Thomson Reuters Reports Second-Quarter 2014 Results
NEW YORK, July 30, 2014 -- Thomson Reuters (TSX / NYSE: TRI) today
reported results for the second quarter ended June 30, 2014.
* Revenues from ongoing businesses grew 1% before currency to $3.2 billion
* Adjusted EBITDA grew 2% to $877 million with a margin of 27.8%, up 20 basis
points from the prior-year period
+ Excluding charges from both periods, adjusted EBITDA margin was 28.7%,
up 80 basis points from the prior-year period
* Underlying operating profit grew 2% to $581 million with a margin of 18.4%,
up 10 basis points from the prior-year period
+ Excluding charges from both periods, underlying operating profit margin
was 19.3%, up 70 basis points from the prior-year period
* Adjusted earnings per share were $0.51 versus $0.48 in the prior-year
period
* Financial & Risk Q2 net sales positive
* Company completed $1.0 billion share buyback program announced last October
and plans to repurchase up to an additional $1.0 billion of its shares by
the end of 2015
* 2014 Outlook affirmed
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"Our second-quarter results build upon the good start to the year and are
consistent with our full-year expectations," said James C. Smith, chief
executive officer of Thomson Reuters. "The actions we are taking are building a
platform for sustainable growth, and we will continue to simplify our
organization and position resources behind the most promising growth
opportunities."
Consolidated Financial Highlights - Second Quarter
Three Months Ended June 30,
(Millions of U.S. dollars, except EPS and
margins)
IFRS Financial Measures 2014 2013 Change
Revenues $3,159 $3,163 0%
Operating profit $381 $597 -36%
Diluted earnings per share (EPS) $0.31 $0.30 3%
Cash flow from operations $876 $904 -3%
Second-quarter 2013 results were impacted by two offsetting items: operating
profit benefited from a $140 million gain realized on the sale of the
company's Corporate Services business; and the company also recorded a $161
million tax charge associated with the consolidation of its technology and
content assets. No similar items impacted second-quarter 2014 results.
Non-IFRS Financial Measures(1) 2014 2013 Change
Revenues from ongoing businesses $3,158 $3,108 2%
Adjusted EBITDA $877 $858 2%
Adjusted EBITDA margin 27.8% 27.6% 20bp
Underlying operating profit $581 $569 2%
Underlying operating profit margin 18.4% 18.3% 10bp
Adjusted earnings per share (EPS) $0.51 $0.48 6%
Free cash flow $652 $732 -11%
* Revenues from ongoing businesses were $3.2 billion, a 1% increase before
currency, reflecting 5% 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 increased 2%, and the corresponding margin was 27.8% versus
27.6% in the prior-year period. The increase was primarily due to cost
savings generated in the Financial & Risk business from the company's
simplification program announced in October 2013, which were partially
offset by $30 million of charges incurred in the quarter. Excluding charges
from both periods, adjusted EBITDA margin was 28.7%, up 80 basis points
from the prior-year period.
* Underlying operating profit increased 2%, and the corresponding margin was
18.4% versus 18.3% in the prior-year period. The increase was primarily due
to the same factors that impacted adjusted EBITDA. Excluding charges from
both periods, underlying operating profit margin was 19.3%, up 70 basis
points from the prior-year period.
* Adjusted EPS was $0.51 compared to $0.48 in the prior-year period, up 6%.
Second-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 decline in transactions-related
revenues.
* Recurring subscription-related revenues decreased 2% (down 3% organic) due
to the impact of negative net sales over the prior 12 months.
* Transactions-related revenues decreased 4% (down 11% organic) due to lower
trading volumes related to lower volatility in the equity, foreign exchange
and fixed income markets. Recoveries revenues were flat.
* By geography, revenues in Europe, Middle East and Africa (EMEA) were down
4%, revenues in the Americas were down 1% and revenues in Asia were up 1%.
* Net sales were positive for the quarter and were better than both the
prior-year period and the first quarter of 2014. Net sales were positive
for the Americas and Asia and remained negative in Europe. However, all
three regions showed year-on-year improvements in their respective net
sales performance.
* EBITDA increased 1%, primarily due to simplification program savings,
despite $30 million of charges incurred in the quarter compared to $3
million in the prior-year period. The margin was 25.7% compared to 25.3% in
the prior-year period.
+ Excluding charges from both periods, EBITDA increased 8% with a margin
of 27.6% compared to a margin of 25.5% in the prior-year period.
* Operating profit increased 2%. The margin was 16.1% compared to 15.7% in
the prior-year period.
+ Excluding charges from both periods, operating profit increased 13%
with a margin of 17.9% compared to a margin of 15.8% in the prior-year
period.
Legal
* Revenues increased 1% (flat organic). Excluding US print, revenues grew 3%
(2% organic).
* Solutions businesses (45% of Legal revenues) grew 6% (5% organic), driven
by strong growth from Elite, Practical Law and FindLaw. Solutions
businesses represent all of Legal's revenue excluding US print and US
online legal information.
* US online legal information (39% of Legal revenues) declined 1%.
* US print (16% of Legal revenues) declined 9%.
* EBITDA increased 2% primarily from savings programs. The margin was 38.9%
compared to 38.5% in the prior-year period.
* Operating profit increased 2% with a margin of 30.7% versus 30.1% in the
prior-year period.
Tax & Accounting
* Revenues increased 14% (10% organic) driven by growth across the business.
* EBITDA increased 13% with a margin of 30.2%, flat compared to the
prior-year period due to acquisition dilution and reinvestment in the
business.
* Operating profit increased 14% and the margin was 20.1% compared to 19.8%
in the prior-year period.
* 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 7% (5% organic), driven by recurring revenue growth of
10% (8% organic) partially offset by a 1% decline (down 3% organic) in
transactions-related revenues.
* EBITDA increased 8% due to revenue flow-through. The margin was 33.9%, up
10 basis points compared to the prior-year period.
* Operating profit increased 5%. The margin was 24.7% compared to 25.2% in
the prior-year period, down 50 basis points due to the dilutive impact of
acquisitions in 2013.
* 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 second quarter of 2014 were $82 million, down 1%
from the prior-year period. Corporate & Other costs for the second quarter of
2014 were $73 million, compared to $62 million in the prior-year period. The
increase was primarily related to costs associated with the company's
transformation program.
Consolidated Financial Highlights - Six Months
Six Months Ended June 30,
(Millions of U.S. dollars, except EPS and
margins)
IFRS Financial Measures 2014 2013 Change
Revenues $6,289 $6,338 -1%
Operating profit $740 $987 -25%
Diluted earnings per share (EPS) $0.65 $0.26 150%
Cash flow from operations $989 $1,020 -3%
Results for the first six months of 2013 were impacted by the following
significant items: operating profit benefited from a $140 million gain realized
on the sale of the company'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
six months of 2014.
Non-IFRS Financial Measures(2) 2014 2013 Change
Revenues from ongoing businesses $6,287 $6,205 1%
Adjusted EBITDA $1,697 $1,615 5%
Adjusted EBITDA margin 27.0% 26.0% 100bp
Underlying operating profit $1,109 $1,031 8%
Underlying operating profit margin 17.6% 16.6% 100bp
Adjusted earnings per share (EPS) $0.97 $0.86 13%
Free cash flow $517 $501 3%
* Revenues from ongoing businesses were $6.3 billion, a 1% increase before
currency.
* Adjusted EBITDA increased 5% and the corresponding margin was 27.0% versus
26.0% in the prior-year period. The increase was primarily due to
simplification program savings in the Financial & Risk business and lower
charges compared to the prior-year period. Charges for the six-month period
were $40 million versus $87 million in the prior-year period.
+ Excluding charges from both periods, adjusted EBITDA increased 2% and
the related margin was 27.6% versus 27.4% in the prior-year period.
* Underlying operating profit increased 8% and the corresponding margin was
17.6% versus 16.6% in the prior-year period. The increase was primarily due
to the same factors that impacted adjusted EBITDA.
* Excluding charges from both periods, underlying operating profit increased
3% and the related margin was 18.3% versus 18.0% in the prior-year period.
+ Adjusted EPS was $0.97 compared to $0.86 in the prior-year period.
* Free cash flow was $517 million versus $501 million in the prior-year
period. The increase was primarily due to the timing of capital
expenditures partially offset by payments related to simplification program
charges and a loss of free cash flow from disposals. For the full year, the
company continues to expect to achieve free cash flow between $1.3 billion
and $1.5 billion.
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 September 15,
2014, to common shareholders of record as of August 21, 2014.
Through July 29, 2014, the company had repurchased approximately 26.6 million
shares at an aggregate cost of approximately $960 million under its $1.0
billion share buyback program announced in October 2013. In the second quarter
of 2014, the company returned approximately $353 million to shareholders
through the repurchase of approximately 10 million shares.
Today, the company announced that its board of directors approved plans to
repurchase up to an additional $1.0 billion of its shares through the end of
2015.
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 second-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.
(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.
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Three Months Ended
June 30, Change
Before
2014 2013 Total Currency Organic
Revenues
Financial & Risk $1,655 $1,660 0% -2% -3%
Legal 850 846 1% 1% 0%
Tax & Accounting 324 288 13% 14% 10%
Intellectual Property & Science 251 234 7% 7% 5%
Corporate & Other (includes Reuters News) 82 82 0% -1% -1%
Eliminations (4) (2)
Revenues from ongoing businesses(1) 3,158 3,108 2% 1% 0%
Other Businesses (2) 1 55
Revenues $3,159 $3,163 0%
Margin
Adjusted EBITDA (3) Change 2014 2013 Change
Financial & Risk $426 $420 1% 25.7% 25.3% 40bp
Legal 331 326 2% 38.9% 38.5% 40bp
Tax & Accounting 98 87 13% 30.2% 30.2% 0bp
Intellectual Property & Science 85 79 8% 33.9% 33.8% 10bp
Corporate & Other (includes Reuters News) (63) (54)
Adjusted EBITDA $877 $858 2% 27.8% 27.6% 20bp
Underlying Operating Profit (4)
Financial & Risk $266 $260 2% 16.1% 15.7% 40bp
Legal 261 255 2% 30.7% 30.1% 60bp
Tax & Accounting 65 57 14% 20.1% 19.8% 30bp
Intellectual Property & Science 62 59 5% 24.7% 25.2% -50bp
Corporate & Other (includes Reuters News) (73) (62)
Underlying operating profit $581 $569 2% 18.4% 18.3% 10bp
Refer to page 12 for footnotes.
Thomson Reuters Corporation
Business Segment Information
(millions of U.S. dollars)
(unaudited)
Six Months
Ended
June 30, Change
Before
2014 2013 Total Currency Organic
Revenues
Financial & Risk $3,313 $3,335 -1% -2% -3%
Legal 1,653 1,640 1% 1% 0%
Tax & Accounting 672 605 11% 13% 10%
Intellectual Property & Science 494 467 6% 6% 4%
Corporate & Other (includes Reuters News) 161 163 -1% -1% -1%
Eliminations (6) (5)
Revenues from ongoing businesses(1) 6,287 6,205 1% 1% 0%
Other Businesses (2) 2 133
Revenues $6,289 $6,338 -1%
Margin
Adjusted EBITDA (3) Change 2014 2013 Change
Financial & Risk $825 $780 6% 24.9% 23.4% 150bp
Legal 615 602 2% 37.2% 36.7% 50bp
Tax & Accounting 213 185 15% 31.7% 30.6% 110bp
Intellectual Property & Science 157 149 5% 31.8% 31.9% -10bp
Corporate & Other (includes Reuters News) (113) (101)
Adjusted EBITDA $1,697 $1,615 5% 27.0% 26.0% 100bp
Underlying Operating Profit (4)
Financial & Risk $506 $460 10% 15.3% 13.8% 150bp
Legal 476 456 4% 28.8% 27.8% 100bp
Tax & Accounting 149 126 18% 22.2% 20.8% 140bp
Intellectual Property & Science 113 110 3% 22.9% 23.6% -70bp
Corporate & Other (includes Reuters News) (135) (121)
Underlying operating profit $1,109 $1,031 8% 17.6% 16.6% 100bp
Refer to page 12 for footnotes.
Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA(3)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 Change 2014 2013 Change
Operating profit $381 $597 -36% $740 $987 -25%
Adjustments to remove:
Amortization of other identifiable intangible assets 165 157 328 317
Fair value adjustments 33 (29) 35 (91)
Other operating losses (gains), net 2 (136) 5 (130)
Operating (profit) loss from Other Businesses (2) - (20) 1 (52)
Underlying operating profit $581 $569 2% $1,109 $1,031 8%
Remove: depreciation and amortization of computer
software (excluding Other Businesses (2)) 296 289 588 584
Adjusted EBITDA $877 $858 2% $1,697 $1,615 5%
Underlying operating profit margin (4) 18.4% 18.3% 10bp 17.6% 16.6% 100bp
Adjusted EBITDA margin (3) 27.8% 27.6% 20bp 27.0% 26.0% 100bp
Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA (3)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 Change 2014 2013 Change
Earnings from continuing operations $260 $256 2% $552 $239 131%
Adjustments to remove:
Tax expense 40 209 27 456
Other finance (income) costs (29) 17 (57) 72
Net interest expense 111 124 219 239
Amortization of other identifiable intangible assets 165 157 328 317
Amortization of computer software 197 188 391 376
Depreciation 99 101 197 208
EBITDA $843 $1,052 $1,657 $1,907
Adjustments to remove:
Share of post-tax earnings in equity method
investments (1) (9) (1) (19)
Other operating losses (gains), net 2 (136) 5 (130)
Fair value adjustments 33 (29) 35 (91)
EBITDA from Other Businesses (2) - (20) 1 (52)
Adjusted EBITDA $877 $858 2% $1,697 $1,615 5%
Refer to page 12 for footnotes.
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
June 30, 2014 June 30, 2013
Add: Add:
Underlying Depreciation Underlying Depreciation
Operating and Adjusted Operating and Adjusted
Profit Amortization EBITDA Profit Amortization of EBITDA
of Computer Computer
Software ** Software **
Financial & Risk $266 $160 $426 $260 $160 $420
Legal 261 70 331 255 71 326
Tax & Accounting 65 33 98 57 30 87
Intellectual Property & Science 62 23 85 59 20 79
Corporate & Other (includes Reuters News) (73) 10 (63) (62) 8 (54)
$581 $296 $877 $569 $289 $858
Six Months Ended Six Months Ended
June 30, 2014 June 30, 2013
Add: Add:
Underlying Depreciation Underlying Depreciation
Operating and Adjusted Operating and Adjusted
Profit Amortization EBITDA Profit Amortization of EBITDA
of Computer Computer
Software ** Software **
Financial & Risk $506 $319 $825 $460 $320 $780
Legal 476 139 615 456 146 602
Tax & Accounting 149 64 213 126 59 185
Intellectual Property & Science 113 44 157 110 39 149
Corporate & Other (includes Reuters News) (135) 22 (113) (121) 20 (101)
$1,109 $588 $1,697 $1,031 $584 $1,615
** Excludes Other Businesses (2)
Refer to page 12 for footnotes.
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 Six
Months Months
Ended Ended
June 30, June 30,
2014 2013 2014 2013
Earnings attributable to common shareholders $249 $248 $531 $217
Adjustments to remove:
Operating (profit) loss from Other Businesses (2) - (20) 1 (52)
Fair value adjustments 33 (29) 35 (91)
Other operating losses (gains), net 2 (136) 5 (130)
Other finance (income) costs (29) 17 (57) 72
Share of post-tax earnings in equity method investments (1) (9) (1) (19)
Tax on above items (4) 36 (4) 58
Discrete tax items 14 151 - 372
Amortization of other identifiable intangible assets 165 157 328 317
Discontinued operations - (6) - (6)
Interim period effective tax rate normalization (6) 7 19 (5) 12
Tax charge amortization (7) (21) (24) (43) (32)
Dividends declared on preference shares - (1) (1) (2)
Adjusted earnings $415 $403 $789 $716
Adjusted earnings per share $0.51 $0.48 $0.97 $0.86
Diluted weighted-average common shares (millions) 813.4 832.5 817.3 831.5
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 Six Months
Ended Ended
June 30, June 30,
2014 2013 2014 2013
Net cash provided by operating activities $876 $904 $989 $1,020
Capital expenditures, less proceeds from
disposals (225) (188) (473) (538)
Other investing activities 1 17 2 21
Dividends paid on preference shares - (1) (1) (2)
Free cash flow 652 732 517 501
Remove: Other Businesses (2) 1 (59) 1 (52)
Free cash flow from ongoing businesses $653 $673 $518 $449
Refer to page 12 for footnotes.
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 Six Months
Ended Ended
June 30, June 30,
Other Businesses 2014 2013 2014 2013
Revenues $1 $55 $2 $133
Operating profit (loss) - $20 ($1) $52
Depreciation and amortization of computer software - - - -
EBITDA - $20 ($1) $52
(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 Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Revenues $3,159 $3,163 $6,289 $6,338
Operating expenses (2,315) (2,256) (4,628) (4,580)
Depreciation (99) (101) (197) (208)
Amortization of computer software (197) (188) (391) (376)
Amortization of other identifiable intangible assets (165) (157) (328) (317)
Other operating (losses) gains, net (2) 136 (5) 130
Operating profit 381 597 740 987
Finance costs, net:
Net interest expense (111) (124) (219) (239)
Other finance income (costs) 29 (17) 57 (72)
Income before tax and equity method investments 299 456 578 676
Share of post-tax earnings in equity method
investments 1 9 1 19
Tax expense (40) (209) (27) (456)
Earnings from continuing operations 260 256 552 239
Earnings from discontinued operations, net of tax - 6 - 6
Net earnings $260 $262 $552 $245
Earnings attributable to:
Common shareholders 249 248 531 217
Non-controlling interests 11 14 21 28
Basic and diluted earnings per share $0.31 $0.30 $0.65 $0.26
Basic weighted-average common shares 809,941,274 829,921,311 813,910,056 829,136,505
Diluted weighted-average common shares 813,363,597 832,509,774 817,255,753 831,453,225
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
June 30, December 31,
2014 2013
Assets
Cash and cash equivalents $704 $1,316
Trade and other receivables 1,798 1,751
Other financial assets 143 183
Prepaid expenses and other current assets 590 650
Current assets 3,235 3,900
Computer hardware and other property, net 1,224 1,291
Computer software, net 1,566 1,622
Other identifiable intangible assets, net 7,639 7,890
Goodwill 17,060 16,871
Other financial assets 181 192
Other non-current assets 603 583
Deferred tax 70 90
Total assets $31,578 $32,439
Liabilities and equity
Liabilities
Current indebtedness $591 $596
Payables, accruals and provisions 2,074 2,624
Deferred revenue 1,429 1,348
Other financial liabilities 143 193
Current liabilities 4,237 4,761
Long-term indebtedness 7,467 7,470
Provisions and other non-current liabilities 1,814 1,759
Other financial liabilities 142 102
Deferred tax 1,801 1,917
Total liabilities 15,461 16,009
Equity
Capital 10,208 10,347
Retained earnings 6,914 7,303
Accumulated other comprehensive loss (1,477) (1,614)
Total shareholders' equity 15,645 16,036
Non-controlling interests 472 394
Total equity 16,117 16,430
Total liabilities and equity $31,578 $32,439
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Cash provided by (used in):
Operating activities
Net earnings $260 $262 $552 $245
Adjustments for:
Depreciation 99 101 197 208
Amortization of computer software 197 188 391 376
Amortization of other identifiable
intangible assets 165 157 328 317
Net (gains) losses on disposals of
businesses and investments - (142) 1 (156)
Deferred tax (35) 70 (75) 242
Other 77 60 111 125
Changes in working capital and other
items 113 208 (516) (337)
Net cash provided by operating activities 876 904 989 1,020
Investing activities
Acquisitions, net of cash acquired (137) (118) (137) (848)
Proceeds from disposals of businesses and
investments, net of taxes paid 12 322 12 352
Capital expenditures, less proceeds from
disposals (225) (188) (473) (538)
Other investing activities 1 17 2 21
Net cash (used in) provided by investing
activities (349) 33 (596) (1,013)
Financing activities
Proceeds from debt - 854 - 1,294
Repayments of debt - - - (440)
Net repayments under short-term loan
facilities - (327) - -
Repurchases of common shares (353) - (617) -
Dividends paid on preference shares - (1) (1) (2)
Dividends paid on common shares (258) (260) (520) (519)
Other financing activities 125 (2) 129 7
Net cash (used in) provided by financing
activities (486) 264 (1,009) 340
Increase (decrease) in cash and bank
overdrafts 41 1,201 (616) 347
Translation adjustments 3 (6) 3 (17)
Cash and bank overdrafts at beginning of
period 655 411 1,312 1,276
Cash and bank overdrafts at end of period $699 $1,606 $699 $1,606
Cash and bank overdrafts at end of period
comprised of:
Cash and cash equivalents $704 $1,613 $704 $1,613
Bank overdrafts (5) (7) (5) (7)
$699 $1,606 $699 $1,606