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Press release from Filing Services Canada

Thomson Reuters Reports Third-Quarter 2012 Results

Friday, November 02, 2012

Thomson Reuters Reports Third-Quarter 2012 Results07:00 EDT Friday, November 02, 2012FSC / Press ReleaseThomson Reuters Reports Third-Quarter 2012 Results* Revenues grew 1% before currency* Adjusted EBITDA of $864 million with a margin of 27.3% * Underlying operating profit of $585 million with a margin of 18.5% * Adjusted earnings per share were $0.54, unchanged from the third quarter of 2011 * 2012 Outlook affirmedNEW YORK, November 2, 2012 - Thomson Reuters (TSX / NYSE: TRI), the world's leading source of intelligent information for businesses and professionals, today reported results for the third quarter ended September 30, 2012. The company reported revenues from ongoing businesses of $3.2 billion, a 1% increase before currency. Adjusted EBITDA decreased 5% from the prior-year period and the corresponding margin was 27.3% versus 28.5% in the third quarter of 2011. Underlying operating profit decreased 15% and the corresponding margin was 18.5% versus 21.6% in the prior-year period. The third quarter of 2011 was the high-water mark for adjusted EBITDA and underlying operating profit margins last year.the world's leading source of intelligent information for businesses and professionals, today reported results for the third quarter ended September 30, 2012. The company reported revenues from ongoing businesses of $3.2 billion, a 1% increase before currency. Adjusted EBITDA decreased 5% from the prior-year period and the corresponding margin was 27.3% versus 28.5% in the third quarter of 2011. Underlying operating profit decreased 15% and the corresponding margin was 18.5% versus 21.6% in the prior-year period. The third quarter of 2011 was the high-water mark for adjusted EBITDA and underlying operating profit margins last year.Adjusted earnings per share (EPS) were $0.54, unchanged from the prior-year period. "Third-quarter results met our expectations even as the market environment remained challenging," said James C. Smith, chief executive officer of Thomson Reuters. "Our resilient subscription-based businesses performed well, while non-recurring revenues were weaker due to difficult prior-year comparables and lower transaction volumes. That said, we continue to make significant progress toward achieving our operational priorities and we remain on track to achieve our full-year outlook." "Furthermore, despite what is anticipated to be a continued challenging environment on the top-line, we expect further operational improvements to drive continued efficiencies as we work to achieve sustainable, predictable free cash flow improvement and earnings growth," continued Mr. Smith. -***-Consolidated Financial Highlights Three Months Ended September 30, (Millions of U.S. dollars, except EPS and margins) IFRS Financial 2012 2011 Change Measures Revenues $3,216 $3,453 -7% Operating profit $390 $659 -41% Diluted earnings $0.56 $0.44 27% per share (EPS) Cash flow from $607 $576 5% OperationsNon-IFRS Financial Change Change Before Currency Measures(1) 2012 2011 Revenues from $3,165 $3,197 -1% 1% ongoing businesses Adjusted EBITDA $864 $911 -5% -4% Adjusted EBITDA 27.3% 28.5% -120bp -150bp Margin Underlying operating $585 $690 -15% -14% Profit Underlying operating 18.5% 21.6% -310bp -320bp profit margin Adjusted earnings $0.54 $0.54 0% per share (EPS) Free cash flow $376 $360 4% Free cash flow from $369 $319 16% ongoing operations-****--------------------- (1) These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release. Additional information is provided in the explanatory note at the end of this news release.* Revenues from ongoing businesses were $3.2 billion, a 1% increase before currency.* Adjusted EBITDA decreased 5% and the corresponding margin was 27.3% versus 28.5% in the prior-year period. The margin declined as the benefit from no integration expenses in the quarter (versus $39 million in the prior-year period) was offset by lower organic revenue growth; a decrease in high-margin revenues compared to the prior-year period; and anticipated increases in expenses in Financial & Risk related to investments in customer service and customer administration.* Underlying operating profit decreased 15% and the corresponding margin was 18.5% versus 21.6% in the prior-year period due to higher depreciation and amortization from investments made in prior periods, planned increases in expenses and nominal revenue growth.* Adjusted EPS was $0.54, unchanged from the prior-year period. Anticipated lower underlying operating profit was offset by the elimination of integration expenses and a lower tax rate. Foreign exchange had a $0.01 negative impact on adjusted EPS.Third-Quarter Business Segment Highlights Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency as Thomson Reuters believes this provides the best basis to measure the performance of its business. Financial & Risk * Revenues were flat compared to the prior-year period as the benefit from acquisitions was offset by a decline in organic growth. Growth in Marketplaces and Governance, Risk & Compliance was offset by a decline in the Trading business. Investors revenues were unchanged from the prior-year period.* Recurring subscription-related revenues decreased 1%. Transactions-related revenues increased 4% solely due to acquisitions. Recoveries revenues decreased 1% and Outright revenues increased 2%.* By geography, revenues in Europe, Middle East and Africa (EMEA) were flat, revenues in the Americas were up 1% while revenues in Asia declined 1%, primarily related to Japan.* EBITDA was $440 million, down 16%, with a related margin of 24.7%. EBITDA margin decreased 370 basis points from the prior-year period due to lower organic revenues, planned investments in customer service and customer administration.* Operating profit was $283 million, down 26%, with a related margin of 15.9%. Operating profit margin decreased 480 basis points due to the same items that impacted the EBITDA margin and higher depreciation and amortization from product investments made in prior periods.* Eikon desktops totaled 25,600 at the end of the third quarter of 2012, up approximately 35% from the end of the second quarter of 2012.Trading * Revenues decreased 4% with growth in Commodities & Energy, Data Feeds & Platform and Elektron hosting offset by desktop cancellations in Exchange Traded Instruments and Fixed Income. Omgeo declined by 17% due to low equity transaction volumes. * Recoveries revenues decreased 2%.Investors* Revenues were flat compared to the prior-year period. Investment Management declined 4%, but continued to improve compared to the second quarter (down 5%) and first quarter (down 10%). Investment Management continues to be impacted by weakness in Europe and Asia. Enterprise Content revenues grew 12% (12% of Investors total revenues).* Corporates revenues were down 1%. Wealth Management and Banking & Advisory were up 1% and down 1%, respectively, versus the prior-year period.Marketplaces* Revenues increased 7% due to acquisitions with organic revenues down 2%. Tradeweb was up 13% related to the acquisition of Rafferty in 2011.* Foreign exchange-related revenues increased 5% due to the acquisition of FXall. Foreign exchange-related organic revenues however declined 2% as overall market volumes declined compared to the prior-year period. Governance, Risk & Compliance* Revenues grew 17%, all organic, to $55 million driven by new sales and continued strong demand for risk and compliance solutions.* Thomson Reuters GRC business was recently named by Gartner, Inc. to the prestigious "Leaders Quadrant of the Enterprise Governance, Risk and Compliance Platforms Magic Quadrant." The announcement was made following Gartner's evaluation of Thomson Reuters Enterprise GRC solution on completeness of vision and ability to execute. Legal* Revenues increased 2% (1% organic). US Law Firm Solutions grew slightly driven by a 13% increase in Business of Law revenues (FindLaw and Elite) while research-related revenues declined 3%. Corporate, Government and Academic revenues rose 1%. Global businesses grew 9% with a strong performance by Latin American operations.* US print revenues declined 9%, partly timing-related. Excluding US print, revenues grew 5% (3% organic).* EBITDA was up slightly from the prior-year period and the associated margin increased 10 basis points to 39.4%. Excluding the benefit of currency, the margin declined 40 basis points. * Operating profit was flat and the associated margin was 30.8% compared to 31.3% in the prior-year period. Excluding the benefit of currency, the margin declined 100 basis points due to the decline in print revenues and higher depreciation and amortization expense. * 73% of Westlaw revenue is now converted to WestlawNext.Tax & Accounting* Revenues increased 10% (3% organic) driven by acquisitions and strong growth in revenues from the ONESOURCE suite and software sales to accounting firms. Organic revenue growth was partly impacted by difficult comparisons to the prior-year period.* EBITDA increased 3% and the corresponding margin decreased 120 basis points to 24.8% due mainly to acquisition dilution and a change in business mix.* Operating profit decreased 8% and the corresponding margin decreased 230 basis points to 13.0% due to softer revenue growth and software amortization from acquisitions. * Tax & Accounting is a seasonal business with a significant percentage of its operating profit traditionally generated in the fourth quarter. Small movements in the timing of revenues and expenses can impact margins in any given quarter for the Tax & Accounting business. Full-year margins are more reflective of the segment's underlying performance.Intellectual Property & Science* Revenues were up 3% (flat organic) impacted by strong prior-year comparables. IP Solutions grew 3%, Life Sciences increased 8% and Scientific & Scholarly Research revenues decreased 6% due to strong back-file sales recorded in the prior-year period that did not repeat this year. * EBITDA decreased 9% with the corresponding margin declining 380 basis points to 32.9% primarily due to acquisition dilution associated with MarkMonitor and a difficult comparison to the prior-year period when the business benefited from significant back-file sales.* Operating profit decreased 14% with the corresponding margin declining 470 basis points to 25.1%. The decline in the margin reflected the same items that impacted the EBITDA margin as well as an increase in depreciation and amortization due to products released in the second half of 2011.* Small movements in the timing of revenues and expenses can impact margins in any given quarter for the Intellectual Property & Science business. Full-year margins are more reflective of the segment's underlying performance. -***-Consolidated Financial Highlights - Nine Months Nine Months Ended September 30, (Millions of U.S. dollars, except EPS and margins) IFRS Financial 2012 2011 Change Measures Revenues $9,879 $10,230 -3% Operating profit $2,094 $1,888 11% Diluted earnings $2.04 $1.41 45% per share (EPS) Cash flow from $1,750 $1,655 6% operationsNon-IFRS Financial Change Change Measures[1] 2012 2011 Before Currency Revenues from $9,541 $9,435 1% 3% ongoing businesses Adjusted EBITDA $2,581 $2,516 3% 4% Adjusted EBITDA 27.1% 26.7% 40bp 30bp margin Underlying operating $1,747 $1,895 -8% -6% profit Underlying operating 18.3% 20.1% -180bp -180bp profit margin Adjusted earnings $1.52 $1.42 7% per share (EPS) Free cash flow $1,030 $933 10% Free cash flow from $969 $785 23% ongoing operations-****-* Revenues from ongoing businesses were $9.5 billion, a 3% increase before currency. * Adjusted EBITDA increased 3% and the corresponding margin was 27.1% versus 26.7% in the prior-year period as higher revenues and the elimination of integration expenses in 2012 offset the planned investments in customer service and customer administration. * Underlying operating profit decreased 8% and the corresponding margin was 18.3% versus 20.1% in the prior-year period due to higher depreciation and amortization expense related to new product launches and planned increases in expenses.* Adjusted EPS was $1.52 compared to $1.42 in the prior-year period. The increase was primarily attributable to the elimination of integration expenses and a lower tax rate, partly offset by lower underlying operating profit.* Free cash flow was $1.03 billion, up 10% compared to the prior-year period. Free cash flow from ongoing operations was $969 million, up 23% from the same period in 2011.Corporate & Other (Including Media) Third-quarter Media revenues were $79 million, up 1% from the prior-year period (organic growth of 1%). Third-quarter Corporate & Other costs were $43 million compared to $48 million in the prior-year period. Media revenues for the first nine months of 2012 were $244 million, up 1% from the prior-year period (1% organic). Corporate & Other costs for the first nine months of 2012 were $178 million compared to $186 million in the same period of 2011.Business Outlook (Before Currency)Thomson Reuters today reaffirmed its business outlook for 2012 that was previously communicated in February. The company continues to expect its: * revenues to grow low single-digits in 2012;* adjusted EBITDA margin to range between 27% and 28% in 2012; * underlying operating profit margin to range between 18% and 19% in 2012 due to higher depreciation and amortization expense; and* reported free cash flow to grow 5% to 10% and free cash flow from ongoing operations to grow 15% to 20% in 2012.The information in this section is forward-looking and should be read in conjunction with the section below entitled "Special Note Regarding Forward-Looking Statements, Material Assumptions and Material Risks."Dividend and Share RepurchasesAs previously announced, Thomson Reuters increased its 2012 annual dividend by $0.04 per share to $1.28 per share. A quarterly dividend of $0.32 per share is payable on December 17, 2012 to common shareholders of record as of November 21, 2012. Year-to-date through October 30, 2012, the company repurchased 5.9 million shares for an aggregate cost of approximately $168 million pursuant to its Normal Course Issuer Bid (NCIB). The company repurchased 4.3 million shares under the current NCIB program which was renewed in May 2012 and authorizes the company to purchase up to 15 million shares.Thomson ReutersThomson 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 and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs approximately 60,000 people and operates in over 100 countries. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, go to http://www.thomsonreuters.com.NON-IFRS FINANCIAL MEASURESThomson Reuters prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). This news release includes certain non-IFRS financial measures. Thomson Reuters uses these non-IFRS financial measures as supplemental indicators of its operating performance and financial position. These measures do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance calculated in accordance with IFRS. Non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the appended tables. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKSCertain statements in this news release, including, but not limited to, statements in the "Business Outlook (Before Currency)" section and Mr. Smith's comments, are forward-looking. These forward-looking statements are based on certain assumptions and reflect our company's current expectations. As a result, 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. There is no assurance that the events described in any forward-looking statement will materialize. A business outlook is provided for the purpose of presenting information about current expectations for 2012. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements which reflect expectations only as of the date of this news release. Except as may be required by applicable law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.The company's 2012 business outlook is based on various external and internal assumptions. Economic and market assumptions include, but are not limited to, positive GDP growth in the countries where Thomson Reuters operates led by rapidly developing economies and a continued increase in the number of professionals around the world and their demand for high quality information and services. Internal financial and operational assumptions include, but are not limited to, the successful execution of the company's ongoing product release programs, globalization strategy, other growth initiatives and efficiency initiatives. Some of the material risk factors that could cause actual results or events to differ materially from those expressed in or implied by forward-looking statements in this news release include, but are not limited to, changes in the general economy (including the current European Union debt crisis); actions of competitors; failure to develop new products, services, applications and functionalities to meet customers' needs, attract new customers or expand into new geographic markets; increased accessibility to free or relatively inexpensive information sources; failures or disruptions of network systems or the Internet; failure to maintain a high renewal rate for subscription-based services; dependency on third parties for data, information and other services; changes to law and regulations, including the impact of the Dodd-Frank legislation and similar financial services laws around the world; failure to adapt to recent organizational changes; failure to recruit, motivate and retain high quality management and key employees; failure to meet the challenges involved in operating globally; failure to protect the brands and reputation of Thomson Reuters; additional impairment of goodwill and identifiable intangible assets; inadequate protection of intellectual property rights; threat of legal actions and claims; risk of antitrust/competition-related claims or investigations; downgrading of credit ratings and adverse conditions in the credit markets; fluctuations in foreign currency exchange and interest rates; the effect of factors outside of the control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; actions or potential actions that could be taken by the company's principal shareholder, The Woodbridge Company Limited; and failure to derive fully the anticipated benefits from existing or future acquisitions, joint ventures, investments or dispositions. These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Thomson Reuters annual and quarterly reports are also available in the "Investor Relations" section of http://www.thomsonreuters.com.CONTACTMEDIA Carla Jones Senior Vice President +1 646 223 5285carla.jones@thomsonreuters.comINVESTORS Frank J. Golden Senior Vice President, Investor Relations +1 646 223 5288frank.golden@thomsonreuters.comThomson Reuters will webcast a discussion of its third-quarter 2012 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You can access the webcast by visiting the "Investor Relations" section of http://www.thomsonreuters.com. An archive of the webcast will be available following the presentation. -***-Thomson Reuters Corporation Business Segment Information (millions of U.S. dollars) (unaudited) Three Months Ended September Change 30, ---------------- ------------------------------------- 2012 2011(1) Total Before Currency Organic Revenues Trading $816 $887 -8% -4% -4% Investors 604 616 -2% 0% -1% Marketplaces 303 289 5% 7% -2% Governance, 55 47 17% 17% 17% Risk & Compliance ---------------- Financial & Risk 1,778 1,839 -3% 0% -2% Legal 830 821 1% 2% 1% Tax & Accounting 262 242 8% 10% 3% Intellectual 219 215 2% 3% 0% Property & Science Corporate & Other 79 83 -5% 1% 1% (includes Media) Eliminations (3) (3) ---------------- Revenues from 3,165 3,197 -1% 1% -1% ongoing businesses (2) Other businesses(3) 51 256 ---------------- Revenues $3,216 $3,453 -7% ---------------- Change Margin ---------------------------------- Adjusted EBITDA (4) Total Before Currency 2012 2011 Financial & Risk $440 $523 -16% -13% 24.7% 28.4% Legal 327 323 1% 1% 39.4% 39.3% Tax & Accounting 65 63 3% 3% 24.8% 26.0% Intellectual Property 72 79 -9% -8% 32.9% 36.7% & Science Corporate & Other (40) (38) (includes Media) Integration programs - (39) expenses -------------- Adjusted EBITDA $864 $911 -5% -4% 27.3% 28.5% -------------- Underlying Operating Profit (5) Financial & Risk $283 $380 -26% -22% 15.9% 20.7% Legal 256 257 0% -1% 30.8% 31.3% Tax & Accounting 34 37 -8% -8% 13.0% 15.3% Intellectual Property 55 64 -14% -14% 25.1% 29.8% & Science Corporate & Other (43) (48) (includes Media) -------------- Underlying operating $585 $690 -15% -14% 18.5% 21.6% profit -------------- -****--***-Thomson Reuters Corporation Business Segment Information (millions of U.S. dollars) (unaudited) Nine Months Ended September 30, Change ------------------------------------------------- 2012 2011 (1) Total Before Currency Organic Revenues Trading $2,515 $2,668 -6% -3% -3% Investors 1,815 1,866 -3% -1% -2% Marketplaces 893 844 6% 8% 1% Governance, 158 104 52% 53% 17% Risk & Compliance ------------------ Financial & Risk 5,381 5,482 -2% 1% -1% Legal 2,425 2,378 2% 3% 1% Tax & Accounting 855 709 21% 22% 6% Intellectual Property 644 627 3% 4% 2% & Science Corporate & Other 244 249 -2% 1% 1% (includes Media) Eliminations (8) (10) ------------------ Revenues from 9,541 9,435 1% 3% 0% Ongoing businesses (2) Other businesses (3) 338 795 ------------------ Revenues $9,879 $10,230 -3% ------------------ Change Margin ---------------------------------- Adjusted EBITDA (4) Total Before Currency 2012 2011 Financial & Risk $1,359 $1,514 -10% -7% 25.3% 27.6% Legal 916 898 2% 2% 37.8% 37.8% Tax & Accounting 245 196 25% 26% 28.7% 27.6% Intellectual Property 219 216 1% 2% 34.0% 34.4% & Science Corporate & Other (158) (157) (includes Media) Integration programs - (151) expenses ---------------- Adjusted EBITDA $2,581 $2,516 3% 4% 27.1% 26.7% ---------------- Underlying Operating Profit (5) Financial & Risk $891 $1,084 -18% -14% 16.6% 19.8% Legal 707 697 1% 1% 29.2% 29.3% Tax & Accounting 158 127 24% 25% 18.5% 17.9% Intellectual Property 169 173 -2% -2% 26.2% 27.6% & Science Corporate & Other (178) (186) (includes Media) ---------------- Underlying operating $1,747 $1,895 -8% -6% 18.3% 20.1% profit ---------------- -****--***-Thomson Reuters Corporation Reconciliation of Operating Profit to Adjusted EBITDA (4) (millions of U.S. dollars) (unaudited) Three Months Nine Months Ended Ended September September 30, 30, ------------------------------------------- 2012 2011 Change 2012 2011 ChangeOperating profit $390 $659 -41% $2,094 $1,888 11% Adjustments: Amortization of other 158 152 459 446 identifiable intangible assets Integration programs - 39 - 151 expenses Fair value adjustments 34 (102) 21 (112) Other operating losses 18 17 (802) (302) (gains), net Operating profit from (15) (75) (25) (176) Other businesses (1),(3) -------------- ---------------- Underlying operating $585 $690 -15% $1,747 $1,895 -8% profit (1) Adjustments: Integration programs - (39) - (151) expenses Depreciation and 279 260 834 772 amortization of computer software (excluding Other businesses (1), (3)) -------------- ---------------- Adjusted EBITDA (1) $864 $911 -5% $2,581 $2,516 3% -------------- ---------------- Underlying operating 18.5% 21.6% -310bp 18.3% 20.1% -180bp profit margin -------------- ---------------- Adjusted EBITDA margin 27.3% 28.5% -120bp 27.1% 26.7% 40bp -------------- ---------------- -****--***-Thomson Reuters Corporation Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA (4) (millions of U.S. dollars) (unaudited) Three Months Nine Months Ended Ended September 30, September 30, -------------------------------------------- 2012 2011 Change 2012 2011 ChangeEarnings from $472 $381 24% $1,736 $1,208 44% continuing operations Adjustments: Tax (benefit) (140) 145 106 371 expense Other finance (30) 35 (44) 19 (income) costs Net interest 90 102 295 301 expense Amortization 158 152 459 446 of other identifiable intangible assets Amortization 175 155 516 481 of computer software Depreciation 104 107 323 324 ----------------- --------------- EBITDA $829 $1,077 -23% $3,391 $3,150 8% Adjustments: Share of post tax (2) (4) 1 (11) (earnings) losses in equity method investees Other operating 18 17 (802) (302) losses (gains), net Fair value 34 (102) 21 (112) adjustments EBITDA from Other (15) (77) (30) (209) businesses (1), (3) ----------------- --------------- Adjusted EBITDA (1) ]$864 $911 -5% $2,581 $2,516 3% ----------------- --------------- -****--***-Thomson Reuters Corporation Reconciliation of Underlying Operating Profit (5) to Adjusted EBITDA (4) by Business Segment (millions of U.S. dollars) (unaudited)-***------------------------------------------------------------ Three Months Ended September 30, 2012 ----------------------------------------------------------- Add: Depreciation and Underlying Amortization Operating of Computer Adjusted Profit Software ** EBITDA ---------------------------------------------------------- Financial & Risk $283 $157 $440 Legal 256 71 327 Tax & Accounting 34 31 65 Intellectual Property & Science 55 17 72 Corporate & Other (includes Media) (43) 3 (40) Integration programs expenses na na - ----------------------------------------------------------- $585 $279 $864----------------------------------------------------------- Three Months Ended September 30, 2011(1) ----------------------------------------------------------- Add: Depreciation and Underlying Amortization Operating of Computer Adjusted Profit Software ** EBITDA ---------------------------------------------------------- Financial & Risk $380 $143 $523 Legal 257 66 323 Tax & Accounting 37 26 63 Intellectual Property & Science 64 15 79 Corporate & Other (includes Media) (48) 10 (38) Integration programs expenses na na (39) ------------------------------------------------------------ $690 $260 $911-****--***------------------------------------------------------------ Nine Months Ended September 30, 2012 ----------------------------------------------------------- Add: Depreciation and Underlying Amortization Operating of Computer Adjusted Profit Software ** EBITDA ---------------------------------------------------------- Financial & Risk $891 $468 $1,359 Legal 707 209 916 Tax & Accounting 158 87 245 Intellectual Property & Science 169 50 219 Corporate & Other (includes Media) (178) 20 (158) Integration programs expenses na na - ---------------------------------------------------------- $1,747 $834 $2,581---------------------------------------------------------- Nine Months Ended September 30, 2011(1) ---------------------------------------------------------- Add: Depreciation and Underlying Amortization Operating of Computer Adjusted Profit Software ** EBITDA ---------------------------------------------------------- Financial & Risk $1,084 $430 $1,514 Legal 697 201 898 Tax & Accounting 127 69 196 Intellectual Property & Science 173 43 216 Corporate & Other (includes Media) (186) 29 (157) Integration programs expenses na na (151) ----------------------------------------------------------- $1,895 $772 $2,516 ------------------------------------------------------------****------------------------------ **excludes Other businesses (1)(2) na - not applicable-***-Thomson Reuters Corporation Reconciliation of Earnings Attributable to Common Shareholders to Adjusted Earnings from Continuing Operations (6) (millions of U.S. dollars, except as otherwise indicated and except for per share data) (unaudited) Three Months Nine Months Ended Ended September September 30, 30, ------------------------------ 2012 2011 2012 2011 Earnings attributable $462 $369 $1,698 $1,182 to common shareholders Adjustments: Operating profit (15) (75) (25) (176) from Other businesses (1), (3) Fair value 34 (102) 21 (112) adjustments Other operating 18 17 (802) (302) losses (gains), net Other finance (30) 35 (44) 19 (income) costs Share of post tax (2) (4) 1 (11) (earnings) losses in equity method investees Tax on above items (3) 63 184 190 Interim period effective (60) (15) (8) (10) tax rate normalization(7) Discrete tax items (115) 13 (224) (33) Amortization of other 158 152 459 446 identifiable intangible assets Discontinued operations (2) - 1 (2) Dividends declared on - - (2) (2) preference shares ------------------------------ Adjusted earnings from $445 $453 $1,259 $1,189 continuing operations(1) ------------------------------ Adjusted earnings per $0.54 $0.54 $1.52 $1.42 share from continuing operations(1) ------------------------------ ------------------------------ Diluted weighted average 828.4 836.7 829.7 838.2 common shares (in millions) -------------------------------****--***-Thomson Reuters Corporation Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow from Ongoing Operations (8) (millions of U.S. dollars) (unaudited) Three Months Nine Months Ended Ended September September 30, 30, --------------------------- 2012 2011 2012 2011 Net cash provided by $607 $576 $1,750 $1,655 operating activities Capital expenditures, (232) (218) (726) (759) less proceeds from disposals Other investing 1 2 8 39 activities Dividends paid on - - (2) (2) preference shares --------------------------- Free cash flow 376 360 1,030 933 Remove: Other (7) (41) (61) (148) businesses --------------------------- Free cash flow from $369 $319 $969 $785 ongoing operations ----------------------------****-Footnotes(1) Prior-period amounts have been reclassified to reflect the current presentation.(2) Revenues from ongoing businesses are revenues from reportable segments and Corporate & Other (which includes the Media business) less eliminations. Other businesses (see note (3) below) are excluded. (3) 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.-***-(millions of U.S. dollars) Three Months Nine Months Ended Ended September September 30, 30, -------------------------- Other businesses 2012 2011 2012 2011 Revenues $51 $256 $338 $795 --------------------------Operating profit $15 $75 $25 $176 Depreciation and amortization - 2 5 33 of computer software -------------------------- EBITDA $15 $77 $30 $209 ---------------------------****-(4) Thomson Reuters defines adjusted EBITDA as underlying operating profit excluding the related depreciation and amortization of computer software but including integration programs expense. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues from ongoing businesses.(5) Underlying operating profit is operating profit from reportable segments and Corporate & Other (includes Media). Underlying operating profit margin is the underlying operating profit expressed as a percentage of revenues from ongoing businesses. (6) Adjusted earnings from continuing operations and adjusted earnings per share from continuing operations include dividends declared on preference shares and integration programs expense, but exclude the pre-tax impacts of amortization of other identifiable intangible assets as well as the post-tax impacts of fair value adjustments, other operating (gains) and losses, certain impairment charges, the results of Other businesses (see note (3) above), other finance (income) costs, Thomson Reuters share of post-tax (earnings) losses in equity method investees, discontinued operations and other items affecting comparability. Adjusted earnings per share from continuing operations is calculated using diluted weighted average shares and does not represent actual earnings or loss per share attributable to shareholders.(7) Adjustment to reflect income taxes based on estimated full-year effective tax rate. Reported earnings or loss for interim periods reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which Thomson Reuters operates. The adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full year income taxes.(8) Free cash flow is net cash provided by operating activities less capital expenditures, other investing activities and dividends paid on the company's preference shares. Other businesses (see note (3) above) are also removed to arrive at free cash flow from ongoing operations.-***-Thomson Reuters Corporation Consolidated Income Statement (millions of U.S. dollars, except per share data) (unaudited) Three Months Nine Months Ended Ended September September 30, 30, ---------------------------------------------------- 2012 2011 2012 2011Revenues $3,216 $3,453 $9,879 $10,230 Operating expenses (2,371) (2,363) (7,289) (7,393) Depreciation (104) (107) (323) (324) Amortization of (175) (155) (516) (481) computer software Amortization of other (158) (152) (459) (446) identifiable intangible assets Other operating (losses) (18) (17) 802 302 gains,net ---------------------------------------------------- Operating profit 390 659 2,094 1,888 Finance costs, net: Net interest expense (90) (102) (295) (301) Other finance income 30 (35) 44 (19) (costs) ---------------------------------------------------- Income before tax and 330 522 1,843 1,568 equity method investees Share of posttax 2 4 (1) 11 earnings (losses) in equity method investees Tax benefit (expense) 140 (145) (106) (371) ---------------------------------------------------- Earnings from continuing 472 381 1,736 1,208 operations Earnings (loss) from 2 - (1) 2 discontinued operations, net of tax ---------------------------------------------------- Net earnings $474 $381 $1,735 $1,210 ----------------------------------------------------Earnings attributable to: Common shareholders 462 369 1,698 1,182 Non-controlling 12 12 37 28 interestsBasic earnings per share $0.56 $0.44 $2.05 $1.41 ---------------------------------------------------- Diluted earnings per $0.56 $0.44 $2.04 $1.41 share ----------------------------------------------------Basic weighted average 826,257,191 834,645,519 827,804,739 835,624,471 common shares ---------------------------------------------------- Diluted weighted average 828,405,144 836,712,254 829,747,967 838,203,018 common shares-****--***-Thomson Reuters Corporation Consolidated Statement of Financial Position (millions of U.S. dollars) (unaudited) September December 30, 31, 2012 2011 ------------------- Assets Cash and cash $769 $422 equivalents Trade and other 1,772 1,984 receivables Other financial 81 100 assets Prepaid expenses 604 641 and other current assets ------------------- Current assets 3,226 3,147 excluding assets held for sale Assets held for sale 141 767 ------------------- Current assets 3,367 3,914Computer hardware 1,364 1,509 and other property, net Computer software, 1,679 1,640 net Other identifiable 8,215 8,471 intangible assets, net Goodwill 16,583 15,932 Other financial 390 425 assets Other non-current 552 535 assets Deferred tax 42 50 ------------------- Total assets $32,192 $32,476 -------------------Liabilities and equity Liabilities Current indebtedness $1,007 $434 Payables, accruals 2,442 2,675 and provisions Deferred revenue 1,138 1,379 Other financial 97 81 liabilities ------------------- Current liabilities 4,684 4,569 excluding liabilities associated with assets held for sale Liabilities associated 18 35 with assets held for sale ------------------- Current liabilities 4,702 4,604Long-term indebtedness 6,255 7,160 Provisions and other 2,689 2,513 non-current liabilities Other financial liabilities 8 27 Deferred tax 1,176 1,422 ------------------- Total liabilities 14,830 15,726Equity Capital 10,331 10,288 Retained earnings 8,197 7,633 Accumulated other (1,508) (1,516) comprehensive loss ------------------- Total shareholders' 17,020 16,405 equity Non-controlling 342 345 interests ------------------- Total equity 17,362 16,750 ------------------- Total liabilities $32,192 $32,476 and equity --------------------****--***-Thomson Reuters Corporation Consolidated Statement of Cash Flow (millions of U.S. dollars) (unaudited) Three Months Nine Months Ended Ended September September 30, 30, ---------------------------------- 2012 2011 2012 2011 Cash provided by (used in): Operating activities Net earnings $474 $381 $1,735 $1,210 Adjustments for: Depreciation 104 107 323 324 Amortization of 175 155 516 481 computer software Amortization of other 158 152 459 446 identifiable intangible assets Net losses (gains) on 11 (3) (815) (389) disposals of businesses and investments Deferred tax (97) (55) (216) (229) Other (65) (3) (41) 161 Changes in working capital (153) (158) (211) (349) and other items ---------------------------------- Net cash provided by 607 576 1,750 1,655 operating activities ----------------------------------Investing activities Acquisitions, net of (1,015) (388) (1,275) (1,114) cash acquired (Payments for) proceeds (176) (5) 1,807 505 from disposals, net of taxes paid Capital expenditures, (232) (218) (726) (759) less proceeds from disposals[ Other investing 1 2 8 39 activities ---------------------------------- Investing cash flows (1,422) (609) (186) (1,329) from continuing operations Investing cash flows - 12 90 51 from discontinued operations ---------------------------------- Net cash used in (1,422) (597) (96) (1,278) investing activities ----------------------------------Financing activities Repayments of debt - (593) (2) (646) Net borrowings - 1,083 (423) 1,063 (repayments) under short-term loan facilities Repurchases of - (319) (168) (319) common shares Dividends paid - - (2) (2) on preference shares Dividends paid (254) (247) (766) (712) on common shares Other financing 32 (17) 52 (31) activities ---------------------------------- Net cash used in (222) (93) (1,309) (647) financing activities ----------------------------------Translation adjustments 5 (10) 2 (5) on cash and cash equivalents ---------------------------------- (Decrease) increase in (1,032) (124) 347 (275) cash and cash equivalents Cash and cash equivalents 1,801 713 422 864 at beginning of period ---------------------------------- Cash and cash equivalents $769 $589 $769 $589 at end of period ----------------------------------To view this release as a web page, please click on the following link:http://www.usetdas.com/pr/thompsonreuters11022012.htmMaximum News Dissemination by FSCwire. http://www.fscwire.com