 Financial Tables
Q4 2008 Reconciliations
Q4 pro forma revenues up 5% before currency; underlying operating profit up 13%
Full-year pro forma revenues up 8%; underlying operating profit up 19%
Integration savings target raised
Board approves $0.04 annual dividend increase
NEW YORK, Feb. 24 /PRNewswire/ -- Thomson Reuters (NYSE: TRI; TSX: TRI; LSE: TRIL; Nasdaq: TRIN), the world's leading source of intelligent information for businesses and professionals, today reported strong results for the fourth quarter and full year ended December 31, 2008. These results reflect balanced contributions across the company's portfolio of businesses, despite very challenging market conditions.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080424/NYTH069LOGO )
- Pro forma fourth-quarter revenues of $3.4 billion, an increase of 5%
before currency (flat after the impact of currency).(1)
- Full-year pro forma revenues of $13.4 billion, an increase of 8%
(currency had no impact).
- GAAP revenues increased 68% for the fourth quarter and 60% for 2008,
primarily due to the Reuters acquisition, which was completed on April
17, 2008.
- Fourth-quarter diluted earnings per common share of $0.79 and pro
forma adjusted diluted earnings per share of $0.57.
- 2008 diluted earnings per share of $1.81 and pro forma adjusted
diluted earnings per share of $1.91.
- Fourth-quarter free cash flow of $694 million and underlying free cash
flow of $829 million.(2)
- 2008 free cash flow of $1.8 billion and underlying free cash flow of
$2.3 billion.(2)
(1) Pro forma financial information disclosed in this news release assumes that Thomson's acquisition of Reuters closed on January 1, 2007. Thomson Reuters believes that pro forma financial information provides more meaningful period-to-period comparisons of its performance because Reuters results prior to the April 17, 2008 closing are not included in GAAP results. For more information, see the explanatory note on page 10.
(2) Underlying free cash flow for the fourth quarter and full year excludes one-time cash costs related to the Reuters acquisition and costs associated with integration and synergy programs.
"I am very pleased with the operating performance of Thomson Reuters in 2008, as well as the significant progress we achieved in integrating the acquired Reuters business," said Thomas H. Glocer, chief executive officer of Thomson Reuters.
"As major economies slid into recession in 2008, we nonetheless continued to perform well, thanks to our proven business model of providing must-have content and services to professionals and our well-balanced set of businesses, both by market and geography.
"I am especially pleased we have been able to accelerate the Reuters integration, significantly increase the savings we expect to achieve, and reach our goal of becoming 'one company in one year'. While considerable work remains to consolidate operations and migrate customers to the new strategic products we will launch this year, we are beginning to benefit from the advantages of increased scale.
"Based on the current environment in the markets we serve, we expect our revenues to grow in 2009," said Mr. Glocer.
Consolidated Pro Forma Financial Highlights - Fourth-Quarter 2008
- Revenues were $3.4 billion, an increase of 5% before currency and flat
after currency.
- Underlying operating profit increased 13% to $833 million.(3)
- Underlying operating profit margin increased 280 basis points to
24.4%.
Consolidated Pro Forma Financial Highlights - Full-Year 2008
- Revenues increased 8% to $13.4 billion. There was no impact from
currency.
- In 2008, revenues were 58% from the Americas, 32% from Europe, the
Middle East and Africa, and 10% from Asia.
- Underlying operating profit increased 19% to $2.8 billion.(3)
- Underlying operating profit margin increased 190 basis points to
20.7%.
(3) Pro forma underlying operating profit excludes amortization of intangibles, fair value adjustments, costs associated with integration and synergy programs and other items affecting comparability.
Fourth-Quarter and Full-Year Business Segment Highlights
Professional Division
- Fourth-quarter revenues were $1.5 billion, an increase of 6% before
currency (up 3% after currency) driven by online, software and
services revenue growth of 10% slightly offset by a 1% decline in
print and CD revenues.
- Fourth-quarter operating profit was $511 million, an 8% increase from
the prior-year period. Operating profit margin was 34.4%, compared to
32.7% in the fourth quarter of 2007, with all segments of the
Professional Division demonstrating margin expansion. Operating
profit growth and margin expansion were due to strong revenue
flow-through.
- Full-year revenues grew 8% to $5.5 billion (currency had no impact).
Growth was driven by online, software and services product offerings
which grew 8% and included strength from key products like FindLaw and
Elite in Legal, Checkpoint in Tax & Accounting, ISI Web of Knowledge /
Web of Science in Scientific and Medstat Advantage Suite in
Healthcare.
- Full-year 2008 operating profit increased 9% to $1.6 billion.
Operating profit margin was 29.5%, representing a 20 basis point
improvement.
Legal
- Fourth-quarter revenues were $887 million, up 6% before currency (up
1% after currency) primarily due to continued strength in
international online products, and growth in Westlaw and within
software and services led by FindLaw.
- Fourth-quarter operating profit was $282 million, a 4% increase. The
corresponding margin of 31.8% represented a 70 basis point improvement
from a year ago. Margin expansion was due to strong revenue
flow-through and efficiency savings.
- For the full year, revenues increased 6% to $3.5 billion driven by
continued strong performance from Westlaw, and double-digit growth
from international online products. FindLaw and Elite helped more
than offset slowing ancillary (additional services above base
subscription) revenues. Print and CD revenues were up 1% for the
year.
- Full-year operating profit increased 9% to $1.1 billion, with the
related margin increasing 60 basis points to 32.1%.
Tax & Accounting
- Fourth-quarter revenues increased 13% to $281 million. Growth was
driven by core products Checkpoint, UltraTax, and the acquisition of
Property Tax Services. Checkpoint has now recorded 24 consecutive
quarters of double-digit revenue growth.
- Fourth-quarter operating profit increased 27% to $113 million, while
the related margin increased 430 basis points to 40.2%. Operating
profit and margin growth primarily reflected strong revenue
flow-through, benefits of efficiency initiatives and the impact of
purchase accounting adjustments compared to the prior year period. As
in past years, about 50% of the unit's operating profit was generated
in the fourth quarter.
- Full-year revenues rose 22% to $861 million. Growth was driven by
strong performance in core products such as Checkpoint, which grew 18%
for the year.
- Full-year operating profit increased 19% to $219 million, while the
operating profit margin decreased 70 basis points to 25.4%. Margins
were lower due to the impact of acquisition accounting and an increase
in revenues from faster growing services businesses, which have had
lower margins to date.
Scientific
- Fourth-quarter revenues were $159 million, up 6% before currency (flat
after currency). Growth was driven by strength in ISI Web of Knowledge
/ Web of Science subscriptions. Results for Scientific exclude the
impact of Dialog, which was sold in July 2008.
- Fourth-quarter operating profit was $54 million, representing a 2%
increase. The related margin increased 70 basis points to 34.0%,
primarily due to solid cost controls and favorable currency trends,
offset by investments in growth initiatives, primarily in Asia.
- Full-year revenues were $604 million, up 8% before currency (up 7%
after currency). Growth was led by a double-digit increase from ISI
Web of Knowledge / Web of Science. These gains helped to offset
softening in one-time revenues.
- Full-year operating profit grew 4% to $171 million with the related
margin decreasing 70 basis points to 28.3%, primarily due to
incremental investments in Asia.
Healthcare
- Fourth-quarter revenues were $160 million, a 1% increase. Growth was
driven by the Payer business which demonstrated strength across all
segments, led by the Medstat Advantage Suite. Excluding the results
for PDR (Physicians Desk Reference), which we intend to sell, revenues
were up 6%.
- Fourth-quarter operating profit increased 9% to $62 million, and the
related margin increased 270 basis points to 38.8%. As in past years,
about 70% of Healthcare's operating profit was generated in the fourth
quarter.
- Full-year revenues increased 4% to $468 million. Revenue growth in
2008 was impacted by a decline in PDR revenues. Double-digit growth
in the Payer segment offset continued declines from PDR. Excluding
PDR, full-year revenue growth was 7%.
- Full-year operating profit was $85 million, unchanged compared to
2007. The related margin decreased 60 basis points to 18.2%, with
operating profit and margin affected in part by the decline in PDR
revenues.
Markets Division Pro Forma Results
- Fourth-quarter 2008 revenues were $1.9 billion, up 4% before currency
(down 2% after currency). The Markets Division continued to
demonstrate solid performance, despite extreme volatility in the
financial sector due to competitive wins, a broad global customer mix,
and a breadth of offerings. Growth was led by continued momentum in
the Enterprise, Investment & Advisory, and Sales & Trading businesses.
In the fourth quarter, 7% revenue growth in the Europe, Middle East
and Africa region led all geographic areas, while Asia grew 4% and the
Americas declined 1%.
- Fourth-quarter operating profit increased 7% to $365 million and the
related margin increased 160 basis points to 19.0%, reflecting the
continued benefits of synergies, efficiency initiatives and tight cost
management.
- Full-year revenues were $7.9 billion, up 6% before currency (up 7%
after currency). Growth was spread across the division and was driven
by strong performance from Enterprise solutions, Investment
Management, Corporate Services, Commodities & Energy and Treasury
units.
- Full-year operating profit increased 26% to $1.4 billion, with the
corresponding margin increasing 260 basis points to 17.7%. The margin
expansion was driven by revenue growth and the benefits of the
integration and savings programs.
Sales & Trading
- Fourth-quarter revenues were $888 million, up 2% before currency (down
4% after currency). Sales & Trading generates revenue from the sale of
desktop products, as well as trading systems. Growth was generated by
transaction volumes driven by volatile markets, offset by headcount
reductions in the industry.
- Full-year revenues were $3.8 billion, up 4% before currency (up 5%
after currency). Growth was driven by double-digit increases in
Commodities & Energy and Tradeweb, as well as good performance in
Treasury and foreign exchange transaction products. Growth was
particularly strong outside North America.
Investment & Advisory
- Fourth-quarter revenues were $582 million, up 5% before currency (down
1% after currency). Investment Management, Wealth Management and
Corporate Services all contributed solidly to the quarter's results.
Despite large reductions in client assets under management from weak
performance and redemptions, Investment Management continued to
perform well with an 8% growth in revenues, as demand grew for
datafeeds and analytics products, such as QAI and Starmine. Retail
Wealth Management and Corporate Services grew 7% and 9%, respectively.
Wealth Management revenues were driven by strong sales of ThomsonONE
and from strength in the transaction processing business, BETA, which
benefited from high market volumes. The Corporate Services business
continued to drive growth through geographic expansion and cross
selling. As anticipated, Investment Banking revenues declined for the
quarter as the economic environment continued to have an adverse
impact on its customer base.
- Full-year revenues were $2.4 billion, up 8% before currency (up 7%
after currency). Growth was driven by strong demand for datafeeds and
analytics products in the Investment Management segment. The
Corporate Services business grew revenues in double-digits, and Retail
Wealth Management grew 5%, led by BETA. These segments helped to
offset a challenging year for the Investment Banking unit.
Enterprise
- Fourth-quarter revenues were $350 million, up 13% before currency (up
5% after currency). Growth was driven by the increasing demand for
automated information and management solutions, including pricing and
reference datafeeds and risk and information management systems.
- Full-year revenues were $1.3 billion, up 13% before currency (up 14%
after currency). Growth was driven by strong performance in the
Enterprise and Information Management System segments as customers
continue to seek ways to reduce risk, drive efficiencies and increase
returns.
Media
- Fourth-quarter revenues were $106 million, down 5% before currency
(down 11% after currency). The decline in the quarter was
attributable to modest weakness in the Agency business and marked
slowdowns in the advertising-driven Consumer and Professional
Publishing segments.
- Full-year revenues were $450 million, comparable to last year before
currency (up 4% after currency). Increases within Agency and Consumer
segments were offset by a decline in Professional Publishing revenues.
Advertising spending in Consumer and Professional Publishing segments
slowed towards the end of 2008.
Corporate and Other Pro Forma Results
- Fourth-quarter Corporate and Other expenses increased $34 million to
$140 million, primarily due to $123 million of integration and
synergy related costs, which were $55 million higher than the
integration and synergy costs in the fourth quarter of 2007. These
expenses were partially offset by favorable non-cash fair value
currency related adjustments. Core Corporate and Other costs were $43
million compared to $76 million in the prior period, reflecting the
benefits of the integration program.
- Full-year Corporate and Other expenses increased $78 million to $502
million, primarily due to $362 million of integration and
synergy-related costs which increased $209 million compared to the
prior year. These expenses were partially offset by favorable
non-cash fair value currency related adjustments. Core Corporate and
Other costs were $243 million compared to $257 million in 2007.
Integration Programs
- As Thomson Reuters progressed with the execution of its Reuters
integration plan, the company identified significant additional
opportunities for cost savings. Thomson Reuters now expects $1 billion
in annualized cost savings from integration programs by the end of
2011, up from $750 million of savings projected in May 2008. This
raises the overall savings target (including legacy efficiency
programs) to $1.4 billion.
- Across all integration and legacy efficiency programs, Thomson Reuters
achieved combined run-rate savings of $750 million as of December 31,
2008. The 2008 cost required to achieve these savings through
December 31 was approximately $362 million.
- Thomson Reuters is now beginning the second phase of the acquisition
integration, which includes retiring legacy products and systems to
simplify the business and help make it more agile, responsive and
profitable. In 2009, Thomson Reuters will roll out new strategic
products, consolidate data centers and capture revenue synergies.
Consolidated GAAP Financial Highlights - Fourth-Quarter 2008 (GAAP financial information does not include the results of Reuters prior to the closing date of April 17, 2008.)
- Revenues were $3.4 billion, a 68% increase, primarily due to the
acquisition of Reuters.
- Operating profit was $689 million, an increase of 68%. The increase
was due to both additional profit from existing businesses and the
Reuters acquisition, which offset costs associated with the
acquisition as well as integration programs.
- Earnings attributable to common and ordinary shares were $656 million,
or $0.79 per share, compared to $432 million, or $0.67 per share, in
the same period in 2007. Earnings in the fourth quarter of 2007
included $123 million related to discontinued operations.
- Net cash provided by operations in the fourth quarter was $1 billion
compared to $659 million a year ago. Free cash flow was $694 million.
After adjusting for one-time cash costs related to the Reuters
acquisition and costs associated with integration and synergy
programs, underlying free cash flow was $829 million.
Consolidated GAAP Financial Highlights - Full-Year 2008 (GAAP financial information does not include the results of Reuters prior to the closing date of April 17, 2008.)
- Revenues were $11.7 billion, an increase of 60%, primarily due to the
acquisition of Reuters.
- Operating profit was $1.7 billion, a 31% increase, as additional
profit from existing businesses and the Reuters acquisition offset
costs associated with the acquisition as well as integration programs.
- Earnings attributable to common and ordinary shares were $1.4 billion,
or $1.81 per share on a diluted basis, compared to $4 billion, or
$6.20 per share on a diluted basis in 2007. Earnings for 2007
included $2.9 billion related to discontinued operations, net of tax,
primarily related to the gain from the sale of Thomson Learning's
higher education assets.
- Net cash provided by operations in 2008 was $2.8 billion compared to
$1.8 billion a year ago. Free cash flow was $1.8 billion and, after
adjusting for one-time cash costs related to the Reuters acquisition
and costs associated with integration and synergy programs, underlying
free cash flow was $2.3 billion.
2009 Business Outlook (Before Currency)
Based on the current environment in the markets we serve, Thomson Reuters expects its revenues to grow in 2009. We also expect underlying operating margin to be comparable to 2008, supported by revenue growth and the expected savings from integration and synergy programs. Underlying free cash flow is expected to be comparable to 2008, adjusted for certain timing related items.
Dividend
The Board of Directors approved an increase in the quarterly dividend. On an annualized basis, 2009 dividends will increase $0.04 per share. The quarterly dividend of $0.28 per share is payable on March 26, 2009 to shareholders of record as of March 6, 2009.
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, scientific, healthcare and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people in 93 countries. Thomson Reuters shares are listed on the New York Stock Exchange (NYSE: TRI); Toronto Stock Exchange (TSX: TRI); London Stock Exchange (LSE: TRIL); and Nasdaq (Nasdaq: TRIN). For more information, go to www.thomsonreuters.com.
Thomson Reuters will webcast a discussion of its fourth-quarter and full-year results today beginning at 10:00 a.m. U.S. Eastern Standard Time (EST)/ 3:00 p.m. GMT. To participate in the webcast, please visit www.thomsonreuters.com and click the "Investor Relations" link located at the top of the page and then "Earnings Webcasts" on the left side of the "Investor Relations" page. A copy of this news release along with slides and other materials for the webcast are available at www.thomsonreuters.com.
Thomson Reuters Corporation is incorporated in Ontario, Canada with a registered office at Suite 2706, Toronto Dominion Bank Tower, P.O. Box 24, Toronto-Dominion Centre, Toronto, Ontario M5K 1A1, Canada. Thomson Reuters PLC (registered no. 06141013) is registered in England & Wales with a registered office at The Thomson Reuters Building, South Colonnade, Canary Wharf, London E14 5EP, United Kingdom. Thomson Reuters primary financial statements are the consolidated financial statements of Thomson Reuters Corporation. Those statements account for Thomson Reuters PLC as a subsidiary.
All references to growth rate percentages compare the results of the period to those of the prior year comparable period.
NON-GAAP FINANCIAL MEASURES
This news release includes certain non-GAAP financial measures, including pro forma financial information as described herein. Thomson Reuters uses these non-GAAP financial measures as supplemental indicators of its operating performance and financial position. These measures do not have any standardized meanings prescribed by Canadian GAAP and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance calculated in accordance with Canadian GAAP. Non-GAAP financial measures (other than pro forma financial information) are defined and reconciled to the most directly comparable Canadian GAAP measures in the following tables.
In this news release, Thomson Reuters refers to growth rates before and after currency so that its results can be viewed without the impact of changes in foreign currency exchange rates. Thomson Reuters believes this facilitates period-to-period comparisons of its fourth-quarter and full-year 2008 results.
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information included in this news release is for information purposes only and is unaudited. Pro forma financial information was prepared in U.S. dollars in a manner consistent with accounting policies that applied to Thomson under Canadian GAAP prior to the closing of the acquisition and which currently apply to Thomson Reuters as though Reuters was acquired on January 1, 2007. Pro forma financial information should not be considered indicative of actual balance sheet data or operating results that would have been achieved had Thomson acquired Reuters on January 1, 2007, or of results which may occur in the future. Pro forma financial information should be read in conjunction with historical financial results for Thomson and Reuters. Pro forma information reflects the impacts of purchase accounting but excludes deal-related expenses. The impacts of purchase accounting were based on preliminary estimates during the course of 2008, but were finalized in the fourth quarter. These adjustments have been reflected in the full-year pro forma results as though they had been recorded at the finalized amounts in earlier quarters.
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
This news release, in particular the section under the heading "2009 Business Outlook", includes forward-looking statements that are based on certain assumptions and reflect Thomson Reuters current expectations. Forward-looking statements are those that are not historical facts and also include Thomson Reuters expectations about its future prospects. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of the factors that could cause actual results to differ materially from current expectations include risks related to Thomson Reuters ability to achieve the anticipated benefits from the Reuters transaction and other integration program initiatives (including within the time periods currently expected), develop additional products and services to meet customers' needs, attract new customers, general economic conditions and actions of competitors. These and other factors are discussed in materials that Thomson Reuters Corporation and Thomson Reuters PLC from time to time file with, or furnish to, securities regulatory authorities. Thomson Reuters disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law, rule or regulation. CONTACTS
Fred Hawrysh
Senior Vice President, Corporate Affairs
1.646 223 5285
fred.hawrysh@thomsonreuters.com
Victoria Brough
Head of Corporate Communications, EMEA
+44 (0) 207 542 8763
victoria.brough@thomsonreuters.com
Frank Golden
Senior Vice President, Investor Relations
1.646 223 5288
frank.golden@thomsonreuters.com
Pro Forma Thomson Reuters
Division and Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Ended
------------------
December 31,
------------
2008 2007 Change Organic
---- ---- ------ -------
Pro Forma Revenues
Legal $887 $875 1% 5%
Tax & Accounting 281 248 13% 11%
Scientific 159 159 0% 6%
Healthcare 160 158 1% 1%
------ ------
Professional Division 1,487 1,440 3% 6%
Sales & Trading 888 927 -4% 2%
Investment & Advisory 582 585 -1% 4%
Enterprise 350 333 5% 13%
Media 106 119 -11% -5%
------ ------
Markets Division 1,926 1,964 -2% 4%
Intercompany eliminations (1) (3)
------ ------
Pro Forma Revenues -
Ongoing Businesses(1) 3,412 3,401 0% 5%
Purchase accounting difference (1) - -
Disposals(2) - 21
------ ------
Pro Forma Revenues $3,412 $3,422 0%
====== ======
Pro Forma Operating Profit
Legal $282 $272 4%
Tax & Accounting 113 89 27%
Scientific 54 53 2%
Healthcare 62 57 9%
------ ------
Professional Division 511 471 8%
Markets Division 365 341 7%
Corporate and Other (140) (106)
Amortization (126) (134)
------ ------
Pro Forma Operating profit
- Ongoing Businesses(1) 610 572 7%
Purchase accounting
difference(1) - -
Disposals(2) 2
Impairment of assets held for sale - -
------ ------
Pro Forma Operating Profit $610 $574 6%
====== ======
Twelve Months Ended
-------------------
December 31,
------------
2008 2007 Change Organic
---- ---- ------ -------
Pro Forma Revenues
Legal $3,531 $3,318 6% 6%
Tax & Accounting 861 705 22% 10%
Scientific 604 565 7% 4%
Healthcare 468 452 4% 4%
------ ------
Professional Division 5,464 5,040 8% 6%
Sales & Trading 3,828 3,640 5% 4%
Investment & Advisory 2,371 2,207 7% 7%
Enterprise 1,295 1,139 14% 13%
Media 450 432 4% 0%
------ ------
Markets Division 7,944 7,418 7% 6%
Intercompany eliminations (9) (16)
------ ------
Pro Forma Revenues -
Ongoing Businesses(1) 13,399 12,442 8% 6%
Purchase accounting difference (1) - (86)
Disposals(2) 42 86
------ ------
Pro Forma Revenues $13,441 $12,442 8%
====== ======
Pro Forma Operating Profit
Legal $1,135 $1,044 9%
Tax & Accounting 219 184 19%
Scientific 171 164 4%
Healthcare 85 85 0%
------ ------
Professional Division 1,610 1,477 9%
Markets Division 1,406 1,117 26%
Corporate and Other (502) (424)
Amortization (511) (524)
------ ------
Pro Forma Operating profit
- Ongoing Businesses(1) 2,003 1,646 22%
Purchase accounting
difference(1) - (86)
Disposals(2) 5 11
Impairment of assets held for sale (72) -
------ ------
Pro Forma Operating Profit $1,936 $1,571 23%
====== ======
Pro Forma Thomson Reuters
Reconciliation of Operating Profit to Underlying Operating Profit
(millions of U.S. dollars)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December 31,
------------ ------------
2008 2007 Change 2008 2007 Change
---- ---- ------ ---- ---- ------
Pro Forma Operating Profit $610 $574 6% $1,936 $1,571 23%
Adjustments:
Amortization 126 134 511 524
Purchase accounting
difference - - - 86
Disposals - (2) (5) (11)
Impairment of assets
held for sale - - 72 -
Fair value adjustments (26) (4) (103) 48
Integration and
synergy costs 123 68 362 153
Pension - (34) - (34)
----- ----- ----- -----
Pro Forma Underlying
Operating Profit(3) $833 $736 13% $2,773 $2,337 19%
===== ===== ===== =====
Pro Forma Underlying
Operating Profit Margin %(3) 24.4% 21.6% 20.7% 18.8%
===== ===== ===== =====
Pro Forma Thomson Reuters
Reconciliation of Underlying Operating Profit to Adjusted Earnings From
Continuing Operations
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, 2008 December 31, 2008
----------------- -----------------
Pro Forma Underlying Operating Profit(3) $833 $2,773
Integration and synergy costs (123) (362)
Net interest expense(4) (102) (434)
Income taxes(5) (121) (367)
Tradeweb ownership interests (8) (17)
Dividends declared on preference shares (1) (5)
-------- --------
Pro Forma Adjusted Earnings -
Ongoing Businesses(6) $478 $1,588
======== ========
Pro Forma Adjusted Basic Earnings
Per Share - Ongoing Businesses $0.58 $1.92
======== ========
Pro Forma Adjusted Diluted Earnings
Per Share - Ongoing Businesses $0.57 $1.91
======== ========
Pro forma basic weighted average common
and ordinary shares(7) 825.7 828.6
======== ========
Pro forma diluted weighted average common
and ordinary shares(8) 831.7 833.0
======== ========
Pro Forma Thomson Reuters
Division and Business Segment Depreciation
(millions of U.S. dollars)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December 31,
------------ ------------
Pro Forma Depreciation by Segment 2008 2007 2008 2007
---- ---- ---- ----
Professional Division
Legal $(59) $(52) $(235) $(205)
Tax & Accounting (8) (6) (30) (21)
Scientific (10) (7) (35) (28)
Healthcare (6) (7) (25) (24)
------------------ ----------------
Professional Division (83) (72) (325) (278)
Markets Division (157) (149) (617) (626)
Corporate and Other (13) (4) (21) (14)
------------------ ----------------
Pro Forma Depreciation -
Ongoing Businesses (253) (225) (963) (918)
Disposals - (2) (1) (4)
------------------ ----------------
Total Pro Forma Depreciation $(253) $(227) $(964) $(922)
================== ================
(1) Pro forma revenues from ongoing businesses and pro forma operating
profit from ongoing businesses exclude the results of disposals (see
note (2) below). These revenues exclude the initial one-time
purchase accounting adjustment related to acquired revenue. Pro
forma operating profit has been restated to reflect purchase
accounting adjustments based on the final valuation of net assets
acquired.
(2) Disposals include the results of businesses sold or held for sale
that do not qualify as discontinued operations.
(3) Pro forma underlying operating profit excludes amortization of
acquired intangible assets, fair value adjustments, the impairment
of assets held for sale, costs associated with integration and
synergy programs, and other items affecting comparability. Pro forma
underlying operating profit excludes the results of disposals as well
as the initial one-time purchase accounting adjustments related to
acquired revenue. Pro forma underlying operating profit margin is
the pro forma underlying operating profit expressed as a percentage
of pro forma ongoing revenues.
(4) Pro forma net interest expense for the three months ended December
31, 2008 equals actual interest expense. Pro forma net interest
expense for the twelve months represents a pro rata portion of full
year pro forma interest expense of $450 million through June 2008
plus actual net interest expense for the six months ended December
31, 2008.
(5) Pro forma income taxes are calculated using an effective tax rate
of 25%.
(6) Pro forma adjusted earnings from ongoing operations and pro forma
adjusted earnings per share from ongoing operations include costs
associated with the integration and synergy programs, but exclude
non-recurring items, discontinued operations, the results of
disposals (see note (2) above) and other items affecting
comparability. Pro forma adjusted earnings per share from ongoing
operations does not represent actual earnings per share attributable
to shareholders.
(7) Pro forma basic weighted average common and ordinary shares includes
approximately 194.1 million Thomson Reuters PLC shares issued to
former Reuters Group PLC shareholders on April 17, 2008 as if the
shares were outstanding from January 1, 2008, the beginning of the
periods presented.
(8) Pro forma diluted weighted average common and ordinary shares
includes the effect of Reuters Group PLC options and other awards
assumed in the acquisition from January 1, 2008, the beginning of the
periods presented.
Thomson Reuters Corporation
Consolidated Statement of Earnings
(millions of U.S. dollars, except per common share data)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Revenues 3,412 2,033 11,707 7,296
Cost of sales, selling,
marketing, general and
administrative expenses (2,367) (1,436) (8,700) (5,275)
Depreciation (306) (120) (831) (468)
Amortization (50) (67) (411) (256)
Impairment of assets held
for sale - - (72) -
----------- ----------- ----------- -----------
Operating profit 689 410 1,693 1,297
Net other income (expense) 249 (40) 304 (34)
Net interest (expense) income
and other financing costs (102) 52 (224) (12)
Income taxes (187) (111) (351) (155)
Tradeweb ownership interests (8) - (17) -
----------- ----------- ----------- -----------
Earnings from continuing
operations 641 311 1,405 1,096
Earnings from discontinued
operations, net of tax 16 123 - 2,908
----------- ----------- ----------- -----------
Net earnings 657 434 1,405 4,004
Dividends declared on
preference shares (1) (2) (5) (6)
----------- ----------- ----------- -----------
Earnings attributable to
common and ordinary shares 656 432 1,400 3,998
Basic earnings per share $0.79 $0.67 $1.82 $6.24
=========== =========== =========== ===========
Diluted earnings per share $0.79 $0.67 $1.81 $6.20
=========== =========== =========== ===========
Basic weighted average
common and ordinary
shares 825,737,282 641,393,907 770,837,612 641,157,718
=========== =========== =========== ===========
Diluted weighted average
common and ordinary
shares 831,688,580 644,516,692 775,179,027 644,430,796
=========== =========== =========== ===========
Thomson Reuters Corporation
Consolidated Balance Sheet
(millions of U.S. dollars)
(unaudited)
December 31, December 31,
2008 2007
---- ----
Assets
Cash and cash equivalents 841 7,497
Accounts receivable, net of allowances 1,780 1,565
Prepaid expenses and other current assets 952 512
Deferred income taxes 100 104
------- -------
Current assets 3,673 9,678
Computer hardware and other property, net 1,555 731
Computer software, net 1,298 721
Identifiable intangible assets, net 8,596 3,438
Goodwill 19,348 6,935
Other non-current assets 1,550 1,328
------- -------
Total assets 36,020 22,831
======= =======
Liabilities and shareholders' equity
Liabilities
Short-term indebtedness 13 183
Accounts payable and accruals 2,710 1,536
Deferred revenue 1,196 1,108
Current portion of long-term debt and
finance lease obligations 672 412
------- -------
Current liabilities 4,591 3,239
Long-term debt and finance lease obligations 6,834 4,264
Other non-current liabilities 1,723 783
Deferred income taxes 2,674 974
Minority interest in equity of
consolidated affiliate 72 -
Shareholders' equity
Capital 11,135 2,932
Retained earnings 10,969 10,355
Accumulated other comprehensive (loss) income (1,978) 284
------- -------
Total shareholders' equity 20,126 13,571
------- -------
Total liabilities and shareholders' equity 36,020 22,831
======= =======
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Cash provided by (used in):
Operating activities
Net earnings 657 434 1,405 4,004
Remove earnings from
discontinued operations (16) (123) - (2,908)
Add back (deduct) items
not involving cash:
Depreciation 306 120 831 468
Amortization 50 67 411 256
Net gains on disposals of
businesses and investments (6) - (35) (8)
Impairment of assets
held for sale - - 72 -
Deferred income taxes 117 (54) 32 (124)
Other, net (249) 58 (125) 258
Changes in working capital
and other items 146 71 192 (136)
Cash provided by (used in)
operating activities -
discontinued operations - 86 (22) 6
------------------- ------------------
Net cash provided by
operating activities 1,005 659 2,761 1,816
------------------- ------------------
Investing activities
Acquisitions, less cash
acquired (204) (173) (8,502) (488)
(Payments for) proceeds from
disposals of discontinued
operations, net of income
taxes paid - (899) (65) 7,151
(Payments for) proceeds from
disposals, net of income
taxes paid (27) 7 244 18
Capital expenditures, less
proceeds from disposals (317) (225) (906) (608)
Other investing activities 7 (4) (26) (37)
Capital expenditures of
discontinued operations - - - (97)
Acquisitions by discontinued
operations - - - (54)
Other investing activities of
discontinued operations - - (7) (2)
------------------- ------------------
Net cash (used in) provided by
investing activities (541) (1,294) (9,262) 5,883
------------------- ------------------
Financing activities
Proceeds from debt - 794 7,600 794
Repayments of debt (408) - (5,487) (249)
Net borrowings (repayments)
under short-term loan
facilities - 190 (1,065) (180)
Purchase of sterling call
options - - - (76)
Repurchase of common and
ordinary shares (11) (93) (522) (168)
Dividends paid on
preference shares (1) (2) (5) (6)
Dividends paid on common
and ordinary shares (180) (153) (842) (612)
Other financing activities, net 2 14 207 33
------------------- ------------------
Net cash (used in) provided
by financing activities (598) 750 (114) (464)
------------------- ------------------
Translation adjustments (8) (73) (41) (72)
------------------- ------------------
(Decrease) increase in
cash and cash equivalents (142) 42 (6,656) 7,163
Cash and cash equivalents
at beginning of period 983 7,455 7,497 334
------------------- ------------------
Cash and cash equivalents
at end of period 841 7,497 841 7,497
=================== ==================
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to Free
Cash Flow(1)
(millions of U.S. dollars)
(unaudited)
Three Months Twelve Months
------------ -------------
Ended Ended
----- -----
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Net cash provided by operating
activities 1,005 659 2,761 1,816
Capital expenditures (317) (225) (906) (608)
Other investing activities 7 (4) (26) (37)
Capital expenditures of discontinued
operations - - - (97)
Other investing activities of
discontinued operations - - (7) (2)
Dividends paid on preference shares (1) (2) (5) (6)
----------------------------------
Free cash flow 694 428 1,817 1,066
==================================
(1) Free cash flow is net cash provided by operating activities less
capital expenditures, other investing activities and dividends paid
on preference shares. Thomson Reuters uses free cash flow as a
performance measure because it represents cash available to repay
debt, pay dividends and fund new acquisitions.
In 2008, free cash flow was affected by certain unusual items.
The following analysis removes these items to derive our
underlying free cash flow:
Three Months Twelve Months
------------ -------------
Ended Ended
----- -----
December 31, December 31,
------------ ------------
2008 2008
---- ----
Free cash flow $694 $1,817
One-time Reuters acquisition,
integration and synergy costs 135 518
----------------------------
Underlying free cash flow 829 2,335
Adjustments for certain items - (450)
----------------------------
829 1,885
============================
To provide a more Normalized 2008 Free Cash Flow number we adjust
for two timing related items:
(1) Interest costs which were substantially lower in 2008 since
we benefitted from having interest income and only a partial
year of interest expense related to the Reuters acquisition
debt.
(2) And last year's figure does not include what is traditionally
negative free cash flow from the Reuters business in the first
quarter of the year, which will be reflected in 2009.
SOURCE Thomson Reuters
-0- 02/24/2009
/CONTACT: Fred Hawrysh, Senior Vice President, Corporate Affairs,
+1-646-223-5285, fred.hawrysh@thomsonreuters.com; Victoria Brough, Head of
Corporate Communications, EMEA, +44 (0) 207 542 8763,
victoria.brough@thomsonreuters.com; or Frank Golden, Senior Vice President,
Investor Relations, +1-646-223-5288, frank.golden@thomsonreuters.com/
/Photo: http://www.newscom.com/cgi-bin/prnh/20080424/NYTH069LOGO/
/Web Site: http://www.thomson.com /
(TRI TRIN TRI. TRIL.L)
CO: Thomson Reuters
ST: New York
IN: FIN PUB
SU: ERN ERP CCA DIV
PR
-- NY74309 --
4309 02/24/2009 09:00 EST http://www.prnewswire.com
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