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Thomson Reuters Reports Second-Quarter 2009 Results
PR Newswire
Aug 06, 2009
NEW YORK, Aug. 6 /PRNewswire/ -- Thomson Reuters (NYSE: TRI; TSX: TRI; LSE: TRIL; Nasdaq: TRIN), the world's leading source of intelligent information for businesses and professionals, today reported results for the second quarter ended June 30, 2009. Despite difficult global economic conditions, Thomson Reuters achieved revenue growth and margin expansion as a result of its balanced portfolio of businesses, continuing progress on the Reuters integration and effective cost management.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090507/NY12658LOGO )
Thomson Reuters said its second-quarter results reflect the resilience of its business model of providing essential information to professional customers around the world, principally on a recurring subscription basis. The company also said its market-leading positions and continuing strong operating performance are the direct result of continuing to invest across its businesses through the economic cycle.
Three Months Ended June 30,
---------------------------
(Millions of U.S. dollars, except EPS and Profit Margin)
IFRS Financial Measures 2009 2008 Change
---- ---- ------
Revenues $3,293 $3,133 5%
Operating profit $475 $254 87%
Diluted earnings per share (EPS) $0.38 $0.19 100%
Cash flow from operations $1,006 $880 14%
Change
Before
Non-IFRS Financial Measures(1) 2009 2008(2) Currency Change
---- ---- -------- ------
Revenues from ongoing businesses $3,282 $3,413 2% -4%
Underlying operating profit $793 $713 11%
Underlying operating profit margin 24.2% 20.9% +330bps
Adjusted earnings per share (EPS) $0.58 $0.39 49%
Free cash flow $738 $636 16%
(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.
(2) This 2008 financial information 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.
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.
-- Revenues from ongoing businesses were $3.3 billion, an increase of 2%
before currency compared to second-quarter 2008 pro forma revenues.( )
-- IFRS revenues increased 5% after currency primarily as a result of the
Reuters acquisition completed on April 17, 2008.
-- Underlying operating profit increased 11% to $793 million, with the
related margin expanding 330 basis points, primarily due to
integration-related savings, effective cost management and the benefit
of currency.
-- Adjusted earnings per share were $0.58 compared to $0.39 a year ago,
driven by underlying profit growth and lower integration costs.
-- Net cash provided by operations was $1 billion in the quarter, up 14%
from a year ago. Free cash flow of $738 million was up 16% from a year
ago. These increases were attributable to higher operating profits and
lower tax payments.
-- Integration and legacy savings programs are tracking against the
accelerated plan with $925 million of run-rate savings (against a 2011
target of $1.4 billion) achieved by quarter-end. Thomson Reuters now
expects to achieve at least $1 billion of run-rate savings by the end of
2009.
"I am pleased with our solid second-quarter operating results despite the continued weakness in the global economy," said Thomas H. Glocer, chief executive officer of Thomson Reuters. "Our revenues continued to grow in both the Professional and Markets divisions, which is a testament not only to the choice and balance of the markets in which we operate, but also the strength of our franchises in the challenging financial services and legal segments."
"Our Tax & Accounting and Healthcare & Science businesses reported accelerating revenues thanks to the very timely products these units provide to handle ever-changing tax rules and increase the efficiency and quality of healthcare and research."
"Tomorrow, our shareholders will be asked to approve the plan to unify our dual listed company structure. We believe that unification is in the best interests of our shareholders because it will improve trading liquidity in our shares and simplify our capital structure. We are gratified by the support we are receiving from shareholders around the world," said Mr. Glocer.
Second-Quarter Business Segment Highlights
Professional Division
Three Months Ended June 30,
---------------------------
(Millions of U.S. dollars, unless otherwise indicated)
Change
Before
Revenues 2009 2008 Change Currency
---- ---- ------ ----------
Legal $934 $950 -2% 2%
Tax & Accounting 225 209 8% 9%
Healthcare & Science 217 206 5% 7%
--- ---
Professional
Division Total 1,376 1,365 1% 4%
Operating Profit 2009 2008
2009 2008 Change Margin Margin
---- ---- ------ ------- ------
Legal $341 $340 0% 36.5% 35.8%
Tax & Accounting 36 34 6% 16.0% 16.3%
Healthcare & Science 53 42 26% 24.4% 20.4%
-- --
Professional
Division Total 430 416 3% 31.3% 30.5%
All revenue growth and operating profit comparisons are based upon results from ongoing businesses and exclude the results of disposals.
-- Revenues increased 4%, 2% of which was organic, with all segments
contributing to growth, including strong performances from the core
Westlaw and international online legal businesses, as well as Tax &
Accounting and Healthcare & Science.
-- Revenue growth in the division continues to be driven by online
products, software and services, which increased 5% and represented 80%
of the division's revenues.
-- Operating profit increased 3% and the related margin expanded 80 basis
points, due to the benefits of currency and efficiency initiatives,
which were partly offset by dilution from recent acquisitions in Tax
& Accounting.
Legal
-- Revenues increased 2%, with organic growth of 1%, driven by continued
growth in Westlaw, FindLaw and online international legal businesses.
Growth was partly offset by lower revenues in ancillary services and
declines in practice management software and consulting revenues. By
customer segment, revenue growth was driven by small law firms and
government units.
-- Operating profit increased slightly, while the related margin expanded
70 basis points, primarily due to the benefits of efficiency initiatives
and currency.
Tax & Accounting
-- Revenues were up 9%, 5% of which was organic. Growth was driven by
strength in core products such as the UltraTax suite of solutions as
well as software and services led by Property Tax and Tax Stream.
Checkpoint revenues grew in line with Tax & Accounting's
organic growth. Acquisitions contributed 4% growth, primarily from
compliance software provider Paisley. The Tax & Accounting
segment's strong market position and breadth of products continues
to enable it to take share and grow at above-market rates. Revenue
growth is expected to continue to accelerate over the balance of the
year.
-- Operating profit increased 6% and the related margin decreased 30 basis
points, primarily due to lower initial margins for certain acquisitions
due to accounting adjustments.
Healthcare & Science
-- Revenues increased 7%, all of which was organic, driven by strength in
the Payer decision-support business, which experienced significant
demand in both the Federal and Employer segments, where the business is
well positioned to improve the efficiency and quality of healthcare.
-- Operating profit increased 26% and the related margin expanded 400 basis
points driven by strong revenue flow-through, effective cost management
and currency.
Markets Division
Three Months Ended June 30,
---------------------------
(Millions of U.S. dollars unless otherwise indicated)
Change
Before
Revenues 2009 2008 Change Currency
---- ---- ------ -----------
Sales &
Trading $903 $1,008 -10% -1%
Investment &
Advisory 590 593 -1% 0%
Enterprise 324 338 -4% 7%
Media 91 112 -19% -6%
-- ---
Markets Division
Total 1,908 2,051 -7% 0.3%
2009 2008
Operating Profit 2009 2008 Change Margin Margin
---- ---- ------ ------ ------
Markets Division
Total 424 367 16% 22.2% 17.9%
-- Organic revenues grew 0.2% (2% growth in recurring subscription
revenues) compared to 7% pro forma organic growth in the same period a
year ago. The Markets division's geographic, customer and product
diversity enabled it to grow at above-market rates, despite the
challenges presented by the financial crisis and ongoing global
recession.
-- Recurring revenues grew despite a decline in recoveries. Recoveries are
primarily low margin, third-party information feeds, such as exchange
data.
-- A 9% decline in transaction revenues was due to lower foreign exchange
volumes for Reuters Matching and lower equity volumes affecting Omgeo,
Markets' trade processing joint venture.
-- Outright (one-time) revenues also declined, as clients' purchases
of large software systems slowed.
-- The Europe, Middle East and Africa (EMEA) and Asia regions each grew 2%,
while revenues from the Americas decreased 2%.
-- Operating profit increased 16% with the corresponding margin expanding
430 basis points due to integration savings, effective cost management
and the benefit of currency.
Sales & Trading
-- Revenues decreased 1% due to lower foreign exchange transaction volumes,
a 6% decline in recoveries and declines in desktops partly offset by
growth in Commodities & Energy and Tradeweb.
Investment & Advisory
-- Revenues were unchanged for the quarter. Revenue growth in Asia and
demand for high-value analytics were offset by lower desktop revenues as
investment managers reduced costs and headcount. Strong demand for
ThomsonONE.com among mid-size and boutique investment banks helped to
slow the quarter's Investment Banking revenue decline to 3% as
compared to 17% in the first quarter. Corporate Services declined
slightly, with Investor Relations and Business Intelligence products
failing to offset declines in transaction-based Advisory and
Communications services.
Enterprise
-- Revenues rose 7% against very strong results from a year ago, when
organic revenues grew 14%. Enterprise information continued to benefit
from strong customer demand for reference data, independently validated
pricing services and data to automate front, middle- and back-office
applications. The breadth of the Enterprise segment's offerings
continues to create significant business opportunities and market share
gains.
Media
-- Revenues declined 6%, hurt by continued declines in the professional
publishing and consumer businesses. The core news agency business
declined 4% as a result of consolidation in traditional media outlets.
Corporate and Other
Corporate and Other expenses decreased $20 million, to $255 million, mainly reflecting benefits from synergy programs. Core Corporate Costs accounted for $9 million of the $20 million decline.
Financial Highlights - Six-Months 2009
Six Months Ended June 30,
-------------------------
(Millions of U.S. dollars, except EPS and Profit Margin)
2009 2008 Change
IFRS Financial Measures ---- ---- ------
Revenues $6,424 $4,973 29%
Operating profit 851 482 77%
Diluted earnings per
share (EPS) $0.60 $0.47 28%
Cash flow from operations $1,257 $1,164 8%
Change
Before
Non-IFRS Financial 2009 2008 Currency Change
Measures ---- ---- -------- ------
Revenues from ongoing
businesses $6,409 $6,646 2% -4%
Underlying operating
profit 1,383 1,302 6%
Underlying operating +200bps
profit margin 21.6% 19.6%
Adjusted earnings per
share (EPS) $0.98 $0.84 17%
Free cash flow $789 $791 0%
-- Revenues from ongoing businesses increased 2% before currency, to $6.4
billion.
-- IFRS revenues increased 29% after currency.
-- Underlying operating profit increased 6%, to $1.4 billion, and the
related margin increased 200 basis points.
-- Adjusted earnings per share were $0.98.
-- Net cash provided by operations was $1.3 billion, up 8% compared with
the first half of 2008. This growth resulted from higher operating
profits and lower tax payments, and reflected an increase of over $200
million in net interest payments in 2009. Free cash flow of $789
million was comparable to the prior year period, despite the higher
interest payments, and reflected an increase in capital expenditures on
platform and product development initiatives.
Integration Programs
-- Thomson Reuters previously announced that it expects to achieve $1
billion in annualized cost savings from the Reuters integration by the
end of 2011, up from $750 million in savings projected in May 2008. This
raised the overall savings target (including legacy efficiency programs)
to $1.4 billion.
-- Thomson Reuters achieved combined run-rate savings of $925 million in
the first half of 2009. Given the progress the company continues to
make on its integration programs, Thomson Reuters now expects to achieve
at least $1 billion of run-rate savings by year-end 2009, up from the
previous estimate of $975 million. Savings were principally achieved
through elimination of redundant positions and the retirement of legacy
products.
-- The first-half costs required to achieve these savings were $195
million.
Proposed DLC Unification
In June 2009, Thomson Reuters announced a plan to unify its dual listed company (DLC) structure by exchanging each outstanding Thomson Reuters PLC ordinary share for one Thomson Reuters Corporation common share. Each outstanding Thomson Reuters PLC American Depositary Share (ADS) will be exchanged for six Thomson Reuters Corporation common shares. Current holders of Thomson Reuters Corporation common shares will continue to hold their existing shares. If unification is approved, Thomson Reuters shares will remain listed on the Toronto Stock Exchange and New York Stock Exchange and will no longer be listed on the London Stock Exchange and Nasdaq.
Thomson Reuters is seeking shareholder approval to approve the DLC unification at meetings to be held tomorrow in Toronto and London. The DLC unification is also subject to UK court approval, which Thomson Reuters plans to seek on August 25, 2009. If shareholder and court approvals are obtained, the unification will be completed on September 10, 2009, and the last day of trading of Thomson Reuters PLC ordinary shares on the London Stock Exchange and ADSs on Nasdaq will be September 9, 2009.
Business Outlook (Before Currency)
Based on the current environment in the markets it serves, Thomson Reuters reaffirms its previous outlook that revenues are expected to grow in 2009 and underlying operating margin and free cash flow (adjusted for certain timing-related items) will be comparable to 2008.
Dividend
Thomson Reuters will pay a quarterly dividend of $0.28 per share on September 15, 2009 to shareholders of record as of August 21, 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 New York Stock Exchange (NYSE: TRI); Toronto Stock Exchange (TSX: TRI); London Stock Exchange (LSE: TRIL); and Nasdaq (NASDAQ: TRIN). For more information, go to www.thomsonreuters.com.
CONTACTS
Fred Hawrysh
Senior Vice President, Corporate Affairs
+1.646 223 5285
fred.hawrysh@thomsonreuters.com
Frank Golden
Senior Vice President, Investor Relations
+1.646 223 5288
frank.golden@thomsonreuters.com
Victoria Brough
Head of External Affairs, EMEA
+44 (0) 207 542 8763
victoria.brough@thomsonreuters.com
Thomson Reuters will webcast a discussion of its second-quarter results today beginning at 10:00 a.m. U.S. Eastern Daylight Time (EDT) / 3:00 p.m. British Summer Time (BST). 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 Second-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 Corporation is incorporated in Ontario, Canada with a registered office at Suite 2706, Toronto Dominion Bank Tower, P.O. Box 24, Toronto-Dominion Centre, Toronto, Ontario M5K 1A1, Canada. Thomson Reuters PLC (registered no. 06141013) is registered in England & Wales with a registered office at The Thomson Reuters Building, South Colonnade, Canary Wharf, London E14 5EP, United Kingdom. Thomson Reuters primary financial statements are the consolidated financial statements of Thomson Reuters Corporation. Those statements account for Thomson Reuters PLC as a subsidiary.
All references to growth rate percentages compare the results of the period to those of the prior year comparable period. Unless otherwise stated, revenue growth discussions in this news release are before currency.
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 following tables.
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", "Proposed DLC Unification" 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 Corporation and Thomson Reuters PLC from time to time file with, or furnish 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, rule or regulation.
2009 IFRS Results Compared to 2008 Pro Forma Results
Thomson Reuters Corporation
Division and Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Ended
June 30,
--------
2009 2008(1)(2) Change Organic
---- ---------- ------ -------
Revenues
Legal $934 $950 -2% 1%
Tax & Accounting 225 209 8% 5%
Healthcare & Science 217 206 5% 7%
--- ---
Professional Division 1,376 1,365 1% 2%
Sales & Trading 903 1,008 -10% -1%
Investment & Advisory 590 593 -1% 0%
Enterprise 324 338 -4% 7%
Media 91 112 -19% -6%
-- ---
Markets Division 1,908 2,051 -7% 0%
Eliminations (2) (3)
-- --
Revenues from ongoing
businesses(3) 3,282 3,413 -4% 1%
Disposals(3) 11 34
-- --
Revenues $3,293 $3,447 -4%
====== ======
Operating Profit
Legal $341 $340 0%
Tax & Accounting 36 34 6%
Healthcare & Science 53 42 26%
-- --
Professional Division 430 416 3%
Markets Division 424 367 16%
Corporate and Other (255) (275)
Amortization of other
intangible assets (124) (131)
---- ----
Operating profit from
ongoing businesses(3) 475 377 26%
Disposals(3) - 4
Impairment of assets held for sale - (89)
-- ---
Operating profit $475 $292 63%
==== ====
Six Months Ended
June 30,
--------
2009 2008(1)(2) Change Organic
---- ----------- ------ -------
Revenues
Legal $1,766 $1,787 -1% 1%
Tax & Accounting 470 436 8% 5%
Healthcare & Science 414 394 5% 7%
--- ---
Professional Division 2,650 2,617 1% 3%
Sales & Trading 1,793 1,989 -10% -2%
Investment & Advisory 1,161 1,189 -2% 0%
Enterprise 628 638 -2% 8%
Media 180 220 -18% -7%
--- ---
Markets Division 3,762 4,036 -7% 0%
Eliminations (3) (7)
-- --
Revenues from ongoing
businesses(3) 6,409 6,646 -4% 1%
Disposals(3) 15 61
-- --
Revenues $6,424 $6,707 -4%
====== ======
Operating Profit
Legal $582 $573 2%
Tax & Accounting 77 78 -1%
Healthcare & Science 84 71 18%
-- --
Professional Division 743 722 3%
Markets Division 761 705 8%
Corporate and Other (404) (323)
Amortization of other
intangible assets (243) (260)
---- ----
Operating profit from
ongoing businesses(3) 857 844 2%
Disposals(3) (6) 1
Impairment of assets held
for sale - (89)
-- ---
Operating profit $851 $756 13%
==== ====
Thomson Reuters Corporation
Reconciliation of Operating Profit to Underlying Operating Profit (4)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008(2) Change 2009 2008(2) Change
---- ------ ------ ---- ------ ------
Operating profit $475 $292 63% $851 $756 13%
Adjustments:
Amortization
of other
intangible
assets 124 131 243 260
Disposals - (4) 6 (1)
Impairment
of assets
held for sale - 89 - 89
Fair value
adjustments 87 4 88 (16)
Integration
program costs 107 201 195 214
--- --- --- ---
Underlying operating
profit $793 $713 11% $1,383 $1,302 6%
==== ==== ====== ======
Underlying operating
profit margin 24.2% 20.9% 21.6% 19.6%
===== ===== ===== =====
2009 IFRS Results Compared to 2008 Pro Forma Results
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common and Ordinary Shares
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 Six Months Ended
June 30, June 30,
-------- --------
2009 2008(6) 2009 2008(6)
---- ------ ---- ------
Earnings attributable to
common and ordinary shares $315 $505
Adjustments:
Disposals - 6
Fair value adjustments 87 88
Other finance costs 34 57
Share of post tax earnings
in equity method
investees - (1)
Tax on above items (31) (36)
Interim period effective tax
rate normalization (7) (42) (35)
Amortization of other
intangible assets 124 243
Discontinued operations (2) (6)
Dividends declared on
preference shares - (1)
-- --
Adjusted earnings from
continuing operations $485 $328 $820 $703
==== ==== ==== ====
Adjusted earnings per
share from continuing
operations $0.58 $0.39 $0.98 $0.84
===== ===== ===== =====
Weighted average common
and ordinary shares (in
millions) 836.5 836.5 835.6 837.3
===== ===== ===== =====
2009 IFRS Results Compared to 2008 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 Six Months Ended
Depreciation and June 30, June 30,
amortization of -------- --------
computer software 2009 2008(1)(2) 2009 2008(1)(2)
---- ----------- ---- -----------
Legal (65) (65) (128) (125)
Tax & Accounting (19) (13) (38) (27)
Healthcare &
Science (20) (16) (37) (28)
--- --- --- ---
Professional Division (104) (94) (203) (180)
Markets Division (133) (154) (297) (314)
Corporate and Other (5) (3) (10) (4)
-- -- --- --
Depreciation - Ongoing
Businesses (242) (251) (510) (498)
Disposals - (1) (1) (3)
-- -- -- --
Total Depreciation
and amortization
of computer software (242) (252) (511) (501)
==== ==== ==== ====
(1) 2008 segment results have been restated to be comparable to the
presentation for 2009.
(2) 2008 results 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 costs, Thomson Reuters share of post-tax
earnings in equity method investees and discontinued operations.
Adjusted earnings per share from continuing operations is calculated
using diluted weighted average common and ordinary shares and does not
represent actual earnings per share attributable to shareholders.
(6) In 2008, Thomson Reuters calculated its pro forma adjusted earnings by
deducting from pro forma 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 pro forma underlying
operating profit to pro forma adjusted earnings from continuing
operations for the three and six months ended June 30, 2008.
(millions of U.S. dollars, except as
otherwise indicated and except per Three Months Six Months
share data) Ended Ended
Pro forma basis June 30, June 30,
2008(a) 2008(a)
--------------- ------------- -------------
Underlying operating profit 713 1,302
Adjustments:
Integration program costs (201) (214)
Net interest expense (calculated as pro
rata $450 million annualized) (112) (225)
Income taxes (calculated using an
estimated effective tax rate of 25%) (67) (151)
Earnings attributable to non-controlling
interests (4) (6)
Dividends declared on preference shares (1) (3)
--------------------------------------- -- --
Adjusted earnings from continuing
operations 328 703
--------------------------------- --- ---
Adjusted earnings per share from
continuing operations $0.39 $0.84
-------------------------------- ----- -----
Weighted average common and ordinary
shares outstanding (in millions) 836.5 837.3
------------------------------------ ----- -----
(a) This calculation has been restated to be comparable to the 2009
presentation of disposals.
Weighted average common and ordinary shares outstanding reflected the
actual reported diluted weighted average common and ordinary 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) 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 Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $3,293 $3,133 $6,424 $4,973
Operating expenses (2,452) (2,432) (4,819) (3,851)
Depreciation (113) (112) (242) (167)
Amortization of computer
software (129) (128) (269) (204)
Amortization of other intangible
assets (124) (118) (243) (180)
Impairment of assets held for sale - (89) - (89)
-- --- -- ---
Operating profit 475 254 851 482
Finance costs, net:
Net interest expense (104) (50) (200) (12)
Other finance costs (34) (44) (57) (72)
--- --- --- ---
Income before tax and equity
method investees 337 160 594 398
Share of post tax earnings in
equity method investees - 1 1 1
Tax expense (14) (1) (83) (46)
--- -- --- ---
Earnings from continuing
operations 323 160 512 353
Earnings from discontinued
operations, net of tax 2 (6) 6 (4)
- -- - --
Net earnings $325 $154 $518 $349
---- ---- ---- ----
Earnings attributable to:
Common and ordinary shareholders 315 150 505 343
Non-controlling interests 10 4 13 6
Basic earnings per share $0.38 $0.19 $0.61 $0.47
===== ===== ===== =====
Diluted earnings per share $0.38 $0.19 $0.60 $0.47
===== ===== ===== =====
Basic weighted average
common and ordinary
shares 829,065,567 792,544,170 828,691,308 716,323,549
=========== =========== =========== ===========
Diluted weighted average
common and ordinary
shares 836,493,404 797,766,197 835,577,207 720,098,337
=========== =========== =========== ===========
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
June 30, December 31,
2009 2008
---- ----
Assets
Cash and cash equivalents $1,572 $841
Trade and other receivables 1,746 1,818
Other financial assets 114 261
Prepaid expenses and other current assets 658 766
--- ---
Current assets 4,090 3,686
Computer hardware and other property, net 1,508 1,556
Computer software, net 1,398 1,299
Other identifiable intangible assets, net 8,830 8,702
Goodwill 18,640 18,324
Other financial assets 322 286
Other non-current assets 634 627
Deferred tax 95 109
-- ---
Total assets $35,517 $34,589
======= =======
Liabilities and equity
Liabilities
Current indebtedness $735 $688
Payables, accruals and provisions 2,450 2,704
Deferred revenue 1,183 1,193
Other financial liabilities 34 60
-- --
Current liabilities 4,402 4,645
Long-term indebtedness 7,255 6,783
Provisions and other non-current liabilities 1,862 1,798
Other financial liabilities 193 222
Deferred tax 2,686 2,653
----- -----
Total liabilities 16,398 16,101
Equity
Capital 10,099 10,034
Retained earnings 10,678 10,650
Accumulated other comprehensive loss (1,728) (2,268)
------ ------
Total shareholders' equity 19,049 18,416
Non-controlling interests 70 72
-- --
Total equity 19,119 18,488
------ ------
Total liabilities and equity $35,517 $34,589
======= =======
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
Cash provided by (used in):
Operating activities
Net earnings $325 $154 $518 $349
Add back (deduct) items not
involving cash:
Depreciation 113 112 242 167
Amortization of computer software 129 128 269 204
Amortization of other intangible
assets 124 118 243 180
Impairment of assets held for sale - 89 - 89
Deferred tax (75) (99) (66) (140)
Other 204 45 259 113
Changes in working capital and
other items 186 340 (208) 222
--- --- ---- ---
Operating cash flows from
continuing operations 1,006 887 1,257 1,184
Operating cash flows from
discontinued operations - (7) - (20)
-- -- -- ---
Net cash provided by operating
activities 1,006 880 1,257 1,164
----- --- ----- -----
Investing activities
Acquisitions, less cash acquired (25) (8,147) (45) (8,270)
Proceeds from other disposals,
net of tax paid 3 - 3 154
Capital expenditures, less
proceeds from disposals (268) (239) (466) (356)
Other investing activities - (4) (1) (7)
- -- -- --
Investing cash flows from
continuing operations (290) (8,390) (509) (8,479)
Investing cash flows from
discontinued operations - - 22 (60)
-- -- -- ---
Net cash used in investing
activities (290) (8,390) (487) (8,539)
---- ------ ---- ------
Financing activities
Proceeds from debt - 5,921 609 7,600
Repayments of debt (189) (4,679) (192) (5,079)
Net borrowings (repayments) under
short-term loan facilities 2 (1,426) (8) (1,072)
Share repurchases - (458) - (458)
Dividends paid on preference
shares - (1) (1) (3)
Dividends paid on common and
ordinary shares (226) (144) (454) (270)
Dividend payable assumed from
Reuters Group PLC - (246) - (246)
Other financing activities (3) 192 (5) 194
-- --- -- ---
Net cash (used in) provided by
financing activities (416) (841) (51) 666
---- ---- --- ---
Translation adjustments 21 (82) 12 1
-- --- -- -
Increase (decrease) in cash and
cash equivalents 321 (8,433) 731 (6,708)
Cash and cash equivalents at
beginning of period 1,251 9,222 841 7,497
----- ----- --- -----
Cash and cash equivalents at end
of period $1,572 $789 $1,572 $789
====== ==== ====== ====
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 Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
Net cash provided by operating
activities $1,006 $880 $1,257 $1,164
Capital expenditures, less
proceeds from disposals (268) (239) (466) (356)
Other investing activities - (4) (1) (7)
Investing activities of
discontinued operations - - - (7)
Dividends paid on preference
shares - (1) (1) (3)
-- -- -- --
Free cash flow (1) $738 $636 $789 $791
==== ==== ==== ====
(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
Copyright (2009) PR Newswire. All Rights Reserved.
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