o
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REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
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x
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ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2012
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Commission File Number: 1-31349
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common shares
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New York Stock Exchange
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x Annual information form
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x Audited annual financial statements
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Yes x
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No o
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Yes o
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No o
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(1)
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The Registrant has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.
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(2)
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Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of the Registrant.
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THOMSON REUTERS CORPORATION | ||
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By:
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/s/ Deirdre Stanley
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Name:
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Deirdre Stanley
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Title:
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Executive Vice President, General Counsel & Secretary
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Date: March 11, 2013
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Exhibit Number
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Description
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Annual Report for the year ended December 31, 2012 (which constitutes an Annual Information Form and includes Management’s Discussion and Analysis and Audited Financial Statements for the year ended December 31, 2012), and includes a Form 40-F Cross Reference Table on page 152
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Consent of PricewaterhouseCoopers LLP
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Audit Committee Charter
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—
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“Thomson Reuters,” “we,” “us” and “our” each refers to Thomson Reuters Corporation and its consolidated subsidiaries, unless the context otherwise requires;
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—
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“Woodbridge” refers to The Woodbridge Company Limited and other companies affiliated with it; and
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—
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“$,” “US$” or “dollars” are to U.S. dollars.
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2
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Business
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17
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Risk Factors
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24
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Management’s Discussion and Analysis
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78
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Consolidated Financial Statements
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134
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Executive Officers and Directors
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142
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Additional Information
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151
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Cross Reference Tables
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—
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Financial & Risk, a leading provider of critical news, information and analytics, enabling transactions and bringing together financial communities. Financial & Risk also provides leading regulatory and operational risk management solutions;
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—
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Legal, a leading provider of critical online and print information, decision support tools, software and services to support legal, investigation, business and government professionals around the world;
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—
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Tax & Accounting, a leading provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government; and
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·
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Intellectual Property & Science, a leading provider of comprehensive intellectual property and scientific information, decision support tools and services that enable governments, academia, publishers, corporations and law firms to discover, develop and deliver innovations.
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Industry leader
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● #1 or #2 in most of the market segments that we serve
● Deep and broad industry knowledge
● Products and services tailored for professionals
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Balanced and diversified
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● Four distinct core customer groups
● Geographical diversity – our 2012 revenues were 57% from the Americas, 31% from Europe, the Middle East and Africa (EMEA) and 12% from Asia
● Our largest single customer accounted for approximately 1% of our 2012 revenues
● Technology and operating platforms are built to address the global marketplace
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Attractive business model
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● 86% of our 2012 revenues were recurring
● 91% of our 2012 revenues were from information delivered electronically, software and services
● Strong & consistent cash generation capabilities
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2012
(millions of US dollars,
except EPS and margins)
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Change from 2011
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|||||
Revenues from ongoing businesses
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$12,899 | 3% | ||||
Adjusted EBITDA
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$3,529 | 6% | ||||
Adjusted EBITDA margin
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27.4% |
90 basis points
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||||
Adjusted EBITDA less capital expenditures
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$2,567 | 9% | ||||
Adjusted EBITDA less capital expenditures margin
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19.9% |
110 basis points
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||||
Underlying operating profit
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$2,405 | -4% | ||||
Underlying operating profit margin
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18.6% |
-130 basis points
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||||
Adjusted earnings per share (EPS)
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$2.12 | 8% | ||||
Free cash flow
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$1,737 | 8% | ||||
Free cash flow from ongoing businesses
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$1,667 | 20% |
2012 Priority
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2012 Progress
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Restarting growth in our Financial & Risk business
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● We simplified the business and improved product quality and customer service
● Customer satisfaction ratings and retention rates are improving
● We executed on the development and rollout of our foundational future platforms, Thomson Reuters Eikon and Thomson Reuters Elektron
● We have a robust product pipeline
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Investing in higher growing market segments and adjacent market segments
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● We continued to shift our investment towards what we believe are higher growth opportunities. We strengthened our positions in key market segments through the following acquisitions:
o FXall – the leading independent global provider of electronic foreign exchange trading solutions to corporations and asset managers within our Financial & Risk segment
o MarkMonitor – a provider of online brand protection within our Intellectual Property & Science segment
o Practical Law Company (PLC) – a leading provider of legal know-how, current awareness and workflow tools within our Legal segment
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2012 Priority
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2012 Progress
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Utilizing the strengths and advantages of our global businesses
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● We continue to expand our position at the intersection of regulation and finance
● Our Governance, Risk & Compliance (GRC) business reported organic revenue growth of 17%. We believe that we have an opportunity to significantly expand our GRC business and we are continuing to invest in it
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Accelerating development and expanding our position in faster growing geographic areas around the world
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● Our Global Growth & Operations (GGO) business reported 19% revenue growth (10% organic)
● We are working to expand our position in faster-growing geographic areas
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●
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Focusing on execution, product quality and customer satisfaction;
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●
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Driving growth through new product development, further expansion into fast-growing geographies and continuing the transformation to software and workflow solutions; and
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●
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Engaging a talented and diverse workforce.
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Three-Year Overview
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2010
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●
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We focused on restarting growth and returned to revenue growth in the second half of 2010
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●
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We launched a number of new product platforms, including:
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o WestlawNext – our next generation legal research platform
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o Thomson Reuters Eikon – our flagship financial information desktop
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o ONESOURCE – our comprehensive global tax compliance solution
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o Thomson Reuters Elektron – our financial markets network and managed services environment
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● |
We completed 26 acquisitions to support new initiatives such as global expansion and our GRC business
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● |
We consolidated and integrated technology platforms to achieve cost savings and increase flexibility and scalability
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2011
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●
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We continued to invest through a challenging economic cycle
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●
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Our 2011 revenue growth was 5% before currency
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●
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We completed 39 acquisitions, investing in faster growing international markets, with a particular emphasis on rapidly developing economies such as Brazil
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●
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We realigned our sales force more closely with our markets, customers and products
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● |
We completed our Reuters integration programs
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2012
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●
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2012 was a year of change for our company. James C. Smith became our new CEO and Stephane Bello became our new CFO. We also collapsed our divisional structure (which previously consisted of Markets and Professional) into a group of strategic business units with a single corporate center to support them
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●
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Our 2012 revenue growth was 3% before currency
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● |
We completed 29 acquisitions to support higher growing market segments and adjacent market segments. We sold our Healthcare business, three Financial & Risk businesses and a Tax & Accounting business
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● |
We made further improvements in product quality, customer service and execution capabilities in our Financial & Risk business
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·
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Trading;
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·
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Investors;
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·
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Marketplaces; and
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·
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Governance, Risk & Compliance (GRC).
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Major Brands
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Type of Product/Service
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Target Customers
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Thomson Reuters Eikon,
Reuters 3000 Xtra*
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Flagship desktop products providing pre-trade decision-making tools, news, real-time pricing, trading connectivity and collaboration tools
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Trading professionals, salespeople, brokers, corporate treasurers and financial analysts
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Thomson Reuters Elektron
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Flexible, high performance, cross asset data and trading infrastructure
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Investment banks, asset managers, custodians, liquidity centers and depositories, hedge funds, prime brokers, proprietary traders, inter-dealer brokers, multilateral trading facilities (MTFs), central banks and fund administrators
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Thomson Reuters Elektron Real Time
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Next generation real time datafeed
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Financial institutions
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Thomson Reuters Enterprise Platform
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Scalable and robust technology platforms that enable financial institutions to control real time information flows
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Financial institutions
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Thomson Reuters Autex
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Leading FIX order routing network
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Buy and sell-side firms
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Thomson Reuters Machine Readable News
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Advanced analytics for automating the consumption of news for automated trading strategies and portals
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Programmatic trading firms
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Major Brands and Product Categories
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Type of Product/Service
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Target Customers
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Thomson Reuters Eikon
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Flagship desktop product providing pre-trade decision-making tools, news, real-time pricing, trading connectivity and collaboration tools
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Investment professionals, salespeople, brokers, corporate treasurers and financial analysts
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Thomson ONE
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Integrated access to information, analytics and tools delivered within workspaces designed specifically for each target customer’s workflow
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Portfolio managers, buy-side research analysts and associates, investment bankers, consultants, lawyers, private equity professionals, wealth management and high net worth professionals
Corporate customers including investor relations officers, public relations officers, strategy and research professionals, treasurers and finance professionals
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Thomson Reuters Datastream
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Sophisticated historical time-series analysis that enables the visualization of economic and asset class trends and relationships
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Economists, strategists, portfolio managers and research analysts
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Thomson Reuters Deals Business Intelligence
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Analysis and reporting tools for business planning, including performance, market share and targeting
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Business management and strategy teams in investment banks
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Lipper
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Mutual fund information, benchmarking data, performance information and analysis
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Asset management professionals including fund marketing, sales, product development, performance measurement, financial intermediaries and individual investors
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Thomson Reuters DataScope
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Data delivery platform for non-streaming cross asset class content globally
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Custodians, banks, insurance companies, fund administrators, pension firms, mutual funds, hedge funds, sovereign funds, underwriters, market makers, accounting firms and government institutions
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Major Brands
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Type of Product/Service
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Target Customers
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Thomson Reuters Dealing
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Peer-to-peer conversational trading product primarily related to FX and money markets
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FX and money market traders, sales desks, hedge funds and voice brokers
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Thomson Reuters Matching
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Anonymous electronic FX trade matching system, providing trading in spot and forwards FX and prime brokerage capabilities
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FX traders, sales desks and hedge funds
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FXall
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Global electronic foreign exchange trading platform enabling FX price discovery, trade execution and pre-trade and post-trade automated workflow
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Traders, asset managers, corporate treasurers, market makers and intermediaries
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Tradeweb
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Global electronic multi-dealer-to-customer marketplace for trading fixed income, derivatives and money market products which connects major investment banks with institutional customers
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Institutional traders
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Major Brand
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Type of Product/Service
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Target Customers
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Thomson Reuters Accelus
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Information-based governance, risk and compliance products and services
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Corporate compliance, audit and risk management professionals, corporate and company secretaries, general counsel, business leaders, boards of directors and law firms
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·
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U.S. Law Firm Solutions;
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·
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Corporate, Government & Academic; and
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·
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Global Businesses.
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Major Brands
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Type of Product/Service
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Target Customers
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WestlawNext
Westlaw Classic
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Legal, regulatory and compliance information-based products and services
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Lawyers, law students, law librarians and other legal professionals
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Practical Law Company (PLC)
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Legal know-how and workflow tools
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Lawyers, law librarians and other legal professionals
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West LegalEdcenter
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Continuing legal education materials and seminars, as well as peer rating services
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Lawyers and legal professionals
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Sweet & Maxwell (U.K.)
Carswell (Canada)
Aranzadi (Spain)
Brookers (New Zealand)
La Ley (Argentina)
Lawtel (U.K. and E.U.)
Revista dos Tribunais (Brazil)
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Legal information-based products and services
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Lawyers, law students, law librarians, corporate legal professionals, government agencies and trademark professionals
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Major Brands
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Type of Product/Service
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Target Customers
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Elite 3E
ProLaw
eBillingHub
MatterSphere
LawSoft
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Suite of integrated software applications that assist with business management functions, including financial and practice management, matter management, document and email management, accounting and billing, timekeeping and records management
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Professional services organizations, lawyers, law firm finance and technology professionals
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FindLaw
Super Lawyers
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Online legal directory, website creation and hosting services; law firm marketing solutions
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Lawyers, legal professionals and consumers
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Case Logistix
Case Notebook
Drafting Assistant
West km
Thomson Reuters Expert Witness Services
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Online research tools, case analysis software and deposition technology. Expert witness, document review and document retrieval services and drafting tools to support each stage of the litigation workflow
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Lawyers, paralegals and courts
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Thomson Reuters ProView
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Professional grade e-reader platform
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Lawyers and legal professionals globally
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CLEAR
PeopleMap
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Public and proprietary records about individuals and companies with tools for immediately usable results
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Fraud prevention and investigative professionals in government, law enforcement, law firms and businesses
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Serengeti
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Online matter management, e-billing and legal analytics services
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Corporate counsel and law firm professionals
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Pangea3
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Legal process outsourcing services
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Corporate and law firm legal professionals
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·
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Professional, which provides a suite of tax, accounting, payroll, document management, and practice management software and services to accounting firms;
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·
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Corporate, which provides federal, state, local and international tax compliance, planning and management software and services to companies around the world;
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·
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Knowledge Solutions, which provides information, research and certified professional education tools for tax and accounting professionals; and
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·
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Government, which provides integrated property tax management and land registry solutions.
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Major Brands
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Type of Product/Service
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Target Customers
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ONESOURCE
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Comprehensive global tax compliance solution with local tax tools in a growing number of countries to manage a company’s entire tax workflow. The software links an organization’s global staff, controllers and finance personnel with tax advisors and auditors on one system, supporting compliance across corporate income, indirect, property, trust, fringe benefits and other taxes and reporting requirements. ONESOURCE products and services, which can be sold separately or as a suite, include solutions for tax planning, tax provision, transfer pricing, tax return compliance, tax information reporting, accounts production, and overall workflow management
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Corporate, legal, bank and trust market and large accounting firms
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Checkpoint
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Integrated information solution delivering research, expert guidance, applications and workflow tools as well as primary sources and third party content providers
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Accounting firms, corporate tax, finance and accounting departments, international trade professionals, law firms and governments
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Checkpoint Learning
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Online platform for continuing professional education and training, integrating global research, courses and certification with credit-tracking capability for individuals and firms
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Accounting firms, corporate tax, finance and accounting departments
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Checkpoint World
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Online offering combining global research, news and guidance on international tax and accounting practices to effectively manage cross-border transactions
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Accounting firms, corporate tax, finance and accounting departments of multinational corporations
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CS Professional Suite
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Integrated suite of software applications, including leading products such as UltraTax CS and Practice CS, that encompass every aspect of a professional accounting firm’s operations - from collecting customer data and posting finished tax returns to the overall management of the accounting practice
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Small to medium accounting firms
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Enterprise Suite
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Solutions for tax preparation, engagement, practice management and document and workflow management, including GoSystem Tax RS and GoFileRoom
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Large accounting firms
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Digita
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U.K. tax compliance and accounting software and services
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Accounting firms, corporate tax, finance and accounting departments, law firms and governments
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Government Revenue Management (GRM)
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End-to-end software and services that empower governments to manage revenue through automated land and property tax administration
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National, state and local governments responsible for property registration, tax generation and collection
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·
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IP Solutions, which provides patent, trademark and brand content and services that help corporate and legal IP professionals drive new growth opportunities, manage and protect IP assets and create maximum value from their IP portfolio;
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·
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Life Sciences, which helps accelerate pharmaceutical research and development by providing decision support information and analytics and professional services to pharmaceutical and biotechnology companies; and
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·
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Scientific & Scholarly Research, which fosters collaboration and enables discovery by providing access to the world’s critical research, as well as analytics designed to maximize returns on research funding and tools to facilitate the peer-review and publishing process.
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Major Brands
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Type of Product/Service
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Target Customers
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||
Thomson IP Manager
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Enterprise-level, highly configurable intellectual asset management solution for patents, trademarks, licensing agreements, invention disclosures and related IP matters
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Business executives, IP portfolio managers, docketing administrators, IP counsel, attorneys, paralegals and licensing executives
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Thomson Innovation
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Leading IP intelligence and collaboration platform with comprehensive content, powerful analysis and visualization tools and market insight
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IP counsel, attorneys, information professionals, heads of research and development, licensing executives, business strategists, business intelligence analysts and M&A executives
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MarkMonitor
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Online brand protection
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Business executives, IP counsel, licensing executives, strategists, business developers and marketing executives
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SERION
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Suite of trademark research solutions within a web-based workflow environment for screening, searching and protecting brands globally
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Trademark attorneys, paralegals, IP executives, marketing executives, name generators and competitive intelligence analysts in corporations and law firms
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Thomson Reuters Web of Knowledge
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Multidisciplinary platform
that provides access to scholarly literature along with tools to search, track, measure and collaborate
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Scientists, researchers, scholars and librarians at government agencies, research institutions and universities
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EndNote
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Research management solution for searching, collecting, organizing and sharing research
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Researchers, scholarly writers, students and librarians
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Research Analytics
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A suite of solutions to evaluate and measure research performance, locate experts, promote accomplishments, demonstrate impact, define research strategies and guide decisions
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Academic and research institutions, governments, not-for-profits and funding agencies
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ScholarOne
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Peer-review workflow solutions that streamline and manage the submission, review, production, and publication processes
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Publishers, organizations and associations
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Thomson Reuters Cortellis
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Integrated platform containing authoritative R&D drug pipeline information, patents, deals, company information, breaking industry news, conference coverage and global regulatory intelligence
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Business development, licensing, investment and regulatory professionals at pharmaceutical and biotechnology companies
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Major Brands
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Type of Product/Service
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Target Customers
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Life Sciences Professional Services
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Analysts with deep pharmaceutical and life science knowledge who apply disease understanding and patient needs to discovery, clinical development and launch
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Life science, pharmaceutical and biotechnology companies
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Thomson Reuters Integrity
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Detailed information for scientists and researchers that integrates biology, chemistry and pharmacology data to support drug discovery and development
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R&D scientific professionals at pharmaceutical and biotechnology companies
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Thomson Reuters MetaCore
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Integrated software suite for analysis of microarray, metabolic, proteomics, siRNA, microRNA and screening data
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Scientists, biologists and researches at biotechnology and pharmaceutical companies
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Thomson Reuters
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59,400 | ||
Americas
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27,600 | ||
Europe, Middle East and Africa
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12,100 | ||
Asia
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19,700 | ||
Financial & Risk
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20,700 | ||
Legal
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10,200 | ||
Intellectual Property & Science
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2,700 | ||
Tax & Accounting
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5,500 | ||
Global Growth & Operations
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6,900 | ||
News
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3,200 | ||
Corporate headquarters
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10,200 |
Facility
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Approx. sq. ft.
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Owned/Leased
|
Principal use
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610 Opperman Drive,
Eagan, Minnesota
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2,792,000
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Owned
|
Legal headquarters and operating facilities
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3 Times Square,
New York, New York
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481,700
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Owned/Leased2
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Thomson Reuters headquarters and Financial & Risk operating facilities
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195 Broadway,
New York, New York
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435,200
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Leased
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Financial & Risk and Tax & Accounting offices
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2395 Midway Road,
Carrollton, Texas
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409,150
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Owned
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Tax & Accounting headquarters and operating facilities
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Boston, Massachusetts1
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312,000
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Leased
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Financial & Risk operating facilities
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Geneva, Switzerland
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291,160
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Owned
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Financial & Risk operating facilities
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||
Canary Wharf,
London, United Kingdom
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282,700
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Leased
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Financial & Risk operating facilities
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RMZ Infinity, Bangalore, India
|
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248,000
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Leased
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Financial & Risk operating facilities
|
|
Blackwall Yard, London,
United Kingdom
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240,000
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Owned
|
Financial & Risk Dockland’s Technical Center
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1
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Consists of three addresses.
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2
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We lease this facility from 3XSQ Associates, an entity owned by one of our subsidiaries and Rudin Times Square Associates LLC. 3XSQ Associates was formed to build and operate the 3 Times Square property and building in New York, New York that now serves as our corporate headquarters. 481,700 sq. ft. represents the net amount of office space that we currently physically occupy. The main lease covers a total of 688,000 sq. ft., with an additional 30,500 sq. ft. that we occupy under sub-lease. Under the main lease, 223,000 sq. ft. has been sub-leased and 13,800 sq. ft. is used for storage.
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·
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Overview – a brief discussion of our business;
|
|
·
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Results of Operations – a comparison of our current and prior period results;
|
|
·
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Liquidity and Capital Resources – a discussion of our cash flow and debt;
|
|
·
|
Outlook – our current financial outlook for 2013;
|
|
·
|
Related Party Transactions – a discussion of transactions with our principal and controlling shareholder, The Woodbridge Company Limited (Woodbridge), and others;
|
|
·
|
Subsequent Events – a discussion of material events occurring after December 31, 2012 and through the date of this management’s discussion and analysis;
|
|
·
|
Changes in Accounting Policies – a discussion of changes in our accounting policies and recent accounting pronouncements;
|
|
·
|
Critical Accounting Estimates and Judgments – a discussion of critical estimates and judgments made by our management in applying accounting policies;
|
|
·
|
Additional Information – other required disclosures; and
|
|
·
|
Appendices – supplemental information and discussion.
|
|
·
|
General economic conditions and market trends and their anticipated effects on our business;
|
|
·
|
Our 2013 financial outlook;
|
|
·
|
Investments that we have made and plan to make and the timing for businesses that we expect to sell; and
|
|
·
|
Our liquidity and capital resources available to us to fund our ongoing operations, investments and returns to shareholders.
|
|
·
|
Our 2012 revenues from ongoing businesses grew 3% (before currency)(1) to $12.9 billion. Tax & Accounting grew 16%, Intellectual Property & Science grew 6% and Legal grew 3%. Our Financial & Risk business grew 1%, as net sales performance was lower than expected. Acquisitions contributed 3% to revenue growth.
|
|
·
|
Adjusted EBITDA(1) increased 5% and the associated margin(1) expanded 100 basis points. Underlying operating profit(1) decreased 5% and the associated margin(1) decreased 130 basis points. Adjusted earnings per share (adjusted EPS)(1) increased 8% to $2.12.
|
|
·
|
Free cash flow and free cash flow from ongoing businesses(1) were $1.7 billion, growing 8% and 20%, respectively.
|
|
·
|
FXall, a leading global provider of electronic foreign exchange trading solutions to corporations and asset managers within Financial & Risk;
|
|
·
|
MarkMonitor, a provider of online brand protection within Intellectual Property & Science; and
|
|
·
|
Practical Law Company (PLC), a provider of practical legal know-how, current awareness and workflow solutions within Legal, which we acquired in the first quarter of 2013.
|
|
·
|
Driving for growth by prioritizing investments toward our highest growth opportunities and continuing to shift more of our revenue mix from mature businesses to higher growth opportunities;
|
|
·
|
Focusing on streamlining our costs and curbing our capital intensity; and
|
|
·
|
Simplifying our systems and processes across the organization.
|
(1)
|
Refer to Appendix A for additional information on non-IFRS financial measures.
|
(2)
|
Our 2013 outlook is on a different basis than our 2012 actual results. Refer to the section of this management’s discussion and analysis entitled “Outlook” for further information.
|
Revenues from ongoing businesses(1)
|
||
by Media
|
by Type
|
by Geographic Area
|
(1)
|
Refer to Appendix A for additional information on this measure.
|
(1)
|
Excludes fair value adjustments and Other Businesses. Refer to “Consolidated Results – Operating expenses”.
|
Acquisition Activity
|
|
Cash Cost (1,2)
(millions of U.S. dollars)
|
Number / Location(2)
|
|
(1)
|
Cash consideration for acquisitions and investments in businesses, net of cash acquired.
|
(2)
|
Americas includes North America and South America and EMEA includes Europe, Middle East and Africa.
|
Company
|
Acquirer
|
Description
|
||
FXall
|
Financial & Risk
|
A global provider of electronic foreign exchange trading solutions to corporations and asset managers
|
||
MarkMonitor
|
Intellectual Property & Science
|
A provider of online brand protection
|
||
Dr. Tax Software
|
Tax & Accounting
|
A Canadian based developer of income tax software
|
Business
|
Former segment
|
Description
|
||
Healthcare
|
Healthcare & Science
|
A provider of data analytics and performance benchmarking solutions and services to companies, government agencies and healthcare professionals
|
||
Trade and Risk Management
|
Financial & Risk
|
A provider of risk management solutions to financial institutions, including banks, broker-dealers and hedge funds
|
||
Portia
|
Financial & Risk
|
A provider of portfolio accounting and reporting applications
|
||
Property Tax Consulting
|
Tax & Accounting
|
A provider of property tax outsourcing and compliance services in the U.S.
|
|
·
|
Revenues from ongoing businesses;
|
|
·
|
Revenues at constant currency (before currency or revenues excluding the effects of foreign currency);
|
|
·
|
Underlying operating profit and the related margin;
|
|
·
|
Adjusted EBITDA and the related margin;
|
|
·
|
Adjusted EBITDA less capital expenditures and the related margin;
|
|
·
|
Adjusted earnings and adjusted earnings per share;
|
|
·
|
Net debt;
|
|
·
|
Free cash flow;
|
|
·
|
Free cash flow from ongoing businesses; and
|
|
·
|
Return on invested capital.
|
|
·
|
Corporate & Other includes expenses for corporate functions, certain share-based compensation costs and the Reuters News business, which is comprised of the Reuters News Agency and consumer publishing.
|
|
·
|
Other Businesses is an aggregation of businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. The results of Other Businesses are not comparable from period to period as the composition of businesses changes due to the timing of completed divestitures.
|
Financial Measure
|
Outlook
|
Actual Performance
|
|
Revenues from ongoing businesses
|
Grow low single digits (before currency)
|
+3%
|
ü |
Adjusted EBITDA margin
|
Between 27% and 28%
|
27.4%
|
ü |
Underlying operating profit margin
|
Between 18% and 19%
|
18.6%
|
ü |
Free cash flow
|
Increase 5% to 10%
|
+8%
|
ü |
Free cash flow from ongoing businesses
|
Increase 15% to 20%
|
+20%
|
ü |
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
Change
|
|||||||||
IFRS Financial Measures
|
||||||||||||
Revenues
|
13,278 | 13,807 | (4 | %) | ||||||||
Operating profit (loss)
|
2,651 | (705 | ) | n/m | ||||||||
Diluted earnings (loss) per share
|
$ | 2.49 | $ | (1.67 | ) | n/m | ||||||
Non-IFRS Financial Measures
|
||||||||||||
Revenues from ongoing businesses
|
12,899 | 12,743 | 1 | % | ||||||||
Adjusted EBITDA
|
3,529 | 3,368 | 5 | % | ||||||||
Adjusted EBITDA margin
|
27.4 | % | 26.4 | % | 100 | bp | ||||||
Adjusted EBITDA less capital expenditures
|
2,567 | 2,402 | 7 | % | ||||||||
Adjusted EBITDA less capital expenditures margin
|
19.9 | % | 18.8 | % | 110 | bp | ||||||
Underlying operating profit
|
2,405 | 2,541 | (5 | %) | ||||||||
Underlying operating profit margin
|
18.6 | % | 19.9 | % | (130 | )bp | ||||||
Adjusted earnings per share
|
$ | 2.12 | $ | 1.96 | 8 | % |
Year ended December 31,
|
Percentage change:
|
||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Existing
businesses
|
Acquired
businesses
|
Constant
currency
|
Foreign
currency
|
Total
|
||||||||||||||||
Revenues from ongoing businesses
|
12,899 | 12,743 | - | 3% | 3% | (2%) | 1% | ||||||||||||||||
Other Businesses
|
379 | 1,064 | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||
Revenues
|
13,278 | 13,807 | n/m | n/m | n/m | n/m | (4%) |
Revenues from ongoing businesses
Year ended December 31, 2012
|
|
·
|
On a combined basis, our professional businesses, Legal, Tax & Accounting and Intellectual Property & Science, increased 6% in 2012, or 8% excluding our U.S. print business.
|
|
·
|
Our Financial & Risk segment increased 1% in 2012. While the five businesses that experienced revenue declines were all in our Financial & Risk segment, approximately 60% of its revenue increased 6%.
|
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Operating profit (loss)
|
2,651 | (705 | ) | n/m | ||||||||
Adjustments to remove:
|
||||||||||||
Goodwill impairment
|
- | 3,010 | ||||||||||
Amortization of other identifiable intangible assets
|
619 | 612 | ||||||||||
Integration programs expenses
|
- | 215 | ||||||||||
Fair value adjustments
|
36 | (149 | ) | |||||||||
Other operating gains, net
|
(883 | ) | (204 | ) | ||||||||
Operating profit from Other Businesses
|
(18 | ) | (238 | ) | ||||||||
Underlying operating profit
|
2,405 | 2,541 | (5 | %) | ||||||||
Adjustment:
|
||||||||||||
Add: integration programs expenses
|
- | (215 | ) | |||||||||
Remove: depreciation and amortization of computer software (excluding Other Businesses)
|
1,124 | 1,042 | ||||||||||
Adjusted EBITDA (1)
|
3,529 | 3,368 | 5 | % | ||||||||
Remove: capital expenditures, less proceeds from disposals (excluding Other Businesses)
|
962 | 966 | ||||||||||
Adjusted EBITDA less capital expenditures
|
2,567 | 2,402 | 7 | % | ||||||||
Underlying operating profit margin
|
18.6 | % | 19.9 | % | (130 | )bp | ||||||
Adjusted EBITDA margin
|
27.4 | % | 26.4 | % | 100 | bp | ||||||
Adjusted EBITDA less capital expenditures margin
|
19.9 | % | 18.8 | % | 110 | bp |
(1)
|
Refer to Appendix B for a reconciliation of earnings (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA less capital expenditures.
|
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Operating expenses
|
9,762 | 9,997 | (2 | %) | ||||||||
Adjustments to remove:
|
||||||||||||
Fair value adjustments (1)
|
(36 | ) | 149 | |||||||||
Other Businesses
|
(356 | ) | (771 | ) | ||||||||
Operating expenses, excluding fair value adjustments and Other Businesses
|
9,370 | 9,375 | - |
(1)
|
Fair value adjustments primarily represent non-cash accounting adjustments from the revaluation of embedded foreign exchange derivatives within certain customer contracts due to fluctuations in foreign exchange rates and mark-to-market adjustments from certain share-based awards.
|
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Depreciation
|
429 | 438 | (2 | %) | ||||||||
Amortization of computer software
|
700 | 659 | 6 | % | ||||||||
Subtotal
|
1,129 | 1,097 | 3 | % | ||||||||
Amortization of other identifiable intangible assets
|
619 | 612 | 1 | % |
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Other operating gains, net
|
883 | 204 |
|
·
|
$743 million from the sale of the Healthcare business;
|
|
·
|
$40 million from the sale of the Portia business;
|
|
·
|
$37 million from the sale of the Trade and Risk Management business; and
|
|
·
|
$84 million from pension settlements.
|
|
·
|
$41 million of acquisition-related costs; and
|
|
·
|
$10 million of disposal-related expenses associated with businesses held for sale.
|
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Net interest expense
|
390 | 396 | (2 | %) |
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Other finance income (costs)
|
40 | (15 | ) |
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Share of post-tax earnings and impairment in equity method investees
|
(23 | ) | 13 |
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Tax (expense)
|
(157 | ) | (293 | ) |
Benefit (expense)
|
Year ended December 31,
|
|||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Discrete tax items:
|
||||||||
Uncertain tax positions(1)
|
175 | 72 | ||||||
Adjustments related to the prior year(2)
|
42 | - | ||||||
Corporate tax rates(3)
|
27 | - | ||||||
Tax losses from sale of an investment to Woodbridge(4)
|
- | 46 | ||||||
Other(5)
|
10 | (13 | ) | |||||
Subtotal
|
254 | 105 | ||||||
Tax related to:
|
||||||||
Sale of businesses(6)
|
(172 | ) | (112 | ) | ||||
Tax on operating profit of “Other Businesses”
|
(5 | ) | (50 | ) | ||||
Tax on goodwill impairment(7)
|
- | 28 | ||||||
Fair value adjustments
|
5 | (51 | ) | |||||
Other items
|
(36 | ) | 42 | |||||
Subtotal
|
(208 | ) | (143 | ) | ||||
Total
|
46 | (38 | ) |
(1)
|
Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.
|
(2)
|
Relates to changes in estimates identified during the preparation of our income tax returns.
|
(3)
|
Relates to the reduction of deferred tax liabilities due to lower effective U.S. state tax rates and other corporate tax rate changes that were substantively enacted in certain jurisdictions outside the U.S.
|
(4)
|
Relates to the recognition of tax losses that arose in a prior year from the sale of an investment to Woodbridge.
|
(5)
|
In 2012, relates to the recognition of deferred tax assets in connection with acquisitions and disposals. In 2011, relates to certain tax losses previously used to offset taxable income in a foreign subsidiary that could not, in fact, be used by that subsidiary.
|
(6)
|
In 2012, primarily relates to the sale of Healthcare; in 2011 primarily relates to the sale of BARBRI.
|
(7)
|
Relates to the $3.0 billion goodwill impairment charge.
|
Taxes paid
|
Year ended December 31,
|
|||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Taxes paid on operations
|
249 | 358 | ||||||
Taxes paid on sales of businesses
|
197 | 153 | ||||||
Total taxes paid
|
446 | 511 |
Year ended December 31,
|
||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
||||||
Net earnings (loss)
|
2,123 | (1,392 | ) | |||||
Diluted earnings (loss) per share
|
$ | 2.49 | $ | (1.67 | ) |
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars, except per share amounts and share data)
|
2012
|
2011
|
Change
|
|||||||||
Earnings (loss) attributable to common shareholders
|
2,070 | (1,390 | ) | n/m | ||||||||
Adjustments to remove:
|
||||||||||||
Goodwill impairment
|
- | 3,010 | ||||||||||
Goodwill impairment attributable to non-controlling interests
|
- | (40 | ) | |||||||||
Operating profit from Other Businesses
|
(18 | ) | (238 | ) | ||||||||
Fair value adjustments
|
36 | (149 | ) | |||||||||
Other operating gains, net
|
(883 | ) | (204 | ) | ||||||||
Other finance (income) costs
|
(40 | ) | 15 | |||||||||
Share of post-tax earnings and impairment in equity method investees
|
23 | (13 | ) | |||||||||
Tax on above
|
208 | 143 | ||||||||||
Discrete tax items(1)
|
(254 | ) | (105 | ) | ||||||||
Amortization of other identifiable intangible assets
|
619 | 612 | ||||||||||
Discontinued operations
|
(2 | ) | (4 | ) | ||||||||
Dividends declared on preference shares
|
(3 | ) | (3 | ) | ||||||||
Adjusted earnings
|
1,756 | 1,634 | 7 | % | ||||||||
Adjusted earnings per share (adjusted EPS)
|
$ | 2.12 | $ | 1.96 | 8 | % | ||||||
Diluted weighted average common shares (millions)(2)
|
829.6 | 835.8 |
(1)
|
Refer to “Tax expense”.
|
(2)
|
Refer to Appendix B for reconciliation of diluted weighted average common shares at December 31, 2011.
|
Year ended December 31,
|
Percentage change:
|
||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Existing
businesses
|
Acquired
businesses
|
Constant
currency
|
Foreign
currency
|
Total
|
||||||||||||||||||||
Trading
|
3,345 | 3,537 | (3%) | - | (3%) | (2%) | (5%) | ||||||||||||||||||||
Investors
|
2,416 | 2,472 | (2%) | 1% | (1%) | (1%) | (2%) | ||||||||||||||||||||
Marketplaces
|
1,213 | 1,134 | 1% | 7% | 8% | (1%) | 7% | ||||||||||||||||||||
Governance, Risk & Compliance (GRC)
|
219 | 154 | 17% | 26% | 43% | (1%) | 42% | ||||||||||||||||||||
Revenues
|
7,193 | 7,297 | (1%) | 2% | 1% | (2%) | (1%) | ||||||||||||||||||||
EBITDA
|
1,842 | 1,972 | (7%) | ||||||||||||||||||||||||
EBITDA margin
|
25.6 | % | 27.0 | % | (140)bp | ||||||||||||||||||||||
Segment operating profit
|
1,215 | 1,396 | (13%) | ||||||||||||||||||||||||
Segment operating profit margin
|
16.9 | % | 19.1 | % | (220)bp |
Results by type were:
|
2012 Revenues by Type
|
|
· Subscription revenues were unchanged as the benefit from acquisitions and price increases was offset by desktop cancellations in Equities, Fixed Income and Investment Management. Excluding acquisitions, subscription revenues decreased 1% reflecting the impact of negative net sales. At the end of 2012, Thomson Reuters Eikon desktop users were nearly 34,000, a 33% increase from the third quarter of 2012.
· Recoveries revenues (low-margin revenues that we collect and largely pass-through to a third party provider, such as stock exchange fees) increased 1%. Recoveries revenues are negatively impacted as more third party providers move to direct billing of customers.
· Transaction revenues increased 6%, driven by the acquisition of Rafferty Capital and FXall. Transaction revenues from existing businesses declined 4% due to lower market volumes.
· Outright revenues, which are primarily discrete sales of software and services, increased 4%.
|
|
●
|
Trading declined 3% as growth in Commodities & Energy, Data Feeds and Elektron Managed Services was more than offset by desktop cancellations in Equities, Fixed Income and Foreign Exchange. Lower revenues from Omgeo, due to lower market transaction volumes, also contributed to the decline.
|
●
|
Investors revenues declined 1% as growth from acquisitions was more than offset by decreases in existing businesses. Enterprise Content grew 10% driven by demand for pricing and reference data, but was offset by a 7% decline in Investment Management from desktop cancellations. Revenues from Corporate Services declined 2%, while Wealth Management increased 1% and Banking & Advisory was unchanged.
|
●
|
Marketplaces revenues increased 8% largely due to the acquisition of FXall and Rafferty Capital. Tradeweb increased 19%, of which 5% was from existing businesses and the remainder reflected the acquisition of Rafferty Capital.
|
●
|
GRC revenues increased significantly due to acquisitions, however revenues from existing businesses increased 17% due to strong demand for Financial Crime & Reputational Risk solutions.
|
Year ended December 31,
|
Percentage change:
|
||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Existing
businesses
|
Acquired
businesses
|
Constant
currency
|
Foreign
currency
|
Total
|
||||||||||||||||||||
Revenues
|
3,286 | 3,221 | 1% | 2% | 3% | (1%) | 2% | ||||||||||||||||||||
EBITDA
|
1,243 | 1,210 | 3% | ||||||||||||||||||||||||
EBITDA margin
|
37.8 | % | 37.6 | % | 20bp | ||||||||||||||||||||||
Segment operating profit
|
964 | 941 | 2% | ||||||||||||||||||||||||
Segment operating profit margin
|
29.3 | % | 29.2 | % | 10bp |
Results by type were:
|
2012 Revenues by Type
|
|
· Subscription revenues increased 4% led by client development solutions and global businesses;
· Transaction revenues increased 8% led by our back office, legal process outsourcing solutions and global businesses; and
· U.S. print revenues declined 5%, as customers continued to control discretionary spending.
|
|
·
|
U.S. Law Firm Solutions - these include businesses such as Westlaw, FindLaw and Elite that sell products and services to large, medium and small law firms. Revenues increased 1% largely from acquisitions. Revenues from Business of Law (FindLaw and Elite) increased 12% (7% from existing businesses), offset by a 2% decline in legal research which reflected the decline in U.S. Print;
|
|
·
|
Corporate, Government & Academic - these businesses serve general counsels/corporate legal departments, government customers and law schools as well as support the regulatory needs of our customers. Revenues increased 3% (2% from existing businesses) led by a 7% increase in Corporate Counsel solutions reflecting growth in legal process outsourcing solutions. The Government and Academic business grew 1%; and
|
|
·
|
Global Businesses - these are our legal businesses in Latin America, Asia and other countries outside of the United States. Revenues increased 8% (5% from existing businesses) led by an 18% increase in Latin America.
|
2012 Legal Revenues
3% constant currency revenue growth
(billions of U.S. dollars)
|
Year ended December 31,
|
Percentage change:
|
||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Existing
businesses
|
Acquired
businesses
|
Constant
currency
|
Foreign
currency
|
Total
|
||||||||||||||||||||
Revenues
|
1,206 | 1,050 | 5% | 11% | 16% | (1%) | 15% | ||||||||||||||||||||
EBITDA
|
376 | 332 |
13%
|
||||||||||||||||||||||||
EBITDA margin
|
31.2 | % | 31.6 | % | (40)bp | ||||||||||||||||||||||
Segment operating profit
|
261 | 237 | 10% | ||||||||||||||||||||||||
Segment operating profit margin
|
21.6 | % | 22.6 | % | (100)bp |
Results by line of business were:
|
2012 Revenues by Line of Business
|
|
· Professional revenues from small, medium and large accounting firms increased 18% (8% from existing businesses) primarily from our UltraTax CS web based software as a service solution and acquisitions;
· Knowledge Solutions revenues increased 9% (4% from existing businesses) primarily from growth in international revenues and our U.S. Checkpoint business;
· Corporate revenues increased 18% (10% from existing businesses) primarily from ONESOURCE software and services and strong growth of solutions revenue in Latin America; and
· Government revenues increased 45% driven by the acquisition of Manatron in 2011. Revenues from existing businesses decreased 29% as the number of new government contracts slowed and because a large government software contract in the fourth quarter of 2011 did not recur in 2012. Revenues from the Government business can fluctuate significantly from period to period due to the unpredictable nature of contract negotiations and the timing of implementation programs.
|
Year ended December 31,
|
Percentage change:
|
||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Existing
businesses
|
Acquired
businesses
|
Constant
currency
|
Foreign
currency
|
Total
|
||||||||||||||||||||
Revenues
|
894 | 852 | 3% | 3% | 6% | (1%) | 5% | ||||||||||||||||||||
EBITDA
|
303 | 296 | 2% | ||||||||||||||||||||||||
EBITDA margin
|
33.9 | % | 34.7 | % | (80)bp | ||||||||||||||||||||||
Segment operating profit
|
235 | 237 | (1%) | ||||||||||||||||||||||||
Segment operating profit margin
|
26.3 | % | 27.8 | % | (150)bp |
By line of business:
|
2012 Revenues by Line of Business
|
|
· IP Solutions revenues increased 10% led by the acquisition of MarkMonitor, Intellectual Property Management Services and Techstreet. These solutions provide support to business professionals and attorneys to defend, protect and manage their intellectual property rights, trademarks and brands.
· Scientific & Scholarly Research solutions increased 2% led by higher subscriptions. These solutions support scholars and researchers and include offerings such as the Thomson Reuters Web of Knowledge database and our ScholarOne web-based manuscript submission and peer review workflow solutions.
· Life Sciences revenues increased 5% from solutions that provide content and analytics to pharmaceutical, biotechnology and other life sciences companies to improve research and development productivity and lower the cost and time of bringing a product to market.
|
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Revenues - Reuters News
|
331 | 336 | ||||||
Reuters News
|
(16 | ) | - | |||||
Core corporate expenses
|
(254 | ) | (270 | ) | ||||
Total
|
(270 | ) | (270 | ) |
Business
|
Status
|
Former segment
|
Description
|
||
Healthcare
|
Sold – Q2 012
|
Healthcare & Science
|
A provider of data analytics and performance benchmarking solutions and services to companies, government agencies and healthcare professionals
|
||
Trade and Risk Management
|
Sold – Q1 2012
|
Financial & Risk
|
A provider of risk management solutions to financial institutions, including banks, broker-dealers and hedge funds
|
||
Portia
|
Sold – Q2 2012
|
Financial & Risk
|
A provider of portfolio accounting and reporting applications
|
||
Property Tax Consulting
|
Sold – Q4 2012
|
Tax & Accounting
|
A provider of property tax outsourcing and compliance services in the U.S.
|
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Revenues
|
379 | 1,064 | ||||||
Operating profit
|
18 | 238 |
Three months ended
December 31,
|
||||||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
Change
|
|||||||||
IFRS Financial Measures
|
||||||||||||
Revenues
|
3,399 | 3,577 | (5 | %) | ||||||||
Operating profit (loss)
|
557 | (2,593 | ) | n/m | ||||||||
Diluted earnings (loss) per share
|
$ | 0.45 | $ | (3.11 | ) | n/m | ||||||
Non-IFRS Financial Measures
|
||||||||||||
Revenues from ongoing businesses
|
3,358 | 3,308 | 2 | % | ||||||||
Adjusted EBITDA
|
948 | 852 | 11 | % | ||||||||
Adjusted EBITDA margin
|
28.2 | % | 25.8 | % | 240 | bp | ||||||
Adjusted EBITDA less capital expenditures
|
698 | 593 | 18 | % | ||||||||
Adjusted EBITDA less capital expenditures margin
|
20.8 | % | 17.9 | % | 290 | bp | ||||||
Underlying operating profit
|
658 | 646 | 2 | % | ||||||||
Underlying operating profit margin
|
19.6 | % | 19.5 | % | 10 | bp | ||||||
Adjusted earnings per share
|
$ | 0.60 | $ | 0.54 | 11 | % |
Three months ended
December 31,
|
Percentage change:
|
||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Existing
businesses
|
Acquired
businesses
|
Constant
currency
|
Foreign
currency
|
Total
|
||||||||||||||||
Trading
|
830 | 869 | (3%) | - | (3%) | (1%) | (4%) | ||||||||||||||||
Investors
|
601 | 606 | (1%) | 1% | - | (1%) | (1%) | ||||||||||||||||
Marketplaces
|
320 | 290 | - | 11% | 11% | (1%) | 10% | ||||||||||||||||
Governance, Risk & Compliance (GRC)
|
61 | 50 | 18% | 4% | 22% | - | 22% | ||||||||||||||||
Financial & Risk
|
1,812 | 1,815 | (1%) | 2% | 1% | (1%) | - | ||||||||||||||||
Legal
|
861 | 843 | 1% | 1% | 2% | - | 2% | ||||||||||||||||
Tax & Accounting
|
351 | 341 | 1% | 3% | 4% | (1%) | 3% | ||||||||||||||||
Intellectual Property & Science
|
250 | 225 | 3% | 9% | 12% | (1%) | 11% | ||||||||||||||||
Corporate & Other
|
87 | 87 | 1% | - | 1% | (1%) | - | ||||||||||||||||
Eliminations
|
(3 | ) | (3 | ) | n/m | n/m | n/m | n/m | n/m | ||||||||||||||
Revenues from ongoing businesses
|
3,358 | 3,308 | - | 2% | 2% | - | 2% | ||||||||||||||||
Other Businesses
|
41 | 269 | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||
Revenues
|
3,399 | 3,577 | n/m | n/m | n/m | n/m | (5%) |
|
·
|
Subscription revenues decreased 1% as the benefit of price increases was more than offset by desktop cancellations.
|
|
·
|
Transactions revenues increased 12%, driven by acquisitions which more than offset lower market volumes.
|
|
·
|
Outright revenues increased 9%, largely from increases in GRC and the benefit of timing of revenues in Trading.
|
|
·
|
Recoveries revenues were unchanged.
|
|
·
|
Trading revenues decreased 3%, reflecting lower revenues in Equities and Fixed Income due to desktop cancellations, and lower revenues in Omgeo due to lower market transaction volumes. Increases in Commodities & Energy, Datafeeds and Elektron Managed Services partially offset these decreases.
|
|
·
|
Investors revenues were unchanged as contributions from acquisitions offset decreases from existing businesses. Enterprise Content increased 9%, driven by demand for pricing and reference data, and Wealth Management increased 5%. However, these increases were offset by a 7% decrease in Investment Management, due to the impact of negative net sales.
|
|
·
|
Marketplaces revenues increased 11% due to acquisitions. Tradeweb increased 8% (7% from existing businesses). Foreign Exchange revenue increased 12% as the benefits from the acquisition of FXall were partially offset by declines in overall market transaction volumes.
|
|
·
|
GRC revenues increased 22% (18% from existing businesses), due to strong demand for Financial Crime and Reputational risk solutions.
|
|
·
|
U.S. Law Firm Solutions revenues decreased 1%, as increases in Business of Law (FindLaw and Elite) of 6% (4% from existing businesses) were offset by a decrease in Core Legal Research revenues of 3%.
|
|
·
|
Corporate, Government & Academic revenues increased 2%, driven by growth in Corporate Counsel and in legal process outsourcing partially offset by a decline in U.S. print.
|
|
·
|
Global businesses revenues increased 10% (6% from existing businesses), led by a 32% increase in Latin America (15% from existing businesses).
|
Three months ended
December 31,
|
||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
Commentary
|
||
Financial & Risk
|
EBITDA, segment operating profit and the related margins benefited from cost controls and lower severance costs in 2012 compared to 2011. Segment operating profit included higher amortization principally from investments in Eikon and Elektron.
|
|||||
EBITDA
|
483
|
458
|
5%
|
|||
EBITDA margin
|
26.7%
|
25.2%
|
150bp
|
|||
Segment operating profit
|
324
|
312
|
4%
|
|||
Segment operating profit margin
|
17.9%
|
17.2%
|
70bp
|
|||
Legal
|
EBITDA and segment operating profit increased due to higher revenues, cost controls and the favorable timing of expenses.
|
|||||
EBITDA
|
327
|
312
|
5%
|
|||
EBITDA margin
|
38.0%
|
37.0%
|
100bp
|
|||
Segment operating profit
|
257
|
244
|
5%
|
|||
Segment operating profit margin
|
29.8%
|
28.9%
|
90bp
|
|||
Tax & Accounting
|
EBITDA, segment operating profit and the related margins decreased due to the decline in Government revenues. Excluding Government, EBITDA and segment operating profit grew 9% and 10%, respectively. EBITDA margin was unchanged and segment operating profit margin increased 30bp.
|
|||||
EBITDA
|
131
|
136
|
(4%)
|
|||
EBITDA margin
|
37.3%
|
39.9%
|
(260)bp
|
|||
Segment operating profit
|
103
|
110
|
(6%)
|
|||
Segment operating profit margin
|
29.3%
|
32.3%
|
(300)bp
|
|||
Intellectual Property & Science
|
EBITDA and segment operating profit increased due to higher revenues and cost controls. The related margins decreased largely due to the anticipated dilution from the acquisition of MarkMonitor.
|
|||||
EBITDA
|
84
|
80
|
5%
|
|||
EBITDA margin
|
33.6%
|
35.6%
|
(200)bp
|
|||
Segment operating profit
|
66
|
64
|
3%
|
|||
Segment operating profit margin
|
26.4%
|
28.4%
|
(200)bp
|
Three months ended
December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Revenues - Reuters News
|
87 | 87 | ||||||
Reuters News
|
(2 | ) | 2 | |||||
Core corporate expenses
|
(90 | ) | (86 | ) | ||||
Total
|
(92 | ) | (84 | ) |
Three months ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Revenues
|
41 | 269 | ||||||
Operating (loss) profit
|
(7 | ) | 62 |
Three months ended
December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Operating profit (loss)
|
557 | (2,593 | ) | n/m | ||||||||
Adjustments to remove:
|
||||||||||||
Goodwill impairment
|
- | 3,010 | ||||||||||
Amortization of other identifiable intangible assets
|
160 | 166 | ||||||||||
Integration programs expenses
|
- | 64 | ||||||||||
Fair value adjustments
|
15 | (37 | ) | |||||||||
Other operating (gains) losses, net
|
(81 | ) | 98 | |||||||||
Operating loss (profit) from Other Businesses
|
7 | (62 | ) | |||||||||
Underlying operating profit
|
658 | 646 | 2 | % | ||||||||
Adjustment:
|
||||||||||||
Add: integration programs expenses
|
- | (64 | ) | |||||||||
Remove: depreciation and amortization of computer software (excluding Other Businesses)
|
290 | 270 | ||||||||||
Adjusted EBITDA (1)
|
948 | 852 | 11 | % | ||||||||
Remove: capital expenditures, less proceeds from disposals (excluding Other Businesses)
|
250 | 259 | ||||||||||
Adjusted EBITDA less capital expenditures
|
698 | 593 | 18 | % | ||||||||
Underlying operating profit margin
|
19.6 | % | 19.5 | % | 10 | bp | ||||||
Adjusted EBITDA margin
|
28.2 | % | 25.8 | % | 240 | bp | ||||||
Adjusted EBITDA less capital expenditures margin
|
20.8 | % | 17.9 | % | 290 | bp |
(1)
|
Refer to Appendix B for a reconciliation of earnings (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA less capital expenditures.
|
Three months ended
December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Operating expenses
|
2,473 | 2,604 | (5 | %) | ||||||||
Adjustments to remove:
|
||||||||||||
Fair value adjustments (1)
|
(15 | ) | 37 | |||||||||
Other Businesses
|
(48 | ) | (185 | ) | ||||||||
Operating expenses, excluding fair value adjustments and Other Businesses
|
2,410 | 2,456 | (2 | %) |
(1)
|
Fair value adjustments primarily represent non-cash accounting adjustments from the revaluation of embedded foreign exchange derivatives within certain customer contracts due to fluctuations in foreign exchange rates and mark-to-market adjustments from certain share-based awards.
|
Three months ended
December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Depreciation
|
106 | 114 | (7 | %) | ||||||||
Amortization of computer software
|
184 | 178 | 3 | % | ||||||||
Subtotal
|
290 | 292 | (1 | %) | ||||||||
Amortization of other identifiable intangible assets
|
160 | 166 | (4 | %) |
Three months ended
December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Other operating gains (losses), net
|
81 | (98 | ) |
Three months ended
December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
|||||||||
Net interest expense
|
95 | 95 | - |
Three months ended
December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Share of post-tax earnings and impairment in equity method investees
|
(22 | ) | 2 |
Three months ended
December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Tax (expense) benefit
|
(51 | ) | 78 |
Benefit (expense)
|
Three months ended
December 31,
|
|||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Discrete tax items:
|
||||||||
Uncertain tax positions(1)
|
22 | 72 | ||||||
Corporate tax rates(2)
|
11 | - | ||||||
Other(3)
|
(3 | ) | - | |||||
Subtotal
|
30 | 72 | ||||||
Tax related to:
|
||||||||
Sale of businesses
|
9 | - | ||||||
Tax on operating profit of “Other Businesses”
|
2 | (8 | ) | |||||
Tax on goodwill impairment(4)
|
- | 28 | ||||||
Fair value adjustments
|
- | (14 | ) | |||||
Other items
|
(43 | ) | 31 | |||||
Subtotal
|
(32 | ) | 37 | |||||
Total
|
(2 | ) | 109 |
(1)
|
Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.
|
(2)
|
Relates to the reduction of deferred tax liabilities due to lower effective U.S. state tax rates.
|
(3)
|
Relates to the recognition of deferred tax assets in connection with acquisitions and disposals.
|
(4)
|
Relates to the $3.0 billion goodwill impairment charge. The majority of goodwill was non-deductible for tax purposes.
|
Three months ended
December 31,
|
||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
||||||
Net earnings (loss)
|
388 | (2,602 | ) | |||||
Diluted earnings (loss) per share
|
$ | 0.45 | $ | (3.11 | ) |
Three months ended
December 31,
|
||||||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
Change
|
|||||||||
Earnings (loss) attributable to common shareholders
|
372 | (2,572 | ) | n/m | ||||||||
Adjustments to remove:
|
||||||||||||
Goodwill impairment
|
- | 3,010 | ||||||||||
Goodwill impairment attributable to non-controlling interests
|
- | (40 | ) | |||||||||
Operating loss (profit) from Other Businesses
|
7 | (62 | ) | |||||||||
Fair value adjustments
|
15 | (37 | ) | |||||||||
Other operating (gains) losses, net
|
(81 | ) | 98 | |||||||||
Other finance costs (income)
|
4 | (4 | ) | |||||||||
Share of post-tax earnings and impairment in equity method investees
|
22 | (2 | ) | |||||||||
Tax on above
|
24 | (47 | ) | |||||||||
Interim period effective tax rate normalization
|
8 | 10 | ||||||||||
Discrete tax items(1)
|
(30 | ) | (72 | ) | ||||||||
Amortization of other identifiable intangible assets
|
160 | 166 | ||||||||||
Discontinued operations
|
(3 | ) | (2 | ) | ||||||||
Dividends declared on preference shares
|
(1 | ) | (1 | ) | ||||||||
Adjusted earnings
|
497 | 445 | 12 | % | ||||||||
Adjusted earnings per share
|
$ | 0.60 | $ | 0.54 | 11 | % | ||||||
Diluted weighted average common shares (millions)(2)
|
829.2 | 829.7 |
(1)
|
Refer to “Tax (expense) benefit”.
|
(2)
|
Refer to Appendix B for reconciliation of diluted weighted average common shares at December 31, 2011.
|
Three months ended
December 31,
|
|||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
$ Chg
|
Commentary
|
|||||||||
Net cash provided by operating activities
|
954 | 942 | 12 |
Lower tax payments and the elimination of Reuters integration expenses partially offset by higher interest payments and lower net cash provided by operating activities due to the sale of businesses.
|
|||||||||
Net cash used in investing activities
|
(178 | ) | (529 | ) | 351 |
Higher proceeds from disposal of businesses, lower acquisition spending and lower capital expenditures.
|
|||||||
Net cash used in financing activities
|
(242 | ) | (580 | ) | 338 |
Debt repayments in 2011.
|
|||||||
Translation adjustments on cash and cash equivalents
|
(2 | ) | - | (2 | ) | ||||||||
Increase (decrease) in cash and cash equivalents
|
532 | (167 | ) | 699 | |||||||||
Cash and cash equivalents at beginning of period
|
769 | 589 | 180 | ||||||||||
Cash and cash equivalents at end of period
|
1,301 | 422 | 879 |
|
·
|
Focus on free cash flow and ensure that cash generated is balanced between reinvestment in the business and returns to shareholders; and
|
|
·
|
Maintain a strong balance sheet, strong credit ratings and ample financial flexibility to support the execution of our business strategies.
|
|
·
|
Approximately $1.3 billion of cash on hand;
|
|
·
|
Access through August 2016 to an undrawn $2.0 billion syndicated credit facility;
|
|
·
|
The ability to access capital markets; and
|
|
·
|
Average long-term debt maturity of approximately seven years with no significant concentration in any one year.
|
As at December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Financial & Risk
|
19,042 | 18,655 | ||||||
Legal
|
6,106 | 6,053 | ||||||
Tax & Accounting
|
2,337 | 2,213 | ||||||
Intellectual Property & Science
|
1,748 | 1,345 | ||||||
Reportable segments
|
29,233 | 28,266 | ||||||
Corporate & Other (includes Reuters News)
|
3,296 | 2,571 | ||||||
Other Businesses
|
43 | 1,639 | ||||||
Total assets
|
32,572 | 32,476 |
As at December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Current indebtedness
|
1,008 | 434 | ||||||
Long-term indebtedness
|
6,223 | 7,160 | ||||||
Total debt
|
7,231 | 7,594 | ||||||
Swaps
|
(242 | ) | (224 | ) | ||||
Total debt after swaps
|
6,989 | 7,370 | ||||||
Other derivatives (2)
|
- | (2 | ) | |||||
Remove fair value adjustments for hedges
|
(54 | ) | (19 | ) | ||||
Total debt after hedging arrangements
|
6,935 | 7,349 | ||||||
Remove transaction costs and discounts included in the carrying value of debt
|
50 | 60 | ||||||
Less: cash and cash equivalents (3)
|
(1,301 | ) | (422 | ) | ||||
Net debt
|
5,684 | 6,987 |
(1)
|
Net debt is a non-IFRS financial measure, which we define in Appendix A.
|
(2)
|
Fair value of derivatives associated with commercial paper borrowings that were not designated as hedges for accounting purposes.
|
(3)
|
Includes restricted cash of $148 million and $147 million at December 31, 2012 and 2011, respectively.
|
($ millions) |
Schedule of debt maturities (after swaps and other derivatives) (1)
at December 31, 2012
|
(1)
|
Excludes $8 million of bank and other borrowings primarily used for short-term cash management.
|
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Balance at January 1,
|
16,750 | 19,675 | ||||||
Net earnings (loss)
|
2,123 | (1,392 | ) | |||||
Share issuances
|
139 | 187 | ||||||
Share repurchases
|
(168 | ) | (326 | ) | ||||
Effect of share-based compensation plans on contributed surplus
|
16 | (53 | ) | |||||
Dividends declared on common shares
|
(1,059 | ) | (1,034 | ) | ||||
Dividends declared on preference shares
|
(3 | ) | (3 | ) | ||||
Change in unrecognized net (loss) gain on cash flow hedges
|
(34 | ) | 21 | |||||
Change in foreign currency translation adjustment
|
13 | (57 | ) | |||||
Net actuarial losses on defined benefit pension plans, net of tax
|
(234 | ) | (262 | ) | ||||
Change in ownership interest of subsidiary
|
- | 34 | ||||||
Distributions to non-controlling interests
|
(45 | ) | (40 | ) | ||||
Balance at December 31,
|
17,498 | 16,750 |
Year ended December 31,
|
||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
$ Change
|
|||||||||
Net cash provided by operating activities
|
2,704 | 2,597 | 107 | |||||||||
Net cash used in investing activities
|
(274 | ) | (1,807 | ) | 1,533 | |||||||
Net cash used in financing activities
|
(1,551 | ) | (1,227 | ) | (324 | ) | ||||||
Translation adjustments on cash and cash equivalents
|
- | (5 | ) | 5 | ||||||||
Increase (decrease) in cash and cash equivalents
|
879 | (442 | ) | 1,321 | ||||||||
Cash and cash equivalents at beginning of period
|
422 | 864 | (442 | ) | ||||||||
Cash and cash equivalents at end of period
|
1,301 | 422 | 879 |
|
·
|
$2.7 billion of net cash was provided by operating activities reflecting our highly cash-generative business model;
|
|
·
|
$1.3 billion was re-invested through acquisitions in 2012, partially redeploying $1.9 billion of proceeds principally realized from the disposal of non-core businesses; and
|
|
·
|
$1.2 billion was returned to shareholders through dividends and share repurchases in 2012.
|
(millions of U.S. dollars)
Net cash (used) provided by
investing activities
|
Capital expenditures
|
Capital expenditures mix
|
(1)
|
Net of cash acquired of $28 million and $25 million in 2012 and 2011, respectively.
|
Business
|
Former segment
|
Description
|
||
Healthcare
|
Healthcare & Science
|
A provider of data analytics and performance benchmarking solutions and services to companies, government agencies and healthcare professionals
|
||
Trade and Risk Management
|
Financial & Risk
|
A provider of risk management solutions to financial institutions, including banks, broker-dealers and hedge funds
|
||
Portia
|
Financial & Risk
|
A provider of portfolio accounting and reporting applications
|
||
Property Tax Consulting
|
Tax & Accounting
|
A provider of property tax outsourcing and compliance services in the U.S.
|
|
·
|
Commercial paper program. Our $2.0 billion commercial paper program provides efficient and flexible short-term funding to balance the timing of completed acquisitions, expected disposal proceeds, dividend payments and debt repayments. We had no commercial paper borrowings outstanding at December 31, 2012. Issuances of commercial paper reached a peak of $0.6 billion in 2012.
|
|
·
|
Credit facility. We have a $2.0 billion unsecured syndicated credit facility agreement which we may utilize from time to time to provide liquidity in connection with our commercial paper program and for general corporate purposes. As of December 31, 2012, we had no amounts drawn under the credit facility.
|
|
·
|
Long-term debt. There was no long-term debt activity in 2012. Activity in 2011 was comprised of:
|
Date
|
Transaction
|
Principal Amount
(in millions)
|
Notes issued
|
||
October 2011
|
3.95% notes due 2021
|
US$350
|
Notes repaid
|
||
July 2011
|
5.25% notes due 2011
|
C$600
|
|
·
|
Credit ratings. Our access to financing depends on, among other things, suitable market conditions and the maintenance of suitable long-term credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demand, increased competition, a further deterioration in general economic and business conditions and adverse publicity. Any downgrades in our credit ratings may impede our access to the debt markets or raise our borrowing rates.
|
Moody’s
|
Standard &
Poor’s
|
DBRS
Limited
|
Fitch
|
|
Long-term debt
|
Baa1
|
A-
|
A (low)
|
A-
|
Commercial paper
|
-
|
A-1 (low)
|
R-1 (low)
|
F2
|
Trend/Outlook
|
Stable
|
Negative
|
Stable
|
Stable
|
|
·
|
Dividends. Dividends paid on our common shares during the last two years were as follows:
|
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Dividends declared
|
1,059 | 1,034 | ||||||
Dividends reinvested
|
(38 | ) | (74 | ) | ||||
Dividends paid
|
1,021 | 960 |
|
·
|
Share repurchases. We may buy back shares (and subsequently cancel them) from time to time as part of our capital management strategy. In May 2012, we renewed our normal course issuer bid (NCIB) share repurchase facility for an additional 12-month period. Under the NCIB, we may repurchase up to 15 million common shares (representing less than 2% of the total outstanding shares) in open market transactions on the TSX or the New York Stock Exchange (NYSE) between May 22, 2012 and May 21, 2013.
|
Year ended December 31,
|
||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Net cash provided by operating activities
|
2,704 | 2,597 | ||||||
Capital expenditures, less proceeds from disposals
|
(977 | ) | (1,041 | ) | ||||
Other investing activities
|
13 | 49 | ||||||
Dividends paid on preference shares
|
(3 | ) | (3 | ) | ||||
Free cash flow
|
1,737 | 1,602 | ||||||
Remove: Other Businesses
|
(70 | ) | (215 | ) | ||||
Free cash flow from ongoing businesses
|
1,667 | 1,387 |
Revenues (1)
|
Expenses (1)
|
|
(1)
|
Revenues from ongoing businesses. Expenses associated with underlying operating profit. Based on average rates of U.S. dollar / British pound sterling = 1.585 and U.S. dollar / Euro = 1.286.
|
(millions of U.S. dollars)
|
2013
|
2014
|
2015
|
2016
|
2017
|
Thereafter
|
Total
|
|||||||||||||||||||||
Long-term debt (1)
|
1,000 | 1,392 | 587 | 727 | - | 3,465 | 7,171 | |||||||||||||||||||||
Interest payable (1)
|
376 | 330 | 248 | 196 | 185 | 1,244 | 2,579 | |||||||||||||||||||||
Debt-related hedges outflows (2)
|
127 | 617 | 685 | 649 | 28 | 810 | 2,916 | |||||||||||||||||||||
Debt-related hedges inflows (2)
|
(142 | ) | (730 | ) | (682 | ) | (769 | ) | (31 | ) | (801 | ) | (3,155 | ) | ||||||||||||||
Operating lease payments
|
321 | 282 | 241 | 176 | 146 | 477 | 1,643 | |||||||||||||||||||||
Unconditional purchase obligations
|
586 | 371 | 261 | 48 | 16 | 10 | 1,292 | |||||||||||||||||||||
Pension contributions (3)
|
70 | - | - | - | - | - | 70 | |||||||||||||||||||||
Total
|
2,338 | 2,262 | 1,340 | 1,027 | 344 | 5,205 | 12,516 |
(1)
|
Represents our contractual principal and interest payments (before swaps). Future cash flows have been calculated using forward foreign exchange rates.
|
(2)
|
Substantially all our non-U.S. dollar-denominated debt has been hedged into U.S. dollars. Debt-related hedges outflows represent our projected payments to counterparties. Where future interest cash flows are not fixed, amounts have been calculated using forward interest rates. Debt-related hedges inflows represent our projected cash receipts from counterparties. These future cash flows have been calculated using forward foreign exchange rates. We present our projected inflows along with outflows in order to reflect the net cash flow we anticipate from our debt-related hedging instruments in order to satisfy principal and interest payments to our long-term debt securities holders.
|
(3)
|
Represents expected contributions to our funded pension plans. These amounts do not include voluntary contributions we may elect to make from time to time.
|
|
·
|
Operating leases – We enter into operating leases in the ordinary course of business, primarily for real property and equipment. Lease payments represent scheduled, contractual obligations. With certain leases, we guarantee the restoration of the leased property to a specified condition after completion of the lease period. The liability associated with these restorations is recorded within “Provisions and other non-current liabilities” in our statement of financial position.
|
|
·
|
Subsidiary guarantees – For certain real property leases, banking arrangements and commercial contracts, we guarantee the obligations of some of our subsidiaries. We also guarantee borrowings by our subsidiaries under our credit agreement.
|
|
·
|
Unconditional purchase obligations – We have various obligations for materials, supplies and services in the ordinary conduct of business.
|
|
·
|
Pension obligations – We sponsor defined benefit plans that provide pension and other post-employment benefits to covered employees. As of December 31, 2012, the fair value of plan assets for our funded plans was 84% of the plan obligations. In 2012, we made contributions of $105 million to our defined benefit plans, including special contributions of $11 million and $9 million to the Reuters Supplementary Pension Plan (SPS) and the Reuters Pension Fund (RPF), respectively, reflecting agreements with plan trustees to our U.K. pension plans.
|
|
·
|
Acquisition and disposition contingencies – We have obligations to pay additional consideration for prior acquisitions, typically based upon performance measures contractually agreed at the time of purchase. In certain disposition agreements, we guarantee indemnification obligations of our subsidiary that sold the business or assets. We believe that based upon current facts and circumstances, additional payments in connection with these transactions would not have a material impact on our financial statements.
|
2013 Outlook
|
Material assumptions
|
Material risks
|
||
Revenues expected to grow low single digits
|
●
|
Improvement in net sales as the year progresses
|
●
|
Uneven economic growth or recession across the markets we serve may result in reduced spending levels by our customers
|
●
|
Positive gross domestic product (GDP) growth in the countries where we operate, led by rapidly developing economies
|
●
|
Demand for our products and services could be reduced by changes in customer buying patterns, competitive pressures or our inability to execute on key product or customer support initiatives
|
|
●
|
Continued increase in the number of professionals around the world and their demand for high quality information and services
|
●
|
Implementation of regulatory reform, including Dodd-Frank legislation and similar financial services laws around the world, may limit business opportunities for our customers, lowering their demand for our products and services
|
|
●
|
Continued operational improvement in the Financial & Risk business and the successful execution of ongoing product release programs, our globalization strategy and other growth initiatives
|
●
|
Uncertainty regarding the European sovereign debt crisis and the Euro currency could impact demand from our customers as well as their ability to pay us
|
|
●
|
Pressure on our customers, in developed markets in particular, to constrain the number of professionals employed due to regulatory and economic uncertainty
|
2013 Outlook
|
Material assumptions
|
Material risks
|
||
Adjusted EBITDA margin expected to be between 26% and 27%
|
●
|
Revenues expected to grow low single digits
|
●
|
Refer to the risks above related to the revenue outlook
|
●
|
Business mix continues to shift to higher-growth lower margin offerings
|
●
|
Revenues from higher margin businesses may be lower than expected
|
|
●
|
Realization of expected benefits from cost control and efficiency initiatives, specifically in our Financial & Risk business relative to reductions in workforce, platform consolidation and operational simplification
|
●
|
The costs of required investments exceed expectations or actual returns are below expectations
|
|
●
|
Acquisition and disposal activity may dilute margins
|
|||
●
|
Cost control initiatives may cost more than expected, be delayed or may not produce the expected level of savings
|
|||
Underlying operating profit margin expected to be between 16.5% and 17.5%
|
●
|
Adjusted EBITDA margin expected to be between 26% and 27%
|
●
|
Refer to the risks above related to adjusted EBITDA margin outlook
|
●
|
Depreciation and amortization expense expected to represent approximately 9.5% of revenues
|
●
|
Capital expenditures may be higher than currently expected, resulting in higher in-period depreciation and amortization
|
|
●
|
Capital expenditures expected to be approximately 8% of revenues
|
|||
Free cash flow is expected to be between $1.7 billion and $1.8 billion
|
●
|
Revenues expected to grow low single digits
|
●
|
Refer to the risks above related to the revenue outlook and adjusted EBITDA margin outlook
|
● |
Adjusted EBITDA margin expected to be between 26% and 27%
|
●
|
A weaker macroeconomic environment and unanticipated disruptions from new order-to-cash applications could negatively impact working capital performance
|
|
● |
Capital expenditures expected to be approximately 8% of revenues
|
●
|
Capital expenditures may be higher than currently expected resulting in higher cash outflows
|
|
●
|
The timing of completing disposals of businesses may vary from our expectations resulting in actual free cash flow performance below our expectations
|
|||
●
|
The timing and amount of tax payments to governments may differ from our expectations.
|
|||
●
|
We may decide to make a voluntary contribution to our defined benefit plans
|
|
·
|
Operating profit and net finance costs decrease $48 million and increase $63 million, respectively, resulting in a $111 million decrease to pre-tax earnings;
|
|
·
|
Net earnings and the related diluted per share amount decrease $81 million and $0.10, respectively; and
|
|
·
|
No impact to total comprehensive income, net assets or cash.
|
IFRS 10
|
Consolidated Financial Statements
|
IFRS 10 replaces the guidance on ‘consolidation’ in IAS 27 - Consolidated and Separate Financial Statements, and Standing Interpretations Committee (SIC) 12 - Consolidation - Special Purpose Entities. The new standard contains a single consolidation model that identifies control as the basis for consolidation for all types of entities, including special purpose entities. The new standard also sets out requirements for situations when control is difficult to assess, including circumstances in which voting rights are not the dominant factor in determining control.
|
|
IFRS 11
|
Joint Arrangements
|
IFRS 11 replaces the guidance on ‘joint ventures’ in IAS 31 - Interests in Joint Ventures, and SIC 13 - Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The new standard introduces a principles-based approach to accounting for joint arrangements that requires a party to a joint arrangement to recognize its rights and obligations arising from the arrangement. The new standard requires that joint ventures be accounted for under the equity method and eliminates the option to proportionally consolidate.
|
|
IAS 27
|
Separate Financial Statements
|
IAS 27 has been amended for the issuance of IFRS 10, but retains the current guidance for separate financial statements.
|
|
IAS 28
|
Investments in Associates and Joint Ventures
|
IAS 28 has been amended for conforming changes based on the issuance of IFRS 10 and IFRS 11. The amendment requires that where a joint arrangement is determined to be a joint venture under IFRS 11, it should be accounted for using the equity method guidance provided in this standard.
|
IFRS 13
|
Fair Value Measurement
|
IFRS 13 defines 'fair value' and sets out in a single standard a framework for measuring fair value and requires disclosures about fair value measurements. The new standard reduces complexity and improves consistency by clarifying the definition of fair value and requiring its application to all fair value measurements.
|
2009 – 2011
Cycle
|
Annual Improvements to IFRSs
|
The Annual Improvements to IFRSs for the 2009 – 2011 Cycle (Annual Improvements) make non-urgent but necessary amendments to several IFRSs. Among several changes, the Annual Improvements: (a) amend IAS 16, Property, Plant and Equipment, to clarify the classification of servicing equipment; (b) amend IAS 32, Financial Instruments: Presentation, to clarify the treatment of income tax relating to distributions and transaction costs; and (c) amend IAS 34, Interim Financial Reporting, to clarify the disclosure requirements for segment assets and liabilities in interim financial statements.
|
IFRS 9
|
Financial Instruments (Classification and Measurement)
|
IFRS 9 replaces the guidance on ‘classification and measurement’ of financial instruments in IAS 39 - Financial Instruments - Recognition and Measurement. The new standard requires a consistent approach to the classification of financial assets and replaces the numerous categories of financial assets in IAS 39 with two categories, measured at either amortized cost or at fair value. For financial liabilities, the standard retains most of the IAS 39 requirements, but where the fair value option is taken, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.
|
|
·
|
IFRS 7 - Financial Instruments: Disclosures (amendments effective January 1, 2013 and 2015);
|
|
·
|
IFRS 12 - Disclosure of Interests in Other Entities (effective January 1, 2013); and
|
|
·
|
IAS 32 - Financial Instruments: Presentation (amendment effective January 1, 2014).
|
Non-IFRS Financial
Measure
|
How We Define It
|
Why We Use It and Why It Is
Useful to Investors
|
Most Directly
Comparable IFRS
Measure/Reconciliation
|
|||
Revenues from ongoing businesses
|
Revenues from reportable segments and Corporate & Other (which includes the Reuters News business), less eliminations.
|
Provides a measure of our ability to grow our ongoing businesses over the long term.
|
Revenues
|
|||
Revenues at constant currency (before currency or revenues excluding the effects of foreign currency)
|
Revenues applying the same foreign currency exchange rates for the current and equivalent prior period. To calculate the foreign currency impact between periods, we convert the current and equivalent prior period’s local currency revenues using the same foreign currency exchange rate.
|
Provides a measure of underlying business trends, without distortion from the effect of foreign currency movements during the period.
Our reporting currency is the U.S. dollar. However, we conduct a significant amount of our activities in currencies other than the U.S. dollar. We manage our operating segments on a constant currency basis, and we manage currency exchange risk at the corporate level.
|
Revenues
|
|||
Underlying operating profit and underlying operating profit margin
|
Operating profit from reportable segments and Corporate & Other. The related margin is expressed as a percentage of revenues from ongoing businesses.
|
Provides a basis to evaluate operating profitability and performance trends, excluding the impact of items which distort the performance of our operations.
|
Operating profit
|
|||
Adjusted EBITDA and adjusted EBITDA margin
|
Underlying operating profit excluding the related depreciation and amortization of computer software. In 2011, this measure also included expenses associated with the final year of the Reuters integration program. The related margin is expressed as a percentage of revenues from ongoing businesses.
|
Provides a measure commonly reported and widely used by investors as an indicator of a company’s operating performance and ability to incur and service debt, and as a valuation metric.
|
Earnings from continuing operations
|
|||
Adjusted EBITDA less capital expenditures and adjusted EBITDA less capital expenditures margin
|
Adjusted EBITDA less capital expenditures, less proceeds from disposals (excluding Other Businesses). The related margin is expressed as a percentage of revenues from ongoing businesses.
|
Provides a basis for evaluating the operating profitability and capital intensity of a business in a single measure. This measure captures investments regardless of whether they are expensed or capitalized.
|
Earnings from continuing operations
|
Non-IFRS Financial Measure
|
How We Define It |
Why We Use It and Why It Is Useful to Investors
|
Most Directly Comparable IFRS Measure/Reconciliation
|
||||
Adjusted earnings and adjusted earnings per share
|
Earnings attributable to common shareholders and per share excluding: |
Provides a more comparable basis to analyze earnings and is also a measure commonly used by shareholders to measure our performance.
|
Earnings attributable to common shareholders and earnings per share attributable to common shareholders
|
||||
● | the pre-tax impacts of amortization of other identifiable intangible assets; and | ||||||
● | the post-tax impacts of fair value adjustments, other operating gains and losses, certain impairment charges, the results of Other Businesses, other net finance costs or income, our share of post-tax earnings or losses in equity method investees, discontinued operations and other items affecting comparability. We also deduct dividends declared on preference shares. | ||||||
This measure is calculated using diluted weighted average shares. | |||||||
In interim periods, we also adjust our reported earnings and earnings per share to reflect a normalized effective tax rate. Specifically, the normalized effective rate is computed as the estimated full-year effective tax rate applied to adjusted pre-tax earnings of the interim period. The reported effective tax rate is based on separate annual effective income tax rates for each taxing jurisdiction that are applied to each interim period’s pre-tax income. |
Because the geographical mix of pre-tax profits and losses in interim periods distorts the reported effective tax rate within an interim period, we believe that using the expected full-year effective tax rate provides more comparability among interim periods. The adjustment to normalize the effective tax rate reallocates estimated full-year income taxes between interim periods, but has no effect on full year tax expense or on cash taxes paid.
|
Non-IFRS Financial
Measure
|
How We Define It
|
Why We Use It and Why It Is
Useful to Investors
|
Most Directly
Comparable IFRS
Measure/Reconciliation
|
|||
Net debt
|
Total indebtedness, including the associated fair value of hedging instruments on our debt, but excluding unamortized transaction costs and premiums or discounts associated with our debt, less cash and cash equivalents.
|
Provides a commonly used measure of a company’s leverage.
Given that we hedge some of our debt to reduce risk, we include hedging instruments as we believe it provides a better measure of the total obligation associated with our outstanding debt. However, because we intend to hold our debt and related hedges to maturity, we do not consider certain components of the associated fair value of hedges in our measurements. We reduce gross indebtedness by cash and cash equivalents.
|
Total debt (current indebtedness plus long-term indebtedness)
|
|||
Free cash flow
|
Net cash provided by operating activities and other investing activities, less capital expenditures and dividends paid on our preference shares.
|
Helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and new acquisitions.
|
Net cash provided by operating activities
|
|||
Free cash flow from ongoing businesses
|
Free cash flow excluding businesses that have been or are expected to be exited through sale or closure, which we refer to as “Other Businesses”.
|
Provides a supplemental measure of our ability, over the long term, to create value for our shareholders because it represents free cash flow generated by our operations excluding businesses that have been or are expected to be exited through sale or closure.
|
Net cash provided by operating activities
|
|||
Return on invested capital (ROIC)
|
Adjusted operating profit after net taxes paid expressed as a percentage of the average adjusted invested capital during the period.
|
Provides a measure of how efficiently we allocate resources to profitable activities and is indicative of our ability to create value for our shareholders.
|
IFRS does not require a measure comparable to ROIC. Refer to our calculation of ROIC in Appendix D for a reconciliation of the components in the calculation to the most comparable IFRS measure.
|
Three months ended
December 31,
|
Year ended
December 31,
|
|||||||||||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
||||||||||||||||||
Earnings (loss) from continuing operations
|
385 | (2,604 | ) | n/m | 2,121 | (1,396 | ) | n/m | ||||||||||||||||
Adjustments to remove:
|
||||||||||||||||||||||||
Tax expense (benefit)
|
51 | (78 | ) | 157 | 293 | |||||||||||||||||||
Other finance costs (income)
|
4 | (4 | ) | (40 | ) | 15 | ||||||||||||||||||
Net interest expense
|
95 | 95 | 390 | 396 | ||||||||||||||||||||
Amortization of other identifiable intangible assets
|
160 | 166 | 619 | 612 | ||||||||||||||||||||
Amortization of computer software
|
184 | 178 | 700 | 659 | ||||||||||||||||||||
Depreciation
|
106 | 114 | 429 | 438 | ||||||||||||||||||||
EBITDA
|
985 | (2,133 | ) | 4,376 | 1,017 | |||||||||||||||||||
Adjustments to remove:
|
||||||||||||||||||||||||
Share of post-tax earnings and impairment in equity method investees
|
22 | (2 | ) | 23 | (13 | ) | ||||||||||||||||||
Other operating (gains) losses, net
|
(81 | ) | 98 | (883 | ) | (204 | ) | |||||||||||||||||
Goodwill impairment
|
- | 3,010 | - | 3,010 | ||||||||||||||||||||
Fair value adjustments
|
15 | (37 | ) | 36 | (149 | ) | ||||||||||||||||||
EBITDA from Other Businesses (1)
|
7 | (84 | ) | (23 | ) | (293 | ) | |||||||||||||||||
Adjusted EBITDA
|
948 | 852 | 11 | % | 3,529 | 3,368 | 5 | % | ||||||||||||||||
Remove: Capital expenditures, less proceeds from disposals (excluding Other Businesses)(1)
|
250 | 259 | 962 | 966 | ||||||||||||||||||||
Adjusted EBITDA less capital expenditures
|
698 | 593 | 18 | % | 2,567 | 2,402 | 7 | % | ||||||||||||||||
Adjusted EBITDA margin
|
28.2 | % | 25.8 | % | 240 | bp | 27.4 | % | 26.4 | % | 100 | bp | ||||||||||||
Adjusted EBITDA less capital expenditures margin
|
20.8 | % | 17.9 | % | 290 | bp | 19.9 | % | 18.8 | % | 110 | bp |
Three months ended
December 31, 2012
|
Three months ended
December 31, 2011
|
|||||||||||||||||||||||
(millions of U.S. dollars)
|
Underlying
Operating
profit
|
Add:
Depreciation
and
amortization
of computer
software **
|
Adjusted
EBITDA
|
Underlying
Operating
profit
|
Add:
Depreciation
and
amortization of
computer
software **
|
Adjusted
EBITDA
|
||||||||||||||||||
Financial & Risk
|
324 | 159 | 483 | 312 | 146 | 458 | ||||||||||||||||||
Legal
|
257 | 70 | 327 | 244 | 68 | 312 | ||||||||||||||||||
Tax & Accounting
|
103 | 28 | 131 | 110 | 26 | 136 | ||||||||||||||||||
Intellectual Property & Science
|
66 | 18 | 84 | 64 | 16 | 80 | ||||||||||||||||||
Corporate & Other (includes Reuters News)(2)
|
(92 | ) | 15 | (77 | ) | (84 | ) | 14 | (70 | ) | ||||||||||||||
Integration programs expenses
|
na
|
na
|
- |
na
|
na
|
(64 | ) | |||||||||||||||||
Total
|
658 | 290 | 948 | 646 | 270 | 852 |
Year ended
December 31, 2012
|
Year ended
December 31, 2011
|
|||||||||||||||||||||||
(millions of U.S. dollars)
|
Underlying
Operating
profit
|
Add:
Depreciation
and
amortization
of computer
software **
|
Adjusted
EBITDA
|
Underlying
Operating
profit
|
Add:
Depreciation
and
amortization of
computer
software **
|
Adjusted
EBITDA
|
||||||||||||||||||
Financial & Risk
|
1,215 | 627 | 1,842 | 1,396 | 576 | 1,972 | ||||||||||||||||||
Legal
|
964 | 279 | 1,243 | 941 | 269 | 1,210 | ||||||||||||||||||
Tax & Accounting
|
261 | 115 | 376 | 237 | 95 | 332 | ||||||||||||||||||
Intellectual Property & Science
|
235 | 68 | 303 | 237 | 59 | 296 | ||||||||||||||||||
Corporate & Other (includes Reuters News)(2)
|
(270 | ) | 35 | (235 | ) | (270 | ) | 43 | (227 | ) | ||||||||||||||
Integration programs expenses
|
na
|
na
|
- |
na
|
na
|
(215 | ) | |||||||||||||||||
Total
|
2,405 | 1,124 | 3,529 | 2,541 | 1,042 | 3,368 |
**
|
excludes Other Businesses (1)
|
(1)
|
Other Businesses are businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. Significant businesses in this category include: BARBRI (legal education provider, sold in the second quarter of 2011); Trade and Risk Management (trade and risk management solutions provider to financial institutions, sold in the first quarter of 2012); Healthcare (data, analytics and performance benchmarking solutions provider, sold in the second quarter of 2012); and Property Tax Consulting (property tax outsourcing and compliance services provider in the U.S., sold in the fourth quarter of 2012). Further, in December 2012, we accepted a binding offer to sell our Corporate Services business, and therefore classified the business as held for sale at December 31, 2012. The results of operations from businesses held for sale are normally reported within Other Businesses, however, because this business was managed for the entire year as part of the Financial & Risk segment, it has been included within the segment results for Financial & Risk, rather than within Other Businesses.
|
Three months ended
December 31,
|
Year ended
December 31,
|
|||||||||||||||
(millions of U.S. dollars)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Revenues
|
41 | 269 | 379 | 1,064 | ||||||||||||
Operating (loss) profit
|
(7 | ) | 62 | 18 | 238 | |||||||||||
Depreciation and amortization of computer software
|
- | 22 | 5 | 55 | ||||||||||||
EBITDA
|
(7 | ) | 84 | 23 | 293 | |||||||||||
Capital expenditures, less proceeds from disposals
|
1 | 23 | 15 | 75 |
(2)
|
Corporate & Other includes the Reuters News business and expenses for corporate functions and certain share-based compensation costs.
|
Three months ended
|
Year ended
|
|||||||
(weighted average common shares)
|
December 31, 2011
|
|||||||
IFRS: Basic and Diluted
|
828,185,741 | 833,459,452 | ||||||
Effect of stock options and other equity incentive awards
|
1,489,159 | 2,297,510 | ||||||
Non- IFRS Diluted
|
829,674,900 | 835,756,962 |
Year ended
December 31,
2012
|
IFRS Accounting
Amendments
|
Year ended
December 31,
2012
|
||||||||||||||||||
(millions of U.S. dollars, except per share amounts)
|
Actual
|
Less:
Disposals
|
Joint
Ventures(1)
|
Pension(1)
|
Revised
|
|||||||||||||||
Revenues from ongoing businesses(2)
|
12,899 | (310 | ) | (146 | ) | - | 12,443 | |||||||||||||
Adjusted EBITDA
|
3,529 | (125 | ) | (46 | ) | (48 | ) | 3,310 | ||||||||||||
Adjusted EBITDA less capital expenditures
|
2,567 | (122 | ) | (33 | ) | (48 | ) | 2,364 | ||||||||||||
Underlying operating profit
|
2,405 | (119 | ) | (33 | ) | (48 | ) | 2,205 | ||||||||||||
Interest expense(3)
|
(390 | ) | - | - | (63 | ) | (453 | ) | ||||||||||||
Tax expense(3)
|
(203 | ) | 30 | 14 | 30 | (129 | ) | |||||||||||||
Other expenses(3)
|
(56 | ) | - | - | - | (56 | ) | |||||||||||||
Adjusted earnings
|
1,756 | (89 | ) | (19 | ) | (81 | ) | 1,567 | ||||||||||||
Adjusted earnings per share
|
$ | 2.12 | $ | (0.11 | ) | $ | (0.02 | ) | $ | (0.10 | ) | $ | 1.89 | |||||||
Free cash flow from ongoing businesses
|
1,667 | (116 | ) | - | - | 1,551 |
(millions of U.S. dollars)
|
Year ended
December 31, 2012
|
|||||||
Revenues
|
||||||||
Trading
|
2,624 | |||||||
Investors
|
2,195 | |||||||
Marketplaces
|
1,764 | |||||||
Governance Risk & Compliance
|
219 | |||||||
Financial & Risk
|
6,802 | |||||||
Legal
|
3,266 | |||||||
Tax & Accounting
|
1,161 | |||||||
Intellectual Property & Science
|
894 | |||||||
Reportable segments
|
12,123 | |||||||
Corporate & Other (includes Reuters News)
|
331 | |||||||
Eliminations
|
(11 | ) | ||||||
Revenues from ongoing businesses(2)
|
12,443 | |||||||
Adjusted EBITDA
|
Margin
|
|||||||
Financial & Risk
|
1,691 | 24.9 | % | |||||
Legal
|
1,246 | 38.2 | % | |||||
Tax & Accounting
|
352 | 30.3 | % | |||||
Intellectual Property & Science
|
303 | 33.9 | % | |||||
Corporate & Other (includes Reuters News)
|
(282 | ) | ||||||
Adjusted EBITDA
|
3,310 | 26.6 | % | |||||
Remove: capital expenditures, less proceeds from disposals (excluding Other Businesses)
|
946 | |||||||
Adjusted EBITDA less capital expenditures
|
2,364 | 19.0 | % |
(millions of U.S. dollars)
|
Year ended
December 31, 2012
|
|||||||
Underlying Operating Profit
|
Margin
|
|||||||
Financial & Risk
|
1,082 | 15.9 | % | |||||
Legal
|
967 | 29.6 | % | |||||
Tax & Accounting
|
238 | 20.5 | % | |||||
Intellectual Property & Science
|
235 | 26.3 | % | |||||
Corporate & Other (includes Reuters News)
|
(317 | ) | ||||||
Underlying operating profit
|
2,205 | 17.7 | % |
Year ended December 31, 2012
|
||||||||||||
(millions of U.S. dollars)
|
Underlying
Operating
profit
|
Add:
Depreciation
and
amortization of
computer
software **
|
Adjusted
EBITDA
|
|||||||||
Financial & Risk
|
1,082 | 609 | 1,691 | |||||||||
Legal
|
967 | 279 | 1,246 | |||||||||
Tax & Accounting
|
238 | 114 | 352 | |||||||||
Intellectual Property & Science
|
235 | 68 | 303 | |||||||||
Corporate & Other (includes Reuters News)
|
(317 | ) | 35 | (282 | ) | |||||||
Total
|
2,205 | 1,105 | 3,310 |
**
|
excludes Other Businesses (2)
|
(1)
|
Includes the impact of adopting new IFRS pronouncements related to joint ventures and pension effective January 1, 2013, with retrospective application to 2012.
|
|
·
|
The joint ventures pronouncement no longer allows proportionate consolidation of joint ventures. Joint ventures must now be accounted for as equity investments. We exclude equity investments from adjusted earnings.
|
|
·
|
The pension pronouncement requires new accounting for the interest component of pension expense. This change increased 2012 pension expense by $111 million. Additionally, the 2012 interest component of pension expense, $63 million, will now be reported as a component of interest expense rather than as part of operating expenses.
|
(2)
|
Results from ongoing businesses exclude Other Businesses. Other Businesses are businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. Significant businesses in this category include: BARBRI (legal education provider, sold in the second quarter of 2011); Trade and Risk Management (trade and risk management solutions provider to financial institutions, sold in the first quarter of 2012); Healthcare (data, analytics and performance benchmarking solutions provider, sold in the second quarter of 2012); Property Tax Consulting (property tax outsourcing and compliance services provider in the U.S., sold in the fourth quarter of 2012); and Corporate Services (provider of tools and solutions that help companies communicate with investors and media, currently held for sale).
|
(3)
|
Although we do not define these items as non-IFRS measures, they are provided to allow for a full reconciliation between our 2012 actual and revised results. Refer to note (1).
|
(millions of U.S. dollars)
|
2012
|
2011
|
||||||
Calculation of adjusted operating profit after taxes
|
||||||||
Operating profit (loss)
|
2,651 | (705 | ) | |||||
Adjustments to remove:
|
||||||||
Amortization of other identifiable intangible assets
|
619 | 612 | ||||||
Fair value adjustments
|
36 | (149 | ) | |||||
Goodwill impairment
|
- | 3,010 | ||||||
Other operating gains, net
|
(883 | ) | (204 | ) | ||||
Adjusted operating profit (1)
|
2,423 | 2,564 | ||||||
Net cash taxes paid on operations (2)
|
(249 | ) | (358 | ) | ||||
Post-tax adjusted operating profit
|
2,174 | 2,206 | ||||||
Calculation of invested capital
|
||||||||
Trade and other receivables
|
1,835 | 1,984 | ||||||
Prepaid expenses and other current assets
|
641 | 641 | ||||||
Assets held for sale (3)
|
375 | 808 | ||||||
Computer hardware and other property, net
|
1,423 | 1,509 | ||||||
Computer software, net
|
1,682 | 1,640 | ||||||
Other identifiable intangible assets (excludes accumulated amortization)
|
12,448 | 12,491 | ||||||
Goodwill (4)
|
16,516 | 16,283 | ||||||
Payables, accruals and provisions
|
(2,633 | ) | (2,675 | ) | ||||
Liabilities associated with assets held for sale (3)
|
(29 | ) | (27 | ) | ||||
Deferred revenue
|
(1,224 | ) | (1,379 | ) | ||||
Present value of operating leases (5)
|
1,352 | 1,267 | ||||||
Total invested capital (6)
|
32,386 | 32,542 | ||||||
Average invested capital
|
32,464 | 32,042 | ||||||
Return on invested capital
|
6.7 | % | 6.9 | % |
(1)
|
Adjusted operating profit includes integration expenses as well as operating profit from “Other Businesses”.
|
(2)
|
Excludes cash taxes paid on the disposal of businesses and investments.
|
(3)
|
In 2012, assets held for sale includes accumulated intangible asset amortization of $73 million and liabilities associated with assets held for sale excludes $6 million of other non-current liabilities. In 2011, assets held for sale excludes $8 million of financial assets and includes $47 million in accumulated intangible asset amortization and impairment and $2 million in goodwill impairment. Liabilities associated with assets held for sale excludes $8 million of financial liabilities.
|
(4)
|
Goodwill has not been reduced, in either period, for the $3.0 billion impairment recorded in 2011. Goodwill excludes amounts associated with deferred taxes of $ 2.7 billion and $2.6 billion in 2012 and 2011, respectively, arising from acquisition accounting.
|
(5)
|
Present value of operating leases primarily for real property and equipment contracted in the ordinary course of business.
|
(6)
|
Invested capital excludes: financial assets and liabilities, including cash and debt; other non-current assets; deferred taxes; and provisions and other non-current liabilities, which are largely comprised of defined benefit plan obligations.
|
|
·
|
most critical estimates and assumptions in determining the value of assets and liabilities; and
|
|
·
|
most critical judgments in applying accounting policies.
|
|
Perpetual
|
|
Discount
|
|
Tax
|
|||||||
Cash-Generating Unit
|
|
growth rate
|
|
rate
|
|
rate
|
||||||
Financial & Risk
|
|
|
3.0
|
%
|
|
|
9.5
|
%
|
|
|
28.0
|
%
|
Legal
|
|
|
2.5
|
%
|
|
|
7.5
|
%
|
|
|
39.0
|
%
|
Tax & Accounting
|
|
|
3.0
|
%
|
|
|
9.0
|
%
|
|
|
40.0
|
%
|
Intellectual Property & Science
|
|
|
3.0
|
%
|
|
|
8.5
|
%
|
|
|
39.0
|
%
|
For the years ended and as at
December 31,
|
||||||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
2010
|
|||||||||
Consolidated Income Statement Data:
|
||||||||||||
Revenues
|
13,278 | 13,807 | 13,070 | |||||||||
Operating profit (loss)
|
2,651 | (705 | ) | 1,419 | ||||||||
Earnings (loss) earnings from continuing operations
|
2,121 | (1,396 | ) | 933 | ||||||||
Net earnings (loss)
|
2,123 | (1,392 | ) | 933 | ||||||||
Basic earnings (loss) per share from continuing operations
|
$ | 2.50 | $ | (1.68 | ) | $ | 1.09 | |||||
Basic earnings (loss) per share
|
$ | 2.50 | $ | (1.67 | ) | $ | 1.09 | |||||
Diluted earnings (loss) per share from continuing operations
|
$ | 2.49 | $ | (1.68 | ) | $ | 1.08 | |||||
Diluted earnings (loss) per share
|
$ | 2.49 | $ | (1.67 | ) | $ | 1.08 | |||||
Consolidated Statement of Financial Position Data:
|
||||||||||||
Total assets
|
32,572 | 32,476 | 35,531 | |||||||||
Total long-term financial liabilities (1)
|
6,260 | 7,187 | 6,944 | |||||||||
Dividend Data:
|
||||||||||||
Dividends per Thomson Reuters Corporation common share (US$)
|
$ | 1.28 | $ | 1.24 | $ | 1.16 | ||||||
Dividends per Thomson Reuters Corporation Series II preference share (C$)
|
C$ | 0.53 | $ | C0.53 | $ | C0.45 | ||||||
Non-IFRS Data (unaudited) (2):
|
||||||||||||
Revenues from ongoing businesses
|
12,899 | 12,743 | 11,937 | |||||||||
Adjusted EBITDA
|
3,529 | 3,368 | 2,809 | |||||||||
Adjusted EBITDA margin
|
27.4 | % | 26.4 | % | 23.5 | % | ||||||
Adjusted EBITDA less capital expenditures
|
2,567 | 2,402 | 1,764 | |||||||||
Adjusted EBITDA less capital expenditures margin
|
19.9 | % | 18.8 | % | 14.8 | % | ||||||
Underlying operating profit
|
2,405 | 2,541 | 2,317 | |||||||||
Underlying operating profit margin
|
18.6 | % | 19.9 | % | 19.4 | % | ||||||
Adjusted earnings
|
1,756 | 1,634 | 1,279 | |||||||||
Adjusted earnings per share
|
$ | 2.12 | $ | 1.96 | $ | 1.53 | ||||||
Net debt
|
5,684 | 6,987 | 6,389 | |||||||||
Free cash flow
|
1,737 | 1,602 | 1,563 | |||||||||
Free cash flow from ongoing businesses
|
1,667 | 1,387 | 1,293 |
(1)
|
Long-term financial liabilities are comprised of “Long-term indebtedness” and “Other financial liabilities” classified as non-current on our consolidated statement of financial position.
|
(2)
|
Non-IFRS financial measures are defined in Appendix A of this management’s discussion and analysis.
|
Quarter ended
March 31,
|
Quarter ended
June 30,
|
Quarter ended
September 30,
|
Quarter ended
December 31,
|
|||||||||||||||||||||||||||||
(millions of U.S. dollars, except per share amounts)
|
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
||||||||||||||||||||||||
Revenues
|
3,354 | 3,330 | 3,309 | 3,447 | 3,216 | 3,453 | 3,399 | 3,577 | ||||||||||||||||||||||||
Operating profit (loss)
|
386 | 396 | 1,318 | 833 | 390 | 659 | 557 | (2,593 | ) | |||||||||||||||||||||||
Earnings (loss) from continuing operations
|
328 | 255 | 936 | 572 | 472 | 381 | 385 | (2,604 | ) | |||||||||||||||||||||||
Earnings (loss) from discontinued operations, net of tax
|
(2 | ) | 2 | (1 | ) | - | 2 | - | 3 | 2 | ||||||||||||||||||||||
Net earnings (loss)
|
326 | 257 | 935 | 572 | 474 | 381 | 388 | (2,602 | ) | |||||||||||||||||||||||
Earnings (loss) attributable to common shares
|
314 | 250 | 922 | 563 | 462 | 369 | 372 | (2,572 | ) | |||||||||||||||||||||||
Dividends declared on preference shares
|
(1 | ) | (1 | ) | (1 | ) | (1 | ) | - | - | (1 | ) | (1 | ) | ||||||||||||||||||
Basic earnings (loss) per share
|
||||||||||||||||||||||||||||||||
From continuing operations
|
$ | 0.38 | $ | 0.30 | $ | 1.11 | $ | 0.67 | $ | 0.56 | $ | 0.44 | $ | 0.44 | $ | (3.11 | ) | |||||||||||||||
From discontinued operations
|
- | - | - | - | - | - | 0.01 | - | ||||||||||||||||||||||||
$ | 0.38 | $ | 0.30 | $ | 1.11 | $ | 0.67 | $ | 0.56 | $ | 0.44 | $ | 0.45 | $ | (3.11 | ) | ||||||||||||||||
Diluted earnings (loss) per share
|
||||||||||||||||||||||||||||||||
From continuing operations
|
$ | 0.38 | $ | 0.30 | $ | 1.11 | $ | 0.67 | $ | 0.56 | $ | 0.44 | $ | 0.44 | $ | (3.11 | ) | |||||||||||||||
From discontinued operations
|
- | - | - | - | - | - | 0.01 | - | ||||||||||||||||||||||||
$ | 0.38 | $ | 0.30 | $ | 1.11 | $ | 0.67 | $ | 0.56 | $ | 0.44 | $ | 0.45 | $ | (3.11 | ) |
James C. Smith
|
Stephane Bello
|
President and Chief Executive Officer
|
Executive Vice President and Chief Financial Officer
|
March 11, 2013
|
James C. Smith
|
Stephane Bello
|
President and Chief Executive Officer
|
Executive Vice President and Chief Financial Officer
|
|
|
March 11, 2013
|
|
|
|
Year ended December 31,
|
|
|||||
(millions of U.S. dollars, except per share amounts)
|
Notes
|
|
2012
|
|
|
2011
|
|
||
Revenues
|
|
|
|
13,278
|
|
|
|
13,807
|
|
Operating expenses
|
5
|
|
|
(9,762
|
)
|
|
|
(9,997
|
)
|
Depreciation
|
|
|
|
(429
|
)
|
|
|
(438
|
)
|
Amortization of computer software
|
|
|
|
(700
|
)
|
|
|
(659
|
)
|
Amortization of other identifiable intangible assets
|
|
|
|
(619
|
)
|
|
|
(612
|
)
|
Goodwill impairment
|
18
|
|
|
-
|
|
|
|
(3,010
|
)
|
Other operating gains, net
|
6
|
|
|
883
|
|
|
|
204
|
|
Operating profit (loss)
|
|
|
|
2,651
|
|
|
|
(705
|
)
|
Finance costs, net:
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
7
|
|
|
(390
|
)
|
|
|
(396
|
)
|
Other finance income (costs)
|
7
|
|
|
40
|
|
|
|
(15
|
)
|
Income (loss) before tax and equity method investees
|
|
|
|
2,301
|
|
|
|
(1,116
|
)
|
Share of post-tax earnings and impairment in equity method investees
|
8
|
|
|
(23
|
)
|
|
|
13
|
|
Tax expense
|
9
|
|
|
(157
|
)
|
|
|
(293
|
)
|
Earnings (loss) from continuing operations
|
|
|
|
2,121
|
|
|
|
(1,396
|
)
|
Earnings from discontinued operations, net of tax
|
|
|
|
2
|
|
|
|
4
|
|
Net earnings (loss)
|
|
|
|
2,123
|
|
|
|
(1,392
|
)
|
Earnings (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
Common shareholders
|
|
|
|
2,070
|
|
|
|
(1,390
|
)
|
Non-controlling interests
|
|
|
|
53
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
10
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
|
$ |
2.50
|
|
|
$ |
(1.68
|
)
|
From discontinued operations
|
|
|
|
-
|
|
|
|
0.01
|
|
Basic earnings (loss) per share
|
|
|
$ |
2.50
|
|
|
$ |
(1.67
|
)
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
|
$ |
2.49
|
|
|
$ |
(1.68
|
)
|
From discontinued operations
|
|
|
|
-
|
|
|
|
0.01
|
|
Diluted earnings (loss) per share
|
|
|
$ |
2.49
|
|
|
$ |
(1.67
|
)
|
|
|
|
Year ended December 31,
|
|
|||||
(millions of U.S. dollars)
|
Notes
|
|
2012
|
|
|
2011
|
|
||
Net earnings (loss)
|
|
|
|
2,123
|
|
|
|
(1,392
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
Cash flow hedges adjustments to earnings
|
19
|
|
|
(57
|
)
|
|
|
62
|
|
Foreign currency translation adjustments to earnings
|
|
|
|
-
|
|
|
|
2
|
|
Items that may be subsequently reclassified to net earnings (loss):
|
|
|
|
|
|
|
|
|
|
Cash flow hedges adjustments to equity
|
|
|
|
23
|
|
|
|
(41
|
)
|
Foreign currency translation adjustments to equity
|
|
|
|
13
|
|
|
|
(59
|
)
|
|
|
|
36
|
|
|
|
(100
|
)
|
|
Item that will not be reclassified to net earnings (loss):
|
|
|
|
|
|
|
|
|
|
Net actuarial losses on defined benefit pension plans, net of tax(1)
|
26
|
|
|
(234
|
)
|
|
|
(262
|
)
|
Other comprehensive loss
|
|
|
|
(255
|
)
|
|
|
(298
|
)
|
Total comprehensive income (loss)
|
|
|
|
1,868
|
|
|
|
(1,690
|
)
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) for the period attributable to:
|
|
|
|
|
|
|
|
|
|
Common shareholders
|
|
|
|
1,815
|
|
|
|
(1,688
|
)
|
Non-controlling interests
|
|
|
|
53
|
|
|
|
(2
|
)
|
(1)
|
The related tax benefit was $120 million and $126 million for the years ended December 31, 2012 and 2011, respectively.
|
|
|
|
December 31,
|
|
|||||
(millions of U.S. dollars)
|
Notes
|
|
2012
|
|
|
2011
|
|
||
ASSETS
|
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
11
|
|
|
1,301
|
|
|
|
422
|
|
Trade and other receivables
|
12
|
|
|
1,835
|
|
|
|
1,984
|
|
Other financial assets
|
19
|
|
|
72
|
|
|
|
100
|
|
Prepaid expenses and other current assets
|
13
|
|
|
641
|
|
|
|
641
|
|
Current assets excluding assets held for sale
|
|
|
|
3,849
|
|
|
|
3,147
|
|
Assets held for sale
|
14
|
|
|
302
|
|
|
|
767
|
|
Current assets
|
|
|
|
4,151
|
|
|
|
3,914
|
|
Computer hardware and other property, net
|
15
|
|
|
1,423
|
|
|
|
1,509
|
|
Computer software, net
|
16
|
|
|
1,682
|
|
|
|
1,640
|
|
Other identifiable intangible assets, net
|
17
|
|
|
8,135
|
|
|
|
8,471
|
|
Goodwill
|
18
|
|
|
16,256
|
|
|
|
15,932
|
|
Other financial assets
|
19
|
|
|
360
|
|
|
|
425
|
|
Other non-current assets
|
20
|
|
|
515
|
|
|
|
535
|
|
Deferred tax
|
23
|
|
|
50
|
|
|
|
50
|
|
Total assets
|
|
|
|
32,572
|
|
|
|
32,476
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current indebtedness
|
19
|
|
|
1,008
|
|
|
|
434
|
|
Payables, accruals and provisions
|
21
|
|
|
2,633
|
|
|
|
2,675
|
|
Deferred revenue
|
|
|
|
1,224
|
|
|
|
1,379
|
|
Other financial liabilities
|
19
|
|
|
95
|
|
|
|
81
|
|
Current liabilities excluding liabilities associated with assets held for sale
|
|
|
|
4,960
|
|
|
|
4,569
|
|
Liabilities associated with assets held for sale
|
14
|
|
|
35
|
|
|
|
35
|
|
Current liabilities
|
|
|
|
4,995
|
|
|
|
4,604
|
|
Long-term indebtedness
|
19
|
|
|
6,223
|
|
|
|
7,160
|
|
Provisions and other non-current liabilities
|
22
|
|
|
2,514
|
|
|
|
2,513
|
|
Other financial liabilities
|
19
|
|
|
37
|
|
|
|
27
|
|
Deferred tax
|
23
|
|
|
1,305
|
|
|
|
1,422
|
|
Total liabilities
|
|
|
|
15,074
|
|
|
|
15,726
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Capital
|
24
|
|
|
10,371
|
|
|
|
10,288
|
|
Retained earnings
|
|
|
|
8,311
|
|
|
|
7,633
|
|
Accumulated other comprehensive loss
|
|
|
|
(1,537
|
)
|
|
|
(1,516
|
)
|
Total shareholders’ equity
|
|
|
|
17,145
|
|
|
|
16,405
|
|
Non-controlling interests
|
|
|
|
353
|
|
|
|
345
|
|
Total equity
|
|
|
|
17,498
|
|
|
|
16,750
|
|
Total liabilities and equity
|
|
|
|
32,572
|
|
|
|
32,476
|
|
David Thomson
|
James C. Smith
|
Director
|
Director
|
|
|
|
Year ended December 31,
|
|
|||||
(millions of U.S. dollars)
|
Notes
|
|
2012
|
|
|
2011
|
|
||
Cash provided by (used in):
|
|
|
|
|
|
|
|
||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
||
Net earnings (loss)
|
|
|
|
2,123
|
|
|
|
(1,392
|
)
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
429
|
|
|
|
438
|
|
Amortization of computer software
|
|
|
|
700
|
|
|
|
659
|
|
Amortization of other identifiable intangible assets
|
|
|
|
619
|
|
|
|
612
|
|
Goodwill impairment
|
|
|
|
-
|
|
|
|
3,010
|
|
Net gains on disposals of businesses and investments
|
|
|
|
(829
|
)
|
|
|
(388
|
)
|
Deferred tax
|
23
|
|
|
(118
|
)
|
|
|
(202
|
)
|
Other
|
27
|
|
|
(61
|
)
|
|
|
139
|
|
Changes in working capital and other items
|
27
|
|
|
(159
|
)
|
|
|
(279
|
)
|
Net cash provided by operating activities
|
|
|
|
2,704
|
|
|
|
2,597
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired
|
28
|
|
|
(1,301
|
)
|
|
|
(1,286
|
)
|
Proceeds from other disposals, net of taxes paid
|
|
|
|
1,901
|
|
|
|
415
|
|
Capital expenditures, less proceeds from disposals
|
|
|
|
(977
|
)
|
|
|
(1,041
|
)
|
Other investing activities
|
|
|
|
13
|
|
|
|
49
|
|
Investing cash flows from continuing operations
|
|
|
|
(364
|
)
|
|
|
(1,863
|
)
|
Investing cash flows from discontinued operations
|
|
|
|
90
|
|
|
|
56
|
|
Net cash used in investing activities
|
|
|
|
(274
|
)
|
|
|
(1,807
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Proceeds from debt
|
19
|
|
|
-
|
|
|
|
349
|
|
Repayments of debt
|
19
|
|
|
(2
|
)
|
|
|
(648
|
)
|
Net (repayments) borrowings under short-term loan facilities
|
|
|
|
(422
|
)
|
|
|
400
|
|
Repurchases of common shares
|
24
|
|
|
(168
|
)
|
|
|
(326
|
)
|
Dividends paid on preference shares
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Dividends paid on common shares
|
24
|
|
|
(1,021
|
)
|
|
|
(960
|
)
|
Other financing activities
|
|
|
|
65
|
|
|
|
(39
|
)
|
Net cash used in financing activities
|
|
|
|
(1,551
|
)
|
|
|
(1,227
|
)
|
Translation adjustments on cash and cash equivalents
|
|
|
|
-
|
|
|
|
(5
|
)
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
879
|
|
|
|
(442
|
)
|
Cash and cash equivalents at beginning of period
|
11
|
|
|
422
|
|
|
|
864
|
|
Cash and cash equivalents at end of period
|
11
|
|
|
1,301
|
|
|
|
422
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information is provided in note 27.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
(419
|
)
|
|
|
(399
|
)
|
Interest received
|
|
|
|
5
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid:
|
|
|
|
|
|
|
|
|
|
Within operating activities
|
|
|
|
(249
|
)
|
|
|
(358
|
)
|
Within investing activities
|
|
|
|
(197
|
)
|
|
|
(153
|
)
|
Total income taxes paid
|
|
|
|
(446
|
)
|
|
|
(511
|
)
|
(millions of U.S. dollars)
|
Stated
share
capital
|
Contributed
surplus
|
Total
capital
|
Retained
earnings
|
Unrecognized
loss on cash
flow hedges
|
Foreign
currency
translation
adjustments
|
Total
accumulated
other
comprehensive
loss (“AOCL”)
|
Non-
controlling
interests
|
Total
|
|||||||||||||||||||||||||||
Balance, December 31, 2011
|
10,134 | 154 | 10,288 | 7,633 | (22 | ) | (1,494 | ) | (1,516 | ) | 345 | 16,750 | ||||||||||||||||||||||||
Comprehensive income (loss)(1)
|
- | - | - | 1,836 | (34 | ) | 13 | (21 | ) | 53 | 1,868 | |||||||||||||||||||||||||
Distributions to non-controlling interest
|
- | - | - | - | - | - | - | (45 | ) | (45 | ) | |||||||||||||||||||||||||
Dividends declared on preference shares
|
- | - | - | (3 | ) | - | - | - | - | (3 | ) | |||||||||||||||||||||||||
Dividends declared on common shares
|
- | - | - | (1,059 | ) | - | - | - | - | (1,059 | ) | |||||||||||||||||||||||||
Shares issued under Dividend Reinvestment Plan (“DRIP”)
|
38 | - | 38 | - | - | - | - | - | 38 | |||||||||||||||||||||||||||
Repurchases of common shares
|
(72 | ) | - | (72 | ) | (96 | ) | - | - | - | - | (168 | ) | |||||||||||||||||||||||
Stock compensation plans
|
101 | 16 | 117 | - | - | - | - | - | 117 | |||||||||||||||||||||||||||
Balance, December 31, 2012
|
10,201 | 170 | 10,371 | 8,311 | (56 | ) | (1,481 | ) | (1,537 | ) | 353 | 17,498 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
(millions of U.S. dollars)
|
Stated
share
capital
|
Contributed
surplus
|
Total
capital
|
Retained
earnings
|
Unrecognized
(loss) gain on
cash flow
hedges
|
Foreign
currency
translation
adjustments
|
AOCL
|
Non-
controlling
interests
|
Total
|
|||||||||||||||||||||||||||
Balance, December 31, 2010
|
10,077 | 207 | 10,284 | 10,518 | (43 | ) | (1,437 | ) | (1,480 | ) | 353 | 19,675 | ||||||||||||||||||||||||
Comprehensive (loss) income(1)
|
- | - | - | (1,652 | ) | 21 | (57 | ) | (36 | ) | (2 | ) | (1,690 | ) | ||||||||||||||||||||||
Change in ownership interest of subsidiary
|
- | - | - | - | - | - | - | 34 | 34 | |||||||||||||||||||||||||||
Distributions to non-controlling interest
|
- | - | - | - | - | - | - | (40 | ) | (40 | ) | |||||||||||||||||||||||||
Dividends declared on preference shares
|
- | - | - | (3 | ) | - | - | - | - | (3 | ) | |||||||||||||||||||||||||
Dividends declared on common shares
|
- | - | - | (1,034 | ) | - | - | - | - | (1,034 | ) | |||||||||||||||||||||||||
Shares issued under DRIP
|
74 | - | 74 | - | - | - | - | - | 74 | |||||||||||||||||||||||||||
Repurchases of common shares
|
(130 | ) | - | (130 | ) | (196 | ) | - | - | - | - | (326 | ) | |||||||||||||||||||||||
Stock compensation plans
|
113 | (53 | ) | 60 | - | - | - | - | - | 60 | ||||||||||||||||||||||||||
Balance, December 31, 2011
|
10,134 | 154 | 10,288 | 7,633 | (22 | ) | (1,494 | ) | (1,516 | ) | 345 | 16,750 |
(1)
|
Retained earnings for the year ended December 31, 2012 includes net actuarial losses of $234 million, net of tax (2011 - $262 million).
|
|
·
|
acquisition cost is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, excluding transaction costs which are expensed as incurred;
|
|
·
|
identifiable assets acquired and liabilities assumed are measured at their fair values at the acquisition date;
|
|
·
|
the excess of acquisition cost over the fair value of the identifiable net assets acquired is recorded as goodwill;
|
|
·
|
if the acquisition cost is less than the fair value of the net assets acquired, the fair value of the net assets is re-assessed and any remaining difference is recognized directly in the income statement;
|
|
·
|
contingent consideration is measured at fair value on the acquisition date, with subsequent changes in the fair value recorded through the income statement when the contingent consideration is a financial liability. Contingent consideration is not re-measured when it is an equity instrument; and
|
|
·
|
upon gaining control in a step acquisition, the existing ownership interest is re-measured to fair value through the income statement.
|
|
·
|
investments are initially recognized at cost;
|
|
·
|
equity method investees include goodwill identified on acquisition, net of any accumulated impairment loss;
|
|
·
|
the Company’s share of post-acquisition profits or losses is recognized in the income statement and is adjusted against the carrying amount of the investments;
|
|
·
|
when the Company’s share of losses equals or exceeds its interest in the investee, including unsecured receivables, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the investee; and
|
|
·
|
gains on transactions between the Company and its equity method investees are eliminated to the extent of the Company’s interest in these entities, and losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
|
|
·
|
the statement of financial position includes the Company’s share of the assets that it controls jointly and the liabilities for which it is jointly responsible;
|
|
·
|
the income statement includes the Company’s share of the income and expenses of the jointly controlled entity; and
|
|
·
|
gains on transactions between the Company and its joint ventures are eliminated to the extent of the Company’s interest in the joint ventures, and losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
|
|
·
|
borrowings and related hedging instruments;
|
|
·
|
cash and cash equivalents; and
|
|
·
|
intercompany loans that are not permanent in nature.
|
|
·
|
the amount of revenue can be measured reliably;
|
|
·
|
the stage of completion can be measured reliably;
|
|
·
|
the receipt of economic benefits is probable; and
|
|
·
|
costs incurred and to be incurred can be measured reliably.
|
|
·
|
the risks and rewards of ownership, including managerial involvement, have transferred to the buyer;
|
|
·
|
the amount of revenue can be measured reliably;
|
|
·
|
the receipt of economic benefits is probable; and
|
|
·
|
costs incurred or to be incurred can be measured reliably.
|
Computer hardware
|
3-5 years
|
Buildings and building improvements
|
5-40 years
|
Furniture, fixtures and equipment
|
3-10 years
|
|
·
|
it is technically feasible to complete the software product so that it will be available for use;
|
|
·
|
management intends to complete the software product and use or sell it;
|
|
·
|
there is an ability to use or sell the software product;
|
|
·
|
it can be demonstrated how the software product will generate probable future economic benefits;
|
|
·
|
adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
|
|
·
|
the expenditure attributable to the software product during its development can be reliably measured.
|
Trade names
|
2-27 years
|
Customer relationships
|
2-30 years
|
Databases and content
|
2-30 years
|
Other
|
2-30 years
|
|
·
|
the fair value of trade names is determined using an income approach, specifically the relief from royalties method; and
|
|
·
|
goodwill is allocated to cash-generating units (“CGUs”) or groups of CGUs based on the level at which management monitors it, which is not higher than an operating segment. Goodwill is allocated to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose.
|
|
·
|
represent a separate major line of business or geographical area of operations;
|
|
·
|
are part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
|
|
·
|
are a subsidiary acquired exclusively with a view to resale.
|
|
·
|
Classification
|
|
·
|
Recognition and measurement
|
|
·
|
Classification
|
|
·
|
Recognition and measurement
|
|
·
|
Classification
|
|
·
|
Recognition and measurement
|
|
·
|
Fair value hedges
|
|
·
|
Cash flow hedges
|
|
·
|
amounts accumulated in other comprehensive income are recycled to the income statement in the period when the hedged item will affect earnings;
|
|
·
|
when a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss in other comprehensive income remains in other comprehensive income and is recognized when the forecast transaction is ultimately recognized in the income statement; and
|
|
·
|
when a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately recognized in the income statement.
|
|
·
|
are generally recognized for all taxable temporary differences;
|
|
·
|
are recognized for taxable temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future or create a tax liability; and
|
|
·
|
are not recognized on temporary differences that arise from goodwill which is not deductible for tax purposes.
|
|
·
|
are recognized to the extent it is probable that taxable profits will be available against which the deductible temporary differences can be utilized; and
|
|
·
|
are reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
|
|
·
|
most critical estimates and assumptions in determining the value of assets and liabilities; and
|
|
·
|
most critical judgments in applying accounting policies.
|
|
·
|
Operating profit and net finance costs decrease $48 million and increase $63 million, respectively, resulting in a $111 million decrease to pre-tax earnings;
|
|
·
|
Net earnings and the related diluted per share amount decrease $81 million and $0.10, respectively; and
|
|
·
|
No impact to total comprehensive income, net assets or cash.
|
IFRS 10
|
Consolidated Financial Statements
|
IFRS 10 replaces the guidance on ‘consolidation’ in IAS 27 - Consolidated and Separate Financial Statements, and Standing Interpretations Committee (“SIC”) 12 - Consolidation - Special Purpose Entities. The new standard contains a single consolidation model that identifies control as the basis for consolidation for all types of entities, including special purpose entities. The new standard also sets out requirements for situations when control is difficult to assess, including circumstances in which voting rights are not the dominant factor in determining control.
|
|
IFRS 11
|
Joint Arrangements
|
IFRS 11 replaces the guidance on ‘joint ventures’ in IAS 31 - Interests in Joint Ventures, and SIC 13 - Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The new standard introduces a principles-based approach to accounting for joint arrangements that requires a party to a joint arrangement to recognize its rights and obligations arising from the arrangement. The new standard requires that joint ventures be accounted for under the equity method and eliminates the option to proportionally consolidate.
|
|
IAS 27
|
Separate Financial Statements
|
IAS 27 has been amended for the issuance of IFRS 10, but retains the current guidance for separate financial statements.
|
IAS 28
|
Investments in Associates and Joint Ventures
|
IAS 28 has been amended for conforming changes based on the issuance of IFRS 10 and IFRS 11. The amendment requires that where a joint arrangement is determined to be a joint venture under IFRS 11, it should be accounted for using the equity method guidance provided in this standard.
|
IFRS 13
|
Fair Value Measurement
|
IFRS 13 defines 'fair value' and sets out in a single standard a framework for measuring fair value and requires disclosures about fair value measurements. The new standard reduces complexity and improves consistency by clarifying the definition of fair value and requiring its application to all fair value measurements.
|
|
2009 – 2011
Cycle
|
Annual Improvements to IFRSs
|
The Annual Improvements to IFRSs for the 2009 – 2011 Cycle (“Annual Improvements”) make non-urgent but necessary amendments to several IFRSs. Among several changes, the Annual Improvements: (a) amend IAS 16, Property, Plant and Equipment, to clarify the classification of servicing equipment; (b) amend IAS 32, Financial Instruments: Presentation, to clarify the treatment of income tax relating to distributions and transaction costs; and (c) amend IAS 34, Interim Financial Reporting, to clarify the disclosure requirements for segment assets and liabilities in interim financial statements.
|
IFRS 9
|
Financial Instruments (Classification and Measurement)
|
IFRS 9 replaces the guidance on ‘classification and measurement’ of financial instruments in IAS 39 - Financial Instruments - Recognition and Measurement. The new standard requires a consistent approach to the classification of financial assets and replaces the numerous categories of financial assets in IAS 39 with two categories, measured at either amortized cost or at fair value. For financial liabilities, the standard retains most of the IAS 39 requirements, but where the fair value option is taken, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.
|
|
·
|
IFRS 7 - Financial Instruments: Disclosures (amendments effective January 1, 2013 and 2015);
|
|
·
|
IFRS 12 - Disclosure of Interests in Other Entities (effective January 1, 2013); and
|
|
·
|
IAS 32 - Financial Instruments: Presentation (amendment effective January 1, 2014).
|
|
·
|
Corporate & Other includes expenses for corporate functions, certain share-based compensation costs and the Reuters News business, which is comprised of the Reuters News Agency and consumer publishing; and
|
|
·
|
Other Businesses is an aggregation of businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. In December 2012, the Company accepted a binding offer to sell its Investor Relations, Public Relations and Multimedia Solutions business (“Corporate Services”), and therefore classified the business as held for sale at December 31, 2012. The results of operations from businesses held for sale are normally reported within Other Businesses, however, because this business was managed for the entire year as part of the Financial & Risk segment, it has been included within the segment results for Financial & Risk, rather than within Other Businesses. See notes 6 and 14.
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011(1)
|
|
||
Revenues
|
|
|
|
|
|
|
||
Financial & Risk
|
|
|
7,193
|
|
|
|
7,297
|
|
Legal
|
|
|
3,286
|
|
|
|
3,221
|
|
Tax & Accounting
|
|
|
1,206
|
|
|
|
1,050
|
|
Intellectual Property & Science
|
|
|
894
|
|
|
|
852
|
|
Reportable segments
|
|
|
12,579
|
|
|
|
12,420
|
|
Corporate & Other (includes Reuters News)
|
|
|
331
|
|
|
|
336
|
|
Eliminations
|
|
|
(11
|
)
|
|
|
(13
|
)
|
Revenues from ongoing businesses
|
|
|
12,899
|
|
|
|
12,743
|
|
Other Businesses (2)
|
|
|
379
|
|
|
|
1,064
|
|
Consolidated revenues
|
|
|
13,278
|
|
|
|
13,807
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss)
|
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
|
|
|
|
|
Financial & Risk
|
|
|
1,215
|
|
|
|
1,396
|
|
Legal
|
|
|
964
|
|
|
|
941
|
|
Tax & Accounting
|
|
|
261
|
|
|
|
237
|
|
Intellectual Property & Science
|
|
|
235
|
|
|
|
237
|
|
Reportable segments
|
|
|
2,675
|
|
|
|
2,811
|
|
Corporate & Other (includes Reuters News)
|
|
|
(270
|
)
|
|
|
(270
|
)
|
Underlying operating profit
|
|
|
2,405
|
|
|
|
2,541
|
|
Other Businesses (2)
|
|
|
18
|
|
|
|
238
|
|
Integration programs expenses (see note 5)
|
|
|
-
|
|
|
|
(215
|
)
|
Fair value adjustments (see note 5)
|
|
|
(36
|
)
|
|
|
149
|
|
Amortization of other identifiable intangible assets
|
|
|
(619
|
)
|
|
|
(612
|
)
|
Goodwill impairment (3) (see note 18)
|
|
|
-
|
|
|
|
(3,010
|
)
|
Other operating gains, net
|
|
|
883
|
|
|
|
204
|
|
Consolidated operating profit (loss)
|
|
|
2,651
|
|
|
|
(705
|
)
|
|
Depreciation and
amortization of computer
software
|
|
|
Additions to capital
assets(4) and goodwill
|
|
|
Total assets
|
|
||||||||||||||||
|
|
Year ended December 31,
|
|
|
Year ended December 31,
|
|
|
December 31,
|
|
|||||||||||||||
|
|
2012
|
|
|
2011(1)
|
|
|
2012
|
|
|
2011(1)
|
|
|
2012
|
|
|
2011(1)
|
|
||||||
Financial & Risk
|
|
|
627
|
|
|
|
576
|
|
|
|
1,150
|
|
|
|
1,125
|
|
|
|
19,042
|
|
|
|
18,655
|
|
Legal
|
|
|
279
|
|
|
|
269
|
|
|
|
264
|
|
|
|
319
|
|
|
|
6,106
|
|
|
|
6,053
|
|
Tax & Accounting
|
|
|
115
|
|
|
|
95
|
|
|
|
259
|
|
|
|
690
|
|
|
|
2,337
|
|
|
|
2,213
|
|
Intellectual Property & Science
|
|
|
68
|
|
|
|
59
|
|
|
|
446
|
|
|
|
58
|
|
|
|
1,748
|
|
|
|
1,345
|
|
Reportable segments
|
|
|
1,089
|
|
|
|
999
|
|
|
|
2,119
|
|
|
|
2,192
|
|
|
|
29,233
|
|
|
|
28,266
|
|
Corporate & Other (includes Reuters News)
|
|
|
35
|
|
|
|
43
|
|
|
|
327
|
|
|
|
311
|
|
|
|
3,296
|
|
|
|
2,571
|
|
Other Businesses(2)
|
|
|
5
|
|
|
|
55
|
|
|
|
14
|
|
|
|
76
|
|
|
|
43
|
|
|
|
1,639
|
|
Total
|
|
|
1,129
|
|
|
|
1,097
|
|
|
|
2,460
|
|
|
|
2,579
|
|
|
|
32,572
|
|
|
|
32,476
|
|
Geographic Information
|
|
|
|
|
|
|
||||||||||
|
|
Revenues
|
|
|
Non-current assets(5)
|
|
||||||||||
|
|
Year ended December 31,
|
|
|
December 31,
|
|
||||||||||
(by country of origin)
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||
Americas (North America, Latin America, South America)
|
|
|
7,950
|
|
|
|
8,094
|
|
|
|
17,333
|
|
|
|
17,014
|
|
EMEA (Europe, Middle East and Africa)
|
|
|
3,762
|
|
|
|
4,093
|
|
|
|
8,346
|
|
|
|
8,628
|
|
Asia Pacific
|
|
|
1,566
|
|
|
|
1,620
|
|
|
|
2,054
|
|
|
|
2,178
|
|
Total
|
|
|
13,278
|
|
|
|
13,807
|
|
|
|
27,733
|
|
|
|
27,820
|
|
(1)
|
Prior-period amounts have been reclassified to reflect the current presentation.
|
(2)
|
Significant businesses in this category include: BARBRI (legal education provider, sold in the second quarter of 2011); Trade and Risk Management (trade and risk management solutions provider to financial institutions, sold in the first quarter of 2012); Healthcare (data, analytics and performance benchmarking solutions provider, sold in the second quarter of 2012); and Property Tax Consulting (property tax outsourcing and compliance services provider in the U.S., sold in the fourth quarter of 2012).
|
(3)
|
The goodwill impairment relates to the former Markets segment, which consisted largely of businesses now in the Financial & Risk segment.
|
(4)
|
Capital assets include computer hardware and other property, computer software and other identifiable intangible assets.
|
(5)
|
Non-current assets are primarily comprised of computer hardware and other property, computer software, other identifiable intangible assets, goodwill and investments in equity method investees.
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Electronic, software & services
|
|
|
12,089
|
|
|
|
12,546
|
|
Print
|
|
|
1,189
|
|
|
|
1,261
|
|
Total
|
|
|
13,278
|
|
|
|
13,807
|
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Salaries, commissions and allowances
|
|
|
4,998
|
|
|
|
5,132
|
|
Share-based payments
|
|
|
101
|
|
|
|
87
|
|
Post-employment benefits
|
|
|
261
|
|
|
|
242
|
|
Total staff costs
|
|
|
5,360
|
|
|
|
5,461
|
|
Goods and services (1)
|
|
|
2,256
|
|
|
|
2,487
|
|
Data
|
|
|
1,027
|
|
|
|
1,044
|
|
Telecommunications
|
|
|
589
|
|
|
|
628
|
|
Real estate
|
|
|
494
|
|
|
|
526
|
|
Fair value adjustments (2)
|
|
|
36
|
|
|
|
(149
|
)
|
Total operating expenses
|
|
|
9,762
|
|
|
|
9,997
|
|
(1)
|
Goods and services include professional fees, consulting services, contractors, technology-related expenses, selling and marketing, and other general and administrative costs.
|
(2)
|
Fair value adjustments primarily represent mark-to-market impacts on embedded derivatives and certain share-based awards.
|
|
·
|
$743 million from the sale of the Healthcare business;
|
|
·
|
$40 million from the sale of the Portia business;
|
|
·
|
$37 million from the sale of the Trade and Risk Management business; and
|
|
·
|
$84 million from pension settlements. See note 26.
|
|
·
|
$41 million of acquisition-related costs; and
|
|
·
|
$10 million of disposal-related expenses associated with businesses held for sale. See note 14.
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Interest expense:
|
|
|
|
|
|
|
||
Debt
|
|
|
(412
|
)
|
|
|
(422
|
)
|
Derivative financial instruments - hedging activities
|
|
|
16
|
|
|
|
30
|
|
Other
|
|
|
(2
|
)
|
|
|
(23
|
)
|
Fair value gains (losses) on financial instruments:
|
|
|
|
|
|
|
|
|
Debt
|
|
|
5
|
|
|
|
7
|
|
Cash flow hedges, transfer from equity (see note 19)
|
|
|
57
|
|
|
|
(62
|
)
|
Fair value hedges (see note 19)
|
|
|
(2
|
)
|
|
|
12
|
|
Net foreign exchange (losses) gains on debt
|
|
|
(60
|
)
|
|
|
43
|
|
|
|
|
(398
|
)
|
|
|
(415
|
)
|
Interest income
|
|
|
8
|
|
|
|
19
|
|
Net interest expense
|
|
|
(390
|
)
|
|
|
(396
|
)
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Net gains (losses) due to changes in foreign currency exchange rates
|
|
|
14
|
|
|
|
(12
|
)
|
Net gains (losses) on derivative instruments
|
|
|
24
|
|
|
|
(3
|
)
|
Other
|
|
|
2
|
|
|
|
-
|
|
Other finance income (costs)
|
|
|
40
|
|
|
|
(15
|
)
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Share of post-tax earnings in equity method investees
|
|
|
1
|
|
|
|
13
|
|
Impairment in equity method investee
|
|
|
(24
|
)
|
|
|
-
|
|
Share of post-tax earnings and impairment in equity method investees
|
|
|
(23
|
)
|
|
|
13
|
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Current tax expense (benefit):
|
|
|
|
|
|
|
||
Continuing operations
|
|
|
275
|
|
|
|
495
|
|
Discontinued operations
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax expense (benefit):
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(118
|
)
|
|
|
(202
|
)
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total tax expense (benefit):
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
157
|
|
|
|
293
|
|
Discontinued operations
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Deferred tax benefit on actuarial losses on defined benefit plans
|
|
|
(120
|
)
|
|
|
(126
|
)
|
Deferred tax expense on share-based payments
|
|
|
1
|
|
|
|
19
|
|
|
Year ended December 31,
|
|
||||||
(Expense) benefit
|
|
2012
|
|
|
2011
|
|
||
Sale of businesses(1)
|
|
|
(172
|
)
|
|
|
(112
|
)
|
|
|
|
|
|
|
|
|
|
Discrete tax items:
|
|
|
|
|
|
|
|
|
Uncertain tax positions(2)
|
|
|
175
|
|
|
|
72
|
|
Adjustments related to the prior year(3)
|
|
|
42
|
|
|
|
-
|
|
Corporate tax rates(4)
|
|
|
27
|
|
|
|
-
|
|
Tax losses from sale of an investment to Woodbridge(5)
|
|
|
-
|
|
|
|
46
|
|
Other(6)
|
|
|
10
|
|
|
|
(13
|
)
|
(1)
|
In 2012, primarily relates to the sale of Healthcare; in 2011 primarily relates to the sale of BARBRI.
|
(2)
|
Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.
|
(3)
|
Relates to changes in estimates identified during the preparation of the Company’s income tax returns.
|
(4)
|
Relates to the reduction of deferred tax liabilities due to lower effective U.S state tax rates and other corporate tax rate changes that were substantively enacted in certain jurisdictions outside the U.S.
|
(5)
|
Relates to the recognition of tax losses that arose in a prior year from the sale of an investment to Woodbridge.
|
(6)
|
In 2012, relates to the recognition of deferred tax assets in connection with acquisitions and disposals. In 2011, relates to certain tax losses previously used to offset taxable income in a foreign subsidiary that could not, in fact, be used by that subsidiary.
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Income (loss) before tax
|
|
|
2,278
|
|
|
|
(1,103
|
)
|
Income (loss) before tax multiplied by the standard rate of Canadian corporate tax of 26.4% (2011 - 28.0%)
|
|
|
600
|
|
|
|
(309
|
)
|
Effects of:
|
|
|
|
|
|
|
|
|
Income taxes recorded at rates different from the Canadian tax rate
|
|
|
(269
|
)
|
|
|
(272
|
)
|
Tax losses for which no benefit is recognized
|
|
|
75
|
|
|
|
109
|
|
Recognition of tax losses that arose in prior years
|
|
|
(10
|
)
|
|
|
(47
|
)
|
Impairments of non-deductible goodwill (1)
|
|
|
-
|
|
|
|
827
|
|
Net non-taxable gains on disposal of businesses and impairments of investments
|
|
|
(78
|
)
|
|
|
(14
|
)
|
Net non-deductible (non-taxable) foreign exchange and other (gains) losses
|
|
|
29
|
|
|
|
(41
|
)
|
Withholding taxes
|
|
|
32
|
|
|
|
40
|
|
Impact of non-controlling interests
|
|
|
(13
|
)
|
|
|
(10
|
)
|
Other adjustments related to prior years
|
|
|
(45
|
)
|
|
|
(2
|
)
|
Impact of tax law changes
|
|
|
(27
|
)
|
|
|
(2
|
)
|
Provision for uncertain tax positions(2)
|
|
|
(153
|
)
|
|
|
(9
|
)
|
Other differences
|
|
|
16
|
|
|
|
23
|
|
Total tax expense on continuing operations
|
|
|
157
|
|
|
|
293
|
|
(1)
|
Relates primarily to non-deductible impairment of goodwill required under IAS 36. See note 18.
|
(2)
|
Includes $175 million (2011 - $72 million) of tax benefit from the reversal of provisions for uncertain tax positions.
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Net earnings (loss)
|
|
|
2,123
|
|
|
|
(1,392
|
)
|
Less:(Earnings) loss attributable to non-controlling interests
|
|
|
(53
|
)
|
|
|
2
|
|
Dividends declared on preference shares
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Earnings (loss) used in consolidated earnings per share
|
|
|
2,067
|
|
|
|
(1,393
|
)
|
Less: Earnings from discontinued operations, net of tax
|
|
|
(2
|
)
|
|
|
(4
|
)
|
Earnings (loss) used in earnings (loss) per share from continuing operations
|
|
|
2,065
|
|
|
|
(1,397
|
)
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Weighted average number of shares outstanding
|
|
|
826,978,165
|
|
|
|
832,793,760
|
|
Vested DSUs and PRSUs
|
|
|
662,233
|
|
|
|
665,692
|
|
Basic
|
|
|
827,640,398
|
|
|
|
833,459,452
|
|
Effect of stock options and TRSUs
|
|
|
1,963,382
|
|
|
|
-
|
|
Diluted
|
|
|
829,603,780
|
|
|
|
833,459,452
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Cash
|
|
|
|
|
|
|
||
Cash at bank and on hand
|
|
|
327
|
|
|
|
249
|
|
Cash equivalents
|
|
|
|
|
|
|
|
|
Short-term deposits
|
|
|
351
|
|
|
|
25
|
|
Money market accounts
|
|
|
540
|
|
|
|
110
|
|
Commercial paper investments
|
|
|
83
|
|
|
|
38
|
|
Cash and cash equivalents
|
|
|
1,301
|
|
|
|
422
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Trade receivables
|
|
|
1,947
|
|
|
|
2,111
|
|
Less: allowance for doubtful accounts
|
|
|
(64
|
)
|
|
|
(49
|
)
|
Less: allowance for sales adjustments
|
|
|
(71
|
)
|
|
|
(96
|
)
|
Net trade receivables
|
|
|
1,812
|
|
|
|
1,966
|
|
Other receivables
|
|
|
23
|
|
|
|
18
|
|
Trade and other receivables
|
|
|
1,835
|
|
|
|
1,984
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Current
|
|
|
1,139
|
|
|
|
1,456
|
|
Past due 1-30 days
|
|
|
288
|
|
|
|
201
|
|
Past due 31-60 days
|
|
|
220
|
|
|
|
228
|
|
Past due 61-90 days
|
|
|
74
|
|
|
|
70
|
|
Past due >91 days
|
|
|
226
|
|
|
|
156
|
|
Balance at December 31
|
|
|
1,947
|
|
|
|
2,111
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Balance at beginning of year
|
|
|
49
|
|
|
|
39
|
|
Charges
|
|
|
62
|
|
|
|
51
|
|
Write-offs
|
|
|
(50
|
)
|
|
|
(52
|
)
|
Acquisitions
|
|
|
2
|
|
|
|
9
|
|
Other
|
|
|
1
|
|
|
|
2
|
|
Balance at end of year
|
|
|
64
|
|
|
|
49
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Inventory
|
|
|
55
|
|
|
|
66
|
|
Prepaid expenses
|
|
|
350
|
|
|
|
372
|
|
Other current assets
|
|
|
236
|
|
|
|
203
|
|
Prepaid expenses and other current assets
|
|
|
641
|
|
|
|
641
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Trade and other receivables
|
|
|
3
|
|
|
|
12
|
|
Computer software, net
|
|
|
6
|
|
|
|
76
|
|
Other identifiable intangible assets, net
|
|
|
35
|
|
|
|
-
|
|
Goodwill
|
|
|
250
|
|
|
|
659
|
|
Other assets
|
|
|
8
|
|
|
|
20
|
|
Total assets held for sale
|
|
|
302
|
|
|
|
767
|
|
|
|
|
|
|
|
|
|
|
Payables, accruals and provisions
|
|
|
21
|
|
|
|
14
|
|
Deferred revenue
|
|
|
8
|
|
|
|
13
|
|
Other liabilities
|
|
|
6
|
|
|
|
8
|
|
Total liabilities associated with assets held for sale
|
|
|
35
|
|
|
|
35
|
|
|
Computer
hardware
|
|
|
Land,
buildings and
building
improvements
|
|
|
Furniture,
fixtures
and
equipment
|
|
|
Total
|
|
|||||
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2010
|
|
|
2,101
|
|
|
|
1,212
|
|
|
|
524
|
|
|
|
3,837
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
308
|
|
|
|
57
|
|
|
|
55
|
|
|
|
420
|
|
Acquisitions
|
|
|
3
|
|
|
|
3
|
|
|
|
1
|
|
|
|
7
|
|
Removed from service
|
|
|
(122
|
)
|
|
|
(29
|
)
|
|
|
(29
|
)
|
|
|
(180
|
)
|
Transfer to assets held for sale
|
|
|
(73
|
)
|
|
|
(17
|
)
|
|
|
(12
|
)
|
|
|
(102
|
)
|
Translation and other, net
|
|
|
(43
|
)
|
|
|
(13
|
)
|
|
|
5
|
|
|
|
(51
|
)
|
December 31, 2011
|
|
|
2,174
|
|
|
|
1,213
|
|
|
|
544
|
|
|
|
3,931
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
247
|
|
|
|
46
|
|
|
|
52
|
|
|
|
345
|
|
Acquisitions
|
|
|
6
|
|
|
|
4
|
|
|
|
6
|
|
|
|
16
|
|
Disposals
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(5
|
)
|
Removed from service
|
|
|
(41
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
(59
|
)
|
Transfer to assets held for sale
|
|
|
(104
|
)
|
|
|
(15
|
)
|
|
|
(18
|
)
|
|
|
(137
|
)
|
Translation and other, net
|
|
|
4
|
|
|
|
36
|
|
|
|
(5
|
)
|
|
|
35
|
|
December 31, 2012
|
|
|
2,286
|
|
|
|
1,270
|
|
|
|
570
|
|
|
|
4,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
(1,530
|
)
|
|
|
(400
|
)
|
|
|
(340
|
)
|
|
|
(2,270
|
)
|
Current year depreciation
|
|
|
(313
|
)
|
|
|
(82
|
)
|
|
|
(43
|
)
|
|
|
(438
|
)
|
Removed from service
|
|
|
122
|
|
|
|
29
|
|
|
|
29
|
|
|
|
180
|
|
Transfer to assets held for sale
|
|
|
67
|
|
|
|
11
|
|
|
|
9
|
|
|
|
87
|
|
Translation and other, net
|
|
|
14
|
|
|
|
2
|
|
|
|
3
|
|
|
|
19
|
|
December 31, 2011
|
|
|
(1,640
|
)
|
|
|
(440
|
)
|
|
|
(342
|
)
|
|
|
(2,422
|
)
|
Current year depreciation
|
|
|
(297
|
)
|
|
|
(84
|
)
|
|
|
(48
|
)
|
|
|
(429
|
)
|
Removed from service
|
|
|
41
|
|
|
|
10
|
|
|
|
8
|
|
|
|
59
|
|
Transfer to assets held for sale
|
|
|
80
|
|
|
|
11
|
|
|
|
14
|
|
|
|
105
|
|
Translation and other, net
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
2
|
|
|
|
(16
|
)
|
December 31, 2012
|
|
|
(1,826
|
)
|
|
|
(511
|
)
|
|
|
(366
|
)
|
|
|
(2,703
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
534
|
|
|
|
773
|
|
|
|
202
|
|
|
|
1,509
|
|
December 31, 2012
|
|
|
460
|
|
|
|
759
|
|
|
|
204
|
|
|
|
1,423
|
|
|
2012
|
|
|
2011
|
|
|||
Cost:
|
|
|
|
|
|
|
||
Balance at January 1,
|
|
|
4,250
|
|
|
|
4,704
|
|
Additions:
|
|
|
|
|
|
|
|
|
Internally developed
|
|
|
593
|
|
|
|
615
|
|
Purchased
|
|
|
73
|
|
|
|
41
|
|
Acquisitions
|
|
|
119
|
|
|
|
95
|
|
Removed from service
|
|
|
(35
|
)
|
|
|
(979
|
)
|
Transfer to assets held for sale
|
|
|
(150
|
)
|
|
|
(232
|
)
|
Translation and other, net
|
|
|
38
|
|
|
|
6
|
|
Balance at December 31,
|
|
|
4,888
|
|
|
|
4,250
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization:
|
|
|
|
|
|
|
|
|
Balance at January 1,
|
|
|
(2,610
|
)
|
|
|
(3,091
|
)
|
Current year amortization
|
|
|
(700
|
)
|
|
|
(659
|
)
|
Removed from service
|
|
|
35
|
|
|
|
979
|
|
Transfer to assets held for sale
|
|
|
94
|
|
|
|
150
|
|
Translation and other, net
|
|
|
(25
|
)
|
|
|
11
|
|
Balance at December 31,
|
|
|
(3,206
|
)
|
|
|
(2,610
|
)
|
|
|
|
|
|
|
|
|
|
Carrying amount at December 31:
|
|
|
1,682
|
|
|
|
1,640
|
|
|
Indefinite
useful life
|
|
|
Finite useful life
|
|
|
|
|
||||||||||||||||
|
|
Trade
names
|
|
|
Trade
names
|
|
|
Customer
relationships
|
|
|
Databases
and
content
|
|
|
Other
|
|
|
Total
|
|
||||||
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2010
|
|
|
2,646
|
|
|
|
332
|
|
|
|
6,541
|
|
|
|
940
|
|
|
|
1,732
|
|
|
|
12,191
|
|
Acquisitions
|
|
|
-
|
|
|
|
47
|
|
|
|
355
|
|
|
|
89
|
|
|
|
12
|
|
|
|
503
|
|
Transfer to assets held for sale
|
|
|
-
|
|
|
|
(34
|
)
|
|
|
(60
|
)
|
|
|
(14
|
)
|
|
|
(20
|
)
|
|
|
(128
|
)
|
Translation and other, net
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
(41
|
)
|
|
|
-
|
|
|
|
(23
|
)
|
|
|
(75
|
)
|
December 31, 2011
|
|
|
2,646
|
|
|
|
334
|
|
|
|
6,795
|
|
|
|
1,015
|
|
|
|
1,701
|
|
|
|
12,491
|
|
Acquisitions
|
|
|
-
|
|
|
|
58
|
|
|
|
394
|
|
|
|
25
|
|
|
|
3
|
|
|
|
480
|
|
Transfer to assets held for sale
|
|
|
-
|
|
|
|
(35
|
)
|
|
|
(407
|
)
|
|
|
(56
|
)
|
|
|
(35
|
)
|
|
|
(533
|
)
|
Translation and other, net
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
(18
|
)
|
|
|
6
|
|
|
|
27
|
|
|
|
10
|
|
December 31, 2012
|
|
|
2,646
|
|
|
|
352
|
|
|
|
6,764
|
|
|
|
990
|
|
|
|
1,696
|
|
|
|
12,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
-
|
|
|
|
(176
|
)
|
|
|
(1,832
|
)
|
|
|
(544
|
)
|
|
|
(925
|
)
|
|
|
(3,477
|
)
|
Current year amortization
|
|
|
-
|
|
|
|
(36
|
)
|
|
|
(451
|
)
|
|
|
(54
|
)
|
|
|
(71
|
)
|
|
|
(612
|
)
|
Impairment(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
(26
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(26
|
)
|
Transfer to assets held for sale
|
|
|
-
|
|
|
|
10
|
|
|
|
56
|
|
|
|
12
|
|
|
|
12
|
|
|
|
90
|
|
Translation and other, net
|
|
|
-
|
|
|
|
-
|
|
|
|
11
|
|
|
|
3
|
|
|
|
(9
|
)
|
|
|
5
|
|
December 31, 2011
|
|
|
-
|
|
|
|
(202
|
)
|
|
|
(2,242
|
)
|
|
|
(583
|
)
|
|
|
(993
|
)
|
|
|
(4,020
|
)
|
Current year amortization
|
|
|
-
|
|
|
|
(36
|
)
|
|
|
(457
|
)
|
|
|
(56
|
)
|
|
|
(70
|
)
|
|
|
(619
|
)
|
Transfer to assets held for sale
|
|
|
-
|
|
|
|
24
|
|
|
|
261
|
|
|
|
49
|
|
|
|
33
|
|
|
|
367
|
|
Translation and other, net
|
|
|
-
|
|
|
|
1
|
|
|
|
(8
|
)
|
|
|
(6
|
)
|
|
|
(28
|
)
|
|
|
(41
|
)
|
December 31, 2012
|
|
|
-
|
|
|
|
(213
|
)
|
|
|
(2,446
|
)
|
|
|
(596
|
)
|
|
|
(1,058
|
)
|
|
|
(4,313
|
)
|
Carrying amount:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
2,646
|
|
|
|
132
|
|
|
|
4,553
|
|
|
|
432
|
|
|
|
708
|
|
|
|
8,471
|
|
December 31, 2012
|
|
|
2,646
|
|
|
|
139
|
|
|
|
4,318
|
|
|
|
394
|
|
|
|
638
|
|
|
|
8,135
|
|
(1)
|
Impairment charges associated with businesses held for sale. See note 6.
|
|
·
|
$1,939 million of indefinite-lived trade names and $2,791 million of customer relationships, which have a remaining amortization period of 9 to 11 years, each arising from the Reuters acquisition; and
|
|
·
|
$707 million of indefinite-lived trade names associated with West.
|
|
Carrying amount of
indefinite-lived
intangible assets at
|
|
||||||
|
|
December 31,
|
|
|||||
Cash-Generating Unit
|
|
2012
|
|
|
2011
|
|
||
Financial & Risk
|
|
|
1,939
|
|
|
|
1,939
|
|
West(1)
|
|
|
707
|
|
|
|
707
|
|
Total indefinite-lived intangible assets
|
|
|
2,646
|
|
|
|
2,646
|
|
(1)
|
A CGU within the Legal segment which uses the West brand name.
|
|
Perpetual
|
|
|
Discount
|
|
|
Pre-tax
|
|
||||
Cash-Generating Unit
|
|
growth rate
|
|
|
rate
|
|
|
royalty rate
|
|
|||
Financial & Risk
|
|
|
3.0
|
%
|
|
|
9.5
|
%
|
|
|
3.5
|
%
|
West
|
|
|
2.0
|
%
|
|
|
7.5
|
%
|
|
|
5.0
|
%
|
|
2012
|
|
|
2011
|
|
|||
Cost:
|
|
|
|
|
|
|
||
Balance at January 1,
|
|
|
18,911
|
|
|
|
18,892
|
|
Acquisitions
|
|
|
822
|
|
|
|
898
|
|
Transfer to assets held for sale
|
|
|
(596
|
)
|
|
|
(804
|
)
|
Translation and other, net
|
|
|
109
|
|
|
|
(75
|
)
|
Balance at December 31,
|
|
|
19,246
|
|
|
|
18,911
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairments:
|
|
|
|
|
|
|
|
|
Balance at January 1,
|
|
|
(2,979
|
)
|
|
|
-
|
|
Impairment(1)
|
|
|
-
|
|
|
|
(3,010
|
)
|
Translation
|
|
|
(11
|
)
|
|
|
31
|
|
Balance at December 31,
|
|
|
(2,990
|
)
|
|
|
(2,979
|
)
|
|
|
|
|
|
|
|
|
|
Carrying amount at December 31:
|
|
|
16,256
|
|
|
|
15,932
|
|
(1)
|
In the fourth quarter of 2011, an impairment was recorded in the former Markets segment due to weaker than expected performance. The Markets segment consisted largely of businesses which are now in the Financial & Risk segment. The tax impact of the impairment charge was only $28 million because this goodwill had no significant tax basis.
|
|
Carrying amount of goodwill at
|
|
||||||
|
|
December 31,
|
|
|||||
Cash-Generating Unit
|
|
2012
|
|
|
2011(1)
|
|
||
Financial & Risk
|
|
|
10,644
|
|
|
|
10,427
|
|
Legal
|
|
|
3,186
|
|
|
|
3,089
|
|
Tax & Accounting
|
|
|
1,398
|
|
|
|
1,306
|
|
Intellectual Property & Science
|
|
|
1,028
|
|
|
|
762
|
|
Other(2)
|
|
|
-
|
|
|
|
348
|
|
Total goodwill
|
|
|
16,256
|
|
|
|
15,932
|
|
(1)
|
2011 is presented on a comparable basis to 2012.
|
(2)
|
Other is comprised of the Healthcare business that was sold in 2012.
|
|
Perpetual
|
|
|
Discount
|
|
|
Tax
|
|
||||
Cash-Generating Unit
|
|
growth rate
|
|
|
rate
|
|
|
rate
|
|
|||
Financial & Risk
|
|
|
3.0
|
%
|
|
|
9.5
|
%
|
|
|
28.0
|
%
|
Legal
|
|
|
2.5
|
%
|
|
|
7.5
|
%
|
|
|
39.0
|
%
|
Tax & Accounting
|
|
|
3.0
|
%
|
|
|
9.0
|
%
|
|
|
40.0
|
%
|
Intellectual Property & Science
|
|
|
3.0
|
%
|
|
|
8.5
|
%
|
|
|
39.0
|
%
|
December 31, 2012
|
|
Cash, loans
and
receivables
|
|
|
Assets/
(liabilities)
at fair
value
through
earnings
|
|
|
Derivatives
used for
hedging(1)
|
|
|
Available
for sale
|
|
|
Other
financial
liabilities
|
|
|
Total
|
|
||||||
Cash and cash equivalents
|
|
|
1,301
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,301
|
|
Trade and other receivables
|
|
|
1,835
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,835
|
|
Other financial assets – current
|
|
|
31
|
|
|
|
40
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
72
|
|
Other financial assets – non-current
|
|
|
74
|
|
|
|
9
|
|
|
|
257
|
|
|
|
20
|
|
|
|
-
|
|
|
|
360
|
|
Current indebtedness
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,008
|
)
|
|
|
(1,008
|
)
|
Trade payables (see note 21)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(461
|
)
|
|
|
(461
|
)
|
Accruals (see note 21)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,764
|
)
|
|
|
(1,764
|
)
|
Other financial liabilities – current
|
|
|
-
|
|
|
|
(52
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(43
|
)
|
|
|
(95
|
)
|
Long term indebtedness
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,223
|
)
|
|
|
(6,223
|
)
|
Other financial liabilities – non-current
|
|
|
-
|
|
|
|
(22
|
)
|
|
|
(15
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(37
|
)
|
Total
|
|
|
3,241
|
|
|
|
(25
|
)
|
|
|
243
|
|
|
|
20
|
|
|
|
(9,499
|
)
|
|
|
(6,020
|
)
|
December 31, 2011
|
|
Cash, loans
and
receivables
|
|
|
Assets/
(liabilities)
at fair value
through
earnings
|
|
|
Derivatives
used for
hedging(1)
|
|
|
Available
for sale
|
|
|
Other
financial
liabilities
|
|
|
Total
|
|
||||||
Cash and cash equivalents
|
|
|
422
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
422
|
|
Trade and other receivables
|
|
|
1,984
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,984
|
|
Other financial assets – current
|
|
|
27
|
|
|
|
73
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
Other financial assets – non-current
|
|
|
154
|
|
|
|
-
|
|
|
|
251
|
|
|
|
20
|
|
|
|
-
|
|
|
|
425
|
|
Current indebtedness
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(434
|
)
|
|
|
(434
|
)
|
Trade payables (see note 21)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(508
|
)
|
|
|
(508
|
)
|
Accruals (see note 21)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,756
|
)
|
|
|
(1,756
|
)
|
Other financial liabilities – current
|
|
|
-
|
|
|
|
(32
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(49
|
)
|
|
|
(81
|
)
|
Long term indebtedness
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,160
|
)
|
|
|
(7,160
|
)
|
Other financial liabilities – non-current
|
|
|
-
|
|
|
|
-
|
|
|
|
(27
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(27
|
)
|
Total
|
|
|
2,587
|
|
|
|
41
|
|
|
|
224
|
|
|
|
20
|
|
|
|
(9,907
|
)
|
|
|
(7,035
|
)
|
(1)
|
Derivatives are entered into with specific objectives for each transaction, and are linked to specific assets, liabilities, firm commitments or highly probable forecasted transactions.
|
|
Year ended December 31,
|
|
||||||||||||||
|
|
2012
|
|
|
2011
|
|
||||||||||
|
|
Fair value
gain (loss)
through
earnings
|
|
|
Fair value
gain (loss)
through
equity
|
|
|
Fair value
gain (loss)
through
earnings
|
|
|
Fair value
gain (loss)
through
equity
|
|
||||
Embedded derivatives
|
|
|
(37
|
)
|
|
|
-
|
|
|
|
97
|
|
|
|
-
|
|
Hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency interest rate swaps - fair value hedges
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
12
|
|
|
|
-
|
|
Cross currency interest rate swaps – cash flow hedges
|
|
|
57
|
|
|
|
(35
|
)
|
|
|
(62
|
)
|
|
|
21
|
|
Forward interest rate swaps - cash flow hedges
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
Other derivatives (1)
|
|
|
25
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
-
|
|
Other derivatives
|
|
|
43
|
|
|
|
(34
|
)
|
|
|
41
|
|
|
|
21
|
|
(1)
|
Represents derivatives used to manage foreign exchange risk on cash flows excluding long-term indebtedness.
|
|
Carrying amount
|
|
|
Fair value
|
|
|||||||||||
As of December 31, 2012
|
|
Primary
debt
instruments
|
|
|
Derivative
instruments
(asset)
liability
|
|
|
Primary
debt
instruments
|
|
|
Derivative
instruments
(asset)
liability
|
|
||||
Bank and other
|
|
|
8
|
|
|
|
-
|
|
|
|
10
|
|
|
|
-
|
|
C$600, 5.20% Notes, due 2014
|
|
|
612
|
|
|
|
(123
|
)
|
|
|
641
|
|
|
|
(123
|
)
|
C$600, 5.70% Notes, due 2015
|
|
|
601
|
|
|
|
15
|
|
|
|
658
|
|
|
|
15
|
|
C$750, 6.00% Notes due 2016
|
|
|
751
|
|
|
|
(125
|
)
|
|
|
841
|
|
|
|
(125
|
)
|
C$750, 4.35% Notes due 2020
|
|
|
748
|
|
|
|
(9
|
)
|
|
|
827
|
|
|
|
(9
|
)
|
$250, 5.25% Notes, due 2013
|
|
|
250
|
|
|
|
-
|
|
|
|
256
|
|
|
|
-
|
|
$750, 5.95% Notes, due 2013
|
|
|
750
|
|
|
|
-
|
|
|
|
772
|
|
|
|
-
|
|
$800, 5.70% Notes, due 2014
|
|
|
797
|
|
|
|
-
|
|
|
|
867
|
|
|
|
-
|
|
$1,000, 6.50% Notes, due 2018
|
|
|
991
|
|
|
|
-
|
|
|
|
1,243
|
|
|
|
-
|
|
$500, 4.70% Notes due 2019
|
|
|
496
|
|
|
|
-
|
|
|
|
575
|
|
|
|
-
|
|
$350, 3.95% Notes due 2021
|
|
|
346
|
|
|
|
-
|
|
|
|
380
|
|
|
|
-
|
|
$400, 5.50% Debentures, due 2035
|
|
|
393
|
|
|
|
-
|
|
|
|
468
|
|
|
|
-
|
|
$500, 5.85% Debentures, due 2040
|
|
|
488
|
|
|
|
-
|
|
|
|
632
|
|
|
|
-
|
|
Total
|
|
|
7,231
|
|
|
|
(242
|
)
|
|
|
8,170
|
|
|
|
(242
|
)
|
Current portion
|
|
|
(1,008
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
6,223
|
|
|
|
(242
|
)
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
Fair value
|
|
|||||||||||
As of December 31, 2011
|
|
Primary
debt
instruments
|
|
|
Derivative
instruments
(asset)
liability
|
|
|
Primary
debt
instruments
|
|
|
Derivative
instruments
(asset)
liability
|
|
||||
Bank and other
|
|
|
45
|
|
|
|
-
|
|
|
|
47
|
|
|
|
-
|
|
Commercial paper
|
|
|
390
|
|
|
|
-
|
|
|
|
390
|
|
|
|
-
|
|
C$600, 5.20% Notes, due 2014
|
|
|
604
|
|
|
|
(121
|
)
|
|
|
641
|
|
|
|
(121
|
)
|
C$600, 5.70% Notes, due 2015
|
|
|
587
|
|
|
|
27
|
|
|
|
658
|
|
|
|
27
|
|
C$750, 6.00% Notes due 2016
|
|
|
733
|
|
|
|
(117
|
)
|
|
|
842
|
|
|
|
(117
|
)
|
C$750, 4.35% Notes due 2020
|
|
|
731
|
|
|
|
(13
|
)
|
|
|
782
|
|
|
|
(13
|
)
|
$250, 5.25% Notes, due 2013
|
|
|
249
|
|
|
|
-
|
|
|
|
265
|
|
|
|
-
|
|
$750, 5.95% Notes, due 2013
|
|
|
748
|
|
|
|
-
|
|
|
|
799
|
|
|
|
-
|
|
$800, 5.70% Notes, due 2014
|
|
|
796
|
|
|
|
-
|
|
|
|
883
|
|
|
|
-
|
|
$1,000, 6.50% Notes, due 2018
|
|
|
990
|
|
|
|
-
|
|
|
|
1,191
|
|
|
|
-
|
|
$500, 4.70% Notes due 2019
|
|
|
496
|
|
|
|
-
|
|
|
|
552
|
|
|
|
-
|
|
$350, 3.95% Notes due 2021
|
|
|
346
|
|
|
|
-
|
|
|
|
362
|
|
|
|
-
|
|
$400, 5.50% Debentures, due 2035
|
|
|
392
|
|
|
|
-
|
|
|
|
426
|
|
|
|
-
|
|
$500, 5.85% Debentures, due 2040
|
|
|
487
|
|
|
|
-
|
|
|
|
566
|
|
|
|
-
|
|
Total
|
|
|
7,594
|
|
|
|
(224
|
)
|
|
|
8,404
|
|
|
|
(224
|
)
|
Current portion
|
|
|
(434
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
7,160
|
|
|
|
(224
|
)
|
|
|
|
|
|
|
|
|
Received
|
Paid
|
Hedged Risk
|
Year of
Maturity
|
|
Principal
Amount
|
|
|
2012 fair value hedges
|
|
|
|
|
|
|
|
Canadian dollar fixed
|
U.S. dollar floating
|
Interest rate and foreign exchange
|
2014
|
|
|
123
|
|
2011 fair value hedges
|
|
|
|
|
|
|
|
Canadian dollar fixed
|
U.S. dollar floating
|
Interest rate and foreign exchange
|
2014
|
|
|
123
|
|
Received
|
Paid
|
Hedged Risk
|
Year of
Maturity
|
|
Principal
Amount
|
|
|
2012 cash flow hedges
|
|
|
|
|
|
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2014
|
|
|
369
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2015
|
|
|
593
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2016
|
|
|
610
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2020
|
|
|
731
|
|
2011 cash flow hedges
|
|
|
|
|
|
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2014
|
|
|
369
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2015
|
|
|
593
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2016
|
|
|
610
|
|
Canadian dollar fixed
|
U.S. dollar fixed
|
Foreign exchange
|
2020
|
|
|
731
|
|
|
|
Notional Principal
|
|
||||
Received
|
Paid
|
Hedged Risk
|
Year of
Maturity
|
|
Amount
|
|
|
2012 cash flow hedges
(interest rate)
|
|
|
|
|
|
|
|
U.S dollar-floating
|
U.S. dollar fixed
|
Forward interest rate
|
2023
|
|
|
100
|
|
U.S dollar-floating
|
U.S. dollar fixed
|
Forward interest rate
|
2023
|
|
|
100
|
|
|
Before currency hedging
arrangements
|
|
|
After currency hedging
arrangements (1)
|
|
|||||||||||
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||
Canadian dollar
|
|
|
2,712
|
|
|
|
2,794
|
|
|
|
-
|
|
|
|
-
|
|
U.S. dollar
|
|
|
4,512
|
|
|
|
4,791
|
|
|
|
6,928
|
|
|
|
7,340
|
|
Euro
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
Other currencies
|
|
|
4
|
|
|
|
6
|
|
|
|
4
|
|
|
|
6
|
|
|
|
|
7,231
|
|
|
|
7,594
|
|
|
|
6,935
|
|
|
|
7,349
|
|
(1)
|
Excludes fair value adjustments of ($54) million and ($19) million at December 31, 2012 and 2011, respectively. In 2011, there was ($2) million of derivatives associated with commercial paper borrowings that were not designated as hedges for accounting purposes.
|
2012
|
Average
interest rate
|
% Share
|
2011
|
Average
interest rate
|
% Share
|
|||||||||||||||||||
Total fixed
|
6,805 | 5.6 | % | 98 | % | 6,798 | 5.6 | % | 93 | % | ||||||||||||||
Total floating
|
130 | 0.8 | % | 2 | % | 551 | 0.9 | % | 7 | % | ||||||||||||||
|
6,935 | 5.5 | % | 100 | % | 7,349 | 5.2 | % | 100 | % |
Date
|
Transaction
|
Principal Amount
(in millions)
|
Notes issued
|
||
October 2011
|
3.95% notes due 2021
|
US$350
|
Notes repaid
|
||
July 2011
|
5.25% notes due 2011
|
C$600
|
|
December 31,
|
|
||||||
Sell (buy)
|
|
2012
|
|
|
2011
|
|
||
Euros
|
|
|
620
|
|
|
|
477
|
|
British pounds sterling
|
|
|
(309
|
)
|
|
|
(208
|
)
|
Japanese yen
|
|
|
134
|
|
|
|
123
|
|
|
·
|
changes in exchange rates between 2011 and 2012 decreased consolidated revenues by approximately 2%;
|
|
·
|
the translation effects of changes in exchange rates in the consolidated statement of financial position were net translation gains of $13 million in 2012 (2011 - net translation losses of $59 million) and are recorded within accumulated other comprehensive income in shareholders’ equity; and
|
|
·
|
the Company only uses derivative instruments to reduce foreign currency and interest rate exposures. In particular, borrowings in currencies other than the U.S. dollar are generally converted to U.S. dollar obligations through the use of currency swap arrangements. At each reporting date presented, substantially all indebtedness was denominated in U.S. dollars or had been swapped into U.S. dollar obligations. Additionally, the Company enters into forward contracts to mitigate foreign exchange risk related to operating cash flows other than the U.S. dollar.
|
|
10% weakening in foreign currency vs. US$
(in millions)
|
|
||||||||||||||
Decrease to earnings
|
|
£
|
|
|
€
|
|
|
Other
currencies
|
|
|
Total
|
|
||||
Impact on earnings from financial assets and liabilities(1)
|
|
|
(2
|
)
|
|
|
(48
|
)
|
|
|
(3
|
)
|
|
|
(53
|
)
|
Impact on earnings from non-permanent intercompany loans
|
|
|
(56
|
)
|
|
|
(3
|
)
|
|
|
(18
|
)
|
|
|
(77
|
)
|
Total impact on earnings
|
|
|
(58
|
)
|
|
|
(51
|
)
|
|
|
(21
|
)
|
|
|
(130
|
)
|
(1)
|
Excludes debt which has been swapped into U.S. dollar obligations.
|
|
·
|
cash investments are placed with high-quality financial institutions with limited exposure to any one institution. At December 31, 2012, approximately 90% of cash and cash equivalents were held by institutions that were rated at least “A” by major credit rating agencies;
|
|
·
|
counterparties to derivative contracts are major investment-grade international financial institutions and exposure to any single counterparty is monitored and limited; and
|
|
·
|
the Company assesses the creditworthiness of customers.
|
December 31, 2012
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
Thereafter
|
|
|
Total
|
|
|||||||
Long-term debt (1)
|
|
|
1,000
|
|
|
|
1,392
|
|
|
|
587
|
|
|
|
727
|
|
|
|
-
|
|
|
|
3,465
|
|
|
|
7,171
|
|
Interest payable (1)
|
|
|
376
|
|
|
|
330
|
|
|
|
248
|
|
|
|
196
|
|
|
|
185
|
|
|
|
1,244
|
|
|
|
2,579
|
|
Debt-related hedges outflows (2)
|
|
|
127
|
|
|
|
617
|
|
|
|
685
|
|
|
|
649
|
|
|
|
28
|
|
|
|
810
|
|
|
|
2,916
|
|
Debt-related hedges inflows (2)
|
|
|
(142
|
)
|
|
|
(730
|
)
|
|
|
(682
|
)
|
|
|
(769
|
)
|
|
|
(31
|
)
|
|
|
(801
|
)
|
|
|
(3,155
|
)
|
Trade payables
|
|
|
461
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
461
|
|
Accruals
|
|
|
1,764
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,764
|
|
Other financial liabilities
|
|
|
103
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
103
|
|
Total
|
|
|
3,689
|
|
|
|
1,609
|
|
|
|
838
|
|
|
|
803
|
|
|
|
182
|
|
|
|
4,718
|
|
|
|
11,839
|
|
December 31, 2011
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2016
|
|
|
Thereafter
|
|
|
Total
|
|
||
Long-term debt (1)
|
|
|
-
|
|
|
|
1,000
|
|
|
|
1,383
|
|
|
|
581
|
|
|
|
725
|
|
|
|
3,471
|
|
|
|
7,160
|
|
Interest payable (1)
|
|
|
397
|
|
|
|
373
|
|
|
|
328
|
|
|
|
248
|
|
|
|
196
|
|
|
|
1,429
|
|
|
|
2,971
|
|
Debt-related hedges outflows (2)
|
|
|
127
|
|
|
|
127
|
|
|
|
617
|
|
|
|
685
|
|
|
|
649
|
|
|
|
838
|
|
|
|
3,043
|
|
Debt-related hedges inflows (2)
|
|
|
(140
|
)
|
|
|
(139
|
)
|
|
|
(719
|
)
|
|
|
(676
|
)
|
|
|
(767
|
)
|
|
|
(838
|
)
|
|
|
(3,279
|
)
|
Commercial paper
|
|
|
390
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
390
|
|
Trade payables
|
|
|
508
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
508
|
|
Accruals
|
|
|
1,756
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,756
|
|
Other financial liabilities
|
|
|
125
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
126
|
|
Total
|
|
|
3,163
|
|
|
|
1,362
|
|
|
|
1,609
|
|
|
|
838
|
|
|
|
803
|
|
|
|
4,900
|
|
|
|
12,675
|
|
(1)
|
Represents contractual principal and interest payments. Future cash flows have been calculated using forward foreign exchange rates.
|
(2)
|
Substantially all non-U.S. dollar-denominated debt has been hedged into U.S. dollars. Debt-related hedges outflows represent projected payments to counterparties. Where future interest cash flows are not fixed, amounts have been calculated using forward interest rates. Debt-related hedges inflows represent projected cash receipts from counterparties. These future cash flows have been calculated using forward foreign exchange rates.
|
|
·
|
Focus on free cash flow and ensure that cash generated is balanced between reinvestment in the business and returns to shareholders; and
|
|
·
|
Maintain a strong balance sheet, strong credit ratings and ample financial flexibility to support the execution of the Company’s business strategies.
|
Moody's
|
Standard & Poor's
|
DBRS Limited
|
Fitch
|
|
Long-term debt
|
Baa1
|
A-
|
A (low)
|
A-
|
Commercial paper
|
-
|
A-1 (low)
|
R-1 (low)
|
F2
|
Trend/Outlook
|
Stable
|
Negative
|
Stable
|
Stable
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Current indebtedness
|
|
|
1,008
|
|
|
|
434
|
|
Long-term indebtedness
|
|
|
6,223
|
|
|
|
7,160
|
|
Total debt
|
|
|
7,231
|
|
|
|
7,594
|
|
Swaps
|
|
|
(242
|
)
|
|
|
(224
|
)
|
Total debt after swaps
|
|
|
6,989
|
|
|
|
7,370
|
|
Other derivatives (1)
|
|
|
-
|
|
|
|
(2
|
)
|
Remove fair value adjustments for hedges (2)
|
|
|
(54
|
)
|
|
|
(19
|
)
|
Total debt after hedging arrangements
|
|
|
6,935
|
|
|
|
7,349
|
|
Remove transaction costs and discounts included in carrying value of debt
|
|
|
50
|
|
|
|
60
|
|
Less: cash and cash equivalents (3)
|
|
|
(1,301
|
)
|
|
|
(422
|
)
|
Net debt (2)
|
|
|
5,684
|
|
|
|
6,987
|
|
(1)
|
Fair value of derivatives associated with commercial paper borrowings that were not designated as hedges for accounting purposes.
|
(2)
|
Amounts are removed to reflect net cash outflow upon maturity.
|
(3)
|
Includes restricted cash of $148 million and $147 million at December 31, 2012 and 2011, respectively.
|
|
·
|
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
|
·
|
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
|
|
·
|
Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
||||
Assets
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Balance
|
|
||||
Financial assets at fair value through earnings
|
|
|
-
|
|
|
|
49
|
|
|
|
-
|
|
|
|
49
|
|
Derivatives used for hedging
|
|
|
-
|
|
|
|
258
|
|
|
|
-
|
|
|
|
258
|
|
Available for sale
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
Total assets
|
|
|
20
|
|
|
|
307
|
|
|
|
-
|
|
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through earnings
|
|
|
-
|
|
|
|
(74
|
)
|
|
|
-
|
|
|
|
(74
|
)
|
Derivatives used for hedging
|
|
|
-
|
|
|
|
(15
|
)
|
|
|
-
|
|
|
|
(15
|
)
|
Total liabilities
|
|
|
-
|
|
|
|
(89
|
)
|
|
|
-
|
|
|
|
(89
|
)
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
||||
Assets
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Balance
|
|
||||
Financial assets at fair value through earnings
|
|
|
-
|
|
|
|
73
|
|
|
|
-
|
|
|
|
73
|
|
Derivatives used for hedging
|
|
|
-
|
|
|
|
251
|
|
|
|
-
|
|
|
|
251
|
|
Available for sale
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
Total assets
|
|
|
20
|
|
|
|
324
|
|
|
|
-
|
|
|
|
344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through earnings
|
|
|
-
|
|
|
|
(32
|
)
|
|
|
-
|
|
|
|
(32
|
)
|
Derivatives used for hedging
|
|
|
-
|
|
|
|
(27
|
)
|
|
|
-
|
|
|
|
(27
|
)
|
Total liabilities
|
|
|
-
|
|
|
|
(59
|
)
|
|
|
-
|
|
|
|
(59
|
)
|
|
·
|
quoted market prices or dealer quotes for similar instruments; and
|
|
·
|
the fair value of currency and interest rate swaps and also forward foreign exchange contracts is calculated as the present value of the estimated future cash flows based on observable yield curves.
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Net defined benefit plan surpluses (see note 26)
|
|
|
9
|
|
|
|
13
|
|
Cash surrender value of life insurance policies
|
|
|
256
|
|
|
|
241
|
|
Investments in equity method investees(1)
|
|
|
204
|
|
|
|
253
|
|
Other non-current assets
|
|
|
46
|
|
|
|
28
|
|
Total other non-current assets
|
|
|
515
|
|
|
|
535
|
|
(1)
|
The decrease at December 31, 2012 was due to a divestiture and an impairment charge. See note 8.
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Trade payables
|
|
|
461
|
|
|
|
508
|
|
Accruals
|
|
|
1,764
|
|
|
|
1,756
|
|
Provisions (see note 22)
|
|
|
190
|
|
|
|
232
|
|
Other current liabilities
|
|
|
218
|
|
|
|
179
|
|
Total payables, accruals and provisions
|
|
|
2,633
|
|
|
|
2,675
|
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Net defined benefit plan obligations (see note 26)
|
|
|
1,694
|
|
|
|
1,438
|
|
Deferred compensation and employee incentives
|
|
|
221
|
|
|
|
218
|
|
Provisions
|
|
|
166
|
|
|
|
176
|
|
Unfavorable contract liability
|
|
|
99
|
|
|
|
147
|
|
Uncertain tax positions
|
|
|
234
|
|
|
|
446
|
|
Other non-current liabilities
|
|
|
100
|
|
|
|
88
|
|
Total provisions and other non-current liabilities
|
|
|
2,514
|
|
|
|
2,513
|
|
|
Integration &
restructuring
|
|
|
Other
provisions
|
|
|
Total
provisions
|
|
||||
Balance at December 31, 2010
|
|
|
146
|
|
|
|
238
|
|
|
|
384
|
|
Charges
|
|
|
214
|
|
|
|
28
|
|
|
|
242
|
|
Utilization
|
|
|
(189
|
)
|
|
|
(32
|
)
|
|
|
(221
|
)
|
Translation and other, net
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
Balance at December 31, 2011
|
|
|
172
|
|
|
|
236
|
|
|
|
408
|
|
Less: short-term provisions
|
|
|
149
|
|
|
|
83
|
|
|
|
232
|
|
Long-term provisions
|
|
|
23
|
|
|
|
153
|
|
|
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
|
172
|
|
|
|
236
|
|
|
|
408
|
|
Charges
|
|
|
85
|
|
|
|
34
|
|
|
|
119
|
|
Utilization
|
|
|
(146
|
)
|
|
|
(48
|
)
|
|
|
(194
|
)
|
Translation and other, net
|
|
|
(2
|
)
|
|
|
25
|
|
|
|
23
|
|
Balance at December 31, 2012
|
|
|
109
|
|
|
|
247
|
|
|
|
356
|
|
Less: short-term provisions
|
|
|
90
|
|
|
|
100
|
|
|
|
190
|
|
Long-term provisions
|
|
|
19
|
|
|
|
147
|
|
|
|
166
|
|
Deferred tax liabilities
|
|
Goodwill
and other
identifiable
intangible
assets
|
|
|
Computer
software,
computer
hardware
and other
property
|
|
|
Other
|
|
|
Total
|
|
||||
December 31, 2010
|
|
|
2,405
|
|
|
|
172
|
|
|
|
271
|
|
|
|
2,848
|
|
Acquisitions
|
|
|
91
|
|
|
|
23
|
|
|
|
3
|
|
|
|
117
|
|
Benefit to income statement
|
|
|
(280
|
)
|
|
|
(41
|
)
|
|
|
(8
|
)
|
|
|
(329
|
)
|
Translation and other, net
|
|
|
(20
|
)
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
(50
|
)
|
December 31, 2011
|
|
|
2,196
|
|
|
|
154
|
|
|
|
236
|
|
|
|
2,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
141
|
|
|
|
35
|
|
|
|
(12
|
)
|
|
|
164
|
|
(Benefit) expense to income statement
|
|
|
(211
|
)
|
|
|
(46
|
)
|
|
|
35
|
|
|
|
(222
|
)
|
Translation and other, net
|
|
|
4
|
|
|
|
(13
|
)
|
|
|
15
|
|
|
|
6
|
|
December 31, 2012
|
|
|
2,130
|
|
|
|
130
|
|
|
|
274
|
|
|
|
2,534
|
|
Deferred tax assets
|
|
Tax losses
|
|
|
Employee
benefits
|
|
|
Deferred and
share-based
compensation
|
|
|
Other
|
|
|
Total
|
|
|||||
December 31, 2010
|
|
|
359
|
|
|
|
365
|
|
|
|
177
|
|
|
|
331
|
|
|
|
1,232
|
|
Acquisitions
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
7
|
|
(Expense) benefit to income statement
|
|
|
(87
|
)
|
|
|
13
|
|
|
|
(35
|
)
|
|
|
(18
|
)
|
|
|
(127
|
)
|
Benefit (expense) to equity
|
|
|
-
|
|
|
|
126
|
|
|
|
(19
|
)
|
|
|
-
|
|
|
|
107
|
|
Translation and other, net
|
|
|
(6
|
)
|
|
|
1
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
(5
|
)
|
December 31, 2011
|
|
|
270
|
|
|
|
505
|
|
|
|
124
|
|
|
|
315
|
|
|
|
1,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
29
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
|
35
|
|
(Expense) benefit to income statement
|
|
|
(17
|
)
|
|
|
(30
|
)
|
|
|
5
|
|
|
|
(62
|
)
|
|
|
(104
|
)
|
Benefit (expense) to equity
|
|
|
-
|
|
|
|
120
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
119
|
|
Translation and other, net
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
14
|
|
|
|
15
|
|
December 31, 2012
|
|
|
282
|
|
|
|
596
|
|
|
|
128
|
|
|
|
273
|
|
|
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred liability at December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,372
|
)
|
Net deferred liability at December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,255
|
)
|
|
December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Deferred tax liabilities
|
|
|
|
|
|
|
||
Deferred tax liabilities to be recovered after more than 12 months
|
|
|
2,523
|
|
|
|
2,562
|
|
Deferred tax liabilities to be recovered within 12 months
|
|
|
11
|
|
|
|
24
|
|
Total deferred tax liabilities
|
|
|
2,534
|
|
|
|
2,586
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Deferred tax assets to be recovered after more than 12 months
|
|
|
1,083
|
|
|
|
992
|
|
Deferred tax assets to be recovered within 12 months
|
|
|
196
|
|
|
|
222
|
|
Total deferred tax assets
|
|
|
1,279
|
|
|
|
1,214
|
|
Net deferred tax liability
|
|
|
1,255
|
|
|
|
1,372
|
|
|
Number of
Common
shares
|
|
|
Stated
capital
|
|
|
Series II,
cumulative
redeemable
preference
share
capital
|
|
|
Contributed
surplus
|
|
|
Total
capital
|
|
||||||
Balance, December 31, 2010
|
|
|
833,396,235
|
|
|
|
9,967
|
|
|
|
110
|
|
|
|
207
|
|
|
|
10,284
|
|
Shares issued under DRIP
|
|
|
2,003,374
|
|
|
|
74
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74
|
|
Stock compensation plans
|
|
|
3,223,924
|
|
|
|
113
|
|
|
|
-
|
|
|
|
(53
|
)
|
|
|
60
|
|
Repurchases of common shares
|
|
|
(10,755,900
|
)
|
|
|
(130
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(130
|
)
|
Balance, December 31, 2011
|
|
|
827,867,633
|
|
|
|
10,024
|
|
|
|
110
|
|
|
|
154
|
|
|
|
10,288
|
|
Shares issued under DRIP
|
|
|
1,373,389
|
|
|
|
38
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38
|
|
Stock compensation plans
|
|
|
3,609,636
|
|
|
|
101
|
|
|
|
-
|
|
|
|
16
|
|
|
|
117
|
|
Repurchases of common shares
|
|
|
(5,948,600
|
)
|
|
|
(72
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(72
|
)
|
Balance, December 31, 2012
|
|
|
826,902,058
|
|
|
|
10,091
|
|
|
|
110
|
|
|
|
170
|
|
|
|
10,371
|
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Dividends declared per common share
|
|
$ |
1.28
|
|
|
$ |
1.24
|
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Dividend reinvestment
|
|
|
38
|
|
|
|
74
|
|
Equity settled
|
Cash settled (1)
|
|||
Type of award
|
Vesting period
|
Fair Value Measure
|
Compensation expense based on:
|
|
Stock options
|
Up to four years
|
Black-Scholes
option pricing model
|
Fair value on
business day prior
to grant date
|
Fair value
at reporting date
|
TRSUs
|
Up to seven years
|
Closing common
share price
|
Fair value on
business day prior
to grant date
|
Fair value
at reporting date
|
PRSUs
|
Three year
performance period
|
Closing common
share price
|
Fair value on
business day prior
to grant date
|
Fair value
at reporting date
|
(1)
|
Cash settled awards represent the portion of share-based compensation relating to withholding tax.
|
|
2012
|
|
|
2011
|
|
|||
Weighted average fair value ($)
|
|
|
5.19
|
|
|
|
8.39
|
|
Weighted average of key assumptions:
|
|
|
|
|
|
|
|
|
Share price ($)
|
|
|
28.35
|
|
|
|
38.90
|
|
Exercise price ($)
|
|
|
28.35
|
|
|
|
38.90
|
|
Risk-free interest rate
|
|
|
1.2
|
%
|
|
|
2.6
|
%
|
Dividend yield
|
|
|
3.4
|
%
|
|
|
3.3
|
%
|
Volatility factor
|
|
|
28
|
%
|
|
|
29
|
%
|
Expected life (in years)
|
|
|
6
|
|
|
|
6
|
|
|
Stock
Options
|
|
|
TRSUs
|
|
|
PRSUs
|
|
|
SAYE(1)
|
|
|
SARs
|
|
|
Total
|
|
|
Weighted
average
exercise
price ($)
|
|
||||||||
Awards outstanding in thousands:
|
|
|||||||||||||||||||||||||||
Outstanding at December 31, 2010
|
|
|
13,270
|
|
|
|
2,705
|
|
|
|
5,620
|
|
|
|
1,006
|
|
|
|
425
|
|
|
|
23,026
|
|
|
|
21.89
|
|
Granted
|
|
|
1,902
|
|
|
|
862
|
|
|
|
1,791
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,555
|
|
|
|
16.24
|
|
Exercised
|
|
|
(2,339
|
)
|
|
|
(1,785
|
)
|
|
|
(999
|
)
|
|
|
(28
|
)
|
|
|
(13
|
)
|
|
|
(5,164
|
)
|
|
|
15.21
|
|
Forfeited
|
|
|
(639
|
)
|
|
|
(69
|
)
|
|
|
(1,248
|
)
|
|
|
(57
|
)
|
|
|
(48
|
)
|
|
|
(2,061
|
)
|
|
|
11.87
|
|
Expired
|
|
|
(1,623
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(51
|
)
|
|
|
(57
|
)
|
|
|
(1,731
|
)
|
|
|
46.24
|
|
Outstanding at December 31, 2011
|
|
|
10,571
|
|
|
|
1,713
|
|
|
|
5,164
|
|
|
|
870
|
|
|
|
307
|
|
|
|
18,625
|
|
|
|
21.10
|
|
Exercisable at December 31, 2011
|
|
|
6,367
|
|
|
|
-
|
|
|
|
-
|
|
|
|
689
|
|
|
|
300
|
|
|
|
7,356
|
|
|
|
33.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,544
|
|
|
|
2,260
|
|
|
|
1,640
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,444
|
|
|
|
11.19
|
|
Exercised
|
|
|
(594
|
)
|
|
|
(538
|
)
|
|
|
(1,699
|
)
|
|
|
(776
|
)
|
|
|
-
|
|
|
|
(3,607
|
)
|
|
|
8.17
|
|
Forfeited
|
|
|
(1,210
|
)
|
|
|
(281
|
)
|
|
|
(919
|
)
|
|
|
(21
|
)
|
|
|
(29
|
)
|
|
|
(2,460
|
)
|
|
|
17.60
|
|
Expired
|
|
|
(838
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(17
|
)
|
|
|
(172
|
)
|
|
|
(1,027
|
)
|
|
|
39.25
|
|
Outstanding at December 31, 2012
|
|
|
10,473
|
|
|
|
3,154
|
|
|
|
4,186
|
|
|
|
56
|
|
|
|
106
|
|
|
|
17,975
|
|
|
|
19.61
|
|
Exercisable at December 31, 2012
|
|
|
6,664
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56
|
|
|
|
104
|
|
|
|
6,824
|
|
|
|
34.40
|
|
(1)
|
The Company replaced the “Save-as-you-earn” (“SAYE”) plan in the UK with the ESPP in 2010.
|
|
Stock
Options
|
|
|
TRSUs
|
|
|
PRSUs
|
|
|
Others(2)
|
|
|
Total
|
|
||||||
December 31, 2012(1)
|
|
|
10
|
|
|
|
27
|
|
|
|
59
|
|
|
|
9
|
|
|
|
105
|
|
December 31, 2011(1)
|
|
|
(6
|
)
|
|
|
19
|
|
|
|
26
|
|
|
|
5
|
|
|
|
44
|
|
(1)
|
Includes loss of $4 million at December 31, 2012 (2011 – gain of $43 million) relating to the revaluation of withholding taxes on stock based compensation awards, which is included within fair value adjustments in the presentation of “Operating expenses” in note 5.
|
(2)
|
Principally comprised of expense related to ESPP, SAYE and SARs.
|
Range of exercise prices
|
|
Number
Outstanding
(in thousands)
|
|
|
Weighted
average
remaining
contractual
life (years)
|
|
|
Weighted
average
exercise
price for
plans
outstanding
|
|
|
Number
exercisable
(in thousands)
|
|
|
Weighted
average
exercise
price for
plans
exercisable
|
|
||||||
0.00 – 30.00 |
|
|
11,297
|
|
|
|
3.60
|
|
|
$ |
9.16
|
|
|
|
1,386
|
|
|
$ |
23.22
|
|
|
30.01 - 35.00 |
|
|
849
|
|
|
|
1.69
|
|
|
$ |
33.61
|
|
|
|
844
|
|
|
$ |
33.63
|
|
|
35.01 – 40.00 |
|
|
4,793
|
|
|
|
6.20
|
|
|
$ |
36.77
|
|
|
|
3,558
|
|
|
$ |
36.53
|
|
|
40.01 - 45.00 |
|
|
1,036
|
|
|
|
3.73
|
|
|
$ |
42.66
|
|
|
|
1,036
|
|
|
$ |
42.66
|
|
|
Total
|
|
|
17,975
|
|
|
|
|
|
|
|
|
|
|
|
6,824
|
|
|
|
|
|
|
Pension Plans (1)
|
|
|
OPEB (1)
|
|
|
Total (1)
|
|
||||||||||||||||
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||
As of January 1
|
|
|
(1,189
|
)
|
|
|
(782
|
)
|
|
|
(236
|
)
|
|
|
(196
|
)
|
|
|
(1,425
|
)
|
|
|
(978
|
)
|
Plan income (expense) recognized in income statement
|
|
|
12
|
|
|
|
(134
|
)
|
|
|
(14
|
)
|
|
|
(16
|
)
|
|
|
(2
|
)
|
|
|
(150
|
)
|
Actuarial (losses) gains
|
|
|
(373
|
)
|
|
|
(358
|
)
|
|
|
19
|
|
|
|
(30
|
)
|
|
|
(354
|
)
|
|
|
(388
|
)
|
Exchange differences
|
|
|
(12
|
)
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
|
(12
|
)
|
|
|
4
|
|
Contributions paid
|
|
|
94
|
|
|
|
75
|
|
|
|
11
|
|
|
|
11
|
|
|
|
105
|
|
|
|
86
|
|
Other
|
|
|
2
|
|
|
|
8
|
|
|
|
1
|
|
|
|
(7
|
)
|
|
|
3
|
|
|
|
1
|
|
Net plan obligations as of December 31
|
|
|
(1,466
|
)
|
|
|
(1,189
|
)
|
|
|
(219
|
)
|
|
|
(236
|
)
|
|
|
(1,685
|
)
|
|
|
(1,425
|
)
|
Net plan surpluses recognized in non-current assets
|
|
|
|
9
|
|
|
|
13
|
|
|||||||||||||||
Net plan obligations recognized in non-current liabilities
|
|
|
|
(1,694
|
)
|
|
|
(1,438
|
)
|
(1)
|
Includes amounts for immaterial defined benefit and OPEB plans that are not included in the detailed analysis below.
|
|
·
|
a lump-sum payment in December 2012; or
|
|
·
|
reduced annuity payments commencing in January 2013 (with effect from December 2012).
|
|
Funded
|
|
|
Unfunded (1)
|
|
|
OPEB
|
|
|
Total
|
|
|||||||||||||||||||||
As of December 31,
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||||
Present value of plan obligations
|
|
|
(6,157
|
)
|
|
|
(5,686
|
)
|
|
|
(340
|
)
|
|
|
(314
|
)
|
|
|
(201
|
)
|
|
|
(216
|
)
|
|
|
(6,698
|
)
|
|
|
(6,216
|
)
|
Fair value of plan assets
|
|
|
5,173
|
|
|
|
4,991
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,173
|
|
|
|
4,991
|
|
|
|
|
(984
|
)
|
|
|
(695
|
)
|
|
|
(340
|
)
|
|
|
(314
|
)
|
|
|
(201
|
)
|
|
|
(216
|
)
|
|
|
(1,525
|
)
|
|
|
(1,225
|
)
|
Unrecognized plan assets (2)
|
|
|
(121
|
)
|
|
|
(155
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(121
|
)
|
|
|
(155
|
)
|
Net plan obligations
|
|
|
(1,105
|
)
|
|
|
(850
|
)
|
|
|
(340
|
)
|
|
|
(314
|
)
|
|
|
(201
|
)
|
|
|
(216
|
)
|
|
|
(1,646
|
)
|
|
|
(1,380
|
)
|
Net plan surpluses
|
|
|
6
|
|
|
|
11
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
|
11
|
|
Net plan obligations
|
|
|
(1,111
|
)
|
|
|
(861
|
)
|
|
|
(340
|
)
|
|
|
(314
|
)
|
|
|
(201
|
)
|
|
|
(216
|
)
|
|
|
(1,652
|
)
|
|
|
(1,391
|
)
|
(1)
|
The unfunded pension plans referred to above consist of supplemental executive retirement plans (“SERPs”) for eligible employees.
|
(2)
|
Unrecognized plan assets represent the plan surpluses deemed not recoverable as the Company cannot unilaterally reduce future contributions in order to utilize the surplus. These amounts are not included in the statement of financial position.
|
Present Value of Defined Benefit Obligation
|
|
|||||||||||||||||||||||||||||||
|
|
Funded
|
|
|
Unfunded
|
|
|
OPEB
|
|
|
Total
|
|
||||||||||||||||||||
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||||
Opening defined benefit obligation
|
|
|
(5,686
|
)
|
|
|
(4,883
|
)
|
|
|
(314
|
)
|
|
|
(281
|
)
|
|
|
(216
|
)
|
|
|
(186
|
)
|
|
|
(6,216
|
)
|
|
|
(5,350
|
)
|
Current service cost
|
|
|
(102
|
)
|
|
|
(87
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(110
|
)
|
|
|
(94
|
)
|
Past service cost
|
|
|
-
|
|
|
|
(72
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(72
|
)
|
Interest cost
|
|
|
(264
|
)
|
|
|
(264
|
)
|
|
|
(14
|
)
|
|
|
(15
|
)
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
|
(287
|
)
|
|
|
(288
|
)
|
Actuarial (losses) gains
|
|
|
(461
|
)
|
|
|
(542
|
)
|
|
|
(24
|
)
|
|
|
(30
|
)
|
|
|
20
|
|
|
|
(28
|
)
|
|
|
(465
|
)
|
|
|
(600
|
)
|
Contributions by employees
|
|
|
(14
|
)
|
|
|
(16
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
(14
|
)
|
|
|
(16
|
)
|
Benefits paid
|
|
|
431
|
|
|
|
171
|
|
|
|
21
|
|
|
|
16
|
|
|
|
7
|
|
|
|
10
|
|
|
|
459
|
|
|
|
197
|
|
Settlement gain
|
|
|
84
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84
|
|
|
|
-
|
|
Exchange differences
|
|
|
(147
|
)
|
|
|
6
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(148
|
)
|
|
|
6
|
|
Other
|
|
|
2
|
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
Closing defined benefit obligation
|
|
|
(6,157
|
)
|
|
|
(5,686
|
)
|
|
|
(340
|
)
|
|
|
(314
|
)
|
|
|
(201
|
)
|
|
|
(216
|
)
|
|
|
(6,698
|
)
|
|
|
(6,216
|
)
|
Fair Value of Plan Assets
|
||||||||||||||||||||||||||||||||
|
|
Funded
|
|
|
Unfunded
|
|
|
OPEB
|
|
|
Total
|
|
||||||||||||||||||||
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||||
Opening fair value of plan assets
|
|
|
4,991
|
|
|
|
4,586
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,991
|
|
|
|
4,586
|
|
Expected return (1)
|
|
|
327
|
|
|
|
314
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
327
|
|
|
|
314
|
|
Actuarial gains (1)
|
|
|
72
|
|
|
|
201
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
72
|
|
|
|
201
|
|
Contributions by employer
|
|
|
63
|
|
|
|
56
|
|
|
|
21
|
|
|
|
16
|
|
|
|
7
|
|
|
|
10
|
|
|
|
91
|
|
|
|
82
|
|
Contributions by employees
|
|
|
14
|
|
|
|
16
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14
|
|
|
|
16
|
|
Benefits paid
|
|
|
(431
|
)
|
|
|
(171
|
)
|
|
|
(21
|
)
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(10
|
)
|
|
|
(459
|
)
|
|
|
(197
|
)
|
Exchange differences
|
|
|
142
|
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
142
|
|
|
|
(8
|
)
|
Other
|
|
|
(5
|
)
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
(3
|
)
|
Closing fair value of plan assets
|
|
|
5,173
|
|
|
|
4,991
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,173
|
|
|
|
4,991
|
|
(1)
|
Actuarial gains and losses include the difference between the expected and actual return on plan assets. The expected return on assets represents the projected increase in the fair value of plan assets due to investment returns. The actual return on plan assets for the year ended December 31, 2012 was a gain of $399 million (2011 - gain of $515 million).
|
|
As of December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Equity
|
|
|
33
|
%
|
|
|
32
|
%
|
Bonds
|
|
|
58
|
%
|
|
|
61
|
%
|
Property
|
|
|
4
|
%
|
|
|
3
|
%
|
Other
|
|
|
5
|
%
|
|
|
4
|
%
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
As of December 31,
|
2012
|
2011
|
||||||||||||||||||||||||||||||
|
Funded
|
Unfunded
|
OPEB
|
Total
|
Funded
|
Unfunded
|
OPEB
|
Total
|
||||||||||||||||||||||||
Present value of plan obligations
|
(6,157
|
)
|
(340
|
)
|
(201
|
)
|
(6,698
|
)
|
(5,686
|
)
|
(314
|
)
|
(216
|
)
|
(6,216
|
)
|
||||||||||||||||
Fair value of plan assets
|
5,173
|
-
|
-
|
5,173
|
4,991
|
-
|
-
|
4,991
|
||||||||||||||||||||||||
Deficit
|
(984
|
)
|
(340
|
)
|
(201
|
)
|
(1,525
|
)
|
(695
|
)
|
(314
|
)
|
(216
|
)
|
(1,225
|
)
|
||||||||||||||||
Year ended December 31,
|
2012
|
2011
|
||||||||||||||||||||||||||||||
|
Funded
|
Unfunded
|
OPEB
|
Total
|
Funded
|
Unfunded
|
OPEB
|
Total
|
||||||||||||||||||||||||
Experience gains (losses) on plan obligations
|
51
|
(5
|
)
|
7
|
53
|
37
|
(1
|
)
|
(4
|
)
|
32
|
|||||||||||||||||||||
Experience gains on plan assets
|
72
|
-
|
-
|
72
|
201
|
-
|
-
|
201
|
As of December 31,
|
2010
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Funded
|
Unfunded
|
OPEB
|
Total
|
Funded
|
Unfunded
|
OPEB
|
Total
|
Funded
|
Unfunded
|
OPEB
|
Total
|
||||||||||||||||||||||||||||||||||||
Present value of plan obligations
|
(4,883
|
)
|
(281
|
)
|
(186
|
)
|
(5,350
|
)
|
(4,436
|
)
|
(263
|
)
|
(172
|
)
|
(4,871
|
)
|
(3,922
|
)
|
(253
|
)
|
(166
|
)
|
(4,341
|
)
|
||||||||||||||||||||||||
Fair value of plan assets
|
4,586
|
-
|
-
|
4,586
|
4,261
|
-
|
-
|
4,261
|
3,698
|
-
|
-
|
3,698
|
||||||||||||||||||||||||||||||||||||
Deficit
|
(297
|
)
|
(281
|
)
|
(186
|
)
|
(764
|
)
|
(175
|
)
|
(263
|
)
|
(172
|
)
|
(610
|
)
|
(224
|
)
|
(253
|
)
|
(166
|
)
|
(643
|
)
|
||||||||||||||||||||||||
Year ended December 31,
|
2010
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Funded
|
Unfunded
|
OPEB
|
Total
|
Funded
|
Unfunded
|
OPEB
|
Total
|
Funded
|
Unfunded
|
OPEB
|
Total
|
||||||||||||||||||||||||||||||||||||
Experience (losses) gains on plan obligations
|
(22
|
)
|
1
|
-
|
(21
|
)
|
(2
|
)
|
5
|
4
|
7
|
(50
|
)
|
3
|
10
|
(37
|
)
|
|||||||||||||||||||||||||||||||
Experience gains (losses) on plan assets
|
271
|
-
|
-
|
271
|
135
|
-
|
-
|
135
|
(578
|
)
|
-
|
-
|
(578
|
)
|
(1)
|
Experience adjustments represent the difference between actual changes in pension asset and liability balances during the year compared to expectations based on previous actuarial assumptions.
|
|
Funded
|
|
|
Unfunded
|
|
|
OPEB
|
|
||||||||||||||||
As of December 31,
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||
Discount rate
|
|
|
4.05
|
%
|
|
|
4.59
|
%
|
|
|
3.97
|
%
|
|
|
4.53
|
%
|
|
|
3.56
|
%
|
|
|
4.20
|
%
|
Inflation assumption
|
|
|
2.90
|
%
|
|
|
3.17
|
%
|
|
|
2.46
|
%
|
|
|
2.65
|
%
|
|
|
-
|
|
|
|
-
|
|
Rate of increase in salaries
|
|
|
3.64
|
%
|
|
|
3.80
|
%
|
|
|
3.52
|
%
|
|
|
3.58
|
%
|
|
|
3.50
|
%
|
|
|
3.50
|
%
|
Rate of increase in pensions in payment
|
|
|
2.89
|
%
|
|
|
3.12
|
%
|
|
|
2.90
|
%
|
|
|
3.25
|
%
|
|
|
-
|
|
|
|
-
|
|
Medical cost trend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7.02
|
%
|
|
|
7.03
|
%
|
Expected rate of return on assets(1)
|
|
|
-
|
|
|
|
6.57
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Effective January 1, 2013, the expected rate of return on assets will no longer be a critical accounting estimate and assumption because this measure is not applicable under the IAS 19, Employee Benefits amendment. See note 3.
|
December 31, 2012
|
|
Life Expectation in Years
|
|
|||||
|
|
Male
|
|
|
Female
|
|
||
Employee retiring as of December 31, 2012 at age 65
|
|
|
21
|
|
|
|
23
|
|
Employee age 40 as of December 31, 2012 retiring at age 65
|
|
|
23
|
|
|
|
24
|
|
December 31, 2011
|
|
Life Expectation in Years
|
|
|||||
|
|
Male
|
|
|
Female
|
|
||
Employee retiring as of December 31, 2011 at age 65
|
|
|
21
|
|
|
|
23
|
|
Employee age 40 as of December 31, 2011 retiring at age 65
|
|
|
22
|
|
|
|
24
|
|
Income Statement(1)
|
|
Funded
|
|
|
Unfunded
|
|
|
OPEB
|
|
|
Total
|
|
||||||||||||||||||||
Year ended December 31,
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||||
Current service cost
|
|
|
102
|
|
|
|
87
|
|
|
|
5
|
|
|
|
4
|
|
|
|
3
|
|
|
|
3
|
|
|
|
110
|
|
|
|
94
|
|
Interest cost
|
|
|
264
|
|
|
|
264
|
|
|
|
14
|
|
|
|
15
|
|
|
|
9
|
|
|
|
9
|
|
|
|
287
|
|
|
|
288
|
|
Expected gain on plan assets
|
|
|
(327
|
)
|
|
|
(314
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(327
|
)
|
|
|
(314
|
)
|
Past service cost
|
|
|
-
|
|
|
|
72
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
72
|
|
Settlement gain
|
|
|
(84
|
)
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(84
|
)
|
|
|
-
|
|
Other
|
|
|
6
|
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
|
|
2
|
|
Defined benefit plan (income) expense
|
|
|
(39
|
)
|
|
|
110
|
|
|
|
22
|
|
|
|
20
|
|
|
|
12
|
|
|
|
12
|
|
|
|
(5
|
)
|
|
|
142
|
|
(1)
|
The 2012 settlement gain of $84 million and the 2011 past service cost of $72 million are reported within “Other operating gains, net” in the income statement. All other components of defined benefit plan expense are included in the “Post-employment benefits” component of “Operating expenses” as set out in note 5.
|
Statement of Comprehensive Income
|
|
Funded
|
|
|
Unfunded
|
|
|
OPEB
|
|
|
Total
|
|
||||||||||||||||||||
Year ended December 31,
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||||
Actuarial losses (gains)
|
|
|
389
|
|
|
|
341
|
|
|
|
24
|
|
|
|
30
|
|
|
|
(20
|
)
|
|
|
28
|
|
|
|
393
|
|
|
|
399
|
|
Effect of asset ceiling
|
|
|
(38
|
)
|
|
|
(13
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(38
|
)
|
|
|
(13
|
)
|
Total recognized in other comprehensive income before taxation
|
|
|
351
|
|
|
|
328
|
|
|
|
24
|
|
|
|
30
|
|
|
|
(20
|
)
|
|
|
28
|
|
|
|
355
|
|
|
|
386
|
|
Accumulated Comprehensive Income
|
|
Funded
|
|
|
Unfunded
|
|
|
OPEB
|
|
|
Total
|
|
||||||||||||||||||||
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
||||||||
Balance of actuarial losses (gains) at January 1
|
|
|
969
|
|
|
|
628
|
|
|
|
44
|
|
|
|
14
|
|
|
|
26
|
|
|
|
(2
|
)
|
|
|
1,039
|
|
|
|
640
|
|
Net actuarial losses (gains) recognized in the year
|
|
|
389
|
|
|
|
341
|
|
|
|
24
|
|
|
|
30
|
|
|
|
(20
|
)
|
|
|
28
|
|
|
|
393
|
|
|
|
399
|
|
Balance of actuarial losses at December 31
|
|
|
1,358
|
|
|
|
969
|
|
|
|
68
|
|
|
|
44
|
|
|
|
6
|
|
|
|
26
|
|
|
|
1,432
|
|
|
|
1,039
|
|
Balance of asset ceiling at January 1
|
|
|
85
|
|
|
|
98
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
98
|
|
Effects of the asset ceiling in the year
|
|
|
(38
|
)
|
|
|
(13
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(38
|
)
|
|
|
(13
|
)
|
Balance of asset ceiling at December 31
|
|
|
47
|
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47
|
|
|
|
85
|
|
Total accumulated comprehensive income at December 31
|
|
|
1,405
|
|
|
|
1,054
|
|
|
|
68
|
|
|
|
44
|
|
|
|
6
|
|
|
|
26
|
|
|
|
1,479
|
|
|
|
1,124
|
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Non-cash employee benefit charges
|
|
|
215
|
|
|
|
161
|
|
Employee benefits - settlement gain (see note 26)
|
|
|
(84
|
)
|
|
|
-
|
|
Employee benefits - past service cost (see note 26)
|
|
|
1
|
|
|
|
72
|
|
Embedded derivatives fair value adjustments
|
|
|
37
|
|
|
|
(97
|
)
|
Net (gains) losses on foreign exchange and derivative financial instruments
|
|
|
(45
|
)
|
|
|
17
|
|
Other(1)
|
|
|
(185
|
)
|
|
|
(14
|
)
|
|
|
|
(61
|
)
|
|
|
139
|
|
(1)
|
The 2012 period includes non-cash reversals of uncertain tax positions. See note 9.
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Trade and other receivables
|
|
|
88
|
|
|
|
(164
|
)
|
Prepaid expenses and other current assets
|
|
|
(14
|
)
|
|
|
114
|
|
Other financial assets
|
|
|
(17
|
)
|
|
|
2
|
|
Payables, accruals and provisions
|
|
|
(164
|
)
|
|
|
(274
|
)
|
Deferred revenue
|
|
|
(62
|
)
|
|
|
77
|
|
Other financial liabilities
|
|
|
18
|
|
|
|
9
|
|
Income taxes
|
|
|
174
|
|
|
|
146
|
|
Other
|
|
|
(182
|
)
|
|
|
(189
|
)
|
|
|
|
(159
|
)
|
|
|
(279
|
)
|
|
Year ended December 31,
|
|
||||||||||||||
|
|
2012
|
|
|
2011
|
|
||||||||||
|
|
Number of
transactions
|
|
|
Cash
consideration(1)
|
|
|
Number of
transactions
|
|
|
Cash
consideration(1)
|
|
||||
Businesses and identifiable intangible assets acquired
|
|
|
29
|
|
|
|
1,262
|
|
|
|
38
|
|
|
|
1,279
|
|
Contingent consideration payments
|
|
|
-
|
|
|
|
36
|
|
|
|
-
|
|
|
|
-
|
|
Investments in businesses
|
|
|
-
|
|
|
|
3
|
|
|
|
1
|
|
|
|
7
|
|
|
|
|
29
|
|
|
|
1,301
|
|
|
|
39
|
|
|
|
1,286
|
|
(1)
|
Cash consideration is net of cash acquired of $28 million and $25 million for the years ended December 31, 2012 and 2011, respectively.
|
Date
|
Company
|
Acquiring segment
|
Description
|
|||
August 2012
|
FXall
|
Financial & Risk
|
A global provider of electronic foreign exchange trading solutions to corporations and asset managers
|
|||
August 2012
|
MarkMonitor
|
Intellectual Property & Science
|
A provider of online brand protection
|
|||
January 2012
|
Dr. Tax Software
|
Tax & Accounting
|
A Canadian based developer of income tax software
|
|||
October 2011
|
Rafferty Capital Markets
|
Financial & Risk
|
A U.S. based registered broker-dealer
|
|||
July 2011
|
Manatron
|
Tax & Accounting
|
A provider of property tax automation and land registry software for governments and municipalities
|
|||
May 2011
|
Mastersaf
|
Tax & Accounting
|
A Brazilian provider of tax and accounting solutions
|
|||
May 2011
|
World-Check
|
Financial & Risk
|
A provider of financial crime and corruption prevention information
|
(1)
|
The 2012 acquisitions listed above represented approximately 81% of cash consideration for acquired businesses and identifiable intangible assets (2011 - 78%).
|
|
2012
|
|
|
2011
|
|
|||
Cash and cash equivalents
|
|
|
28
|
|
|
|
25
|
|
Trade and other receivables (1)
|
|
|
48
|
|
|
|
78
|
|
Other financial assets
|
|
|
8
|
|
|
|
-
|
|
Prepaid expenses and other current assets
|
|
|
24
|
|
|
|
20
|
|
Current assets
|
|
|
108
|
|
|
|
123
|
|
Computer hardware and other property, net
|
|
|
16
|
|
|
|
7
|
|
Computer software, net
|
|
|
119
|
|
|
|
95
|
|
Other identifiable intangible assets
|
|
|
480
|
|
|
|
503
|
|
Other financial assets and other non-current assets
|
|
|
3
|
|
|
|
8
|
|
Deferred tax
|
|
|
35
|
|
|
|
7
|
|
Total assets
|
|
|
761
|
|
|
|
743
|
|
Current indebtedness
|
|
|
-
|
|
|
|
(49
|
)
|
Payables, accruals and provisions
|
|
|
(51
|
)
|
|
|
(78
|
)
|
Deferred revenue
|
|
|
(70
|
)
|
|
|
(72
|
)
|
Current liabilities
|
|
|
(121
|
)
|
|
|
(199
|
)
|
Provisions and other non-current liabilities
|
|
|
(8
|
)
|
|
|
(7
|
)
|
Other financial liabilities
|
|
|
-
|
|
|
|
(14
|
)
|
Deferred tax
|
|
|
(164
|
)
|
|
|
(117
|
)
|
Total liabilities
|
|
|
(293
|
)
|
|
|
(337
|
)
|
Net assets acquired
|
|
|
468
|
|
|
|
406
|
|
Goodwill
|
|
|
822
|
|
|
|
898
|
|
Total
|
|
|
1,290
|
|
|
|
1,304
|
|
(1)
|
The gross contractual amount of trade and other receivables is $50 million, of which $2 million is expected to be uncollectible at December 31, 2012 (2011 - trade and other receivables were $87 million, of which $9 million was expected to be uncollectible).
|
|
December 31,
|
|
||
|
|
2012
|
|
|
2013
|
|
|
321
|
|
2014
|
|
|
282
|
|
2015
|
|
|
241
|
|
2016
|
|
|
176
|
|
2017
|
|
|
146
|
|
2018 and thereafter
|
|
|
477
|
|
|
|
|
1,643
|
|
|
December 31,
|
|
||
|
|
2012
|
|
|
2013
|
|
|
586
|
|
2014
|
|
|
371
|
|
2015
|
|
|
261
|
|
2016
|
|
|
48
|
|
2017
|
|
|
16
|
|
2018 and thereafter
|
|
|
10
|
|
|
|
|
1,292
|
|
|
Year ended December 31,
|
|
||||||
|
|
2012
|
|
|
2011
|
|
||
Salaries and other benefits
|
|
|
24
|
|
|
|
27
|
|
Share-based payments (1)
|
|
|
20
|
|
|
|
25
|
|
Total compensation
|
|
|
44
|
|
|
|
52
|
|
(1)
|
Share-based payments exclude mark-to-market fair value adjustments.
|
Name
|
|
Age
|
|
Title
|
James C. Smith
|
|
53
|
|
President and Chief Executive Officer
|
Stephane Bello
|
|
52
|
|
Executive Vice President and Chief Financial Officer
|
Deirdre Stanley
|
|
48
|
|
Executive Vice President, General Counsel and Secretary
|
Peter Warwick
|
|
61
|
Executive Vice President and Chief People Officer
|
|
James T. Powell
|
|
51
|
|
Executive Vice President and Chief Technology Officer
|
Stephen J. Adler
|
58
|
President and Editor-in-Chief, Reuters
|
||
David W. Craig
|
43
|
President, Financial & Risk
|
||
Michael E. Suchsland
|
53
|
President, Legal
|
||
Christopher Kibarian
|
43
|
President, Intellectual Property & Science
|
||
Brian Peccarelli
|
52
|
President, Tax & Accounting
|
||
Shanker Ramamurthy
|
52
|
President, Global Growth & Operations
|
Committee memberships
|
|||||
Name
|
Age
|
Audit
|
Corporate
Governance
|
Human
Resources
|
Director
Since
|
David Thomson, Chairman
|
55
|
|
|
|
1988
|
W. Geoffrey Beattie, Deputy Chairman
|
53
|
|
•
|
•
|
1998
|
David W. Binet
|
55
|
|
•
|
•
|
January 2013
|
James C. Smith
|
53
|
|
|
|
2012
|
Manvinder S. Banga
|
58
|
|
|
•
|
2009
|
Mary Cirillo
|
65
|
•
|
Chair
|
2005
|
|
Steven A. Denning
|
64
|
|
|
•
|
2000
|
Lawton W. Fitt
|
59
|
•
|
Chair
|
|
2008
|
Roger L. Martin
|
56
|
•
|
|
|
1999
|
Sir Deryck Maughan
|
65
|
|
•
|
|
2008
|
Ken Olisa, OBE
|
61
|
•
|
|
|
2008
|
Vance K. Opperman
|
70
|
Chair
|
•
|
|
1996
|
John M. Thompson
|
70
|
•
|
•
|
|
2003
|
Peter J. Thomson
|
47
|
|
|
|
1995
|
Wulf von Schimmelmann
|
66
|
•
|
|
2011
|
Audit Committee Member
|
Education/Experience
|
|
Vance K. Opperman (Chair)
|
● |
Former President and COO of West Publishing Company
|
● | President and CEO of Key Investment, Inc. | |
● | Chair of Audit Committee of Thomson Reuters for over 10 years | |
● | Member of private company audit committees and TCF Financial Corporation audit committee | |
● | Represented financial institutions in securities and financial regulations matters as a practicing attorney | |
● | Former Chair of Reuters audit committee | |
● | MBA from the University of Virginia | |
Lawton W. Fitt
|
● | Former Secretary (CEO) of the Royal Academy of Arts |
● | Chair of CIENA Corporation audit committee and member of The Carlyle Group audit committee | |
Roger L. Martin
|
● |
MBA from Harvard Business School
|
● | Former Chair of a public company audit committee | |
● | Member of private company audit committee | |
Ken Olisa
|
● |
Former Interregnum PLC Chair and CEO
|
● | Member of private company audit committees and former member of a public company audit committee | |
● | U.K. Financial Services Authority approved person | |
● | Director of various private and not-for-profit organizations | |
John M. Thompson
|
● |
Graduate of executive management programs at the University of Western Ontario and Northwestern University
|
● | Former member of private company audit committee | |
● | Senior management positions at IBM, including CFO of IBM Canada and Vice Chairman of the IBM Board | |
Wulf von Schimmelmann
|
● |
Former CEO of Deutsche Postbank AG
|
● | Degree in economic sciences and Ph.D in economics from University of Zurich | |
● | Member of Maxingvest AG audit committee |
(in millions of U.S. dollars)
|
2012
|
2011
|
||||||
Audit fees
|
$ | 20.9 | $ | 21.4 | ||||
Audit-related fees
|
11.1 | 14.7 | ||||||
Tax fees
|
8.0 | 8.6 | ||||||
All other fees
|
0.9 | 1.1 | ||||||
Total
|
$ | 40.9 | $ | 45.8 |
|
·
|
The policy gives detailed guidance to management as to the specific types of services that have been pre-approved by the Audit Committee.
|
|
·
|
The policy requires the Audit Committee’s specific pre-approval of all other permitted types of services that have not already been pre-approved.
|
|
·
|
Senior management periodically provides the Audit Committee with a summary of services provided by the independent auditors in accordance with the pre-approval policy.
|
|
·
|
The Audit Committee’s charter delegates to its Chair the authority to evaluate and approve engagements in the event that the need arises for approval between Audit Committee meetings. If the Chair approves any such engagements, he must report his approval decisions to the full Audit Committee at its next meeting.
|
|
·
|
For the year ended December 31, 2012, none of the fees of Thomson Reuters described above made use of the de minimis exception to pre-approval provisions as provided for by Rule 2-01(c)(7)(i)(C) of SEC Regulation S-X and Section 2.4 of the Canadian Securities Administrators’ Multilateral Instrument 52-110 (Audit Committees).
|
Director Independence
|
||||
Name of Director
|
Management
|
Independent
|
Not
Independent
|
Reason for Non-Independence
|
David Thomson
|
P
|
A Chairman of Woodbridge, the principal shareholder of Thomson Reuters
|
||
W. Geoffrey Beattie
|
P
|
Former President and director of Woodbridge, the principal shareholder of Thomson Reuters
|
||
James C. Smith
|
P
|
P
|
Chief Executive Officer of Thomson Reuters
|
|
Manvinder S. Banga
|
P
|
|||
David W. Binet
|
P
|
President and director of Woodbridge, the principal shareholder of Thomson Reuters
|
||
Mary Cirillo
|
P
|
|||
Steven A. Denning
|
P
|
|||
Lawton W. Fitt
|
P
|
|||
Roger L. Martin
|
P
|
|||
Sir Deryck Maughan
|
P
|
|||
Ken Olisa, OBE
|
P
|
|||
Vance K. Opperman
|
P
|
|||
John M. Thompson
|
P
|
|||
Peter J. Thomson
|
P
|
A Chairman of Woodbridge, the principal shareholder of Thomson Reuters
|
||
Wulf von Schimmelmann
|
P
|
|||
Total
|
1
|
10
|
5
|
|
—
|
our authorized share capital consisted of an unlimited number of common shares, an unlimited number of preference shares, issuable in series, and a Thomson Reuters Founders Share; and
|
|
—
|
we had outstanding 827,356,551 common shares, 6,000,000 Series II preference shares and one Thomson Reuters Founders Share.
|
Common shares
(C$)
|
Common shares
(US$)
|
Series II preference shares
(C$)
|
||||||||||||||||||||||||||||||||||||||||||||||
|
High
|
Low
|
Closing
|
Trading
volume
|
High
|
Low
|
Closing
|
Trading
volume
|
High
|
Low
|
Closing
|
Trading
volume
|
||||||||||||||||||||||||||||||||||||
2012
|
||||||||||||||||||||||||||||||||||||||||||||||||
January
|
29.47 | 27.09 | 27.54 | 26,761,760 | 29.14 | 26.59 | 27.49 | 20,441,627 | 21.00 | 20.15 | 21.00 | 10,451 | ||||||||||||||||||||||||||||||||||||
February
|
28.90 | 26.47 | 28.71 | 37,391,217 | 29.24 | 26.39 | 28.98 | 30,131,219 | 23.00 | 20.16 | 20.16 | 11,940 | ||||||||||||||||||||||||||||||||||||
March
|
29.99 | 28.17 | 28.84 | 29,286,838 | 30.25 | 28.14 | 28.90 | 30,861,815 | 22.74 | 20.85 | 22.55 | 14,719 | ||||||||||||||||||||||||||||||||||||
April
|
29.52 | 27.56 | 29.52 | 12,896,676 | 30.00 | 27.47 | 29.82 | 22,007,678 | 22.55 | 22.00 | 22.25 | 64,830 | ||||||||||||||||||||||||||||||||||||
May
|
30.25 | 28.09 | 28.39 | 21,532,689 | 30.66 | 27.36 | 27.47 | 26,424,746 | 22.49 | 21.91 | 21.91 | 482,593 | ||||||||||||||||||||||||||||||||||||
June
|
29.58 | 27.75 | 28.97 | 18,298,156 | 28.88 | 26.20 | 28.45 | 20,386,507 | 22.25 | 21.84 | 22.00 | 83,459 | ||||||||||||||||||||||||||||||||||||
July
|
29.99 | 27.90 | 28.44 | 16,843,378 | 29.77 | 27.31 | 28.31 | 19,270,906 | 22.25 | 21.90 | 22.00 | 257,316 | ||||||||||||||||||||||||||||||||||||
August
|
29.85 | 27.75 | 27.98 | 14,825,132 | 30.20 | 27.50 | 28.45 | 19,707,244 | 22.20 | 21.85 | 22.00 | 126,368 | ||||||||||||||||||||||||||||||||||||
September
|
29.14 | 27.53 | 28.42 | 20,167,783 | 29.93 | 27.58 | 28.86 | 18,130,050 | 22.30 | 21.75 | 22.02 | 889,590 | ||||||||||||||||||||||||||||||||||||
October
|
28.67 | 27.45 | 28.12 | 19,131,664 | 29.35 | 27.89 | 28.26 | 16,534,537 | 22.93 | 21.91 | 22.63 | 811,334 | ||||||||||||||||||||||||||||||||||||
November
|
28.66 | 26.65 | 27.35 | 19,218,235 | 28.76 | 26.71 | 27.54 | 16,431,896 | 22.56 | 22.20 | 22.55 | 161,295 | ||||||||||||||||||||||||||||||||||||
December
|
29.04 | 27.11 | 28.78 | 17,073,118 | 29.40 | 27.31 | 29.06 | 14,976,826 | 22.75 | 22.30 | 22.50 | 52,876 | ||||||||||||||||||||||||||||||||||||
2013
|
||||||||||||||||||||||||||||||||||||||||||||||||
January
|
31.22 | 28.75 | 30.55 | 17,867,749 | 31.06 | 29.10 | 30.64 | 15,803,667 | 23.91 | 22.59 | 23.89 | 74,726 | ||||||||||||||||||||||||||||||||||||
February
|
31.57 | 29.40 | 31.51 | 20,349,755 | 31.18 | 29.33 | 30.58 | 21,883,149 | 24.65 | 23.29 | 24.40 | 120,586 |
Dividend currency (default)
|
Dividend currency (for electing holders)
|
|
Common shares
|
U.S. dollars
|
Canadian dollars
British pounds sterling
|
DIs (representing common shares)
|
British pounds sterling
|
U.S. dollars
Canadian dollars
|
Series II preference shares
|
Canadian dollars
|
N/A
|
Common shares (US$)
|
|
Series II preference shares (C$)
|
||||||
2010
|
|
|
|
|
|
|||
Q1 |
$
|
0.290000
|
C$
|
0.097089
|
||||
Q2 |
$
|
0.290000
|
|
C$
|
0.100349
|
|||
Q3 |
$
|
0.290000
|
|
C$
|
0.119537
|
|||
Q4 |
$
|
0.290000
|
|
C$
|
0.132329
|
|||
2011 |
|
|
|
|
|
|||
Q1 |
$
|
0.310000
|
C$
|
0.129452
|
||||
Q2 |
$
|
0.310000
|
C$
|
0.130890
|
||||
Q3 |
$
|
0.310000
|
C$
|
0.132329
|
||||
Q4 |
$
|
0.310000
|
C$
|
0.132329
|
||||
2012 |
|
|
|
|
|
|||
Q1 |
$
|
0.320000
|
C$
|
0.130533
|
||||
Q2 |
$
|
0.320000
|
C$
|
0.130533
|
||||
Q3 |
$
|
0.320000
|
C$
|
0.131967
|
||||
Q4 |
$
|
0.320000
|
C$
|
0.131967
|
||||
2013 |
|
|
|
|
|
|||
Q1 |
$
|
0.325000
|
C$
|
*
|
*
|
The first quarter 2013 dividend on our Series II preference shares had not yet been declared by our company as of the date of this annual report.
|
|
—
|
corporate governance, including the effectiveness of our board;
|
|
—
|
appointment of the Chief Executive Officer and other members of senior management and related succession planning;
|
|
—
|
development of the long-term business strategy of Thomson Reuters and assessment of its implementation; and
|
|
—
|
capital strategy.
|
Type of shares
|
Country
|
Transfer agent/registrar
|
Location of transfer facilities
|
Common shares | Canada | Computershare Trust Company of Canada | Toronto, Montreal, Calgary and Vancouver |
United States | Computershare Trust Company N.A. | Golden, Colorado | |
United Kingdom | Computershare Investor Services PLC | Bristol, England | |
Depositary interests
|
United Kingdom
|
Computershare Investor Services PLC
|
Bristol, England
|
Series II preference shares
|
Canada
|
Computershare Trust Company of Canada
|
Toronto
|
|
—
|
That Thomson Reuters shall at no time pass into the hands of any one interest, group or faction;
|
|
—
|
That the integrity, independence and freedom from bias of Thomson Reuters shall at all times be fully preserved;
|
|
—
|
That Thomson Reuters shall supply unbiased and reliable news services to newspapers, news agencies, broadcasters and other media subscribers and to businesses, governments, institutions, individuals and others with whom Thomson Reuters has or may have contracts;
|
|
—
|
That Thomson Reuters shall pay due regard to the many interests which it serves in addition to those of the media; and
|
|
—
|
That no effort shall be spared to expand, develop and adapt the news and other services and products of Thomson Reuters so as to maintain its leading position in the international news and information business.
|
Name
|
Country
|
Director since
|
||
Dame Helen Alexander
|
U.K.
|
2011
|
||
Leonard T. Berkowitz
|
U.K.
|
1998
|
||
Uffe Ellemann-Jensen (Chairman)
|
Denmark
|
2001
|
||
John Fairfax
|
Australia
|
2005
|
||
Yuko Kawamoto
|
Japan
|
2011
|
||
Pascal Lamy
|
France
|
2009
|
||
Joseph Lelyveld
|
U.S.A.
|
2004
|
||
Pedro Malan
|
Brazil
|
2011
|
||
Sir Christopher Mallaby (Deputy Chairman)
|
U.K.
|
1998
|
||
Lord Malloch-Brown
|
U.K
|
2011
|
||
John H. McArthur
|
U.S.A.
|
2001
|
||
Dr. Michael Naumann
|
Germany
|
2010
|
||
The Right Honourable Baroness Noakes
|
U.K.
|
1998
|
||
Jaakko Kaarle M. Rauramo
|
Finland
|
1999
|
||
Beverly LW Sunn
|
Hong Kong
|
2012
|
Subsidiary
|
|
Jurisdiction of incorporation/formation
|
1602854 Ontario Limited
|
|
Ontario, Canada
|
3097052 Nova Scotia Company
|
|
Nova Scotia, Canada
|
De Verlichting B.V.
|
The Netherlands
|
|
FX Alliance Inc.
|
Delaware, U.S.A.
|
|
FX Alliance, LLC
|
Delaware, U.S.A.
|
|
International Thomson Reuters B.V.
|
|
The Netherlands
|
LiveNote Inc.
|
|
Delaware, U.S.A.
|
LiveNote Technologies Limited
|
|
England
|
LN Holdings Limited
|
|
Bermuda
|
Reuters (Canvas) Holdings 1 Limited
|
Bermuda
|
|
Reuters Holdings Limited
|
|
England
|
Reuters International Holdings SARL
|
|
Switzerland
|
Reuters Limited
|
|
England
|
The Thomson Organisation (No. 10)
|
England
|
|
The Thomson Organisation Limited
|
England
|
|
Thomson Holdings Limited
|
England
|
|
Thomson Information & Publishing Holdings Limited
|
England
|
|
Thomson Information & Solutions (Holdings) Limited
|
England
|
|
Thomson Information & Solutions Limited
|
England
|
|
Thomson Publishing Group Limited
|
England
|
|
Thomson Reuters (Legal) Inc.
|
|
Minnesota, U.S.A.
|
Thomson Reuters (Markets) LLC
|
Delaware, U.S.A.
|
|
Thomson Reuters (Markets) SA
|
|
Switzerland
|
Thomson Reuters (Professional) UK Ltd.
|
England
|
|
Thomson Reuters (Scientific) LLC
|
Delaware, U.S.A.
|
|
Thomson Reuters (Tax & Accounting) Inc.
|
|
Texas, U.S.A.
|
Thomson Reuters (TRI) Inc.
|
|
Delaware, U.S.A.
|
Thomson Reuters Canada Limited
|
Ontario, Canada
|
|
Thomson Reuters Corporation Pte Limited
|
Singapore
|
|
Thomson Reuters Finance S.A.
|
Luxembourg
|
|
Thomson Reuters Global Resources
|
|
Ireland
|
Thomson Reuters Group Limited
|
|
England
|
Thomson Reuters Holdings A.G.
|
|
Switzerland
|
Thomson Reuters Holdings B.V.
|
|
The Netherlands
|
Thomson Reuters Holdings S.A.
|
|
Luxembourg
|
Thomson Reuters Investment Holdings Limited
|
|
England
|
Thomson Reuters Italia Holdings S.p.A.
|
Italy
|
|
Thomson Reuters Netherlands Holdings BV
|
|
The Netherlands
|
Thomson Reuters No. 4 Inc.
|
|
Delaware, U.S.A.
|
Thomson Reuters No. 5 LLC
|
|
Delaware, U.S.A.
|
Thomson Reuters No. 8 LLC
|
Delaware, U.S.A.
|
|
Thomson Reuters Organization LLC
|
Florida, U.S.A.
|
|
Thomson Reuters U.S. LLC
|
|
Delaware, U.S.A.
|
Thomson TradeWeb LLC
|
Delaware, U.S.A.
|
|
Thomson UK Limited
|
England
|
|
TR (2008) Limited
|
|
England
|
Subsidiary
|
|
Jurisdiction of incorporation/formation
|
TR Holdings Limited
|
|
Bermuda
|
TR Netherlands Holdings Coöperatief U.A.
|
|
The Netherlands
|
TR Organisation Limited
|
England
|
|
TR Professional Holdings Limited
|
England
|
|
TR U.S. Inc.
|
|
Delaware, U.S.A.
|
TTC (1994) Limited
|
England
|
|
TTC Holdings Limited
|
England
|
|
West Publishing Corporation
|
|
Minnesota, U.S.A.
|
West Services Inc.
|
Delaware, U.S.A.
|
|
Worldscope/Disclosure L.L.C.
|
Delaware, U.S.A.
|
|
Page/Document
|
|
ITEM 1. COVER PAGE
|
Cover
|
|
ITEM 2. TABLE OF CONTENTS
|
1
|
|
ITEM 3. CORPORATE STRUCTURE
|
||
3.1 Name, Address and Incorporation
|
142
|
|
3.2 Intercorporate Relationships
|
148-149
|
|
ITEM 4. GENERAL DEVELOPMENT OF THE BUSINESS
|
||
4.1 Three Year History
|
4, 35-41
|
|
4.2 Significant Acquisitions
|
15, 28-29
|
|
ITEM 5. DESCRIBE THE BUSINESS
|
||
5.1 General
|
2-16
|
|
5.2 Risk Factors
|
17-23
|
|
5.3 Companies with Asset-backed Securities Outstanding
|
N/A
|
|
5.4 Companies With Mineral Projects
|
N/A
|
|
5.5 Companies with Oil and Gas Activities
|
N/A
|
|
ITEM 6. DIVIDENDS
|
143-144
|
|
ITEM 7. DESCRIPTION OF CAPITAL STRUCTURE
|
||
7.1 General Description of Capital Structure
|
142
|
|
7.2 Constraints
|
N/A
|
|
7.3 Ratings
|
145-146
|
|
ITEM 8. MARKET FOR SECURITIES
|
||
8.1 Trading Price and Volume
|
143
|
|
8.2 Prior Sales
|
N/A
|
|
ITEM 9. ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER
|
N/A
|
|
ITEM 10. DIRECTORS AND OFFICERS
|
||
10.1 Name, Occupation and Security Holding
|
134-141
|
|
10.2 Cease Trade Orders, Bankruptcies, Penalties or Sanctions
|
141
|
|
10.3 Conflicts of Interest
|
N/A
|
|
ITEM 11. PROMOTERS
|
N/A
|
|
ITEM 12. LEGAL PROCEEDINGS AND REGULATORY ACTIONS
|
||
12.1 Legal Proceedings
|
56
|
|
12.2 Regulatory Actions
|
56
|
|
ITEM 13. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
|
59-60
|
|
ITEM 14. TRANSFER AGENTS AND REGISTRARS
|
145
|
|
ITEM 15. MATERIAL CONTRACTS
|
146-147
|
|
ITEM 16. INTEREST OF EXPERTS
|
||
16.1 Names of Experts
|
149
|
|
16.2 Interests of Experts
|
149
|
|
ITEM 17. ADDITIONAL INFORMATION
|
149-150
|
|
ITEM 18. ADDITIONAL DISCLOSURE FOR COMPANIES NOT SENDING INFORMATION CIRCULARS
|
N/A
|
Page/Document
|
||
ANNUAL INFORMATION FORM
|
See AIF table
|
|
AUDITED ANNUAL FINANCIAL STATEMENTS
|
78-133
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
24-77
|
|
DISCLOSURE CONTROLS AND PROCEDURES
|
62
|
|
INTERNAL CONTROL OVER FINANCIAL REPORTING
|
||
a. Changes in Internal Controls over Financial Reporting
|
63
|
|
b. Management's Report on Internal Control over Financial Reporting
|
78
|
|
c. Independent Auditor's Report on Internal Control over Financial Reporting
|
79
|
|
NOTICE PURSUANT TO REGULATION BTR
|
N/A
|
|
AUDIT COMMITTEE FINANCIAL EXPERT
|
138
|
|
CODE OF ETHICS
|
141
|
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
138-139
|
|
OFF-BALANCE SHEET ARRANGEMENTS
|
55-56
|
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
55-56
|
|
IDENTIFICATION OF THE AUDIT COMMITTEE
|
138
|
1.
|
I have reviewed this annual report on Form 40-F of Thomson Reuters Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
|
4.
|
The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
5.
|
The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
|
/s/ James C. Smith
|
|
James C. Smith
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 40-F of Thomson Reuters Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
|
4.
|
The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
5.
|
The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
|
/s/ Stephane Bello
|
|
Stephane Bello
|
|
Executive Vice President and Chief Financial Officer
|
By:
|
/s/ James C. Smith
|
|
|
James C. Smith
|
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Stephane Bello
|
|
|
Stephane Bello
|
|
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
PURPOSE
|
1
|
2.
|
MEMBERS
|
1
|
3.
|
RESPONSIBILITIES
|
1
|
4.
|
COMPLAINTS PROCEDURE
|
7
|
5.
|
REPORTING
|
7
|
6.
|
REVIEW AND DISCLOSURE
|
7
|
7.
|
ASSESSMENT
|
7
|
8.
|
MEETINGS
|
8
|
9.
|
CHAIR
|
8
|
10.
|
REMOVAL AND VACANCIES
|
8
|
11.
|
ACCESS TO MANAGEMENT AND OUTSIDE ADVISORS
|
8
|
12.
|
DEFINITIONS
|
8
|
1.
|
PURPOSE
|
|
·
|
the integrity of financial statements and other financial information relating to the Corporation and its subsidiaries (collectively, “Thomson Reuters”);
|
|
·
|
Thomson Reuters compliance with risk management, and legal and regulatory requirements;
|
|
·
|
the qualifications, independence and performance of Thomson Reuters auditor;
|
|
·
|
the adequacy and effectiveness of Thomson Reuters internal control over financial reporting and disclosure controls and procedures;
|
|
·
|
the effectiveness of Thomson Reuters internal audit function; and
|
|
·
|
any additional matters delegated to the Audit Committee by the Board.
|
2.
|
MEMBERS
|
3.
|
RESPONSIBILITIES
|
(a)
|
Appointment and Review of the Auditor
|
|
·
|
select, evaluate and nominate the auditor to be proposed for appointment or reappointment, as the case may be;
|
|
·
|
review and approve the auditor’s engagement letter;
|
|
·
|
after seeking and taking into account the views of senior management and the officer in charge of internal audit, review the independence, experience, qualifications and performance of the auditor, including the lead audit partner;
|
|
·
|
oversee the auditor’s work, including investigating and resolving any disagreements between senior management and the auditor regarding financial reporting or the internal audit function;
|
|
·
|
at least annually, obtain and review a report by the auditor describing its internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the auditor and any steps taken to deal with any such issues; and
|
|
·
|
where appropriate, terminate the auditor.
|
(b)
|
Confirmation of the Auditor’s Independence
|
|
·
|
confirm that the auditor has submitted a formal written statement describing all of its relationships with Thomson Reuters that, in the auditor’s professional judgment, may reasonably be thought to bear on its independence;
|
|
·
|
discuss with the auditor any disclosed relationships or services, including any non-audit services the auditor has provided to Thomson Reuters, that may affect its independence;
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obtain written confirmation from the auditor that it is independent with respect to Thomson Reuters within the meaning of the Rules of Professional Conduct adopted by the Ontario Institute of Chartered Accountants, the standards established by the Public Company Accounting Oversight Board (“PCAOB”) and the standards established by the United States Securities and Exchange Commission; and
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·
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confirm that the auditor has complied with applicable law with respect to the rotation of certain members of the audit engagement team for Thomson Reuters.
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(c)
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Pre-Approval of Non-Audit Services
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(d)
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Communications with the Auditor
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·
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planning and staffing of the audit;
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·
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any material written communications between the auditor and senior management, such as any management representation letter, management letter, schedule of adjusted differences and summary of uncorrected misstatements;
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·
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whether or not the auditor is satisfied with the quality and effectiveness of financial recording procedures and systems;
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·
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the extent to which the auditor is satisfied with the nature and scope of its examination;
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·
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any instances of fraud or other illegal acts involving senior management or employees involved in financial reporting of Thomson Reuters;
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whether or not the auditor has received the full cooperation of senior management and other employees of Thomson Reuters and whether the auditor has encountered any audit problems or difficulties in the course of its audit work, including any restrictions on the scope of the auditor’s work or access to required information and any significant disagreements with management (along with management’s response);
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·
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the auditor’s observations of the competence and performance of the Chief Financial Officer and other key financial personnel; and
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the items required to be communicated to the Audit Committee under the standards established by the PCAOB, Canadian authoritative guidance or under Canadian generally accepted auditing standards (“GAAS”).
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(e)
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Review of the Audit Plan
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(f)
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Review of Audit Fees
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(g)
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Review of Annual Financial Statements
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·
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the annual consolidated financial statements of the Corporation and the related management’s discussion and analysis;
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critical accounting policies and practices used or to be used by Thomson Reuters; and
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alternative treatments of financial information within IFRS that have been discussed with senior management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the auditor.
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(h)
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Approval of Quarterly Financial Statements and Earnings Press Releases
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(i)
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Review of Other Financial Information
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·
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periodically assess the adequacy of procedures that are in place for management’s review of all other financial information extracted or derived from Thomson Reuters financial statements that were previously reviewed by the Audit Committee before such information is released to the public, including, without limitation, financial information or statements for use in prospectuses or other offering or public disclosure documents and financial statements required by regulatory authorities;
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·
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review major issues regarding accounting principles and financial statement presentations, including any significant changes in Thomson Reuters selection or application of accounting principles, and major issues as to the adequacy of Thomson Reuters internal control over financial reporting and any special audit steps adopted in light of any material control deficiencies;
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review analyses prepared by management and/or the auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of Thomson Reuters financial statements, including analyses of the effects of alternative IFRS methods on the financial statements; and
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review the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the financial statements.
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(j)
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Review of the Internal Audit Function
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(k)
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Relations with Senior Management
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(l)
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Oversight of Internal Controls and Disclosure Controls
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(m)
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Legal and Regulatory Compliance
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·
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any material legal or regulatory matters; and
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·
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any material inquiries received from regulators and governmental agencies.
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(n)
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Risk Assessment and Risk Management
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(o)
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Taxation Matters
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(p)
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Hiring Employees of the Auditor
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4.
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COMPLAINTS PROCEDURE
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5.
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REPORTING
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regularly report to the Board on all significant matters it has addressed and with respect to such other matters as are within its responsibilities; and
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·
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oversee the preparation of and review any disclosure with respect to its activities in discharging the responsibilities set out in this Charter included in materials sent to shareholders of the Corporation.
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6.
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REVIEW AND DISCLOSURE
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7.
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ASSESSMENT
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8.
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MEETINGS
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9.
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CHAIR
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10.
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REMOVAL AND VACANCIES
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11.
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ACCESS TO MANAGEMENT AND OUTSIDE ADVISORS
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12.
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DEFINITIONS
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(a)
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an understanding of generally accepted accounting principles and financial statements;
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(b)
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the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;
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(c)
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experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by Thomson Reuters financial statements, or experience actively supervising one or more person’s engaged in such activities;
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(d)
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an understanding of internal controls and procedures for financial reporting; and
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(e)
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an understanding of audit committee functions.
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(i)
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education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions;
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(ii)
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experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions;
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(iii)
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experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; or
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(iv)
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other relevant experience.
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