Thomson Reuters Reports Full-Year and Fourth-Quarter 2012 Results
Thomson Reuters Reports Full-Year and Fourth-Quarter 2012 Results
- Revenues grew 3% for full year and 2% for fourth quarter, before currency
- Adjusted EBITDA margin up 100 basis points for full year and up 240 basis points for fourth quarter
- Underlying operating profit margin down 130 basis points for full year and up slightly for fourth quarter
- Full-year adjusted EPS was $2.12, up 8% and fourth-quarter adjusted EPS was $0.60, up 11%
- Board approved $0.02 annual dividend increase to $1.30 per share
- 2013 Outlook provided
NEW YORK, Feb. 13, 2013 /CNW/ - Thomson Reuters (TSX / NYSE: TRI), the world's leading source of intelligent information for businesses and professionals, today reported results for the full year and fourth quarter ended December 31, 2012. The company reported full-year revenues from ongoing businesses of $12.9 billion, a 3% increase before currency. Adjusted EBITDA increased 5% from the prior year and the corresponding margin was 27.4% versus 26.4% in 2011. Underlying operating profit decreased 5% and the corresponding margin was 18.6% versus 19.9% in the prior year.
(Logo: http://photos.prnewswire.com/prnh/20130208/MM57185LOGO )
For the fourth quarter, the company reported revenues from ongoing businesses of $3.4 billion, a 2% increase before currency. Adjusted EBITDA margin of 28.2% and underlying operating profit margin of 19.6% were both up versus the fourth quarter of 2011.
Full-year adjusted earnings per share (EPS) were $2.12, up $0.16 from the prior year while fourth-quarter adjusted EPS was $0.60, up $0.06 from the prior-year period.
"2012 was a watershed year for us," said James C. Smith, chief executive officer of Thomson Reuters.
"First and foremost, we achieved our targets for the full year for revenues, profit and free cash flow. Given the headwinds we faced in 2012, that performance reaffirmed just how strong this business really is."
"2012 will best be known as the year we turned the tide in our Financial & Risk business. I said last year that our journey would entail a multi-quarter turnaround; we are halfway through that process. We laid the groundwork for future success with solid improvements in product quality, customer service and execution capabilities."
"We enter 2013 with more confidence and a much stronger foundation."
Consolidated Financial Highlights – Full-Year Results
Twelve Months Ended December 31,
(Millions of U.S. dollars, except EPS and
margins)
IFRS Financial Measures 2012 2011 Change
Revenues $13,278 $13,807 -4%
Operating profit (loss)(1) $2,651 ($705) nm(2)
Diluted earnings (loss) $2.49 ($1.67) nm(2)
per share (EPS)(1)
Cash flow from operations $2,704 $2,597 4%
Non-IFRS Financial Change Before
Measures(3) 2012 2011 Change
Currency
Revenues from ongoing $12,899 $12,743 1% 3%
businesses
Adjusted EBITDA $3,529 $3,368 5% 6%
Adjusted EBITDA margin 27.4% 26.4% 100bp 90bp
Underlying operating $2,405 $2,541 -5% -4%
profit
Underlying operating 18.6% 19.9% -130bp -130bp
profit margin
Adjusted earnings per $2.12 $1.96 8%
share (EPS)
Free cash flow $1,737 $1,602 8%
Free cash flow from $1,667 $1,387 20%
ongoing businesses
-- Revenues from ongoing businesses were $12.9 billion, a 3%
increase before currency.
-- Adjusted EBITDA increased 5% and the corresponding margin
increased to 27.4% versus 26.4% in the prior year driven by
higher revenues, the elimination of integration expenses in
2012 and the continued focus on cost containment, partially
offset by investments in customer service and customer
administration.
-- Underlying operating profit decreased 5% and the corresponding
margin was 18.6% versus 19.9% in the prior year due to higher
depreciation and amortization expense related to recent
acquisitions and new product launches.
-- Adjusted EPS was $2.12 compared to $1.96 in the prior year. The
increase was primarily attributable to the elimination of
integration expenses and a lower tax rate, partially offset by
lower underlying operating profit. Foreign exchange had a $0.04
negative impact on adjusted EPS.
-- Free cash flow was $1.7 billion, up 8% compared to the prior
year. Free cash flow from ongoing businesses was $1.7 billion,
up 20% from 2011.
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.
(1) In 2011, operating loss and diluted loss per share included a $3.0 billion
non-cash goodwill impairment charge. This charge is excluded from adjusted
earnings, adjusted EBITDA and underlying operating profit. (2) nm – not
meaningful (3) 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.
Full-Year Business Segment Highlights
Financial & Risk
-- Revenues were up 1% (-1% organic) from the prior year as growth
in Trading's Commodities & Energy and Elektron Managed Services
businesses, Investors Enterprise Content business and
Marketplaces Tradeweb and FXall businesses was offset by
weakness in other segments, primarily Trading's Equities
business and Investors Investment Management business.
Governance, Risk & Compliance grew 43% (17% organic).
-- EBITDA of $1.8 billion declined 7% and the related margin
declined 140 basis points versus the prior year driven by a 1%
decline in organic revenue and continued investments into the
business.
-- Operating income of $1.2 billion declined 13% and the related
margin declined 220 basis points versus the prior year due to a
decline in organic revenue and a $50 million increase in
depreciation and amortization primarily from new product
launches and investments made in prior periods.
Trading
-- Revenues decreased 3% with growth in Commodities & Energy, Data
Feeds and Elektron Managed Services offset by legacy desktop
cancellations primarily in Equities and Fixed Income.
-- Recoveries revenues were flat.
Investors
-- Revenues declined 1%. A 10% increase in Enterprise Content and
a 1% increase in Wealth Management were offset by a 7% decline
in Investment Management (due to the impact of negative net
sales) and a 2% decline in Corporates.
Marketplaces
-- Revenues increased 8% (1% organic) driven by the acquisition of
FXall and a 19% increase (5% organic) in Tradeweb (due to the
acquisition of Rafferty in 2011).
Governance, Risk & Compliance
-- Revenues grew 43% (17% organic) to $219 million driven by new
sales and continued strong demand for risk and compliance
solutions.
Legal
-- Revenues increased 3% (1% organic). US Law Firm Solutions grew
1% driven by a 12% increase in Business of Law (FindLaw and
Elite), offset by a 2% decline in research-related revenues.
Corporate, Government & Academic and Risk & Compliance revenues
increased 3%. Global businesses grew 8% with solid growth in
Latin America.
-- US print revenues declined 5% as firms continued to control
discretionary spending. Excluding US print, revenues grew 5%
(3% organic).
-- EBITDA increased 3% and the corresponding margin was 37.8%
compared to 37.6% in the prior year.
-- Operating profit increased 2% and the corresponding margin was
29.3% compared to 29.2% in the prior year.
Tax & Accounting
-- Revenues increased 16% (5% organic) driven by acquisitions and
strong growth from the ONESOURCE suite and software sales to
accounting firms. Government (5% of total revenues) declined
29% and was the only business within Tax & Accounting that saw
organic revenues decline as the number of new government
contracts slowed.
-- EBITDA increased 13% and the related margin decreased 40 basis
points to 31.2%. Excluding Government, EBITDA rose 20% and the
related margin increased more than 100 basis points.
-- Operating profit increased 10% and the related margin decreased
100 basis points to 21.6% due to software amortization from
acquisitions. Excluding Government, operating profit rose 22%
and the related margin increased more than 100 basis points.
Intellectual Property & Science
-- Revenues were up 6% (3% organic), driven by strong subscription
growth (up 9%), somewhat offset by a decline in transactional
revenues (down 4%). IP Solutions grew 3%, Life Sciences
increased 5% and Scientific & Scholarly Research increased 2%.
-- EBITDA increased 2% with the corresponding margin declining 80
basis points to 33.9% primarily due to the dilutive impact of
the MarkMonitor acquisition and the decline in high-margin
transaction revenues.
-- Operating profit decreased 1% with the corresponding margin
declining 150 basis points to 26.3%. 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.
Consolidated Financial Highlights – Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except EPS and
margins)
IFRS Financial Measures 2012 2011 Change
Revenues $3,399 $3,577 -5%
Operating profit (loss)(1) $557 ($2,593) nm(2)
Diluted earnings (loss) $0.45 ($3.11) nm(2)
per share (EPS)(1)
Cash flow from operations $954 $942 1%
Non-IFRS Financial Change Before
Measures(3) 2012 2011 Change
Currency
Revenues from ongoing $3,358 $3,308 2% 2%
businesses
Adjusted EBITDA $948 $852 11% 13%
Adjusted EBITDA margin 28.2% 25.8% 240bp 260bp
Underlying operating $658 $646 2% 3%
profit
Underlying operating 19.6% 19.5% 10bp 20bp
profit margin
Adjusted earnings per $0.60 $0.54 11%
share (EPS)
Free cash flow $707 $669 6%
Free cash flow from $698 $602 16%
ongoing businesses
-- Revenues from ongoing businesses were $3.4 billion, a 2%
increase before currency.
-- Adjusted EBITDA increased 11% and the corresponding margin was
28.2% versus 25.8% in the prior-year period. The margin
improvement was driven by the elimination of integration
expenses, lower reorganization costs and continued cost
containment, partially offset by flat organic revenue growth.
-- Underlying operating profit increased 2% and the corresponding
margin was 19.6% versus 19.5% in the prior-year period driven
by continued cost containment and lower reorganization costs,
offset in part by flat organic revenue growth and higher
depreciation and amortization expense (40 basis point impact)
from investments made in prior periods.
-- Adjusted EPS was $0.60, an increase of $0.06 from the
prior-year period. Higher underlying operating profit and the
elimination of integration expenses were partially offset by a
higher tax rate. Foreign exchange had a $0.01 negative impact
on adjusted EPS.
(1) In 2011, operating loss and diluted loss per share included a $3.0 billion
non-cash goodwill impairment charge. This charge is excluded from adjusted
earnings, adjusted EBITDA and underlying operating profit. (2) nm – not
meaningful (3) 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.
Fourth-Quarter Business Segment Highlights
Financial & Risk
-- Revenues were up 1% versus the prior-year period as the benefit
from acquisitions was offset by a 1% 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 12% (-1% organic) due
to acquisitions. Recoveries revenues were flat and Outright
revenues increased 9%.
-- By geography, revenues in Europe, Middle East and Africa (EMEA)
were down 3%, revenues in the Americas were up 6%, while
revenues in Asia declined 3% primarily related to Japan.
-- EBITDA was $483 million, up 5%, with a related margin of 26.7%.
EBITDA margin increased 150 basis points from the prior-year
period due to effective cost control and the $44 million of
reorganization charges incurred in the prior-year period that
did not repeat.
-- Operating profit was $324 million, up 4%, with a related margin
of 17.9%. Operating profit margin increased 70 basis points
related to the same items that impacted the EBITDA margin,
offset by higher depreciation and amortization primarily from
new product launches and investments made in prior periods.
-- Eikon desktops totaled 33,900 at the end of the fourth quarter,
up approximately 33% from the end of the third quarter of 2012.
Trading
-- Revenues decreased 3% with growth in Commodities & Energy, Data
Feeds and Elektron Managed Services offset by legacy desktop
cancellations primarily in Equities and Fixed Income.
-- Recoveries revenues were down 3%.
Investors
-- Revenues were flat versus the prior-year period. Enterprise
Content grew 9% and Wealth Management grew 5%. This was offset
by a 7% decline in Investment Management (due to the impact of
negative net sales) and a 3% decline in Corporates. Investment
Banking was flat versus the prior-year period.
Marketplaces
-- Revenues increased 11% (flat organic) driven by the
acquisitions of FXall and Rafferty in Tradeweb.
Governance, Risk & Compliance
-- Revenues grew 22% (18% organic) to $61 million.
Legal
-- Revenues increased 2% (1% organic). US Law Firm Solutions
declined 1% with Business of Law revenues (FindLaw and Elite)
growing 6% and research-related revenues declining 3%.
Corporate, Government & Academic revenues rose 2%. Global
businesses grew 10% with continued strong performance by Latin
American operations.
-- EBITDA was up 5% from the prior-year period and the associated
margin increased 100 basis points to 38.0%.
-- Operating profit was up 5% and the related margin was 29.8%
compared to 28.9% in the prior-year period.
-- 76% of Westlaw revenue was converted to WestlawNext as of the
end of the fourth quarter.
Tax & Accounting
-- Revenues increased 4% (1% organic). Excluding Government,
organic revenues rose 6%.
-- EBITDA declined 4% and the corresponding margin decreased 260
basis points to 37.3%. Excluding Government, EBITDA rose 9% and
the related margin was flat.
-- 35% of full-year 2012 EBITDA was generated in the fourth
quarter.
-- Operating profit decreased 6% and the related margin decreased
300 basis points to 29.3%. Excluding Government, operating
profit rose 10% and the related margin rose 30 basis points.
-- 39% of full-year 2012 operating profit was 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 12% (3% organic). Life Sciences increased 6%
and Scientific & Scholarly Research revenues increased 7%. IP
Solutions revenues were up 20% related to the MarkMonitor
acquisition in the third quarter of 2012.
-- EBITDA increased 5% with the corresponding margin declining 200
basis points to 33.6% primarily due to the dilutive impact of
the MarkMonitor acquisition.
-- Operating profit increased 3% with the corresponding margin
declining 200 basis points to 26.4%. The decline in the margin
reflected 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 Media)
Media revenues for the full year 2012 were $331 million, up 1% from the prior
year. Corporate & Other costs for the full year 2012 were $270 million,
unchanged from the prior year.
Fourth-quarter Media revenues were $87 million, up 1% from the prior-year
period. Fourth-quarter Corporate & Other costs were $92 million compared to
$84 million in the prior-year period.
Business Outlook (Before Currency)
Thomson Reuters today issued its business outlook for 2013. The company
expects:
-- revenues to grow low single-digits;
-- adjusted EBITDA margin to range between 26% and 27%;
-- underlying operating profit margin to range between 16.5% and
17.5%; and
-- free cash flow to range between $1.7 billion and $1.8 billion
in 2013.
Our 2013 business outlook is based on expectations including adjustments for
two new accounting pronouncements as well as the reclassification of certain
businesses into disposals. To facilitate comparison with our 2013 outlook,
Appendix A revises our 2012 actual results to a comparable basis.
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
The board of directors approved a $0.02 per share increase in the annual
dividend to $1.30 per share. A quarterly dividend of $0.325 per share is
payable on March 15, 2013 to common shareholders of record as of February 25,
2013. This dividend increase marks the 20th consecutive annual dividend
increase by the company.
In 2012, the company repurchased 5.9 million shares for an aggregate purchase
price of $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 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. 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 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. 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 2013.
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 2013 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, continuing operational improvement in the Financial & Risk
business and 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; 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 www.thomsonreuters.com.
CONTACT
MEDIA
INVESTORS
Carla Jones
Frank J. Golden
Senior Vice President
Senior Vice President, Investor Relations
+1 646 223 5288 +1 646 223 5285 frank.golden@thomsonreuters.comcarla.jones@thomsonreuters.com
Thomson Reuters will webcast a discussion of its full-year and fourth-quarter 2012 results today beginning at 8:30 a.m. Eastern Standard Time (EST). 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
December 31, Change
2012 2011 ( Total Before Organic
(1)) Currency
Revenues
Trading $830 $869 -4% -3% -3%
Investors 601 606 -1% 0% -1%
Marketplaces 320 290 10% 11% 0%
( )
Governance,
Risk & 61 50 22% 22% 18%
Compliance
Financial & 1,812 1,815 0% 1% -1%
Risk
Legal 861 843 2% 2% 1%
Tax & 351 341 3% 4% 1%
Accounting
Intellectual
Property & 250 225 11% 12% 3%
Science
Corporate &
Other 87 87 0% 1% 1%
(includes
Media)
Eliminations (3) (3)
Revenues
from ongoing 3,358 3,308 2% 2% 0%
businesses(
(2))
Other
businesses( 41 269
(3))
Revenues $3,399 $3,577 -5%
Change Margin
Adjusted Total Before 2012 2011 Change
EBITDA ((4)) Currency
Financial & $483 $458 5% 8% 26.7% 25.2% 150bp
Risk
Legal 327 312 5% 5% 38.0% 37.0% 100bp
Tax & 131 136 -4% -4% 37.3% 39.9% -260bp
Accounting
Intellectual
Property & 84 80 5% 5% 33.6% 35.6% -200bp
Science
Corporate &
Other (77) (70)
(includes
Media)
Integration
programs - (64)
expenses
Adjusted $948 $852 11% 13% 28.2% 25.8% 240bp
EBITDA
Underlying
Operating
Profit( )(
(5))
Financial & $324 $312 4% 7% 17.9% 17.2% 70bp
Risk
Legal 257 244 5% 5% 29.8% 28.9% 90bp
Tax & 103 110 -6% -6% 29.3% 32.3% -300bp
Accounting
Intellectual
Property & 66 64 3% 3% 26.4% 28.4% -200bp
Science
Corporate &
Other (92) (84)
(includes
Media)
Underlying
operating $658 $646 2% 3% 19.6% 19.5% 10bp
profit
Thomson Reuters Corporation Business Segment Information (millions of U.S. dollars) (unaudited)
Twelve Months
Ended
December 31, Change
2012 2011 ( Total Before Organic
(1)) Currency
Revenues
Trading $3,345 $3,537 -5% -3% -3%
Investors 2,416 2,472 -2% -1% -2%
Marketplaces 1,213 1,134 7% 8% 1%
( )
Governance,
Risk & 219 154 42% 43% 17%
Compliance
Financial & 7,193 7,297 -1% 1% -1%
Risk
Legal 3,286 3,221 2% 3% 1%
Tax & 1,206 1,050 15% 16% 5%
Accounting
Intellectual
Property & 894 852 5% 6% 3%
Science
Corporate &
Other 331 336 -1% 1% 1%
(includes
Media)
Eliminations (11) (13)
Revenues
from ongoing 12,899 12,743 1% 3% 0%
businesses(
(2))
Other
businesses( 379 1,064
(3))
Revenues $13,278 $13,807 -4%
Change Margin
Adjusted Total Before 2012 2011 Change
EBITDA ((4)) Currency
Financial & $1,842 $1,972 -7% -4% 25.6% 27.0% -140bp
Risk
Legal 1,243 1,210 3% 3% 37.8% 37.6% 20bp
Tax & 376 332 13% 14% 31.2% 31.6% -40bp
Accounting
Intellectual
Property & 303 296 2% 2% 33.9% 34.7% -80bp
Science
Corporate &
Other (235) (227)
(includes
Media)
Integration
programs - (215)
expenses
Adjusted $3,529 $3,368 5% 6% 27.4% 26.4% 100bp
EBITDA
Underlying
Operating
Profit( )(
(5))
Financial & $1,215 $1,396 -13% -9% 16.9% 19.1% -220bp
Risk
Legal 964 941 2% 2% 29.3% 29.2% 10bp
Tax & 261 237 10% 11% 21.6% 22.6% -100bp
Accounting
Intellectual
Property & 235 237 -1% -1% 26.3% 27.8% -150bp
Science
Corporate &
Other (270) (270)
(includes
Media)
Underlying
operating $2,405 $2,541 -5% -4% 18.6% 19.9% -130bp
profit
Thomson Reuters Corporation Reconciliation of Operating Profit (Loss) to
Adjusted EBITDA( (4) )(millions of U.S. dollars) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012( ) 2011 Change 2012( ) 2011 Change
Operating profit $557 ($2,593) nm $2,651 ($705) nm
(loss)
Adjustments to
remove:
Goodwill - 3,010 - 3,010
impairment
Amortization of
other 160 166 619 612
identifiable
intangible assets
Integration - 64 - 215
programs expenses
Fair value 15 (37) 36 (149)
adjustments
Other operating
(gains) losses, (81) 98 (883) (204)
net
Operating losses
(profit) from
Other 7 (62) (18) (238)
businesses( (1),
(3))
Underlying
operating profit $658 $646 2% $2,405 $2,541 -5%
((1))
Adjustments:
Add: integration - (64) - (215)
programs expenses
Remove:
depreciation and
amortization of
computer
290 270 1,124 1,042 software (excluding Other businesses( (1), (3)))
Adjusted EBITDA ( $948 $852 11% $3,529 $3,368 5% (1))
Underlying operating profit 19.6% 19.5% 10bp 18.6% 19.9% -130bp margin
Adjusted EBITDA 28.2% 25.8% 240bp 27.4% 26.4% 100bp margin
Thomson Reuters Corporation Reconciliation of Earnings (Loss) from Continuing Operations to Adjusted EBITDA ((4) )(millions of U.S. dollars) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 Change 2012( ) 2011 Change
Earnings (loss)
from continuing $385 ($2,604) nm $2,121 ($1,396) nm
operations
Adjustments to
remove:
Tax expense 51 (78) 157 293
(benefit)
Other finance 4 (4) (40) 15
costs (income)
Net interest 95 95 390 396
expense
Amortization of
other
identifiable 160 166 619 612
intangible
assets
Amortization of
computer 184 178 700 659
software
Depreciation 106 114 429 438
EBITDA $985 ($2,133) nm $4,376 $1,017 nm
Adjustments to
remove:
Share of post
tax earnings
and impairment
in 22 (2) 23 (13)
equity method
investees
Other operating
(gains) losses, (81) 98 (883) (204)
net
Goodwill - 3,010 - 3,010
impairment
Fair value 15 (37) 36 (149)
adjustments
EBITDA from
Other 7 (84) (23) (293)
businesses(
(1), (3))
Adjusted EBITDA $948 $852 11% $3,529 $3,368 5%
((1))
nm = not meaningful
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 Three Months Ended
December 31, 2012 December 31, 2011 ((1))
Add:
Depreciation Add:
Underlying and Adjusted Underlying Depreciation Adjusted
and
Operating Amortization EBITDA Operating Amortization EBITDA
Profit Profit of Computer
of Computer Software **
Software
( )**
Financial & $324 $159 $483 $312 $146 $458
Risk
Legal 257 70 327 244 68 312
Tax & 103 28 131 110 26 136
Accounting
Intellectual
Property & 66 18 84 64 16 80
Science
Corporate &
Other (92) 15 (77) (84) 14 (70)
(includes
Media)
Integration
programs na na - na na (64)
expenses
$658 $290 $948 $646 $270 $852
Twelve Months Ended Twelve Months Ended
December 31, 2012 December 31, 2011 ((1))
Add:
Depreciation Add:
Underlying Underlying
and Adjusted Depreciation Adjusted
Operating Operating and
Profit Amortization EBITDA Profit Amortization EBITDA
of Computer
of Computer Software **
Software
( )**
Financial & $1,215 $627 $1,842 $1,396 $576 $1,972
Risk
Legal 964 279 1,243 941 269 1,210
Tax & 261 115 376 237 95 332
Accounting
Intellectual
Property & 235 68 303 237 59 296
Science
Corporate &
Other (270) 35 (235) (270) 43 (227)
(includes
Media)
Integration
programs na na - na na (215)
expenses
$2,405 $1,124 $3,529 $2,541 $1,042 $3,368
** excludes Other businesses ((1), (3))
na = not applicable
Thomson Reuters Corporation Reconciliation of Earnings (Loss) Attributable to
Common Shareholders to Adjusted Earnings ((6) )(millions of U.S. dollars,
except as otherwise indicated and except for per share data) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012( ) 2011 2012( ) 2011
Earnings (loss) attributable to $372 ($2,572) $2,070 ($1,390)
common shareholders
Adjustments to remove:
Goodwill impairment - 3,010 - 3,010
Goodwill impairment
attributable to non-controlling - (40) - (40)
interests
Operating loss (profit) from 7 (62) (18) (238)
Other businesses( (1), (3))
Fair value adjustments 15 (37) 36 (149)
Other operating (gains) losses, (81) 98 (883) (204)
net
Other finance costs (income) 4 (4) (40) 15
Share of post tax earnings and
impairment in equity method 22 (2) 23 (13)
investees
Tax on above items 24 (47) 208 143
Interim period effective tax 8 10 - -
rate normalization( (7))
Discrete tax items (30) (72) (254) (105)
Amortization of other 160 166 619 612
identifiable intangible assets
Discontinued operations (3) (2) (2) (4)
Dividends declared on (1) (1) (3) (3)
preference shares
Adjusted earnings ((1)) $497 $445 $1,756 $1,634
Adjusted earnings per share ( $0.60 $0.54 $2.12 $1.96
(1))
Diluted weighted average common 829.2 829.7 829.6 835.8
shares (in millions)
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 Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Net cash provided by operating $954 $942 $2,704 $2,597
activities
Capital expenditures, less (251) (282) (977) (1,041)
proceeds from disposals
Other investing activities 5 10 13 49
Dividends paid on preference (1) (1) (3) (3)
shares
Free cash flow 707 669 1,737 1,602
Remove: Other businesses ((1), (9) (67) (70) (215)
(3))
Free cash flow from ongoing $698 $602 $1,667 $1,387
businesses ((1))
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. To facilitate comparison
of actual results to the 2012 business outlook, ongoing businesses includes
the Financial & Risk segment's Investor Relations, Public Relations and
Multimedia businesses (Corporate Services), which were announced for sale in
December 2012. As our 2013 business outlook is based on expectations excluding
these businesses, we have provided supplemental 2012 financial information in
Appendix A, which excludes the results of these businesses.
(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, except for Corporate Services (see note (2) above).
(millions of U.S. dollars) Three Months Ended Twelve Months Ended
December 31, December 31,
Other businesses 2012 2011 2012 2011
Revenues $41 $269 $379 $1,064
Operating (loss) profit ($7) $62 $18 $238
Depreciation and amortization - 22 5 55
of computer software
EBITDA ($7) $84 $23 $293
(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 and adjusted earnings per share 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 and impairment in equity method investees,
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.
(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 businesses.
Thomson Reuters Corporation Consolidated Income Statement (millions of U.S. dollars, except per share data) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Revenues $3,399 $3,577 $13,278 $13,807
Operating expenses (2,473) (2,604) (9,762) (9,997)
Depreciation (106) (114) (429) (438)
Amortization of (184) (178) (700) (659)
computer software
Amortization of other
identifiable (160) (166) (619) (612)
intangible assets
Goodwill impairment - (3,010) - (3,010)
Other operating gains 81 (98) 883 204
(losses), net
Operating profit 557 (2,593) 2,651 (705)
(loss)
Finance costs, net:
Net interest expense (95) (95) (390) (396)
Other finance (costs) (4) 4 40 (15)
income
Income (loss) before
tax and equity method 458 (2,684) 2,301 (1,116)
investees
Share of post tax
earnings and
impairment in equity (22) 2 (23) 13
method
investees
Tax (expense) benefit (51) 78 (157) (293)
Earnings (loss) from 385 (2,604) 2,121 (1,396)
continuing operations
Earnings from
discontinued 3 2 2 4
operations, net of tax
Net earnings (loss) $388 ($2,602) $2,123 ($1,392)
Earnings (loss)
attributable to:
Common shareholders 372 (2,572) 2,070 (1,390)
Non-controlling 16 (30) 53 (2)
interests
Basic earnings (loss) $0.45 ($3.11) $2.50 ($1.67)
per share
Diluted earnings $0.45 ($3.11) $2.49 ($1.67)
(loss) per share
Basic weighted average 827,175,200 828,185,741 827,640,398 833,459,452 common shares
Diluted weighted 829,180,975 828,185,741 829,603,780 833,459,452 average common shares
Thomson Reuters Corporation Consolidated Statement of Financial Position (millions of U.S. dollars) (unaudited)
____________________________________________________________________ | |December 31,||December 31,| | |____________||____________| | |2012 ||2011 | |_________________________________________|____________||____________| |Assets | || | |_________________________________________|____________||____________| |Cash and cash equivalents |$1,301 ||$422 | |_________________________________________|____________||____________| |Trade and other receivables |1,835 ||1,984 | |_________________________________________|____________||____________| |Other financial assets |72 ||100 | |_________________________________________|____________||____________| |Prepaid expenses and other current assets|641 ||641 | |_________________________________________|____________||____________| |Current assets excluding assets held for |3,849 ||3,147 | |sale | || | |_________________________________________|____________||____________| |Assets held for sale |302 ||767 | |_________________________________________|____________||____________| |Current assets |4,151 ||3,914 | |_________________________________________|____________||____________| | | || | |_________________________________________|____________||____________| |Computer hardware and other property, net|1,423 ||1,509 | |_________________________________________|____________||____________| |Computer software, net |1,682 ||1,640 | |_________________________________________|____________||____________| |Other identifiable intangible assets, net|8,135 ||8,471 | |_________________________________________|____________||____________| |Goodwill |16,256 ||15,932 | |_________________________________________|____________||____________| |Other financial assets |360 ||425 | |_________________________________________|____________||____________| |Other non-current assets |515 ||535 | |_________________________________________|____________||____________| |Deferred tax |50 ||50 | |_________________________________________|____________||____________| |Total assets |$32,572 ||$32,476 | |_________________________________________|____________||____________| | | || | |_________________________________________|____________||____________| |Liabilities and equity | || | |_________________________________________|____________||____________| |Liabilities | || | |_________________________________________|____________||____________| |Current indebtedness |$1,008 ||$434 | |_________________________________________|____________||____________| |Payables, accruals and provisions |2,633 ||2,675 | |_________________________________________|____________||____________| |Deferred revenue |1,224 ||1,379 | |_________________________________________|____________||____________| |Other financial liabilities |95 ||81 | |_________________________________________|____________||____________| |Current liabilities excluding liabilities|4,960 ||4,569 | |associated with assets held for sale | || | |_________________________________________|____________||____________| |Liabilities associated with assets held |35 ||35 | |for sale | || | |_________________________________________|____________||____________| |Current liabilities |4,995 ||4,604 | |_________________________________________|____________||____________| | | || | |_________________________________________|____________||____________| |Long-term indebtedness |6,223 ||7,160 | |_________________________________________|____________||____________| |Provisions and other non-current |2,514 ||2,513 | |liabilities | || | |_________________________________________|____________||____________| |Other financial liabilities |37 ||27 | |_________________________________________|____________||____________| |Deferred tax |1,305 ||1,422 | |_________________________________________|____________||____________| |Total liabilities |15,074 ||15,726 | |_________________________________________|____________||____________| | | || | |_________________________________________|____________||____________| |Equity | || | |_________________________________________|____________||____________| |Capital |10,371 ||10,288 | |_________________________________________|____________||____________| |Retained earnings |8,311 ||7,633 | |_________________________________________|____________||____________| |Accumulated other comprehensive loss |(1,537) ||(1,516) | |_________________________________________|____________||____________| |Total shareholders' equity |17,145 ||16,405 | |_________________________________________|____________||____________| |Non-controlling interests |353 ||345 | |_________________________________________|____________||____________| |Total equity |17,498 ||16,750 | |_________________________________________|____________||____________| |Total liabilities and equity |$32,572 ||$32,476 | |_________________________________________|____________||____________|
Thomson Reuters Corporation Consolidated Statement of Cash Flow (millions of U.S. dollars) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Cash provided by (used in):
Operating activities
Net earnings $388 ($2,602) $2,123 ($1,392)
Adjustments for:
Depreciation 106 114 429 438
Amortization of computer 184 178 700 659
software
Amortization of other 160 166 619 612
identifiable intangible assets
Net (gains) losses on disposals (14) 1 (829) (388)
of businesses and investments
Goodwill impairment - 3,010 - 3,010
Deferred tax 98 27 (118) (202)
Other (20) (22) (61) 139
Changes in working capital and 52 70 (159) (279)
other items( )
Net cash provided by operating 954 942 2,704 2,597
activities
Investing activities
Acquisitions, net of cash (26) (172) (1,301) (1,286)
acquired
Proceeds from (payments for) 94 (90) 1,901 415
disposals, net of taxes paid
Capital expenditures, less (251) (282) (977) (1,041)
proceeds from disposals( )
Other investing activities 5 10 13 49
Investing cash flows from (178) (534) (364) (1,863)
continuing operations
Investing cash flows from - 5 90 56
discontinued operations
Net cash used in investing (178) (529) (274) (1,807)
activities
Financing activities
Proceeds from debt - 349 - 349
Repayments of debt - (2) (2) (648)
Net borrowings (repayments)
under short-term loan 1 (663) (422) 400
facilities
Repurchases of common shares - (7) (168) (326)
Dividends paid on preference (1) (1) (3) (3)
shares
Dividends paid on common shares (255) (248) (1,021) (960)
Other financing activities 13 (8) 65 (39)
Net cash used in financing (242) (580) (1,551) (1,227)
activities
Translation adjustments on cash (2) - - (5)
and cash equivalents
Increase (decrease) in cash and 532 (167) 879 (442)
cash equivalents
Cash and cash equivalents at 769 589 422 864
beginning of period
Cash and cash equivalents at $1,301 $422 $1,301 $422
end of period
Appendix A
The following supplemental information is provided to facilitate comparison to
our 2013 business outlook which is based on expectations including the
adjustments described in note 1 to this appendix.
Thomson Reuters Corporation 2012 Supplemental Information ((1),(2) )(millions
of U.S. dollars, except per share amounts) (unaudited)
__________________________________________________________________
| |Twelve | || || |
| | | || ||Twelve |
| |Months | || || |
| |Ended | || ||Months Ended|
| | | || || |
| |December| || ||December 31,|
| |31, | || || |
|___________|________|_________||____________________||____________|
| |2012 | ||IFRS Accounting ||2012 |
| | | ||Amendments || |
|___________|________|_________||____________________||____________|
|Non-IFRS | |Less: ||Joint | || |
|Financial |Actual | ||ventures|Pension ||Revised |
|Measures | |Disposals|| | || |
|___________|________|_________||________|___________||____________|
|Revenues | | || | || |
|from | | || | || |
|ongoing |$12,899 |(310) ||(146) |- ||$12,443 |
|businesses | | || | || |
|((3)) | | || | || |
|___________|________|_________||________|___________||____________|
| | | || | || |
|___________|________|_________||________|___________||____________|
|Adjusted | | || | || |
|EBITDA ( |$3,529 |(125) ||(46) |(48) ||$3,310 |
|(5)) | | || | || |
|___________|________|_________||________|___________||____________|
| | | || | || |
|___________|________|_________||________|___________||____________|
|Underlying | | || | || |
|operating |$2,405 |(119) ||(33) |(48) ||$2,205 |
|profit ( | | || | || |
|(6)) | | || | || |
|___________|________|_________||________|___________||____________|
| | | || | || |
|___________|________|_________||________|___________||____________|
|Adjusted | | || | || |
|earnings ( |$1,756 |(89) ||(19) |(81) ||$1,567 |
|(7)) | | || | || |
|___________|________|_________||________|___________||____________|
| | | || | || |
|___________|________|_________||________|___________||____________|
|Adjusted | | || | || |
|earnings |$2.12 |($0.11) ||($0.02) |($0.10) ||$1.89 |
|per share (| | || | || |
|(7)) | | || | || |
|___________|________|_________||________|___________||____________|
| | | || | || |
|___________|________|_________||________|___________||____________|
|Free cash | | || | || |
|flow from | | || | || |
|ongoing |$1,667 |(116) ||- |- ||$1,551 |
|businesses | | || | || |
|((8)) | | || | || |
|___________|________|_________||________|___________||____________|
| | | || | || |
|___________|________|_________||________|___________||____________|
Appendix A
Thomson Reuters Corporation Business Segment Information 2012 Supplemental
Information ((1),(2) )(millions of U.S. dollars) (unaudited)
Twelve Months Ended
December 31, 2012
Revised
Revenues
Trading $2,624
Investors 2,195
Marketplaces 1,764
Governance, Risk & Compliance 219
Financial & Risk 6,802
Legal 3,266
Tax & Accounting 1,161
Intellectual Property & Science 894
Corporate & Other (includes Media) 331
Eliminations (11)
Revenues from ongoing businesses( (3)) $12,443
Adjusted EBITDA ((5)) Margin
Financial & Risk $1,691 24.9%
Legal 1,246 38.2%
Tax & Accounting 352 30.3%
Intellectual Property & Science 303 33.9%
Corporate & Other (includes Media) (282)
Adjusted EBITDA $3,310 26.6%
Underlying Operating Profit( )((6)) Margin
Financial & Risk $1,082 15.9%
Legal 967 29.6%
Tax & Accounting 238 20.5%
Intellectual Property & Science 235 26.3%
Corporate & Other (includes Media) (317)
Underlying operating profit $2,205 17.7%
Appendix A
Thomson Reuters Corporation Reconciliation of Underlying Operating Profit(
(6)) to Adjusted EBITDA( (5)) by Business Segment 2012 Supplemental
Information ((1),(2) )(millions of U.S. dollars) (unaudited)
Twelve Months Ended
December 31, 2012
Revised
Add:
Depreciation
Underlying and Adjusted
Operating Profit Amortization EBITDA
of Computer
Software ((9))( )
Financial & Risk $1,082 $609 $1,691
Legal 967 279 1,246
Tax & Accounting 238 114 352
Intellectual Property 235 68 303
& Science
Corporate & Other (317) 35 (282)
(includes Media)
$2,205 $1,105 $3,310
Footnotes
(1) The following adjustments are included in the supplemental schedules in
this appendix to facilitate comparison to our 2013 business outlook, which is
based on expectations including these adjustments:
-- New disposals we will report in 2013, including our Financial &
Risk segment's Corporate Services business announced for sale
in December 2012, are excluded from ongoing businesses.
-- Effective January 1, 2013, with retrospective application to
2012, IFRS no longer allows proportionate consolidation of
joint ventures. Joint ventures must now be accounted for as
equity investments. Thomson Reuters excludes equity investments
from adjusted earnings.
-- Effective January 1, 2013, with retrospective application to
2012, IFRS requires new accounting for the interest component
of pension expense. This change increased 2012 pension expense
by $111 million. Additionally, the 2012 interest component of
pension expense, $63 million, will now be reported as a
component of interest expense rather than as part of operating
expenses.
(2) The realignment of certain products within the Financial & Risk
segment, effective January 1, 2013, has been reflected in this appendix to
facilitate comparability of our business results.
(3) Revenues from ongoing businesses are revenues from reportable segments
and Corporate & Other (which includes the Media business) less eliminations.
Other businesses (see note (4) below) are excluded.
(4) 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 (see note (1) above).
(5) 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.
(6) 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.
(7) Adjusted earnings and adjusted earnings per share include dividends
declared on preference shares, 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, certain impairment charges, the
results of Other businesses (see note (4) above), other finance costs
(income), Thomson Reuters share of post-tax earnings and impairment in equity
method investees, 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.
(8) Free cash flow from ongoing businesses is net cash provided by
operating activities less capital expenditures, other investing activities and
dividends paid on the company's preference shares and excludes Other
businesses (see note (4) above).
(9) Excludes Other businesses (see note (4) above).
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