include dividends declared on
preference shares and integration program costs, 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 (3)
above), other finance (income) costs, Thomson Reuters share of post
tax earnings 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.
(6) In 2008, Thomson Reuters calculated its adjusted earnings by deducting
from underlying operating profit certain normally recurring items
appearing below operating profit on the income statement.
Additionally, Thomson Reuters deducted costs associated with its
integration program as well as earnings attributable to non
controlling interests and dividends declared on preference shares.
The table below presents a reconciliation of underlying operating
profit to adjusted earnings from continuing operations for the three
and nine months ended September 30, 2008.
Pro Forma
Three Months Nine Months
(millions of U.S. dollars, except as Ended Ended
otherwise indicated and except per September September
share data) 30, 2008(a) 30, 2008(a)
------------------------------------ ----------- -----------
Underlying operating profit 690 1,992
Adjustments:
Integration program costs (96) (310)
Net interest expense (b) (109) (334)
Income taxes (calculated using an
estimated effective tax rate of 25%) (90) (241)
Earnings attributable to non-controlling
interests (2) (8)
Dividends declared on preference shares (1) (4)
--------------------------------------- -- --
Adjusted earnings from continuing
operations 392 1,095
--------------------------------- --- -----
Adjusted earnings per share from
continuing operations $0.47 $1.31
-------------------------------- ----- -----
Weighted average shares outstanding
(in millions)(7) 829.4 834.4
----------------------------------- ----- -----
(a) This calculation has been restated to be comparable to the 2009
presentation of disposals.
(b) Pro forma interest expense for the three-month period reflected actual
interest expense, which approximates a proportional amount of the full
year pro forma run rate. For the nine-month period, pro forma interest
expense was derived as the sum of the actual three-month interest expense
plus the proportion of the pro forma full year run rate used for the six
months ended June 30, 2008.
Weighted average common shares outstanding reflected the actual reported
diluted weighted average common shares outstanding adjusted as if the
approximately 194 million Thomson Reuters PLC shares issued to Reuters
shareholders on April 17, 2008 were outstanding from the beginning of the
period presented, as well as the effect of the approximately 34 million
Reuters Group PLC share options assumed as part of the acquisition.
(7) On September 10, 2009, all then-outstanding Thomson Reuters PLC
ordinary shares were exchanged for an equivalent number of Thomson
Reuters Corporation common shares in connection with unification of
the dual listed company (DLC) structure.
(8) 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.
Consolidated IFRS Results
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,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $3,216 $3,339 $9,640 $8,312
Operating expenses (2,444) (2,427) (7,263) (6,278)
Depreciation (128) (122) (370) (289)
Amortization of
computer software (135) (140) (404) (344)
Amortization of other
intangible assets (124) (126) (367) (306)
Impairment of assets
held for sale - - - (89)
Other operating
(losses) gains, net (7) 29 (7) 29
-- -- -- --
Operating profit 378 553 1,229 1,035
Finance costs, net:
Net interest expense (122) (109) (322) (121)
Other finance
(costs) income (7) 90 (64) 18
Other non-operating
charge (326) - (326) -
---- -- ---- --
(Loss) income before
tax and equity
method investees (77) 534 517 932
Share of post tax
earnings in equity
method investees 1 1 2 2
Tax benefit (expense) 232 (118) 149 (164)
--- ---- --- ----
Earnings from continuing
operations 156 417 668 770
Earnings (loss) from
discontinued operations,
net of tax 11 (11) 17 (15)
-- --- -- ---
Net earnings $167 $406 $685 $755
==== ==== ==== ====
Earnings attributable to:
Common shareholders(1) 162 404 667 747
Non-controlling
interests 5 2 18 8
Basic earnings per
share $0.19 $0.49 $0.80 $0.99
===== ===== ===== =====
Diluted earnings per
share $0.19 $0.49 $0.80 $0.98
===== ===== ===== =====
Basic weighted
average common
shares(1) 829,718,327 823,780,979 829,037,410 752,404,146
=========== =========== =========== ===========
Diluted weighted
average common
shares(1) 837,477,121 829,427,276 836,098,202 756,671,587
=========== =========== =========== ===========
(1) On September 10, 2009, all then-outstanding Thomson Reuters PLC
ordinary shares were exchanged for an equivalent number of Thomson
Reuters Corporation common shares in connection with unification of
the dual listed company structure.
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
September 30, December 31,
2009 2008
---- ----
Assets
Cash and cash equivalents $1,860 $841
Trade and other receivables 1,729 1,818
Other financial assets 222 261
Prepaid expenses and other current assets 636 766
--- ---
Current assets 4,447 3,686
Computer hardware and other property, net 1,483 1,556
Computer software, net 1,413 1,299
Other identifiable intangible assets, net 8,714 8,702
Goodwill 18,468 18,324
Other financial assets 354 286
Other non-current assets 646 627
Deferred tax 90 109
-- ---
Total assets $35,615 $34,589
======= =======
Liabilities and equity
Liabilities
Current indebtedness $1,049 $688
Payables, accruals and provisions 2,503 2,704
Deferred revenue 1,021 1,193
Other financial liabilities 34 60
-- --
Current liabilities 4,607 4,645
Long-term indebtedness 7,535 6,783
Provisions and other non-current liabilities 1,947 1,798
Other financial liabilities 97 222
Deferred tax 2,246 2,653
----- -----
Total liabilities 16,432 16,101
Equity
Capital 10,140 10,034
Retained earnings 10,557 10,650
Accumulated other comprehensive loss (1,583) (2,268)
------ ------
Total shareholders' equity 19,114 18,416
Non-controlling interests 69 72
-- --
Total equity 19,183 18,488
------ ------
Total liabilities and equity $35,615 $34,589
======= =======
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Cash provided by (used in):
Operating activities
Net earnings $167 $406 $685 $755
Add back (deduct) items not
involving cash:
Depreciation 128 122 370 289
Amortization of computer
software 135 140 404 344
Amortization of other
intangible assets 124 126 367 306
Net losses (gains) on disposals
of businesses and investments 12 (29) 12 (29)
Impairment of assets held for
sale - - - 89
Loss from redemption of debt
securities 35 - 35 -
Deferred tax (380) 54 (446) (86)
Fair value adjustments 47 (61) 135 (79)
Other non-operating charge 326 - 326 -
Other 35 (46) 206 85
Changes in working capital and
other items (123) (118) (331) 104
---- ---- ---- ---
Operating cash flows from
continuing operations 506 594 1,763 1,778
Operating cash flows from
discontinued operations 7 (2) 7 (22)
- -- - ---
Net cash provided by operating
activities 513 592 1,770 1,756
--- --- ----- -----
Investing activities
Acquisitions, less cash
acquired (53) (28) (98) (8,298)
Proceeds from other disposals,
net of tax paid 12 117 15 271
Capital expenditures, less
proceeds from disposals (254) (259) (720) (615)
Other investing activities 2 - 1 (7)
-- -- -- --
Investing cash flows from
continuing operations (293) (170) (802) (8,649)
Investing cash flows from
discontinued operations - (12) 22 (72)
-- --- -- ---
Net cash used in investing
activities (293) (182) (780) (8,721)
---- ---- ---- ------
Financing activities
Proceeds from debt 498 - 1,107 7,600
Repayments of debt (206) -- (398) (5,079)
Net borrowings (repayments)
under short-term loan
facilities 1 7 (7) (1,065)
Share repurchases -- (53) --- (511)
Dividends paid on preference
shares (1) (1) (2) (4)
Dividends paid on common
shares (1) (228) (146) (682) (416)
Dividend payable assumed from
Reuters Group PLC - - - (246)
Other financing activities (1) 11 (6) 205
-- -- -- ---
Net cash provided by (used in)
financing activities 63 (182) 12 484
-- ---- -- ---
Translation adjustments 5 (34) 17 (33)
-- --- -- ---
Increase (decrease) in cash and
cash equivalents 288 194 1,019 (6,514)
Cash and cash equivalents at
beginning of period 1,572 789 841 7,497
----- --- --- -----
Cash and cash equivalents at
end of period $1,860 $983 $1,860 $983
====== ==== ====== ====
(1) On September 10, 2009, all then-outstanding Thomson Reuters PLC
ordinary shares were exchanged for an equivalent number of Thomson
Reuters Corporation common shares in connection with unification of
the dual listed company structure.
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow(1)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net cash provided by operating
activities $513 $592 $1,770 $1,756
Capital expenditures, less
proceeds from disposals (254) (259) (720) (615)
Other investing activities 2 - 1 (7)
Investing activities of
discontinued operations - - - (7)
Dividends paid on preference
shares (1) (1) (2) (4)
-- -- -- --
Free cash flow (1) $260 $332 $1,049 $1,123
==== ==== ====== ======
(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 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.
SOURCE Thomson Reuters
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