Thomson Reuters Reports Third-Quarter 2014 Results
Third-quarter and nine-month results on track with Financial & Risk net sales
positive year-to-date and for all regions in the quarter, while Legal returned
to positive organic revenue growth
NEW YORK, Oct. 30, 2014 -- Thomson Reuters (TSX / NYSE: TRI) today
reported results for the third quarter ended September 30, 2014.
* Revenues from ongoing businesses grew 1% before currency to $3.1 billion
* Adjusted EBITDA and underlying operating profit were both down 3%
+ Adjusted EBITDA margin 26.5%, down 100 basis points; excluding charges
was 27.0%
+ Underlying operating profit margin 17.1%, down 70 basis points;
excluding charges was 17.6%
* Adjusted earnings per share were $0.45 versus $0.48 in the prior-year
period
* 28.4 million shares repurchased since October 2013 returning $1.0 billion
to shareholders
* 2014 Outlook affirmed
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"I am pleased to report yet another quarter of results in line with
expectations, building on our first-half momentum," said James C. Smith, chief
executive officer of Thomson Reuters. "It is particularly encouraging to see
sales trends continue to improve in both our financial and legal businesses
alongside consistent strong performance from our other units. We are delivering
on our overarching objective: building a platform for higher, more sustainable
and more profitable future growth."
Consolidated Financial Highlights - Third Quarter
Three Months Ended September 30,
(Millions of U.S. dollars, except EPS and margins)
IFRS Financial Measures 2014 2013 Change
Revenues $3,107 $3,086 1%
Operating profit $466 $316 47%
Diluted earnings per share (EPS) $0.28 $0.33 -15%
Cash flow from operations $585 $676 -13%
The increase in operating profit was primarily due to favorable fair value
adjustments largely associated with foreign currency embedded derivatives in
certain customer contracts. The decline in diluted EPS resulted from higher
costs associated with foreign currency fluctuations and income tax expense,
which more than offset the increase in operating profit.
Non-IFRS Financial Measures(1) 2014 2013 Change
Revenues from ongoing businesses $3,107 $3,073 1%
Adjusted EBITDA $822 $845 -3%
Adjusted EBITDA margin 26.5% 27.5% -100bp
Underlying operating profit $530 $548 -3%
Underlying operating profit margin 17.1% 17.8% -70bp
Adjusted earnings per share (EPS) $0.45 $0.48 -6%
Free cash flow $358 $475 -25%
(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
footnotes to the appended tables.
* Revenues from ongoing businesses were $3.1 billion, a 1% increase before
currency, reflecting 4% combined growth from the company's Legal, Tax &
Accounting and Intellectual Property & Science businesses, which was offset
by a 2% decline in Financial & Risk.
* Adjusted EBITDA decreased 3%, and the corresponding margin was 26.5% versus
27.5% in the prior-year period, primarily due to higher operating costs and
charges.
+ Excluding charges from both periods, the margin was 27.0%, down 80
basis points from the prior-year period.
+ Excluding charges from both periods and the negative impact of foreign
currency the margin was 27.3%, down 10 basis points from the prior-year
period.
* Underlying operating profit decreased 3%, and the corresponding margin was
17.1% versus 17.8% in the prior-year period. The decrease was primarily due
to the same factors that impacted adjusted EBITDA.
+ Excluding charges from both periods, the margin was 17.6%, down 60
basis points from the prior-year period.
+ Excluding charges for both periods and the negative impact of foreign
currency, the margin was 18.0%, up 20 basis points from the prior-year
period.
* Adjusted EPS was $0.45 compared to $0.48 in the prior-year period, down
6%.
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 down 2% (down 3% organic) due to the impact of negative net
sales over the prior 12 months and a 5% organic decline in
transactions-related revenues.
* Recurring subscription-related revenues decreased 3% due to the impact of
negative aggregate net sales over the prior 12 months.
* Transactions-related revenues increased 3% (down 5% organic) due to lower
trading volumes in fixed income markets. Recoveries revenues increased 1%.
* By geography, revenues in Europe, Middle East and Africa (EMEA) were down
4%, and revenues in the Americas and Asia were flat.
* Net sales were positive for the quarter and were positive for all regions -
the Americas, Europe and Asia.
* EBITDA decreased 6% due to $18 million in charges and the impact of foreign
currency. The margin was 25.1% versus 26.4% in the prior-year period.
+ Excluding charges from both periods, the margin was 26.2%, down 50
basis points from the prior-year period.
+ Excluding charges from both periods and the negative impact of foreign
currency, the margin was 27.1%, up 100 basis points from the prior-year
period.
* Operating profit decreased 8% due to the same items that impacted EBITDA.
The margin was 15.5% compared to 16.8% in the prior-year period.
+ Excluding charges from both periods, the margin was 16.6%, down 50
basis points from the prior-year period.
+ Excluding charges from both periods and the negative impact of foreign
currency the margin was 17.5%, up 100 basis points from the prior-year
period.
Legal
* Revenues increased 1%. Excluding US print, revenues grew 3% (all organic).
* Solutions businesses (47% of Legal revenues) grew 7% (6% organic), driven
by strong growth from Elite, Practical Law and Pangea3. Solutions
businesses represent all of Legal's revenue excluding US print and US
online legal information.
* US online legal information (38% of Legal revenues) declined 1%.
* US print (15% of Legal revenues) declined 8%.
* EBITDA increased 1%. The margin was 37.9% compared to 38.0% in the
prior-year period.
* Operating profit increased 2% with a margin of 29.7% versus 29.4% in the
prior-year period.
Tax & Accounting
* Revenues increased 13% (9% organic) with good growth across each segment
led by the Corporate business.
* EBITDA increased 9% and the margin was 23.9% compared to 24.4% in the
prior-year period. The EBITDA margin decline was primarily related to
reinvestment in the business.
* Operating profit increased 26% and the margin was 14.3% compared to 12.6%
in the prior-year period due to lower depreciation and amortization
expense.
* 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 increased 3% driven by recurring revenue growth of 5% (79% of
revenues) partially offset by a 4% decline in transactions-related revenues
(21% of revenues).
* EBITDA decreased 5% with a corresponding margin of 30.6% compared to 33.3%
in the prior-year period. The EBITDA margin decline was primarily due to
the dilutive impact of prior-year acquisitions and reinvestments in the
business.
* Operating profit decreased 11% with a corresponding margin of 21.8%
compared to 25.4% in the prior-year period. The operating profit margin
decline was a result of the same items that impacted the EBITDA margin.
* 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.
Corporate & Other (Including Reuters News)
Reuters News revenues for the third quarter of 2014 were $79 million, down 3%
from the prior-year period. Corporate & Other costs for the third quarter of
2014 were $73 million, compared to $70 million in the prior-year period.
Consolidated Financial Highlights - Nine Months
Nine Months Ended September 30,
(Millions of U.S. dollars, except EPS and margins)
IFRS Financial Measures 2014 2013 Change
Revenues $9,396 $9,424 0%
Operating profit $1,206 $1,303 -7%
Diluted earnings per share (EPS) $0.93 $0.58 60%
Cash flow from operations $1,574 $1,696 -7%
Results for the first nine months of 2013 were impacted by the following
significant items: operating profit benefited from a $136 million gain realized
on the sale of Financial & Risk's Corporate Services business; and the company
also recorded a $396 million tax charge associated with the consolidation of
its technology and content assets. No similar items impacted results in the
first nine months of 2014.
Non-IFRS Financial Measures(1) 2014 2013 Change
Revenues from ongoing businesses $9,394 $9,278 1%
Adjusted EBITDA $2,519 $2,460 2%
Adjusted EBITDA margin 26.8% 26.5% 30bp
Underlying operating profit $1,639 $1,579 4%
Underlying operating profit margin 17.4% 17.0% 40bp
Adjusted earnings per share (EPS) $1.41 $1.34 5%
Free cash flow $875 $976 -10%
* Revenues from ongoing businesses were $9.4 billion, a 1% increase before
currency.
* Adjusted EBITDA increased 2% and the corresponding margin was 26.8% versus
26.5% in the prior-year period. The increase was primarily due to lower
charges compared to the prior-year period. Charges for the nine-month
period were $58 million versus $97 million in the prior-year period.
Foreign exchange had a negligible impact on the margin for the year-to-date
period.
+ Excluding charges from both periods, adjusted EBITDA increased 1% and
the related margin was 27.4% versus 27.6% in the prior-year period.
* Underlying operating profit increased 4% and the corresponding margin was
17.4% versus 17.0% in the prior-year period. The increase was primarily due
to the same factor that impacted adjusted EBITDA.
+ Excluding charges from both periods, underlying operating profit
increased 1% and the related margin was 18.1%, unchanged from the
prior-year period.
* Adjusted EPS was $1.41 compared to $1.34 in the prior-year period.
* Free cash flow was $875 million versus $976 million in the prior-year
period. The decrease was primarily due to a $75 million reduction in free
cash flow from disposals compared to the prior-year period and higher
severance costs. For the full year, the company continues to expect to
achieve free cash flow between $1.3 billion and $1.5 billion.
(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
footnotes to the appended tables.
Business Outlook (Before Currency)
Thomson Reuters today reaffirmed its full-year business outlook for 2014 which
was previously communicated in February 2014. The company continues to expect:
* revenues to be comparable to 2013;
* adjusted EBITDA margin to range between 26% and 27%;
* underlying operating profit margin to range between 17.0% and 18.0%; and
* free cash flow to range between $1.3 billion and $1.5 billion in 2014.
The company's 2014 outlook includes the impact of $120 million of previously
announced charges expected to be incurred this year. The estimated aggregate
amount of these charges is $395 million, $275 million of which was incurred in
2013. The free cash flow outlook for 2014 reflects the estimated cash impact of
the charges incurred in 2013 and 2014 as well as the impact of the loss of free
cash flow from disposals (approximately $375 million in aggregate).
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 Repurchases
As previously announced in February 2014, Thomson Reuters board of directors
approved a $0.02 per share annualized increase in the dividend to $1.32 per
share. A quarterly dividend of $0.33 per share is payable on December 15, 2014
to common shareholders of record as of November 20, 2014.
In the third quarter of 2014, the company returned approximately $109 million
to shareholders through the repurchase of approximately 2.9 million shares, of
which 1.8 million were repurchased under its new $1.0 billion share buyback
program announced in July 2014. The company has repurchased 28.4 million shares
at a cost of $1.03 billion since it announced its first $1.0 billion share
buyback program in October 2013.
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 and risk, legal, tax and accounting, intellectual property and
science and media markets, powered by the world's most trusted news
organization. Thomson Reuters shares are listed on the Toronto and New York
Stock Exchanges (symbol: TRI). For more information, go to
www.thomsonreuters.com.
NON-IFRS FINANCIAL MEASURES
Thomson 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 RISKS
Certain 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. Forward-looking statements also include
expectations regarding the 2014 charges. 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 2014. 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 2014 business outlook is based on various external and internal
assumptions. Economic and market assumptions include, but are not limited to,
GDP growth in the countries where Thomson Reuters operates. Internal financial
and operational assumptions include, but are not limited to, continuing
operational improvement in the Financial & Risk business and the successful
execution of new sales initiatives, ongoing product release programs,
globalization strategy and other growth 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; 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 and identify areas of
higher growth; 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 and effectively implement strategic
initiatives; failure to recruit, motivate and retain high quality management
and key employees; failure to meet the challenges involved in operating
globally; failure to derive fully the anticipated benefits from existing or
future acquisitions, joint ventures, investments or dispositions; failure to
protect the brands and reputation of Thomson Reuters; 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; and actions or potential actions that
could be taken by the company's principal shareholder, The Woodbridge Company
Limited. 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 www.thomsonreuters.com.
CONTACTS
MEDIA INVESTORS
David Crundwell Frank J. Golden
Corporate Affairs Senior Vice President, Investor Relations
+1 646 223 5285 +1 646 223 5288
david.crundwell@thomsonreuters.com frank.golden@thomsonreuters.com
Thomson Reuters will webcast a discussion of its third-quarter 2014 results
today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You can access the
webcast by visiting the "Investor Relations" section of 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 30, Change
Before
2014 2013 Total Currency Organic
Revenues
Financial & Risk $1,628 $1,640 -1% -2% -3%
Legal 854 843 1% 1% 1%
Tax & Accounting 301 270 12% 13% 9%
Intellectual Property & Science 248 240 3% 3% 3%
Corporate & Other (includes Reuters News) 79 82 -4% -3% -3%
Eliminations (3) (2)
Revenues from ongoing businesses(1) 3,107 3,073 1% 1% 0%
Other Businesses (2) - 13
Revenues $3,107 $3,086 1%
Margin
Adjusted EBITDA (3) Change 2014 2013 Change
Financial & Risk $408 $433 -6% 25.1% 26.4% -130bp
Legal 324 320 1% 37.9% 38.0% -10bp
Tax & Accounting 72 66 9% 23.9% 24.4% -50bp
Intellectual Property & Science 76 80 -5% 30.6% 33.3% -270bp
Corporate & Other (includes Reuters News) (58) (54)
Adjusted EBITDA $822 $845 -3% 26.5% 27.5% -100bp
Underlying Operating Profit (4)
Financial & Risk $252 $275 -8% 15.5% 16.8% -130bp
Legal 254 248 2% 29.7% 29.4% 30bp
Tax & Accounting 43 34 26% 14.3% 12.6% 170bp
Intellectual Property & Science 54 61 -11% 21.8% 25.4% -360bp
Corporate & Other (includes Reuters News) (73) (70)
Underlying operating profit $530 $548 -3% 17.1% 17.8% -70bp
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Nine Months Ended
September 30, Change
Before
2014 2013 Total Currency Organic
Revenues
Financial & Risk $4,941 $4,975 -1% -2% -3%
Legal 2,507 2,483 1% 1% 0%
Tax & Accounting 973 875 11% 13% 9%
Intellectual Property & Science 742 707 5% 5% 4%
Corporate & Other (includes Reuters News) 240 245 -2% -2% -2%
Eliminations (9) (7)
Revenues from ongoing businesses(1) 9,394 9,278 1% 1% 0%
Other Businesses (2) 2 146
Revenues $9,396 $9,424 0%
Margin
Adjusted EBITDA (3) Change 2014 2013 Change
Financial & Risk $1,233 $1,213 2% 25.0% 24.4% 60bp
Legal 939 922 2% 37.5% 37.1% 40bp
Tax & Accounting 285 251 14% 29.3% 28.7% 60bp
Intellectual Property & Science 233 229 2% 31.4% 32.4% -100bp
Corporate & Other (includes Reuters News) (171) (155)
Adjusted EBITDA $2,519 $2,460 2% 26.8% 26.5% 30bp
Underlying Operating Profit (4)
Financial & Risk $758 $735 3% 15.3% 14.8% 50bp
Legal 730 704 4% 29.1% 28.4% 70bp
Tax & Accounting 192 160 20% 19.7% 18.3% 140bp
Intellectual Property & Science 167 171 -2% 22.5% 24.2% -170bp
Corporate & Other (includes Reuters News) (208) (191)
Underlying operating profit $1,639 $1,579 4% 17.4% 17.0% 40bp
Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA(3)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 Change 2014 2013 Change
Operating profit $466 $316 47% $1,206 $1,303 -7%
Adjustments to remove:
Amortization of other identifiable intangible assets 160 165 488 482
Fair value adjustments (88) 70 (53) (21)
Other operating (gains) losses, net (9) 6 (4) (124)
Operating loss (profit) from Other Businesses (2) 1 (9) 2 (61)
Underlying operating profit $530 $548 -3% $1,639 $1,579 4%
Remove: depreciation and amortization of computer
292 297 880 881
software (excluding Other Businesses (2))
Adjusted EBITDA $822 $845 -3% $2,519 $2,460 2%
Underlying operating profit margin (4) 17.1% 17.8% -70bp 17.4% 17.0% 40bp
Adjusted EBITDA margin (3) 26.5% 27.5% -100bp 26.8% 26.5% 30bp
Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 Change 2014 2013 Change
Earnings from continuing operations $250 $283 -12% $802 $522 54%
Adjustments to remove:
Tax expense (benefit) 26 (33) 53 423
Other finance costs (income) 82 (38) 25 34
Net interest expense 110 109 329 348
Amortization of other identifiable intangible assets 160 165 488 482
Amortization of computer software 195 195 586 571
Depreciation 97 102 294 310
EBITDA $920 $783 $2,577 $2,690
Adjustments to remove:
Share of post-tax earnings in equity method
(2) (5) (3) (24)
Investments
Other operating (gains) losses, net (9) 6 (4) (124)
Fair value adjustments (88) 70 (53) (21)
EBITDA from Other Businesses (2) 1 (9) 2 (61)
Adjusted EBITDA $822 $845 -3% $2,519 $2,460 2%
Thomson Reuters Corporation
Reconciliation of Underlying Operating Profit (4) to Adjusted EBITDA(3) by Business Segment
(millions of U.S. dollars)
(unaudited)
Three Months Ended Three Months Ended
September 30, 2014 September 30, 2013
Add: Add:
Depreciation Depreciation
and and
Underlying Amortization Underlying Amortization
Operating of Computer Adjusted Operating of Computer Adjusted
Profit Software ** EBITDA Profit Software ** EBITDA
Financial & Risk $252 $156 $408 $275 $158 $433
Legal 254 70 324 248 72 320
Tax & Accounting 43 29 72 34 32 66
Intellectual Property & Science 54 22 76 61 19 80
Corporate & Other (includes Reuters News) (73) 15 (58) (70) 16 (54)
$530 $292 $822 $548 $297 $845
Nine Months Ended Nine Months Ended
September 30, 2014 September 30, 2013
Add: Add:
Depreciation Depreciation
and and
Underlying Amortization Underlying Amortization
Operating of Computer Adjusted Operating of Computer Adjusted
Profit Software ** EBITDA Profit Software ** EBITDA
Financial & Risk $758 $475 $1,233 $735 $478 $1,213
Legal 730 209 939 704 218 922
Tax & Accounting 192 93 285 160 91 251
Intellectual Property & Science 167 66 233 171 58 229
Corporate & Other (includes Reuters News) (208) 37 (171) (191) 36 (155)
$1,639 $880 $2,519 $1,579 $881 $2,460
** Excludes Other Businesses (2)
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings (5)
(millions of U.S. dollars, except as otherwise indicated and except for per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Earnings attributable to common shareholders $231 $271 $762 $488
Adjustments to remove:
Operating loss (profit) from Other Businesses (2) 1 (9) 2 (61)
Fair value adjustments (88) 70 (53) (21)
Other operating (gains) losses, net (9) 6 (4) (124)
Other finance costs (income) 82 (38) 25 34
Share of post-tax earnings in equity method investments (2) (5) (3) (24)
Tax on above items 14 (18) 10 40
Discrete tax items (10) (20) (10) 352
Amortization of other identifiable intangible assets 160 165 488 482
Discontinued operations - - - (6)
Interim period effective tax rate normalization (6) 5 (9) - 3
Tax charge amortization (7) (22) (16) (65) (48)
Dividends declared on preference shares (1) - (2) (2)
Adjusted earnings $361 $397 $1,150 $1,113
Adjusted earnings per share $0.45 $0.48 $1.41 $1.34
Diluted weighted-average common shares (millions) 807.6 832.1 814.0 831.7
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow from Ongoing Businesses(8)
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2014 2013 2014 2013
Net cash provided by operating activities $585 $676 $1,574 $1,696
Capital expenditures, less proceeds from (231) (213) (704) (751)
disposals
Other investing activities 5 12 7 33
Dividends paid on preference shares (1) - (2) (2)
Free cash flow 358 475 875 976
Remove: Other Businesses (2) (2) (24) (1) (76)
Free cash flow from ongoing businesses $356 $451 $874 $900
Footnotes
(1) Revenues from ongoing businesses are revenues from reportable segments and
Corporate & Other (which includes Reuters News) less eliminations. Other
Businesses (see note (2) below) are excluded.
(2) 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 30, September 30,
Other Businesses 2014 2013 2014 2013
Revenues - $13 $2 $146
Operating (loss) profit ($1) $9 ($2) $61
Depreciation and amortization of computer software - - - -
EBITDA ($1) $9 ($2) $61
(3) Thomson Reuters defines adjusted EBITDA as underlying operating profit
excluding the related depreciation and amortization of computer software.
Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of
revenues from ongoing businesses.
(4) Underlying operating profit is operating profit from reportable segments
and Corporate & Other (includes Reuters News). Underlying operating profit
margin is the underlying operating profit expressed as a percentage of
revenues from ongoing businesses.
(5) Adjusted earnings and adjusted earnings per share include dividends
declared on preference shares and amortization of the 2013 tax charges
associated with the consolidation of technology and content assets 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 (2) above), other
finance (income) costs, Thomson Reuters share of post-tax (earnings) losses
in equity method investments, discontinued operations and other items
affecting comparability. Adjusted earnings per share is calculated using
diluted weighted-average shares and does not represent actual earnings or
loss per share attributable to shareholders.
(6) 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.
(7) Reflects amortization of the 2013 tax charges associated with the
consolidation of the ownership and management of technology and content
assets. For the non-IFRS measure, the majority of the charges are amortized
over seven years, the period over which the tax is expected to be paid.
(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 (2) above) are also
removed to arrive at free cash flow from ongoing businesses.
Thomson Reuters Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Revenues $3,107 $3,086 $9,396 $9,424
Operating expenses (2,198) (2,302) (6,826) (6,882)
Depreciation (97) (102) (294) (310)
Amortization of computer software (195) (195) (586) (571)
Amortization of other identifiable intangible assets (160) (165) (488) (482)
Other operating gains (losses), net 9 (6) 4 124
Operating profit 466 316 1,206 1,303
Finance costs, net:
Net interest expense (110) (109) (329) (348)
Other finance (costs) income (82) 38 (25) (34)
Income before tax and equity method investments 274 245 852 921
Share of post-tax earnings in equity method investments 2 5 3 24
Tax (expense) benefit (26) 33 (53) (423)
Earnings from continuing operations 250 283 802 522
Earnings from discontinued operations, net of tax - - - 6
Net earnings $250 $283 $802 $528
Earnings attributable to:
Common shareholders 231 271 762 488
Non-controlling interests 19 12 40 40
Basic earnings per share $0.29 $0.33 $0.94 $0.59
Diluted earnings per share $0.28 $0.33 $0.93 $0.58
Basic weighted-average common shares 804,034,944 829,429,587 810,582,179 829,235,273
Diluted weighted-average common shares 807,567,416 832,067,013 813,987,831 831,670,061
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
September 30, December 31,
2014 2013
Assets
Cash and cash equivalents $1,686 $1,316
Trade and other receivables 1,694 1,751
Other financial assets 151 183
Prepaid expenses and other current assets 584 650
Current assets 4,115 3,900
Computer hardware and other property, net 1,161 1,291
Computer software, net 1,516 1,622
Other identifiable intangible assets, net 7,367 7,890
Goodwill 16,653 16,871
Other financial assets 177 192
Other non-current assets 602 583
Deferred tax 69 90
Total assets $31,660 $32,439
Liabilities and equity
Liabilities
Current indebtedness $1,117 $596
Payables, accruals and provisions 2,109 2,624
Deferred revenue 1,255 1,348
Other financial liabilities 273 193
Current liabilities 4,754 4,761
Long-term indebtedness 7,810 7,470
Provisions and other non-current liabilities 1,838 1,759
Other financial liabilities 113 102
Deferred tax 1,646 1,917
Total liabilities 16,161 16,009
Equity
Capital 10,187 10,347
Retained earnings 6,727 7,303
Accumulated other comprehensive loss (1,897) (1,614)
Total shareholders' equity 15,017 16,036
Non-controlling interests 482 394
Total equity 15,499 16,430
Total liabilities and equity $31,660 $32,439
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2014 2013 2014 2013
Cash provided by (used in):
Operating activities
Net earnings $250 $283 $802 $528
Adjustments for:
Depreciation 97 102 294 310
Amortization of computer software 195 195 586 571
Amortization of other identifiable intangible 160 165 488 482
assets
Net gains on disposals of businesses and (2) (1) (1) (157)
investments
Deferred tax (112) 54 (187) 296
Other 37 87 148 212
Changes in working capital and other items (40) (209) (556) (546)
Net cash provided by operating activities 585 676 1,574 1,696
Investing activities
Acquisitions, net of cash acquired (28) (139) (165) (987)
Proceeds from disposals of businesses and
investments, 2 3 14 355
net of taxes paid
Capital expenditures, less proceeds from (231) (213) (704) (751)
disposals
Other investing activities 5 12 7 33
Investing cash flows from continuing (252) (337) (848) (1,350)
operations
Investing cash flows from discontinued - 10 - 10
operations
Net cash used in investing activities (252) (327) (848) (1,340)
Financing activities
Proceeds from debt 997 - 997 1,294
Repayments of debt - (1,000) - (1,440)
Repurchases of common shares (109) (100) (726) (100)
Dividends paid on preference shares (1) - (2) (2)
Dividends paid on common shares (258) (259) (778) (778)
Other financing activities 19 (3) 148 4
Net cash provided by (used in) financing 648 (1,362) (361) (1,022)
activities
Increase (decrease) in cash and bank 981 (1,013) 365 (666)
overdrafts
Translation adjustments (17) 5 (14) (12)
Cash and bank overdrafts at beginning of 699 1,606 1,312 1,276
period
Cash and bank overdrafts at end of period $1,663 $598 $1,663 $598
Cash and bank overdrafts at end of period
comprised of:
Cash and cash equivalents $1,686 $607 $1,686 $607
Bank overdrafts (23) (9) (23) (9)
$1,663 $598 $1,663 $598