Thomson Reuters - 1st Quarter Results
RNS Number:5837T
Thomson Reuters PLC
01 May 2008
CONTACTS
Fred Hawrysh Frank Golden
Global Director, Corporate Affairs Senior Vice President, Investor
1.203 539 8314 Investor Relations
fred.hawrysh@thomsonreuters.com 1.203 539 8470
frank.golden@thomsonreuters.com
Frank DeMaria Victoria Brough
Global Director, Media Relations Head of Corporate Communications, EMEA
1.646 223 5507 +44 (0) 207 542 8763
frank.demaria@thomsonreuters.com victoria.brough@thomsonreuters.com
Thomson Reuters Reports First-Quarter 2008 Results
The Thomson Corporation reports GAAP revenue growth of 10%; 7% organic
Thomson Reuters pro forma revenues increase 12%;
organic growth up 8% on strong customer demand
Strong pro forma underlying operating profit
Results reflect strong performance in both Markets and Professional Divisions
Thomson Reuters expects 2008 pro forma revenue growth of 6% - 8%; nearly all
organic
Integration plan accelerated; targets raised
NEW YORK, NY, May 1, 2008 -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 first quarter
ending March 31, 2008. As The Thomson Corporation's acquisition of Reuters Group
PLC was completed on April 17, 2008, first-quarter results reflect the
performance of the two legacy companies reported under Canadian GAAP in U.S.
dollars. Thomson had first-quarter revenues of $1.8 billion, an increase of 10%
over the first-quarter of 2007, while Reuters had revenues of $1.4 billion, a
13% increase.
Assuming that Thomson's acquisition of Reuters had been completed on January 1,
2007, pro forma revenue for Thomson Reuters for the quarter would have been $3.3
billion, an increase of 12% over the prior year period. (1)
'Our combined first quarter results and guidance for the full year reflect the
robustness of our business, even in turbulent markets. Our Markets division
holds leading positions in higher growth segments of the financial markets,
including foreign exchange, commodities, energy and emerging markets. Our
leading positions in the less cyclical Professional markets of legal, tax &
accounting, scientific and healthcare information also grew strongly in the
quarter. These are high quality businesses with attractive profit margins and
strong cash-flow characteristics,' said Thomas H. Glocer, chief executive
officer of Thomson Reuters.
'Thomson Reuters is extremely well-positioned to capitalize on the growing
demand across the world's business and professional communities for intelligent
information - insightful, high value content that can be used by human beings
and machines. As an enlarged global business, Thomson Reuters will now also
benefit from the value created by more diversified revenue streams, a larger
capital base and synergies resulting from the combination of our businesses.'
1) For an explanation of pro forma financial information, see note on page 7.
Consolidated Pro Forma Financial Highlights for Thomson Reuters - First-Quarter
2008*
* Pro forma revenue increased 12%, and pro forma organic growth was 8%.
* Pro forma underlying operating profit grew 37% to $579 million.
Professional Division
Thomson Reuters Professional Division is made up of four business segments:
Legal, Tax & Accounting, Scientific and Healthcare.
* Revenue for the Professional Division grew 11% to $1.3 billion, led by
strong growth in the Legal, Tax & Accounting and Scientific business
segments. Organic growth was 7% in the quarter with foreign exchange adding
1%. Online, services and software comprised 80% of total revenue and grew
13%. Print represented 20% of total revenue and grew 5%.
* Operating profit for the Professional Division was $299 million in the
first quarter, a 6% increase from the prior year period. Operating profit
margin for the first quarter was 23.5%, representing a 120 basis point
decline compared to the first quarter of 2007. The margin decline was due
to investments in certain growth initiatives, and the impact of accounting
adjustments associated with recent acquisitions.
Legal
* Revenues increased 9% in the first quarter to $809 million. Organic
revenue growth was 7% in the quarter with foreign exchange adding 2%.
* Organic revenue growth reflected strong performance for online solutions
in both the U.S. and internationally. Software and services also
contributedsolidly in the first quarter, posting significant double-digit
revenue growth, led by FindLaw.
* Print revenue represented approximately 30% of total revenue for the
quarter and was up 7%, in part due to timing.
* First quarter segment operating profit grew 9%, to $225 million.
Operating profit growth was driven by strong revenue. Corresponding
operating margin for the quarter was 27.8%, unchanged from the first
quarter of 2007.
Tax & Accounting
* Revenues increased 28% to $205 million. Organic revenues grew 13%, with
growth from acquisitions contributing 15%.
* Strong organic revenue growth was seen across all three businesses:
Research & Guidance, Professional Software & Services, and Corporate
Software & Services driven by core products including Checkpoint and
InSource.
* Acquisition revenue growth was driven by the successful integration of
the Property Tax Services and CrossBorder acquisitions, as well as the
acquisition of TaxStream in the first quarter.
* Operating profit increased 3% to $39 million for the quarter. The
operating margin was 19.0% compared to 23.8% in the prior year period, due
to lower initial margins for the above-mentioned acquisitions related to
purchase accounting adjustments. As the acquisition accounting treatment
normalizes throughout the year, the margin is expected to return to
historical averages for the full year.
* Reflects removal of purchase accounting revenue adjustment which also flows
through to operating income.
Scientific
* Revenues grew 9% to $163 million. Organic growth contributed 4%,
acquisitions added 4%, and foreign exchange added an additional 1%.
* Information Solutions, which includes Web of Science, Thomson Pharma and
Corporate Solutions, contributed 62% of segment revenues and was the driver
of revenue growth in the quarter.
* ISI Web of Knowledge demonstrated continued momentum in the quarter on
the strength of a new release launched in the fourth quarter of 2007.
* Operating profit declined 6% to $32 million for the quarter. Operating
margin of 19.6% was 320 basis points lower than the prior year due to
investments associated with localization of content in certain Asian
markets, and acquisition-related items.
Healthcare
* Revenues increased 3% in the first quarter to $95 million. Organic
revenues grew 2%, with acquisitions contributing 1%.
* The Payer business (35% of total revenue) posted a revenue increase of
9%, reflecting strong renewals and new business from Medstat, and the
Provider business (62% of total revenue) was up 4% led by Solucient and
Micromedex. However, a decline in PDR (Physicians' Desk Reference) revenue
offset the revenue growth in the afore-mentioned businesses. Organic
revenue growth was 6% excluding PDR.
* Operating profit was $3 million for the quarter, a decline of $1 million
compared to the first quarter of last year. Operating margin declined 110
basis points to 3.2%. Operating profit and margins were impacted by the
decline in PDR revenue. Healthcare is highly seasonal with approximately
70% of operating profit historically generated in the fourth quarter.
Markets Division
The Markets Division is made up of four businesses - Sales & Trading, Investment
& Advisory, Enterprise and Media. With the acquisition of Reuters, Thomson
Financial became part of the Markets Division. For the purpose of this release,
first quarter results are provided for the four legacy Reuters Group PLC
businesses, as well as Thomson Financial.
Pro Forma First-Quarter 2008
* Markets Division revenue growth was 11%, 9% organic.
* Markets Division operating profit was $353 million, up 69%.
Reuters Legacy Business Segments - Actual First-Quarter 2008
Sales & Trading
* Sales & Trading revenue was $876 million in the first quarter, an
increase of 9% over the prior year, with 7% organic growth. A key driver of
organic revenue growth was usage revenue, which increased 22%, reflecting
the strength of Reuters foreign exchange business. Growth in Reuters
premium desktop product 3000 Xtra was also strong.
* Revenue from the Trader family products declined 11% organically,
representing a significant improvement compared to the same period in 2007
when revenue declined 21%. The improvement in large part reflected the
absence of revenue attrition from Telerate migrations as well as strong
growth in next generation Trader products.
Investment & Advisory (Formerly Research & Asset Management)
* Revenue was $214 million, an increase of 27%, of which 20% was organic
growth. Revenue growth was driven by continued strength in Investment
Banking and Investment Management, with strong organic revenue growth
driven by demand for content feeds and sales of Reuters Knowledge desktops.
* Revenue from Wealth Management grew 7% organically, mainly attributable
to demand for online feeds and web-based solutions, as well as growth in
Lipper funds' information revenue.
Enterprise
* Enterprise revenue grew 18% to $239 million for the quarter, based on
continued strong performance across the product range. Organic growth was
14% for the period.
* Revenues for the Pricing and Reference Data business grew strongly,
responding to a growing demand for independent pricing and valuations.
* Reuters Data Feed products continued to deliver double digit revenue
growth, driven by a strong demand from algorithmic trading engines and
other client applications.
Media
* Media revenue grew 12% to $91 million; organic revenue increased 9%.
Revenue from text and TV subscriptions experienced consistent growth.
Consumer Services revenue grew at double-digit rates, driven by online
syndication and advertising.
Thomson Financial - Actual First-Quarter 2008
* First-quarter revenues grew 7%, to $565 million, with organic revenue up
6% and foreign exchange adding 1%.
* Organic revenue growth was driven by strong performance across multiple
customer segments, including Investment Management, Corporate Services,
Omgeo and Retail Wealth Management. Other areas contributing to organic
revenue growth included Tradeweb Markets and Enterprise solutions.
Continued good growth in Europe and Asia also contributed to the strong
increase in organic revenue.
* First-quarter segment operating profit increased 16%, to $110 million.
The related margin increased 150 basis points, to 19.5%, driven by strong
revenue growth and operating efficiency and savings attributable to
deferred spending due to the Reuters acquisition.
The Thomson Corporation - Actual First-Quarter 2008
* Revenues increased 10%, to $1.8 billion, led by strong growth in the
Legal, Financial and Tax & Accounting business segments. Organic revenue
growth was 7%.
* Operating profit was $216 million, a decline of 4% from the first
quarter of 2007, resulting in an operating margin of 11.8% compared to
13.5% in the prior year period. Operating profit includes costs related to
the Reuters transaction and THOMSONplus initiatives of $68 million and $13
million, respectively. Historically, approximately 17% of operating profit
is generated in the first quarter.
* Underlying operating profit, which excludes amortization of acquired
intangible assets, Reuters transaction costs in the first quarter and
THOMSONplus costs for both the first quarter of 2008 and 2007, increased
12% to $359 million from $320 million a year ago. As a result,
underlying operating profit margin was 19.6% compared to 19.3% in the
first quarter of 2007.
* Corporate and Other expenses increased $40 million in the quarter, to
$131 million. The increase was primarily due to $68 million in costs during
the quarter related to the Reuters acquisition, offset by lower spending on
THOMSONplus.
* Earnings attributable to common shares were $192 million, or $0.30 per
share, compared to $223 million or $0.35 per share in the same period in
2007.
* Adjusted earnings from continuing operations were $249 million or $0.39 per
share, compared to $144 million or $0.22 per share in the first quarter of
2007.
* Adjusted earnings from continuing operations, excluding acquisition-related
amortization expense of intangibles, was $311 million or $0.48 per share
compared to $205 million or $0.32 per share in the first quarter of 2007.
* Net cash provided by operations was $284 million compared to $287 million
a year ago.
* Free cash flow was $155 million, up 13% from a year ago.
Reuters Group PLC - Actual First-Quarter 2008**
* Reuters first-quarter revenue increased 13% to $1.4 billion driven by
continued customer demand for transaction and information products
in foreign exchange, commodities and energy markets; for enterprise
information products, and from growth in emerging markets.
* Organic revenue growth of 10% was aided by new features and products
developed in the Core Plus program, including the addition of high
value content to Reuters Knowledge; electronic trading initiatives such as
Prime Brokerage, and expanded enterprise solutions such as Reuters
Datascope.
* Operating profit was $335 million in the first quarter, representing a 242%
increase compared to the same period in 2007. The corresponding margin was
23.6% compared to 7.8% for the first quarter of 2007. Operating profit
includes a favorable accounting adjustment of approximately $115 million
associated with the re-measurement of the assets and liabilities of a
pension plan at March 31, 2008. Operating profit and margins further
benefited from operating leverage, as revenue grew significantly.
* Underlying operating profit, which excludes amortization of acquired
intangible assets and other items affecting comparability, increased
88% to $248 million from $132 million in the prior year. Underlying
operating profit margin increased 700 basis points to 17.5%.
* During the first quarter, Reuters Group PLC had cash outflows of
approximately $500 million relating to its share buyback program and an
acquisition.
Savings Outlook
* Thomson Reuters estimates it will achieve run rate savings of $1.0 billion by
December 31, 2010, earlier than originally anticipated, and $1.2 billion by
December 31, 2011.
* The aggregate savings through 2011 includes the benefits from: THOMSONplus
($160 million), Core Plus ($300 million) and Thomson Reuters
integration-related savings ($750 million).
* At March 31, 2008, the THOMSONplus and Core Plus programs had achieved
combined run rate savings of $300 million, leaving an additional $900 million
to be realized by December 31, 2011. The cost to achieve the savings to date
has been approximately $570 million.
* The estimated cash cost to achieve the remaining $900 million of savings is
$1.2 billion through 2011.
* Going forward, Thomson Reuters will track quarterly savings and costs as a
combined total.
** Reuters Group PLC results are presented in U.S. dollars under Canadian GAAP.
IFRS comparable information in British pounds sterling is included in the
accompanying tables.
2008 Business Outlook for Thomson Reuters
The following represents Thomson Reuters current business outlook for full-year
2008 on a pro forma basis (assumes Thomson acquired Reuters on January 1, 2007).
* Revenue growth (excluding currency effects) is estimated to be between 6%-8%
- nearly all organic.
* Underlying operating profit margin is estimated to be between 19% and 21%.
* Free cash flow margin, excluding synergy and integration costs, is estimated
to be between 11% and 12% of revenue.
Share Buyback Program
On April 18, 2008, Thomson Reuters commenced its previously announced
$500 million share repurchase program. Through April 30, 2008, Thomson Reuters
has repurchased approximately 3.3 million ordinary shares of
Thomson Reuters PLC, for a total cost of approximately $103 million.
Thomson Reuters share repurchase activity underscores its financial strength and
commitment to a strong capital structure. Thomson Reuters will manage its
capital structure and set its cash distribution policy in order to maintain a
strong and efficient balance sheet.
Decisions regarding the timing of future repurchases will be based on market
conditions, share price and other factors. Thomson Reuters may elect to suspend
or discontinue the program at any time. Shares repurchased will be cancelled.
Dividend
The first Thomson Reuters dividend will be paid on September 15, 2008 to
shareholders of record as of August 21, 2008, in the amount of $0.22253 per
share. This dividend is based on the 2008 quarterly dividend rate per share of
$0.27 as adjusted for an interim dividend payment paid on May 1, 2008 in
connection with the closing of the Reuters acquisition. Thomson Reuters will
return to a normal quarterly divided payment of $0.27 per share in December
2008.
Thomson Reuters declares dividends in U.S. dollars. Holders of Thomson Reuters
Corporation common shares will receive their dividends in U.S. dollars, unless
they elect to receive their dividends in Canadian dollars or British pounds
sterling. Holders of Thomson Reuters PLC ordinary shares will receive their
dividends in British pounds sterling, unless they elect to receive their
dividends in U.S. dollars, Canadian dollars and certain other local currencies.
Holders of Thomson Reuters PLC ADSs will receive their dividends in U.S.
dollars. Information for Thomson Reuters shareholders who wish to elect to
receive dividends in other currencies is provided in the Investor Relations
section of www.thomsonreuters.com under 'Dividend Timetable'.
Over the course of 2008, Thomson Reuters controlling shareholder, The Woodbridge
Company Limited, plans to reinvest the equivalent of 50% of the dividends that
it receives in the first three quarters of the year. Woodbridge's dividend
reinvestment in additional Thomson Reuters Corporation common shares will be in
accordance with the terms of Thomson Reuters Corporation dividend reinvestment
plan. Woodbridge's reinvestment decision reinforces Thomson Reuters commitment
to a strong capital structure and balance sheet.
About 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, scientific, healthcare 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 in 93 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.
Thomson Reuters will webcast a discussion of first-quarter results beginning at
10:00 a.m. ET today. To participate in the webcast, please visit
www.thomsonreuters.com and click the 'Investor Relations' link located at the
top of the page. A copy of this news release along with slides and other
materials for the webcast are available at www.thomsonreuters.com.
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 (registration 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.
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information included in this news release is for information
purposes only and is unaudited. The pro forma financial information was prepared
in U.S. dollars in a manner consistent with accounting policies that applied to
Thomson under Canadian GAAP prior to the closing of the acquisition and which
currently apply to Thomson Reuters. The 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. The pro forma financial information
should be read in conjunction with historical financial results for Thomson and
Reuters. The Reuters historical financial information has been converted from
British pounds sterling to U.S. dollars for purposes of the pro forma financial
information presented using average exchange rates applicable during the periods
presented.
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS This news
release, in particular the sections under the headings 'Savings Outlook' and
'2008 Business Outlook for Thomson Reuters', 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 and
share repurchase plans. 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 cost savings 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. In addition, Thomson Reuters does not control Woodbridge
and Woodbridge is not obligated to reinvest its dividends in Thomson Reuters
Corporation common shares. Additional factors are discussed in materials filed
by Thomson Reuters Corporation and Thomson Reuters PLC from time to time with
securities regulatory authorities. In preparing its Savings Outlook and Business
Outlook, Thomson Reuters material assumptions were that (i) there will be no
change to existing prevailing worldwide macroeconomic conditions; (ii) there
will be no material adverse events which will have a significant impact on
Thomson Reuters financial results; (iii) a portion of Thomson Reuters
anticipated 2008 revenue growth will come from tactical acquisitions made during
the year; (iv) the anticipated 2008 underlying operating profit margin includes
benefits of savings programs and excludes synergy and integration costs and
acquisition-related expenses of amortization of intangibles; (v) the anticipated
2008 free cash flow margin excludes synergy and integration-related costs;
(vi) the Outlooks reflect the continuing operations of Thomson Reuters business
as of March 31, 2008; (vii) the Business Outlook includes integration-related
costs together with various cost savings initiatives; (viii) the Outlooks assume
Thomson had acquired Reuters on January 1, 2007; and (ix) the Outlooks include
preliminary estimates of pro forma adjustments based on estimated fair values of
assets. 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.
The Thomson Corporation
Consolidated Statement of Earnings
(millions of U.S. dollars, except per common share data)
(unaudited)
Three Months Ended
March 31,
2008 2007
Revenues $1,834 $1,662
Cost of sales, selling, marketing,
general and administrative expenses
(1,435) (1,261)
Depreciation (121) (115)
Amortization (62) (61)
---------------------
Operating profit 216 225
Net other (expense) income (26) 6
Net interest income (expense) and 39 (53)
other financing costs
Income taxes (34) 31
Tradeweb ownership interests (2) -
---------------------
Earnings from continuing operations 193 209
Earnings from discontinued 1 15
operations, net of tax ---------------------
Net earnings 194 224
Dividends declared on preference (2) (1)
shares --------------------
Earnings attributable to common $ 192 $ 223
shares
Basic earnings per common share $0.30 $0.35
====================
Diluted earnings per common share $0.30 $0.35
====================
Basic weighted average common shares 640,067,675 641,071,690
=========================
Diluted weighted average common 642,373,088 643,783,735
shares =========================
The Thomson Corporation
Reconciliation of Earnings Attributable to Common Shares to
Adjusted Earnings from Continuing Operations(1)
(millions of U.S. dollars, except per common share data)
(unaudited)
Three Months Ended
March 31,
2008 2007
Earnings attributable to common shares $192 $223
Adjustments:
One-time items:
Net other expense (income) 26 (6)
Reuters-related costs 68 -
Tax on above item (11) -
Tax benefits - (35)
Interim period effective tax rate (25) (23)
normalization(3)
Discontinued operations (1) (15)
------------------
Adjusted earnings from continuing operations 249 144
Amortization 62 61
------------------
Adjusted earnings from continuing operations
excluding amortization(2) $311 $205
==================
Adjusted diluted earnings per common share
from continuing operations $0.39 $0.22
==================
Adjusted diluted earnings per common share
from continuing operations excluding
amortization $0.48 $0.32
==================
(1) Adjusted earnings from continuing operations and adjusted earnings per
common share from continuing operations are earnings attributable to common
shares and per share amounts after adjusting for non-recurring items,
discontinued operations, and other items affecting comparability. Thomson
Reuters uses these measures to assist in comparisons from one period to another.
Adjusted earnings per common share from continuing operations does not represent
actual earnings per share attributable to shareholders.
(2) Adjusted earnings from continuing operations is presented excluding
amortization of acquired intangible assets as Thomson Reuters believes
that this is a useful measure when evaluating operating profitability and
performance trends by excluding items that distort the performance of Thomson
Reuters' businesses. Adjusted earnings per common share from continuing
operations excluding amortization does not represent actual earnings per share
attributable to shareholders.
(3) Adjustment to reflect income taxes based on the estimated full-year
effective tax rate of the consolidated group. Reported earnings for interim
periods reflect income taxes based on estimated effective tax rates of each of
the group's jurisdictions. The adjustment reallocates estimated full-year income
taxes between interim periods, but has no effect on full-year income taxes.
The Thomson Corporation
Reconciliation of Operating Profit to Underlying Operating Profit(1)
(millions of U.S. dollars)
(unaudited)
Three Months Ended
March 31,
2008 2007
Operating profit $216 $225
Adjustments:
Amortization 62 61
THOMSONplus costs 13 34
Reuters-related costs 68 -
----------------------
Underlying operating profit $ 359 $ 320
======================
Underlying operating profit margin 19.6% 19.3%
======================
(1)Underlying operating profit is operating profit adjusted for amortization of
acquired intangible assets, costs associated with Thomson Reuters corporate
efficiency initiatives, and other items affecting comparability. Underlying
operating profit margin is the underlying operating profit expressed as a
percentage of revenues. Thomson Reuters uses these measures to assist in
comparisons from one period to another. Thomson Reuters definition of underlying
operating profit may not be directly comparable to that of another company.
The Thomson Corporation
Consolidated Balance Sheet
(millions of U.S. dollars)
(unaudited)
March 31, December 31,
2008 2007
Assets
Cash and cash equivalents $9,222 $7,497
Accounts receivable, net of allowances 1,454 1,565
Prepaid expenses and other current assets 506 512
Deferred income taxes 104 104
--------------------
Current assets 11,286 9,678
Computer hardware and other property, net 698 731
Computer software, net 757 721
Identifiable intangible assets, net 3,422 3,438
Goodwill 7,008 6,935
Other non-current assets 1,331 1,328
--------------------
Total assets $24,502 $22,831
=====================
Liabilities and shareholders' equity
Liabilities
Short-term indebtedness $532 $183
Accounts payable and accruals 1,256 1,536
Deferred revenue 1,223 1,108
Current portion of long-term debt 11 412
---------------------
Current liabilities 3,022 3,239
Long-term debt 5,899 4,264
Other non-current liabilities 852 783
Deferred income taxes 921 974
Minority interest in equity of
consolidated affiliates 68 -
Shareholders' equity
Capital 2,998 2,932
Retained earnings 10,374 10,355
Accumulated other comprehensive income 368 284
--------------------
Total shareholders' equity 13,740 13,571
--------------------
Total liabilities and shareholders'
equity $24,502 $22,831
=====================
The Thomson Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars, unaudited)
Three Months Ended
March 31,
2008 2007
Cash provided by (used in):
Operating activities
Net earnings $194 $224
Remove earnings from discontinued operations (1) (15)
Add back (deduct) items not involving cash:
Depreciation 121 115
Amortization 62 61
Net gains on disposals of businesses and
investments - (6)
Deferred income taxes (53) (42)
Other, net 88 64
Changes in working capital and other items (113) (101)
Cash used in operating activities -
discontinued operations (14) (13)
----------------
Net cash provided by operating activities 284 287
----------------
Investing activities
Acquisitions, less cash therein (123) (154)
Proceeds from other disposals 154 6
Capital expenditures, less proceeds from
disposals (108) (98)
Other investing activities (12) (10)
Capital expenditures of discontinued operations - (37)
Other investing activities of discontinued
operations (7) (4)
Proceeds from (payments for) disposals of
discontinued operations, net of income
taxes paid (53) 35
Acquisitions by discontinued operations - (54)
---------------
Net cash used in investing activities (149) (316)
Financing activities
Repayments of debt (400) -
Net borrowings under short-term loan facilities 354 244
Proceeds from debt 1,679 -
Repurchase of common shares - (55)
Dividends paid on preference shares (2) (1)
Dividends paid on common shares (126) (153)
Other financing activities, net 2 10
----------------
Net cash provided by financing activities 1,507 45
Translation adjustments 83 -
----------------
Increase in cash and cash equivalents 1,725 16
Cash and cash equivalents at beginning of
period 7,497 334
---------------
Cash and cash equivalents at end of period $9,222 $350
================
The Thomson Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow(1)
(millions of U.S. dollars, unaudited)
Three Months Ended
March 31,
2008 2007
Net cash provided by operating activities $284 $287
Capital expenditures less proceeds from disposals (108) (98)
Other investing activities (12) (10)
Capital expenditures of discontinued operations - (37)
Other investing activities of discontinued
operations (7) (4)
Dividends paid on preference shares (2) (1)
---------------
Free cash flow $155 $137
==============
(1)Free cash flow is net cash provided by operating activities less capital
expenditures, other investing activities 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 common dividends and fund new
acquisitions.
The Thomson Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
+--------------------------------+------------------------------+---+
| | Three Months Ended | |
| | | |
| | March 31, | |
+--------------------------------+-------+--+--------+--+-------+---+
| | 2008| | 2007 | | Change| |
+--------------------------------+-------+--+--------+--+-------+---+
|Revenues | | | | | | |
+--------------------------------+-------+--+--------+--+-------+---+
| Legal | $809| | $740| | 9%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Financial | 565| | 527| | 7%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Tax & Accounting | 205| | 160| | 28%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Scientific | 163| | 149| | 9%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Healthcare | 95| | 92| | 3%| |
+--------------------------------+-------+--+--------+--+-------+---+
|Intercompany eliminations | (3)| | (6)| | | |
+--------------------------------+-------+--+--------+--+-------+---+
|Total revenues | $1,834| | $1,662| | 10%| |
+--------------------------------+-------+--+--------+--+-------+---+
| | | | | | | |
+--------------------------------+-------+--+--------+--+-------+---+
|Segment Operating Profit | | | | | | |
+--------------------------------+-------+--+--------+--+-------+---+
| Legal | $225| | $206| | 9%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Financial | 110| | 95| | 16%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Tax & Accounting | 39| | 38| | 3%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Scientific | 32| | 34| | -6%| |
+--------------------------------+-------+--+--------+--+-------+---+
| Healthcare | 3| | 4| | -25%| |
+--------------------------------+-------+--+--------+--+-------+---+
|Corporate and other (1) | (131)| | (91)| | | |
+--------------------------------+-------+--+--------+--+-------+---+
|Amortization | (62)| | (61)| | | |
+--------------------------------+-------+--+--------+--+-------+---+
|Operating Profit | $216| | $225| | -4%| |
+--------------------------------+-------+--+--------+--+-------+---+
| | | | | | | |
+--------------------------------+-------+--+--------+--+-------+---+
(1)Corporate and other includes corporate costs, THOMSONplus costs,
Reuters-related costs and certain costs associated with stock-based
compensation.
+----------------------------+-------------------+
| |Three Months Ended |
| | |
| | March 31, |
+----------------------------+---------+---------+
| | 2008| 2007|
+----------------------------+---------+---------+
|Depreciation By Segment | | |
+----------------------------+---------+---------+
| Legal | $(55)| $(48)|
+----------------------------+---------+---------+
| Financial | (41)| (46)|
+----------------------------+---------+---------+
| Tax & Accounting | (8)| (6)|
+----------------------------+---------+---------+
| Scientific | (9)| (7)|
+----------------------------+---------+---------+
| Healthcare | (7)| (5)|
+----------------------------+---------+---------+
|Corporate and Other | (1)| (3)|
+----------------------------+---------+---------+
|Total | $(121)| $(115)|
+----------------------------+---------+---------+
Reuters Group PLC
Business Segment Information
(millions of U.S. dollars, under Canadian GAAP)
(unaudited)
+--------------------------------+-----------------------------+---+
| | Three Months Ended | |
| | | |
| | March 31, | |
+--------------------------------+-------+--+-------+--+-------+---+
| | 2008| | 2007 | | Change| |
+--------------------------------+-------+--+-------+--+-------+---+
|Revenues | | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
| Sales & Trading | $876| | $803| | 9%| |
+--------------------------------+-------+--+-------+--+-------+---+
| Research & Asset Management | 214| | 168| | 27%| |
+--------------------------------+-------+--+-------+--+-------+---+
| Enterprise | 239| | 202| | 18%| |
+--------------------------------+-------+--+-------+--+-------+---+
| Media | 91| | 81| | 12%| |
+--------------------------------+-------+--+-------+--+-------+---+
|Total Revenues | $1,420| | $1,254| | 13%| |
+--------------------------------+-------+--+-------+--+-------+---+
+--------------------------------+-------+--+-------+--+-------+---+
|Operating Profit | $335| | $98| | 242%| |
+--------------------------------+-------+--+-------+--+-------+---+
|Operating Profit Margin | 23.6%| | 7.8%| | | |
+--------------------------------+-------+--+-------+--+-------+---+
| | | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Amortization | 10| | 12| | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Fair value adjustments | (20)| | 2| | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Pension accounting adjustment | (115)| | 20| | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Deal-related expenses | 38| | -| | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Underlying Operating Profit(1) | $248| | $132| | 88%| |
+--------------------------------+-------+--+-------+--+-------+---+
|Underlying Operating Profit | 17.5%| | 10.5%| | | |
|Margin | | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
(1)Underlying operating profit is the non-GAAP measure to be used in the
future by Thomson Reuters. For consistency with other information in this
release, Reuters Group PLC results have been shown using this measure of
underlying performance, rather than Reuters Group PLC's previous definition of
Trading Profit.
Reuters Group PLC
Business Segment Information(1)
(millions of Pounds Sterling, under IFRS)
(unaudited)
+--------------------------------+-----------------------------+---+
| | Three Months Ended | |
| | | |
| | March 31, | |
+--------------------------------+-------+--+-------+--+-------+---+
| | 2008| | 2007 | | Change| |
+--------------------------------+-------+--+-------+--+-------+---+
|Revenues | | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
| Sales & Trading | #442| | #400| | 11%| |
+--------------------------------+-------+--+-------+--+-------+---+
| Research & Asset Management | 108| | 84| | 29%| |
+--------------------------------+-------+--+-------+--+-------+---+
| Enterprise | 121| | 101| | 20%| |
+--------------------------------+-------+--+-------+--+-------+---+
| Media | 46| | 41| | 12%| |
+--------------------------------+-------+--+-------+--+-------+---+
|Total Revenues | #717| | #626| | 15%| |
+--------------------------------+-------+--+-------+--+-------+---+
+--------------------------------+-------+--+-------+--+-------+---+
|Operating Profit | #102| | #71| | 44%| |
+--------------------------------+-------+--+-------+--+-------+---+
|Operating Profit Margin | 14.2%| | 11.3%| | | |
+--------------------------------+-------+--+-------+--+-------+---+
| | | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Fair value adjustments | (1)| | (1)| | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Impairments and amortization of | 4| | 6| | | |
|business combination intangibles| | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Deal-related expenses | 19| | -| | | |
+--------------------------------+-------+--+-------+--+-------+---+
|Underlying Operating Profit(2) | #124| | #76| | 63%| |
+--------------------------------+-------+--+-------+--+-------+---+
|Underlying Operating Profit | 17.3%| | 12.1%| | | |
|Margin | | | | | | |
+--------------------------------+-------+--+-------+--+-------+---+
(1)These unaudited results do not comprise statutory accounts of Reuters
Group PLC within the meaning of Section 435 of the UK Companies Act 2006.
Statutory accounts for the year ended December 31, 2007 have not been delivered
to the Registrar of Companies in the UK. A report of the auditors has been made
on those accounts and such report was unqualified and did not contain any
statement under Section 498 of the UK Companies Act 2006.
(2)Underlying operating profit is the non-GAAP measure to be used in the
future by Thomson Reuters. For consistency with other information in this
release, Reuters Group PLC results have been shown using this measure of
underlying performance, rather than Reuters Group PLC's previous definition of
Trading Profit.
Pro Forma Thomson Reuters
Division and Business Segment Information(1)
(millions of U.S. dollars)
(unaudited)
Three Months Ended
March 31,
2008 2007 Change
Pro Forma Revenues
Legal $809 $740 9%
Tax & Accounting 205 160 28%
Scientific 163 149 9%
Healthcare 95 92 3%
------------------------
Professional Division 1,272 1,141 11%
Sales & Trading 975 843 16%
Investment & Advisory 596 515 16%
Enterprise 300 241 24%
Media 114 96 19%
------------------------
Markets Division 1,985 1,695 17% (2)
Intercompany eliminations (3) (6)
------------------------
Total Pro Forma Revenues 3,254 2,830 15%
Accounting adjustment - 86
------------------------
Total Pro Forma Revenues
Excluding Accounting
Adjustment $3,254 $2,916 12%
========================
Pro Forma Segment Operating Profit
Legal $225 $206 9%
Tax & Accounting 39 38 3%
Scientific 32 34 -6%
Healthcare 3 4 -25%
------------------------
Professional Division 299 282 6%
Markets Division 353 123 187% (2)
Corporate and other (66) (103)
Amortization (158) (157)
------------------------
Pro Forma Operating Profit $428 $145 195%
========================
Amortization 158 157
Fair value adjustments (20) 2
Revenue accounting adjustment - 86
THOMSONplus 13 34
------------------------
Pro Forma Underlying $579 $424 37%
Operating Profit ========================
(1)Pro forma financial information included in this news release is for
information purposes only and is unaudited. The pro forma financial information
was prepared in U.S. dollars in a manner consistent with accounting policies
that applied to Thomson under Canadian GAAP prior to the closing of the
acquisition and which currently apply to Thomson Reuters. The 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. The pro forma financial information should be read in conjunction with
historical financial results for Thomson and Reuters. The Reuters historical
financial information has been converted from British pounds sterling to U.S.
dollars for purposes of the pro forma financial information presented using
average exchange rates applicable during the periods presented. Pro forma
information reflects the estimated impacts of purchase accounting but excludes
deal-related expenses. The impacts of purchase accounting are based on
preliminary estimates and therefore subject to change during the course of 2008,
pending a final valuation of the Reuters net assets.
(2)Excluding the impact of the revenue accounting adjustment from first-quarter
2007 results for the Markets Division, year-on-year revenue growth is 11% and
operating profit growth is 69%.
Pro Forma Thomson Reuters
Division and Business Segment Information
(millions of U.S. dollars)
(unaudited)
+--------------------------------+----------------------+
| |Three Months Ended |
| | |
| | March 31, |
+--------------------------------+---------+------------+
| | 2008 | 2007 |
+--------------------------------+---------+------------+
|Pro Forma Depreciation by | | |
|Segment: | | |
+--------------------------------+---------+-+-------+--+
|Professional Division | | | |
+--------------------------------+---------+---------+--+
| Legal | $ (55) | $ (48)| |
+--------------------------------+---------+---------+--+
| Tax & Accounting | (8) | (6)| |
+--------------------------------+---------+---------+--+
| Scientific | (9) | (7)| |
+--------------------------------+---------+---------+--+
| Healthcare | (7) | (5)| |
+--------------------------------+---------+---------+--+
|Markets Division | (126) | (128)| |
+--------------------------------+---------+---------+--+
|Corporate and Other | (1) | (3)| |
+--------------------------------+---------+---------+--+
|Total: |$ (206) | $ (197)| |
+--------------------------------+---------+-+-------+--+
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFILFVVEEILIIT