6-K

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FORM 6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of July 2004                                                 Commission File No.: 1-31349

THE THOMSON CORPORATION
(Translation of registrant's name into English)

Metro Center, One Station Place
Stamford, Connecticut 06902, United States
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  o                   Form 40-F  ý

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):                    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):                    

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  o                   No  ý

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                             .

EXHIBIT INDEX

Exhibit Number	Description
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
99.1	Management's Discussion and Analysis
99.2	Unaudited Consolidated Financial Statements
99.3	Controls and Procedures

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE THOMSON CORPORATION
	By:	/s/  DEIRDRE STANLEY Name: Deirdre Stanley Title: Senior Vice President and General Counsel
Date: July 30, 2004

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EXHIBIT INDEX
SIGNATURES

EX-31.1

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EXHIBIT 31.1

CERTIFICATION

I, Richard J. Harrington, President and Chief Executive Officer of The Thomson Corporation, certify that:

1.

I have reviewed this report on Form 6-K of The Thomson Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c.

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 30, 2004

/s/ RICHARD J. HARRINGTON                             

Richard J. Harrington
President and Chief Executive Officer

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CERTIFICATION

EX-31.2

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EXHIBIT 31.2

CERTIFICATION

I, Robert D. Daleo, Executive Vice President and Chief Financial Officer of The Thomson Corporation, certify that:

1.

I have reviewed this report on Form 6-K of The Thomson Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c.

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 30, 2004

/s/ ROBERT D. DALEO                             

Robert D. Daleo
Executive Vice President and Chief Financial Officer

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CERTIFICATION

EX-32.1

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the report of The Thomson Corporation (the "Corporation") on Form 6-K for the period ended June 30, 2004, as furnished to the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard J. Harrington, President and Chief Executive Officer of the Corporation, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: July 30, 2004

/s/ RICHARD J. HARRINGTON                             

Richard J. Harrington
President and Chief Executive Officer

A signed original of this written statement or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to The Thomson Corporation and will be retained by The Thomson Corporation and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of this report or as a separate disclosure document.

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

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EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the report of The Thomson Corporation (the "Corporation") on Form 6-K for the period ended June 30, 2004, as furnished to the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert D. Daleo, Executive Vice President and Chief Financial Officer of the Corporation, hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: July 30, 2004

/s/ ROBERT D. DALEO                             

Robert D. Daleo
Executive Vice President and Chief Financial Officer

A signed original of this written statement or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to The Thomson Corporation and will be retained by The Thomson Corporation and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of this report or as a separate disclosure document.

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-99.1

Exhibit 99.1

THE THOMSON CORPORATION

Management's Discussion and Analysis

The following management's discussion and analysis should be read in conjunction with our consolidated financial statements prepared in accordance with accounting principles generally accepted in Canada, or Canadian GAAP, and the related notes to those financial statements. All dollar amounts in this discussion are in U.S. dollars unless otherwise specified. Unless otherwise indicated, references in this discussion to "we," "our" and "us" are to The Thomson Corporation and its subsidiaries. This management's discussion and analysis is dated as of July 27, 2004.

OVERVIEW

Description of Our Business

We are a global leader in providing integrated information solutions to business and professional customers. We generate revenues by supplying our customers with business-critical information, which we make more valuable by adding expert analysis, insight and commentary, and couple it with software tools and applications that our customers can use to search, compare, synthesize and communicate the information. To further enhance our customers' workflows, we increasingly deliver real-time information and services electronically, integrate our solutions with our customers' own data, and tailor the delivery of information to meet specific customer needs. As we integrate critical information with analysis, tools and applications, we place greater focus on the ways our customers use our content, rather than simply on selling the content itself.

As a global company, we are affected by the economic conditions and business characteristics of each market in which we operate. The development of our business is also largely driven by our customers' technological, informational and other needs.

We organize our operations into four market groups that are structured on the basis of the customers they serve:

•

Thomson Legal & Regulatory,



•

Thomson Learning,



•

Thomson Financial, and



•

Thomson Scientific & Healthcare.

We report the financial results of our four market groups together with those of a corporate and other reporting category. The corporate and other category principally includes corporate expenses and expenses associated with our stock-related compensation.

2004 Financial Outlook

We expect full-year 2004 revenue growth to be in line with our long-term target of 7% to 9% (excluding the effects of currency translation), compared to the previous outlook of mid-single digit growth. Full-year 2004 revenue growth will continue to be driven by growth from existing businesses and supplemented by acquisitions.

Adjusted EBITDA is expected to show solid growth in the second half. Full-year adjusted EBITDA margin is expected to improve slightly reflecting continued operating improvements, partially offset by higher pension costs and corporate expenses.

Adjusted earnings in the second half of the year will grow at a lower rate than in the first half due largely to higher depreciation and a higher effective tax rate versus the second half of 2003.

We also expect to continue to generate strong free cash flow in 2004.

Seasonality

We typically derive a greater portion of our operating profit and operating cash flow in the second half of the year as customer buying patterns are concentrated in the second half of the year, particularly in the learning and regulatory markets. Costs are incurred more evenly throughout the year. As a result, our operating margins generally increase as the year progresses, though the seasonality of our overall results between the first and second halves has been reducing over the past several years. For these reasons, it may not be possible to compare the performance of our businesses quarter to consecutive quarter, and our quarterly results should be considered on the basis of results for the whole year or by comparing results in a quarter with the results in the same quarter for the previous year.

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Use of Non-GAAP Financial Measures

In addition to the results reported in accordance with Canadian GAAP, we use non-GAAP financial measures as supplemental indicators of our operating performance and financial position. We use these non-GAAP financial measures internally for comparing actual results from one period to another, as well as for future planning purposes. We have historically reported non-GAAP financial results as we believe their use provides more insight to our performance. The following discussion defines the measures that we use and explains why we believe they are useful measures of our performance, including our ability to generate cash flow:

•

Adjusted EBITDA.    We define adjusted EBITDA as earnings from continuing operations before interest, taxes, depreciation and amortization, net other income and equity in net losses of associates, net of tax. Because adjusted EBITDA excludes interest and taxes, it provides a more standard comparison among businesses by eliminating the differences that arise between them due to the manner in which they were acquired or funded. We use the measure as a supplemental cash flow metric as adjusted EBITDA also excludes depreciation and amortization of identifiable intangible assets, which are both non-cash charges. Net other income, which normally includes items such as gains and losses on sales of businesses, is excluded from adjusted EBITDA as this item is not considered relevant to operating performance. Finally, as the results of equity in associates are not directly under our control, we exclude this item from our analysis of current operating performance. We also use adjusted EBITDA margin, which we define as adjusted EBITDA as a percentage of revenues.



•

Adjusted operating profit.    Adjusted operating profit is defined as operating profit before amortization of identifiable intangible assets. We use this measure for our segments because we do not consider amortization to be a controllable operating cost for purposes of assessing the current performance of our segments. We also use adjusted operating profit margin, which we define as adjusted operating profit as a percentage of revenues.



•

Free cash flow.    We evaluate our operating performance based on free cash flow, which we define as net cash provided by operating activities less additions to property and equipment, other investing activities and dividends paid on our preference shares. We use free cash flow as a performance measure because it represents cash available to repay debt, pay common dividends and fund new acquisitions.



•

Adjusted earnings and adjusted earnings per common share from continuing operations.    We measure our earnings attributable to common shares and per share amounts to adjust for non-recurring items, discontinued operations and other items affecting comparability, which we refer to as adjusted earnings from continuing operations and adjusted earnings per common share from continuing operations. We use these measures to assist in comparisons from one period to another. Adjusted earnings per common share from continuing operations do not represent actual earnings per share attributable to shareholders.



•

Net debt.    We measure our indebtedness including associated hedging instruments (swaps) on our debt less cash and cash equivalents. Given that we hedge some of our debt to reduce risk, we include hedging instruments as a better measure of the total obligation associated with our outstanding debt. We reduce gross indebtedness by cash and cash equivalents, on the basis that they could be used to pay down debt.

These and related measures do not have any standardized meaning prescribed by Canadian GAAP and, therefore, are unlikely to be comparable with the calculation of similar measures used by other companies. You should not view these measures as alternatives to operating profit, cash flow from operations, net earnings, total debt or other measures of financial performance calculated in accordance with GAAP. We encourage you to review the reconciliations of these non-GAAP financial measures to the most directly comparable Canadian GAAP measure within this management's discussion and analysis.

RESULTS OF OPERATIONS

The following discussion compares our results in the three-month and six-month periods ended June 30, 2004 and 2003 and provides analyses of results from continuing operations and discontinued operations.

Basis of Analysis

Our results from continuing operations include the performance of acquired businesses from the date of their purchase and exclude results from operations classified as discontinued. Results from operations that qualify as discontinued operations have been reclassified to that category for all periods presented. Please see the section entitled "Discontinued Operations" for a discussion of these operations. Additionally, our market group results represent ongoing businesses, which exclude the results of businesses sold or held for sale that do not qualify as discontinued operations, i.e., disposals. The principal businesses included in disposals were various businesses in our financial market group.

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The following table summarizes our consolidated results for the periods indicated.

	Three months ended June 30,					Six months ended June 30,
(unaudited) (millions of U.S. dollars, except per share amounts))	2004		2003		Change	2004		2003		Change
Consolidated Operations
Revenues		1,866		1,713	9%		3,548		3,261	9%
Adjusted EBITDA		468		414	13%		775		662	17%
Adjusted EBITDA margin		25.1%		24.2%			21.8%		20.3%
Operating profit		257		207	24%		354		253	40%
Operating profit margin		13.8%		12.1%			10.0%		7.8%
Net earnings		192		115	67%		229		162	41%
Earnings attributable to common shares		191		110	74%		227		176	29%
Earnings per share attributable to common shares	$	0.29	$	0.17	71%	$	0.35	$	0.27	30%

Continuing Operations

Revenues.    For both the three-month and six-month periods ended June 30, 2004, revenues increased 9%. Excluding the impact of foreign currency translation, the increase was 7% for the second quarter and 6% for the six-month period. These increases were due to growth from our existing businesses and, to a slightly lesser extent, contributions from acquisitions. Growth from existing businesses was largely within our legal and regulatory and learning groups, with contributions from our scientific and healthcare group. Revenues from existing businesses for the second quarter increased slightly in our financial group, but remained slightly lower for the six-month period.

In the three-month and six-month periods ended June 30, 2004, products and services delivered electronically accounted for 60% and 63% of our revenues, respectively, unchanged from the comparable prior year periods, and compared to 56% for the year ended December 31, 2003. Because of the seasonality of our learning group, which has a higher percentage of print-based revenues than our other market groups, the percentage of revenues from products and services delivered electronically tends to be higher in the first half of the year. Historically, customer buying-patterns in our learning group have been concentrated in the second half of the year. Therefore, to the extent that revenues in our learning group increase throughout the year, the percentage of revenues from products and services delivered electronically tends to be lower in the second half of the year.

Operating profit.    Operating profit and related margin growth in the three-month and six-month periods ended June 30, 2004 reflected higher revenues and improved operating efficiencies across the corporation with only a marginal contribution from the favorable impact of foreign currency translation. Included in these results for 2004 were insurance recoveries related to September 11, 2001 of $14 million for the second quarter and $19 million for the first six months of the year. Results for the second quarter in 2004 also benefited from an adjustment of $7 million to accrued expenses related to health insurance claims for active employees. See "Corporate and Other" for further discussion of this item. For the second quarter, both the current and prior year periods included an expense associated with our stock appreciation rights, reflecting an increase in the trading price of our common shares, although the expense in 2004 was approximately $2 million lower than that of 2003. The first six months of 2004 included a benefit for stock appreciation rights, compared with an expense in the prior year period, resulting in a favorable variance in 2004 of $5 million. These factors were partially offset by higher pension and other defined benefit plans expense in 2004 of $8 million for the second quarter and $16 million for the first half of the year.

Adjusted EBITDA.    Adjusted EBITDA and its related margin increased for the reasons noted above under "Operating profit."

Net other income. Net other income in 2004 primarily related to the recognition of the second installment of $22 million of the previously announced Skillsoft settlement. There was no net other income for the second quarter in 2003. In the six-month period ended June 30, 2003, other income of $56 million consisted primarily of the gain on the sale of our 20% interest in Bell Globemedia Inc. (BGM). See "Related Party Transactions" for more information about this disposal.

Net interest expense and other financing costs.    Our interest expense and other financing costs in the three months ended June 30, 2004 decreased $11 million to $52 million. In the six-month period, the net expense declined $15 million to $113 million. These decreases in interest expense and other financing costs reflected lower average levels of outstanding net debt and lower interest rates in 2004 compared with 2003. Included in net interest expense and other financing costs in 2004 was a net benefit of $6 million for the second quarter and $4 million for the first six months related to new accounting guidance on derivatives. See the section entitled "Accounting Changes" for more information.

Income taxes.    Income taxes for the three-month and six-month periods ended June 30, 2004 reflected a refinement of the calculation by which we allocate estimated full year income tax expense among interim periods in 2004. See the section entitled

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"Accounting Changes" for more information. Because of the seasonality in our businesses, our interim effective tax rates for the second quarter and six-month period in 2004 are not indicative of our estimated effective tax rate for the full year.

Equity in net losses of associates, net of tax.    Equity in net losses of associates, net of tax, includes our proportionate share of net losses of investments accounted for under the equity method. For the three-month and six-month periods ended June 30, 2004, equity in net losses of associates, net of tax, reflected the improved performance of equity method investees.

Earnings attributable to common shares and earnings per common share.    Earnings attributable to common shares for the three-month and six-month periods ended June 30, 2004 increased due to higher operating profit, as well as a change in our allocation of expected full year income tax expense among interim periods in 2004. The second quarter of 2004 also benefited from the recognition of the Skillsoft settlement noted under "Net other income." Aside from the gain on the sale of BGM also noted under "Net other income," results for 2003 also included a $21 million gain related to the redemption of our Series V preference shares. The gain of $21 million represents a foreign exchange gain of $30 million, less the premium paid on redemption of $6 million, and taxes of $3 million.

The following table presents a summary of our earnings and our earnings per common share from continuing operations for the periods indicated, after adjusting for items affecting comparability in both years.

		Three months ended June 30,						Six months ended June 30,
(unaudited) (millions of U.S. dollars, except per common share amounts)			2004			2003			2004			2003
Earnings attributable to common shares			191			110			227			176
Adjustments for one-time items:
	Net other income		(29	)		—			(29	)		(56	)
	Tax on above item		11			—			11			(1	)
	Net loss (gain) on redemption of Series V preference shares		—			3			—			(21	)
Interim period effective tax rate normalization			(11	)		—			(28	)		—
Discontinued operations			(12	)		(14	)		(8	)		(22	)
Adjusted earnings from continuing operations attributable to common shares			150			99			173			76
Adjusted earnings per common share from continuing operations		$	0.23		$	0.15		$	0.26		$	0.12

On a comparable basis, our adjusted earnings from continuing operations for the three-month and six-month periods ended June 30, 2004 increased largely as a result of higher operating profit, stemming from higher revenues and improved operating efficiencies. Results also benefited from an insurance recovery and an accrual adjustment associated with health insurance claims for active employees in the second quarter of 2004 discussed under "Operating profit", as well as lower net interest expense.

Operating Results by Business Segment

See the "Reconciliations" section at the end of this management's discussion and analysis for a reconciliation of the below non-GAAP financial measures to the most directly comparable GAAP measures.

Thomson Legal & Regulatory

	Three months ended June 30,			Six months ended June 30,
(unaudited) (millions of U.S. dollars)	2004	2003	Change	2004	2003	Change
Revenues	833	768	8%	1,607	1,443	11%
Adjusted EBITDA	271	244	11%	479	395	21%
Adjusted EBITDA margin	32.5%	31.8%		29.8%	27.4%
Adjusted operating profit	223	200	12%	383	308	24%
Adjusted operating profit margin	26.8%	26.0%		23.8%	21.3%

In the three-month and six-month periods ended June 30, 2004, revenues for Thomson Legal & Regulatory increased 8% and 11%, respectively. Excluding the impact of foreign currency translation, revenues increased 7% and 9%, respectively. These increases were driven by strong performance by Westlaw and Checkpoint online services, newly acquired businesses, increased

4

trademark searches and FindLaw. Revenue growth for both periods in 2004 was offset, in part, by continued weakness in the news and business information sector. Revenue from print products increased slightly from that of the prior year periods, but is expected to decline for the full year. Growth attributable to acquired businesses was principally from Thomson Elite, a provider of back-office software to law firms acquired in May 2003, and fold-in tax software acquisitions.

North American Westlaw revenue experienced growth in all of its major market segments: law firm, government and corporate. Outside of North America, Westlaw revenues increased particularly in Europe and the Asia-Pacific region. The North American tax and accounting businesses experienced higher revenues, led by the Checkpoint online service and, for the six-month period, higher tax software sales. Finally, FindLaw revenue increased over 50% as a result of continued strong new sales performance and the benefit of an acquisition.

For the three-month and six-month periods ended June 30, 2004, the growth in adjusted EBITDA and adjusted operating profit, along with the corresponding higher margins, resulted from the revenue growth described above, as well as the impact of improved operating efficiencies. Growth in adjusted EBITDA and adjusted operating profit for future periods in 2004 are expected to be tempered by the anticipated decline in print and CD revenue.

Thomson Learning

	Three months ended June 30,			Six months ended June 30,
(unaudited) (millions of U.S. dollars)	2004	2003	Change	2004		2003		Change
Revenues	428	397	8%	779		724		8%
Adjusted EBITDA	51	46	11%	35		23		52%
Adjusted EBITDA margin	11.9%	11.6%		4.5%		3.2%
Adjusted operating profit	11	9	22%	(43	)	(48	)	10%
Adjusted operating profit margin	2.6%	2.3%		nm		nm

nm = Not meaningful.

Thomson Learning's second quarter and six month results are not indicative of its anticipated performance for the full year due to the seasonal nature of the higher education businesses in which a majority of the revenues and profits are realized in the second half of the year.

In the three-month and six-month periods ended June 30, 2004, revenues for Thomson Learning increased 8%. Excluding the impact of foreign currency translation, revenues increased 6% and 5%, respectively. During the three-and six-month periods ended June 30, 2004, Thomson Learning recorded improved revenue performance across the majority of its businesses. In particular, the Academic group's international businesses, driven by increased English language training, exhibited double digit growth, and revenues for the library reference business increased due to electronic product offerings coupled with an improved state funding environment. In the second quarter, the trend for textbook returns compared with that of the prior year improved, though levels remained above that of the prior year for the six-month period. Lifelong Learning's revenues increased due to growth in vocational training and the e-testing government and professional segments.

The increases in adjusted EBITDA, adjusted operating profit and the related margins in the three- and six-month periods related to the increase in revenue, efficiencies realized through restructuring efforts completed in the prior year and the favorable impact of foreign currency translation. The competitive environment and ongoing weakness in the corporate employee training and information technology markets continued to impact the results for businesses in those markets.

Thomson Financial

	Three months ended June 30,			Six months ended June 30,
(unaudited) (millions of U.S. dollars)	2004	2003	Change	2004	2003	Change
Revenues	416	375	11%	805	755	7%
Adjusted EBITDA	111	101	10%	212	195	9%
Adjusted EBITDA margin	26.7%	26.9%		26.3%	25.8%
Adjusted operating profit	68	59	15%	126	108	17%
Adjusted operating profit margin	16.3%	15.7%		15.7%	14.3%

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In the three-month and six-month periods ended June 30, 2004, revenues for Thomson Financial increased 11% and 7%, respectively. Excluding the impact of foreign currency translation, revenues increased 9% and 4%, respectively. These increases were primarily due to the impact of acquired businesses, including CCBN, Starquote and TradeWeb. Revenues from existing businesses in the United States increased in both periods of 2004 as a result of higher usage and transaction revenues as well as lower cancellations. Thomson ONE workstations increased 13% in the second quarter of 2004, and 30% for the six-month period, due to user migration from legacy products and new client wins. The revenue increases in the United States were offset in both periods by lower revenues from existing businesses in Europe. European market conditions began to exhibit certain positive trends in the first half of 2004, but continued to lag the improvements being exhibited in the United States.

Included in both adjusted EBITDA and adjusted operating profit for the three-month and six-month periods ended June 30, 2004 were insurance recoveries of $14 million and $19 million, respectively, related to September 11, 2001. Excluding these recoveries, adjusted EBITDA, adjusted operating profit, and the related margins decreased in 2004 due to acquisition-related expenses and investments for our online news service and a redundant data center.

Thomson Scientific & Healthcare

	Three months ended June 30,			Six months ended June 30,
(unaudited) (millions of U.S. dollars)	2004	2003	Change	2004	2003	Change
Revenues	200	181	10%	377	350	8%
Adjusted EBITDA	54	46	17%	84	80	5%
Adjusted EBITDA margin	27.0%	25.4%		22.3%	22.9%
Adjusted operating profit	47	37	27%	70	64	9%
Adjusted operating profit margin	23.5%	20.4%		18.6%	18.3%

In the three-month and six-month periods ended June 30, 2004, revenues for Thomson Scientific & Healthcare increased 10% and 8%, respectively. Excluding the impact of foreign currency translation, revenues increased 8% and 5%, respectively. These remaining increases were attributable to higher revenues from existing businesses and contributions from acquired companies, primarily BIOSIS, a provider of databases and services for life sciences research acquired in January 2004. Revenue growth benefited from higher subscription revenues for the Web of Science, Web of Knowledge and MICROMEDEX electronic product portfolio, as well as increased customer spending for healthcare decision support products. Second quarter comparability was impacted by the delayed release of the Diccionario de Especialidades Farmaceuticas, a Mexican drug information product similar to the PDR (Physicians' Desk Reference) in the United States, which was shipped in the first quarter in 2003 but shipped in the second quarter in 2004.

The increases in adjusted EBITDA, adjusted operating profit and the corresponding margins reflected the higher revenue from existing businesses and cost management efforts. For the six-month period in 2004, margin growth was tempered by expenses related to the BIOSIS acquisition, severance related to restructuring activity at Thomson Scientific and the timing of certain costs compared to last year.

Corporate and other

Corporate and other expenses were $22 million for the three-month period ended June 30, 2004, compared with $27 million for that of the prior year. For the six-month period, Corporate and other expenses were $39 million in 2004 and $41 million in 2003. The improvement was primarily due to an adjustment of $7 million to accrued expenses related to health insurance claims for active employees. This adjustment reflected favorable actual claim experience compared with estimated claims. This was partially offset by higher pension and other defined benefit plans expense. As noted below, results for Thomson Media are now reported as discontinued operations and are no longer reflected in Corporate and other.

Discontinued Operations

The following businesses, along with one other small business from Thomson Learning, which was sold in June 2003, are classified as discontinued operations within the consolidated interim financial statements for all periods presented. None of these businesses is or was considered fundamental to our integrated information offerings.

In October 2003, we sold our portfolio of healthcare magazines for $135 million and recorded the related post-tax gain of $63 million in the fourth quarter of 2003. The magazines had previously been managed within our scientific and healthcare group.

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In February 2004, we sold DBM, a provider of human resource solutions, which had been managed within our learning group. Based on the status of negotiations at December 31, 2003, an impairment charge relating to goodwill of $62 million before income taxes was recorded in the fourth quarter of 2003. We recorded a post-tax loss of $4 million in the first quarter of 2004 related to the completion of the sale.

In the second quarter of 2004, we sold Sheshunoff Information Services Inc., a provider of critical data, compliance and management tools to financial institutions, which had been managed within Thomson Media. Based on estimates of fair value, an impairment charge relating to identifiable intangible assets and goodwill of $24 million before income taxes was recorded in the fourth quarter of 2003 and a charge of $6 million relating to intangible assets was recorded in the first quarter of 2004. We recorded a post-tax gain of $3 million in the second quarter of 2004 related to the completion of the sale.

In June 2004, we announced our intention to sell the Thomson Media group. Thomson Media is a provider of information products focused on the banking, financial services and related technology markets. The results of Thomson Media had previously been reported within our Corporate and other segment. We anticipate completion of the sale by the end of the year.

LIQUIDITY AND CAPITAL RESOURCES

Financial Position

At June 30, 2004, our total assets were $18.8 billion, an increase of $82 million from December 31, 2003. The net change primarily reflects additions to identifiable intangible assets and goodwill from recent acquisitions, partially offset by decreases from the sale of businesses and a lower level of accounts receivable due to the seasonality of our business. Our total assets by market group were as follows as of the dates indicated:

	As at June 30, 2004		As at December 31, 2003
(unaudited) (millions of U.S. dollars)	Total assets	Percentage of total assets	Total assets	Percentage of total assets
Thomson Legal & Regulatory	7,285	39%	7,414	40%
Thomson Learning	5,029	27%	5,109	27%
Thomson Financial	3,501	19%	2,915	16%
Thomson Scientific & Healthcare	1,005	5%	995	5%
Corporate and other	1,712	9%	1,752	10%
Discontinued operations	235	1%	500	2%
Total assets	18,767	100%	18,685	100%

The following table presents comparative information related to total net debt, which we define as total debt, after accounting for swap arrangements, less cash and cash equivalents; shareholders' equity and the ratio of net debt to shareholders' equity:

(millions of U.S. dollars)		As at June 30, 2004		As at December 31, 2003
Short-term indebtedness		7		87
Current portion of long-term debt		474		484
Long-term debt		4,075		3,684
	Total debt	4,556		4,255
Swaps		(155	)	(199	)
	Total debt after swaps	4,401		4,056
Less: cash and cash equivalents		(609	)	(683	)
Net debt		3,792		3,373
Shareholders' equity		9,218		9,193
Net debt/equity ratio		0.41:1		0.37:1

We completed two long-term debt offerings in the second quarter of 2004. In May 2004, we sold US$250 million of 4.75% global notes due 2010. We entered into an interest rate swap to convert these notes from a fixed interest rate to a floating interest rate. In June 2004, we sold Cdn$250 million of 4.50% notes due 2009. We entered into currency swaps to convert these notes to US$184 million at a floating rate of interest. The net proceeds of $432 million from these offerings were used to repay other indebtedness and for other general corporate purposes.

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The following table displays the changes in our shareholders' equity for the six months ended June 30, 2004:

(millions of U.S. dollars)
Restated shareholders' equity balance at January 1, 2004	9,193
Earnings attributable to common shares for the six months ended June 30, 2004	227
Additional paid in capital related to stock incentive plans	25
Issuance of common shares under stock incentive plan	3
Dividends paid on common shares	(240	)
Increase of cumulative translation gains	10
Shareholders' equity balance at June 30, 2004	9,218

In conjunction with the adoption of new accounting guidance on asset retirement obligations, shareholders' equity was restated from its previously reported amount. See "Accounting Changes" for more information.

At June 30, 2004, the carrying amounts of our total current liabilities exceeded the carrying amounts of our total current assets because current liabilities include deferred revenue. Deferred revenue does not represent a cash obligation, however, but rather an obligation to perform services or deliver products in the future. When recognized, the costs to fulfill these obligations are included in our operating costs.

Cash Flow

Our principal sources of liquidity are cash provided by our operations, borrowings under our revolving bank credit facilities and our commercial paper program and the issuance of public debt. Our principal uses of cash have been to finance working capital and debt servicing costs, repay debt, and finance capital expenditures, acquisitions and dividend payments.

Operating activities.    Cash provided by our operating activities in the three months ended June 30, 2004 increased $17 million to $344 million compared to $327 million for the comparable period in 2003. The increase was primarily attributable to increased operating profit, which was partially offset by the unfavorable timing of accounts receivable collections and payments for normal operating expenses.

Cash provided by our operating activities in the six months ended June 30, 2004 increased $142 million to $634 million compared to $492 million for the comparable period in 2003. The increase was primarily attributable to increased operating profit.

Investing activities.    Cash used in our investing activities in the three months ended June 30, 2004 increased $328 million to $589 million compared to $261 million in 2003. This increased usage reflected higher spending on acquisitions, which was primarily attributable to our purchase of TradeWeb.

Cash used in our investing activities in the six months ended June 30, 2004 increased $689 million to $813 million compared to $124 million in 2003. This increased usage reflected significantly higher spending on acquisitions and additions to property and equipment, and lower proceeds from disposals as 2003 included the sale of our 20% interest in BGM (see "Related Party Transactions"). The increase was partially offset by proceeds from our sales of DBM and Sheshunoff in 2004 (see "Discontinued Operations").

Acquisition spending in 2004 primarily represented our purchases of TradeWeb, CCBN and BIOSIS. Additions to property and equipment increased due to spending on technology initiatives, primarily at our legal and regulatory and financial groups.

Financing activities.    Cash provided by our financing activities was $305 million for the three months ended June 30, 2004, reflecting the proceeds from two debt issuances (see "Financial Position"). In 2003, cash used in our financing activities of $19 million reflected net borrowings of commercial paper and revolving bank credit facilities, largely offset by the payment for the redemption of our Series V preference shares and dividends.

Cash provided by our financing activities was $105 million for the six months ended June 30, 2004 reflecting the proceeds from our two public debt offerings (see "Financial Position"), offset in part by dividend payments. In 2003, $480 million of cash used included the redemption of our Series V preference shares as well as a special dividend payment.

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The following table sets forth our dividend activity for the periods indicated:

	Three months ended June 30,				Six months ended June 30,
(millions of U.S. dollars)	2004		2003		2004		2003
Regular dividends declared	125		118		246		235
Special dividends declared	—		—		—		279
Dividends reinvested	(3	)	(41	)	(6	)	(89	)
Dividends paid	122		77		240		425

The special dividend in 2003 of $279 million related to the sale of our 20% interest in BGM. The decrease in dividends reinvested was because our principal shareholder, The Woodbridge Company Limited, or Woodbridge, discontinued its commitment to participate in our dividend reinvestment plan. See "Related Party Transactions."

Free cash flow.    The following table sets forth a calculation of our free cash flow for the three-month and six-month periods ended June 30, 2004 and 2003:

	Three months ended June 30,				Six months ended June 30,
(millions of U.S. dollars)	2004		2003		2004		2003
Net cash provided by operating activities	344		327		634		492
Additions to property and equipment	(154	)	(135	)	(271	)	(221	)
Other investing activities	(14	)	(16	)	(28	)	(47	)
Dividends paid on preference shares	(1	)	(1	)	(2	)	(7	)
Additions to property and equipment of discontinued operations	(1	)	(2	)	(2	)	(3	)
Free cash flow	174		173		331		214

For the three months ended June 30, 2004, free cash flow was consistent with that of the prior year as higher operating profit was offset by the unfavorable timing of accounts receivable collections, payments for normal operating expenses, as well as an increase in additions to property and equipment. The improvement in our free cash flow for the six months ended June 30, 2004 was a result of higher operating profit and the favorable timing of payments for operating expenses. This was partially offset by increased spending on additions to property and equipment for technology initiatives.

Credit facilities and commercial paper program.    We maintain revolving unsecured credit facilities of $1.56 billion and a commercial paper program authorized to issue up to Cdn$1 billion. Borrowings under our commercial paper program reduce the amount available to us under our credit facilities. At June 30, 2004, our credit lines and related activity were as follows:

(millions of U.S. dollars)
Type		Credit Lines	Amount Drawn		Commercial Paper Outstanding	Lines Available
Multi-year		1,040	(62	)	—	978
364-day		520	—		—	520
	Total	1,560	(62	)	—	1,498

Our multi-year and 364-day facilities currently expire in March 2008 and March 2005, respectively. Our facilities are structured such that, if our long-term debt rating was downgraded by Moody's or Standard & Poor's, our facility fee and borrowing costs under our existing multi-year credit facilities may increase, although availability would be unaffected. Conversely, an upgrade in our ratings may reduce our facility fees and borrowing costs.

PENDING ACQUISITION

In June 2004, we reached an agreement to acquire Information Holdings Inc. (IHI), a provider of intellectual property and regulatory information for the scientific, legal and corporate markets. We plan to acquire all of the outstanding common stock of IHI at a price of $28 per share in cash, for an aggregate cost of approximately $441 million, net of cash and investments currently held by IHI. The IHI Board of Directors has unanimously approved the agreement and stockholders owning

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approximately 40% of IHI's outstanding common stock have agreed to vote in favor of the transaction. The transaction is subject to approval by IHI's stockholders and regulatory authorities and the satisfaction of our customary closing conditions. We anticipate that the transaction will be completed later this year.

RELATED PARTY TRANSACTIONS

As at July 27, 2004, Kenneth R. Thomson, through Woodbridge and its affiliates, controlled approximately 69% of our common shares. Mr. Thomson is a member of our board of directors.

In the normal course of business, a Woodbridge-owned company rents office space from one of our subsidiaries. Additionally, a number of our subsidiaries charge a Woodbridge-owned company fees for various administrative services. In the full year of 2003, the total amount charged to Woodbridge for these rentals and services was approximately $2 million.

The employees of Jane's Information Group, a business we sold to Woodbridge in April 2001, continue to participate in our United States and United Kingdom pension plans as well as the defined contribution plan in the United States. Jane's makes proportional contributions to these pension plans as required, and makes matching contributions in accordance with the provisions of the defined contribution plan.

In 2004, we renewed our agreement with Woodbridge that reduces the cost of our directors' and officers' insurance coverage. Under the terms of the agreement, we maintain standard directors' and officers' insurance for any amount up to $15 million with a third party insurance company. A separate third party insurer is responsible for the next $75 million of coverage. Woodbridge indemnifies this second insurer. For its agreement to indemnify the insurer, we pay Woodbridge an annual premium of $685,000, which is less than the premium that the company would have paid for commercial insurance.

In July 2003, we announced that Woodbridge had agreed to discontinue its commitment to participate in our dividend reinvestment plan (DRIP). Previously, Woodbridge had agreed to reinvest at least 50% of the quarterly dividends received by it and its subsidiaries in common shares through June 2005.

In March 2003, we sold our 20% interest in BGM to a company that is owned by the Thomson family for $279 million. In the event that BGM is subsequently sold to a third party for a gain prior to February 7, 2005, we are entitled to receive half of the gain relative to our former interest, subject to certain adjustments. If no such gains are recognized from a subsequent sale to a third party, we are not required to reimburse the former owner for any losses. Our Board of Directors appointed a committee of independent directors to review the transaction. The committee retained a financial advisor to provide an opinion to us as to the fairness of the transaction to us from a financial point of view. One of our directors is also a director of the parent company of the financial advisor, but was not a member of the committee. In connection with the sale, we paid a special dividend, equal to the proceeds received of $0.428 per common share.

CRITICAL ACCOUNTING POLICIES

Please refer to the "Critical Accounting Policies" section of the "Management's Discussion and Analysis" in our most recent Annual Information Form, which is contained in our annual report on Form 40-F for the year ended December 31, 2003, for information on accounting policies that we consider critical in preparing our consolidated financial statements. Since the date of that Form 40-F, there have not been any significant changes to these policies, nor have there been any new accounting policies that we would consider critical. The preparation of our financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of our ongoing evaluation of these estimates forms the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions. Our critical accounting policies are those that we believe are the most important in portraying our financial condition and results, and require the most subjective judgment and estimates on the part of management.

ACCOUNTING CHANGES

Derivatives and Hedging Activity

Effective January 1, 2004, we adopted Accounting Guideline AcG-13, Hedging Relationships, and Emerging Issues Committee (EIC) Abstract 128, Accounting for Trading, Speculative or Non-Hedging Derivative Financial Instruments. AcG-13 addresses the conditions for applying hedge accounting, including the identification, designation, documentation and effectiveness of hedging relationships. EIC Abstract 128 requires that, with certain exceptions, a freestanding derivative financial instrument that does not qualify for hedge accounting under AcG-13, be recognized in the balance sheet and measured at fair value, with changes in fair value recognized in income.

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As a result of the new guidance, certain derivatives previously accounted for as hedges no longer qualify for such treatment under AcG-13. In accordance with AcG-13, the deferred loss on these instruments as of January 1, 2004 of $26 million will be recognized in "Net interest expense and other financing costs" as the hedged items to which these derivatives formerly related are recognized in earnings. The change in the fair value of these derivative instruments subsequent to January 1, 2004 will also be recognized within "Net interest expense and other financing costs". For the three-month and six-month periods ended June 30, 2004, $6 million and $4 million, respectively, of income was recognized within "Net interest expense and other financing costs" relative to this new guidance. The net amount recognized consisted of amortization of the deferred loss incurred prior to January 1, 2004 of $3 million and $5 million for the three-month and six-month periods ended June 30, 2004, respectively, and the recognition of the change in the fair value of these derivatives, which resulted in income of $9 million. The change in the fair value of these derivatives in the first quarter of 2004 was not material.

Asset Retirement Obligations

Effective January 1, 2004, we adopted Canadian Institute of Chartered Accountants (CICA) Handbook Section 3110, Asset Retirement Obligations, with restatement of our prior periods. The new guidance describes how to recognize and measure obligations associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development or normal operation of the assets.

Our only asset retirement obligations are obligations to restore leased facilities upon termination of the leases. For the six-month period ended June 30, 2004, we recorded expense of $1 million related to these obligations. The expense for the comparable period in the prior year was $1 million. Details of the restatements made to previously reported results are discussed in Note 4 to our consolidated interim financial statements.

Accounting for Income Taxes in Interim Periods

In the first quarter of 2004, we refined the calculation by which we allocate estimated full year income tax expense among interim periods. Previously, the estimated full year effective tax rate for the consolidated results was applied to the relevant interim period's consolidated pre-tax income. Beginning in 2004, we estimate separate annual effective income tax rates for each taxing jurisdiction and individually apply such rates to the interim period's pre-tax income of each jurisdiction. This change was accounted for as a change in estimate.

Revenue Recognition

Effective January 1, 2004, we must apply the guidance in EIC Abstract 141, Revenue Recognition, which incorporates the principles and summarizes the guidance in the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104, Revenue Recognition. The Abstract also provides interpretive guidance on the application of CICA Handbook Section 3400, Revenue. Because we have previously applied the provisions of SAB 104, the adoption of EIC Abstract 141 did not impact our consolidated financial statements.

Also effective January 1, 2004 was EIC Abstract 142, Revenue Arrangements with Multiple Deliverables. This Abstract addresses the accounting by vendors for arrangements in which the vendor will perform multiple revenue-generating activities. The Abstract conforms Canadian GAAP to U.S. GAAP set forth in Emerging Issues Task Force (EITF) Issue 00-21, also entitled Revenue Arrangements with Multiple Deliverables. Because we have previously applied EITF Issue 00-21, the adoption of EIC Abstract 142 did not impact our consolidated financial statements.

Generally Accepted Accounting Principles

Effective for our fiscal year beginning January 1, 2004 was CICA Handbook Section 1100, Generally Accepted Accounting Principles. This Handbook Section establishes standards for financial reporting in accordance with generally accepted accounting principles and clarifies the relative authority of various accounting pronouncements and other sources within Canadian GAAP. This Handbook Section did not impact our consolidated financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS

The Accounting Standards Board and the EIC of the CICA have recently issued several accounting standards, of which only one is applicable to our activities. An overview of this standard follows:

Accounting Guideline AcG-15, Consolidation of Variable Interest Entities.    In June 2003, the CICA issued AcG-15, which requires the consolidation of certain entities that are subject to control on a basis other than the ownership of voting interest. This Guideline provides guidance for determining when an enterprise includes the assets, liabilities and results of operations of a variable interest entity in its consolidated financial statements. The guidance related to consolidation requirements is effective for periods beginning on or after November 1, 2004.

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We have assessed the effects of AcG-15 and do not expect its adoption to have a material impact on our consolidated financial statements.

ADDITIONAL INFORMATION

Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in applicable U.S. and Canadian securities law) as of the end of the period covered by this management's discussion and analysis, have concluded that our disclosure controls and procedures are effective to ensure that all information required to be disclosed by our company in reports that it files or furnishes under the U.S. Securities Exchange Act and applicable Canadian securities law is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission and Canadian securities regulatory authorities.

Changes in Internal Control over Financial Reporting

There was no change in our company's internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Share Capital

As of July 27, 2004, we had outstanding 654,865,286 common shares and 6,000,000 Series II preference shares.

Public Securities Filings

You may access other information about our company, including our annual information form and our other disclosure documents, reports, statements or other information that we file with the Canadian securities regulatory authorities through SEDAR at www.sedar.com and in the United States with the SEC at www.sec.gov.

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Reconciliations

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS AND ADJUSTED OPERATING PROFIT TO OPERATING PROFIT

(millions of U.S. dollars)
(unaudited)

For the Three Months Ended June 30, 2004

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Corporate and Other		Ongoing		Disposals	Total
Adjusted EBITDA		271		51		111		54		(19	)	468		—	468
Less:
	Depreciation	(48	)	(40	)	(43	)	(7	)	(3	)	(141	)	—	(141	)
Adjusted operating profit		223		11		68		47		(22	)	327		—	327
Less:
	Amortization	(26	)	(17	)	(19	)	(8	)	—		(70	)	—	(70	)
Operating profit		197		(6	)	49		39		(22	)	257		—	257
Net other income															29
Net interest expense and other financing costs															(52	)
Income taxes															(54	)
Equity in net losses of associates, net of tax															—
Earnings from continuing operations															180
Earnings from discontinued operations, net of tax															12
Net earnings															192

For the Three Months Ended June 30, 2003

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Corporate and Other		Ongoing		Disposals	Total
Adjusted EBITDA		244		46		101		46		(24	)	413		1	414
Less:
	Depreciation	(44	)	(37	)	(42	)	(9	)	(3	)	(135	)	—	(135	)
Adjusted operating profit		200		9		59		37		(27	)	278		1	279
Less:
	Amortization	(25	)	(23	)	(16	)	(8	)	—		(72	)	—	(72	)
Operating profit		175		(14	)	43		29		(27	)	206		1	207
Net other income															—
Net interest expense and other financing costs															(63	)
Income taxes															(38	)
Equity in net losses of associates, net of tax															(5	)
Earnings from continuing operations															101
Earnings from discontinued operations, net of tax															14
Net earnings															115

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For the Six Months Ended June 30, 2004

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Corporate and Other		Ongoing		Disposals		Total
Adjusted EBITDA		479		35		212		84		(32	)	778		(3	)	775
Less:
	Depreciation	(96	)	(78	)	(86	)	(14	)	(7	)	(281	)	—		(281	)
Adjusted operating profit		383		(43	)	126		70		(39	)	497		(3	)	494
Less:
	Amortization	(54	)	(35	)	(36	)	(15	)	—		(140	)	—		(140	)
Operating profit		329		(78	)	90		55		(39	)	357		(3	)	354
Net other income																29
Net interest expense and other financing costs																(113	)
Income taxes																(48	)
Equity in net losses of associates, net of tax																(1	)
Earnings from continuing operations																221
Earnings from discontinued operations, net of tax																8
Net earnings																229

For the Six Months Ended June 30, 2003

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Corporate and Other		Ongoing		Disposals	Total
Adjusted EBITDA		395		23		195		80		(34	)	659		3	662
Less:
	Depreciation	(87	)	(71	)	(87	)	(16	)	(7	)	(268	)	—	(268	)
Adjusted operating profit		308		(48	)	108		64		(41	)	391		3	394
Less:
	Amortization	(49	)	(46	)	(31	)	(15	)	—		(141	)	—	(141	)
Operating profit		259		(94	)	77		49		(41	)	250		3	253
Net other income															56
Net interest expense and other financing costs															(128	)
Income taxes															(32	)
Equity in net losses of associates, net of tax															(9	)
Earnings from continuing operations															140
Earnings from discontinued operations, net of tax															22
Net earnings															162

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RECONCILIATION OF ADJUSTED EBITDA MARGIN AND ADJUSTED OPERATING PROFIT MARGIN TO
OPERATING PROFIT MARGIN
(as a percentage of revenue)

For the Three Months Ended June 30, 2004

(unaudited)

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Ongoing		Disposals	Total
Adjusted EBITDA		32.5%		11.9%		26.7%		27.0%		25.1%		—	25.1%
Less:
	Depreciation	(5.7%	)	(9.3%	)	(10.4%	)	(3.5%	)	(7.6%	)	—	(7.6%	)
Adjusted operating profit		26.8%		2.6%		16.3%		23.5%		17.5%		—	17.5%
Less:
	Amortization	(3.2%	)	(4.0%	)	(4.5%	)	(4.0%	)	(3.7%	)	—	(3.7%	)
Operating Profit		23.6%		(1.4%	)	11.8%		19.5%		13.8%		—	13.8%

For the Three Months Ended June 30, 2003

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Ongoing		Disposals	Total
Adjusted EBITDA		31.8%		11.6%		26.9%		25.4%		24.2%		25.0%	24.2%
Less:
	Depreciation	(5.8%	)	(9.3%	)	(11.2%	)	(5.0%	)	(7.9%	)	—	(7.9%	)
Adjusted operating profit		26.0%		2.3%		15.7%		20.4%		16.3%		25.0%	16.3%
Less:
	Amortization	(3.2%	)	(5.8%	)	(4.2%	)	(4.4%	)	(4.2%	)	—	(4.2%	)
Operating Profit		22.8%		(3.5%	)	11.5%		16.0%		12.1%		25.0%	12.1%

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For the Six Months Ended June 30, 2004

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Ongoing		Disposals		Total
Adjusted EBITDA		29.8%		4.5%		26.3%		22.3%		21.9%		(150.0%	)	21.8%
Less:
	Depreciation	(6.0%	)	(10.0%	)	(10.6%	)	(3.7%	)	(7.9%	)	—		(7.9%	)
Adjusted operating profit		23.8%		(5.5%	)	15.7%		18.6%		14.0%		(150.0%	)	13.9%
Less:
	Amortization	(3.3%	)	(4.5%	)	(4.5%	)	(4.0%	)	(3.9%	)	—		(3.9%	)
Operating Profit		20.5%		(10.0%	)	11.2%		14.6%		10.1%		(150.0%	)	10.0%

For the Six Months Ended June 30, 2003

		Legal & Regulatory		Learning		Financial		Scientific & Healthcare		Ongoing		Disposals	Total
Adjusted EBITDA		27.4%		3.2%		25.8%		22.9%		20.3%		27.3%	20.3%
Less:
	Depreciation	(6.1%	)	(9.8%	)	(11.5%	)	(4.6%	)	(8.3%	)	—	(8.2%	)
Adjusted operating profit		21.3%		(6.6%	)	14.3%		18.3%		12.0%		27.3%	12.1%
Less:
	Amortization	(3.4%	)	(6.4%	)	(4.1%	)	(4.3%	)	(4.3%	)	—	(4.3%	)
Operating Profit		17.9%		(13.0%	)	10.2%		14.0%		7.7%		27.3%	7.8%

16

Certain information in this management's discussion and analysis, particularly under the heading "2004 Financial Outlook," are forward-looking statements that are not historical facts but reflect our current expectations regarding future results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of the factors that could cause actual results or events to differ materially from current expectations are: actions of our competitors; failure of our significant investments in technology to increase our revenues or decrease our operating costs; failure to fully derive anticipated benefits from our acquisitions; failure to develop additional products and services to meet our customers' needs, attract new customers or expand into new geographic markets; failure to meet the special challenges involved in expansion of our operations outside North America; failure to recruit and retain high quality management and key employees; consolidation of our customers; increased self-sufficiency of our customers; increased accessibility by our customers to free or relatively inexpensive information sources; failure to maintain the availability of information obtained through licensing arrangements and changes in the terms of our licensing arrangements; changes in the general economy; inadequate protection of our intellectual property rights; an increase in our effective income tax rate; impairment of goodwill and identifiable intangible assets; and failures or disruptions of our electronic delivery systems or the Internet. Additional factors are discussed in our materials filed with the securities regulatory authorities in Canada and the United States from time to time, including our annual information form, which is contained in our annual report on Form 40-F for the year ended December 31, 2003 filed with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

17

EX-99.2

Exhibit 99.2

The Thomson Corporation
Consolidated Statement of Earnings and Retained Earnings
(unaudited)

		Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars, except per common share amounts)		2004			2003 (notes 4 and 5)			2004			2003 (notes 4 and 5)
Revenues			1,866			1,713			3,548			3,261
Cost of sales, selling, marketing, general and administrative expenses			(1,398	)		(1,299	)		(2,773	)		(2,599	)
Depreciation			(141	)		(135	)		(281	)		(268	)
Amortization			(70	)		(72	)		(140	)		(141	)
Operating profit			257			207			354			253
Net other income			29			—			29			56
Net interest expense and other financing costs			(52	)		(63	)		(113	)		(128	)
Income taxes			(54	)		(38	)		(48	)		(32	)
Equity in net losses of associates, net of tax			—			(5	)		(1	)		(9	)
Earnings from continuing operations			180			101			221			140
Earnings from discontinued operations, net of tax			12			14			8			22
Net earnings			192			115			229			162
Dividends declared on preference shares			(1	)		(2	)		(2	)		(7	)
Net (loss) gain on redemption of Series V preference shares			—			(3	)		—			21
Earnings attributable to common shares			191			110			227			176
Retained earnings at beginning of period			6,210			5,837			6,295			6,191
Remove net (loss) gain on redemption of Series V preference shares recorded in Capital			—			3			—			(21	)
Dividends declared on common shares			(125	)		(118	)		(246	)		(514	)
Retained earnings at end of period			6,276			5,832			6,276			5,832
Basic and diluted earnings per common share:
	From continuing operations	$	0.27		$	0.15		$	0.34		$	0.24
	From discontinued operations	$	0.02		$	0.02		$	0.01		$	0.03
Basic and diluted earnings per common share		$	0.29		$	0.17		$	0.35		$	0.27

The related notes form an integral part of these consolidated financial statements.

18

The Thomson Corporation
Consolidated Balance Sheet

(millions of U.S. dollars)		June 30, 2004 (unaudited)	December 31, 2003 (notes 4 and 5)
Assets
Cash and cash equivalents		609	683
Accounts receivable, net of allowances		1,227	1,497
Inventories		336	309
Prepaid expenses and other current assets		394	307
Deferred income taxes		181	181
Current assets of discontinued operations		33	67
	Current assets	2,780	3,044
Property and equipment		1,591	1,538
Identifiable intangible assets, net		4,511	4,334
Goodwill		8,481	8,089
Other non-current assets		1,202	1,247
Non-current assets of discontinued operations		202	433
Total assets		18,767	18,685
Liabilities and shareholders' equity
Liabilities
Short-term indebtedness		7	87
Accounts payable and accruals		1,277	1,520
Deferred revenue		986	939
Current portion of long-term debt		474	484
Current liabilities of discontinued operations		51	115
	Current liabilities	2,795	3,145
Long-term debt		4,075	3,684
Other non-current liabilities		1,040	998
Deferred income taxes		1,610	1,608
Non-current liabilities of discontinued operations		29	57
Total liabilities		9,549	9,492
Shareholders' equity
Capital		2,673	2,639
Cumulative translation adjustment		269	259
Retained earnings		6,276	6,295
Total shareholders' equity		9,218	9,193
Total liabilities and shareholders' equity		18,767	18,685

The related notes form an integral part of these consolidated financial statements.

19

The Thomson Corporation
Consolidated Statement of Cash Flow
(unaudited)

		Three months ended June 30,				Six months ended June 30,
(millions of U.S. dollars)		2004		2003 (notes 4 and 5)		2004		2003 (notes 4 and 5)
Cash provided by (used in):
Operating activities
Net earnings		192		115		229		162
Remove earnings from discontinued operations		(12	)	(14	)	(8	)	(22	)
Add back (deduct) items not involving cash:
	Amortization of development costs and capitalized software for sale	8		12		15		24
	Depreciation	141		135		281		268
	Amortization	70		72		140		141
	Net gains on disposals of businesses and investments	(5	)	—		(5	)	(56	)
	Deferred income taxes	37		24		13		14
	Equity in net losses of associates, net of tax	—		5		1		9
	Other, net	49		49		90		65
Changes in working capital and other items		(138	)	(78	)	(137	)	(132	)
Cash provided by operating activities — discontinued operations		2		7		15		19
Net cash provided by operating activities		344		327		634		492
Investing activities
Acquisitions, net of cash acquired		(455	)	(107	)	(655	)	(122	)
Proceeds from disposals		10		1		11		284
Additions to property and equipment, less proceeds from disposals		(154	)	(135	)	(271	)	(221	)
Other investing activities		(14	)	(16	)	(28	)	(47	)
Additions to property and equipment of discontinued operations		(1	)	(2	)	(2	)	(3	)
Proceeds from disposals of discontinued operations		25		—		137		2
Cash used in investing activities — discontinued operations		—		(2	)	(5	)	(17	)
Net cash used in investing activities		(589	)	(261	)	(813	)	(124	)
Financing activities
Proceeds from debt		434		1		434		1
Net (repayments) borrowings of short-term loan facilities		(6	)	369		(88	)	261
Redemption of Series V preference shares		—		(311	)	—		(311	)
Dividends paid on preference shares		(1	)	(1	)	(2	)	(7	)
Dividends paid on common shares		(122	)	(77	)	(240	)	(425	)
Other financing activities, net		—		—		1		1
Net cash provided by (used in) financing activities		305		(19	)	105		(480	)
Translation adjustments		—		1		—		1
Increase (decrease) in cash and cash equivalents		60		48		(74	)	(111	)
Cash and cash equivalents at beginning of period		549		550		683		709
Cash and cash equivalents at end of period		609		598		609		598

The related notes form an integral part of these consolidated financial statements.

20

The Thomson Corporation
Notes to Consolidated Financial Statements (unaudited)

(unless otherwise stated, all amounts are in millions of U.S. dollars)

Note 1: Consolidated Financial Statements

Principles of Consolidation

The unaudited interim consolidated financial statements of The Thomson Corporation ("Thomson" or the "Company") include all controlled companies and are prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). All intercompany transactions and balances are eliminated on consolidation.

Note 2: Accounting Principles and Methods

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the requirements of the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 1751, Interim Financial Statements. Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with Canadian GAAP have been omitted or condensed. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements as at and for the year ended December 31, 2003, as set out in the Company's 2003 Annual Report.

In the opinion of management, the unaudited interim consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary by management to present a fair statement of the results of operations, financial position and cash flows. Except for the changes in accounting policies described in Note 4, the consolidated financial statements were prepared using the same accounting policies and methods as those used in the Company's financial statements for the year ended December 31, 2003.

Where necessary, certain amounts for 2003 have been reclassified to conform to the current period's presentation.

Note 3: Seasonality

Typically, a greater portion of the Company's operating profit and operating cash flow is derived in the second half of the year. Customer buying patterns are concentrated in the second half of the year, particularly in the learning and regulatory markets, while costs are incurred more evenly throughout the year. As a result, operating margins generally increase as the year progresses. For these reasons, the performance of the Company's businesses may not be comparable quarter to consecutive quarter and should be considered on the basis of results for the whole year or by comparing results in a quarter with the results in the same quarter for the previous year.

Note 4: Changes in Accounting Policies

Derivatives and Hedging Activity

Effective January 1, 2004, Thomson adopted Accounting Guideline AcG-13, Hedging Relationships, and Emerging Issues Committee ("EIC") Abstract 128, Accounting for Trading, Speculative or Non-Hedging Derivative Financial Instruments. AcG-13 addresses the conditions for applying hedge accounting, including the identification, designation, documentation and effectiveness of hedging relationships. EIC Abstract 128 requires that, with certain exceptions, a freestanding derivative financial instrument that does not qualify for hedge accounting under AcG-13, be recognized in the balance sheet and measured at fair value, with changes in fair value recognized in income.

As a result of the new guidance, certain derivatives previously accounted for as hedges no longer qualify for such treatment under AcG-13. In accordance with AcG-13, the deferred loss on these instruments as of January 1, 2004 of $26 million will be recognized in "Net interest expense and other financing costs" as the hedged items to which these derivatives formerly related are recognized in earnings. The change in the fair value of these derivative instruments subsequent to January 1, 2004 will also be recognized within "Net interest expense and other financing costs". For the three-month and six-month periods ended June 30, 2004, $6 million and $4 million, respectively, of income was recognized within "Net interest expense and other financing costs" relative to this new guidance. The net amount recognized consisted of amortization of the deferred loss incurred prior to January 1, 2004 of $3 million and $5 million for the three-month and six-month periods ended June 30, 2004, respectively, and the recognition of the change in the fair value of these derivatives, which resulted in income of $9 million. The change in the fair value of these derivatives in the first quarter of 2004 was not material.

Asset Retirement Obligations

Effective January 1, 2004, the Company adopted CICA Handbook Section 3110, Asset Retirement Obligations, with restatement of prior periods. The new guidance describes how to recognize and measure obligations associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development or normal operation of the assets.

The Company's only asset retirement obligations are obligations to restore leased facilities upon termination of the leases. For the six months ended June 30, 2004, the Company recorded expense of $1 million (2003 — $1 million) related to these

21

obligations. For the three months ended June 30, 2003, the Company recorded expense of $1 million related to these obligations.

The following details the restatements related to adoption of CICA Handbook Section 3110 made to the previously reported consolidated financial statements, after taking into account reclassifications related to discontinued operations:

	Three months ended June 30, 2003		Six months ended June 30, 2003
Consolidated statement of earnings and retained earnings	As reported	As restated	As reported	As restated
Depreciation	134	135	267	268
Net earnings	116	115	163	162
Retained earnings at beginning of period	5,842	5,837	6,196	6,191

	December 31, 2003
Consolidated balance sheet	As reported	As restated
Property and equipment	1,533	1,538
Other-non current liabilities	982	998
Net long-term deferred income tax liabilities	1,612	1,608
Retained earnings	6,302	6,295

	Three months ended June 30, 2003		Six months ended June 30, 2003
Consolidated statement of cash flow	As reported	As restated	As reported	As restated
Net earnings	116	115	163	162
Depreciation	134	135	267	268

Accounting for Income Taxes in Interim Periods

In the first quarter of 2004, the Company refined the calculation by which it allocates estimated full year income tax expense among interim periods. Previously, the estimated full year effective tax rate for the consolidated results was applied to the relevant interim period's consolidated pre-tax income. Beginning in 2004, the Company estimates separate annual effective income tax rates for each taxing jurisdiction and individually applies such rates to the interim period's pre-tax income of each jurisdiction. This change was accounted for as a change in estimate.

Revenue Recognition

Effective January 1, 2004, the Company must apply the guidance in EIC Abstract 141, Revenue Recognition, which incorporates the principles and summarizes the guidance in the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104, Revenue Recognition. The Abstract also provides interpretive guidance on the application of CICA Handbook Section 3400, Revenue. Because the Company has previously applied the provisions of SAB 104, the adoption of EIC Abstract 141 did not impact the consolidated financial statements.

Also effective January 1, 2004 was EIC Abstract 142, Revenue Arrangements with Multiple Deliverables. This Abstract addresses the accounting by vendors for arrangements in which the vendor will perform multiple revenue-generating activities. The Abstract conforms Canadian GAAP to U.S. GAAP set forth in Emerging Issues Task Force, or EITF, Issue 00-21, also entitled Revenue Arrangements with Multiple Deliverables. Because the Company has previously applied EITF Issue 00-21, the adoption of EIC Abstract 142 did not impact the consolidated financial statements.

Generally Accepted Accounting Principles

Effective for the Company's fiscal year beginning January 1, 2004 was CICA Handbook Section 1100, Generally Accepted Accounting Principles. This Handbook Section establishes standards for financial reporting in accordance with generally accepted accounting principles and clarifies the relative authority of various accounting pronouncements and other sources within Canadian GAAP. This Handbook Section did not impact the consolidated financial statements.

Note 5: Discontinued Operations

The following four businesses, along with one other small business from Thomson Learning, which was sold in June 2003, are classified as discontinued operations within the consolidated financial statements for all periods presented. None of these businesses is or was considered fundamental to the integrated information offerings of Thomson.

22

In October 2003, the Company sold its portfolio of healthcare magazines for $135 million and recorded the related post-tax gain of $63 million in the fourth quarter of 2003. The magazines had previously been managed within its scientific and healthcare group.

In February 2004, the Company sold DBM, a provider of human resource solutions, which had been managed within its learning group. Based on the status of negotiations at December 31, 2003, an impairment charge relating to goodwill of $62 million before income taxes was recorded in the fourth quarter of 2003. The Company recorded a post-tax loss of $4 million in the first quarter of 2004 related to the completion of the sale.

In the second quarter of 2004, the Company sold Sheshunoff Information Services Inc., a provider of critical data, compliance and management tools to financial institutions, which had been managed within Thomson Media. Based on estimates of fair value, an impairment charge relating to identifiable intangible assets and goodwill of $24 million before income taxes was recorded in the fourth quarter of 2003. Based on the status of negotiations at March 31, 2004, the Company recorded a further pre-tax impairment charge of $6 million relating to intangible assets in the first quarter of 2004. The Company recorded a post-tax gain of $3 million in the second quarter of 2004 related to the completion of the sale.

In June 2004, the Company announced its intention to sell the Thomson Media group. Thomson Media is a provider of information products focused on the banking, financial services and related technology markets. The results of Thomson Media had previously been reported in the Corporate and other segment. The Company anticipates completion of the sale by the end of the year.

The carrying amounts of assets and liabilities related to these discontinued businesses as of June 30, 2004 and December 31, 2003 are as follows:

Balance Sheet

	June 30, 2004	December 31, 2003
	Thomson Media	DBM	Sheshunoff	Thomson Media	Total
Current assets:
Accounts receivable, net of allowances	25	30	1	24	55
Other current assets	8	3	2	7	12
Total current assets	33	33	3	31	67
Non-current assets:
Property and equipment	6	17	3	6	26
Identifiable intangible assets	129	63	38	133	234
Goodwill	67	95	—	66	161
Other non-current assets	—	5	7	—	12
Total non-current assets	202	180	48	205	433
Current liabilities:
Accounts payable and accruals	15	14	1	22	37
Deferred revenue	36	34	12	32	78
Total current liabilities	51	48	13	54	115
Non-current liabilities:
Other non-current liabilities	3	—	—	4	4
Deferred income taxes	26	27	—	26	53
Total non-current liabilities	29	27	—	30	57

23

Earnings from discontinued operations for the periods ended June 30, 2004 and 2003 are summarized below:

Three months ended June 30, 2004

	Sheshunoff	Thomson Media		Total
Revenues from discontinued operations	3	50		53
Earnings from discontinued operations before income taxes	—	14		14
Income taxes	3	(5	)	(2	)
Earnings from discontinued operations	3	9		12

Three months ended June 30, 2003

	DBM		Sheshunoff		Healthcare Magazines		Thomson Media		Other		Total
Revenues from discontinued operations	64		8		21		48		1		142
Earnings (loss) from discontinued operations before income taxes	7		1		4		10		(1	)	21
Income taxes	(1	)	(1	)	(1	)	(4	)	—		(7	)
Earnings (loss) from discontinued operations	6		—		3		6		(1	)	14

Six months ended June 30, 2004

	DBM		Sheshunoff		Thomson Media		Total
Revenues from discontinued operations	28		11		86		125
Earnings (loss) from discontinued operations before income taxes	3		(4	)	15		14
Loss on sale of discontinued operations	(32	)	—		—		(32	)
Income taxes	27		5		(6	)	26
Earnings (loss) from discontinued operations	(2	)	1		9		8

Six months ended June 30, 2003

	DBM		Sheshunoff		Healthcare Magazines		Thomson Media		Other		Total
Revenues from discontinued operations	127		16		41		82		2		268
Earnings (loss) from discontinued operations before income taxes	18		2		8		5		(1	)	32
Income taxes	(4	)	(1	)	(3	)	(2	)	—		(10	)
Earnings (loss) from discontinued operations	14		1		5		3		(1	)	22

Proceeds from disposals of discontinued operations within the consolidated statement of cash flow in the six months ended June 30, 2004 includes taxes paid related to the 2003 sale of the portfolio of healthcare magazines.

Note 6: Earnings per Common Share

Basic earnings per common share are calculated by dividing earnings attributable to common shares by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are calculated using the weighted-average number of common shares outstanding adjusted to include the potentially dilutive effect of outstanding stock options and other securities. The Company uses the treasury stock method to calculate diluted earnings per common share.

24

Earnings used in determining earnings per common share from continuing operations are presented below. Earnings used in determining earnings per common share from discontinued operations are the earnings from discontinued operations as reported within the consolidated statement of earnings and retained earnings.

	Three months ended June 30,				Six months ended June 30,
	2004		2003		2004		2003
Earnings from continuing operations	180		101		221		140
Dividends declared on preference shares	(1	)	(2	)	(2	)	(7	)
Net gain on redemption of Series V preference shares	—		(3	)	—		21
Earnings from continuing operations attributable to common shares	179		96		219		154

The weighted-average number of common shares outstanding, as well as a reconciliation of the weighted-average number of common shares outstanding used in the basic earnings per common share computation to the weighted-average number of common shares outstanding used in the diluted earnings per common share computation, is presented below.

	Three months ended June 30,		Six months ended June 30,
	2004	2003	2004	2003
Basic	655,233,349	653,587,384	655,135,003	652,699,673
Effect of stock and other incentive plans	602,595	396,267	556,266	206,941
Diluted	655,835,944	653,983,651	655,691,269	652,906,614

Note 7: Employee Benefit Plans

The Company's net defined benefit plan (income) expense is comprised of the following elements:

	Three months ended June 30,
	Pensions				Other post-retirement plans
	2004		2003		2004	2003
Current service cost	13		11		1	1
Interest cost	31		29		3	2
Expected return on plan assets	(39	)	(37	)	—	—
Amortization of net transition obligation	—		1		—	—
Amortization of net actuarial losses	6		2		1	—
Amortization of prior service cost	1		—		—	—
Net defined benefit plan expense	12		6		5	3

	Six months ended June 30,
	Pensions				Other post-retirement plans
	2004		2003		2004	2003
Current service cost	26		22		2	2
Interest cost	62		58		6	4
Expected return on plan assets	(78	)	(74	)	—	—
Amortization of net transition obligation	—		2		—	—
Amortization of net actuarial losses	12		4		2	—
Amortization of prior service cost	2		—		—	—
Net defined benefit plan expense	24		12		10	6

In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") was signed into law in the United States. The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal

25

subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The Company has determined the portions of its U.S. benefit plan that are actuarially equivalent and anticipates that it will be eligible to receive a subsidy beginning in 2006. The Company assessed and quantified this benefit in the second quarter of 2004 and in accordance with CICA Handbook Section 3461, Employee Future Benefits and U.S. Financial Accounting Standards Board ("FASB") Staff Position No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the Company will prospectively apply the expected benefit from the subsidy in its determination of benefit plan expense. This benefit will reduce the employee benefit plans expense by $1 million in 2004. The impact of this application on expense in 2004 for any interim period is not material.

Note 8: Business Interruption Insurance

In June 2004, the Company received $14 million related to an insurance recovery for business interruption due to the events of September 11, 2001 in New York City. The recovery was due to loss of revenues, and was recorded as a reduction of "Cost of sales, selling, marketing, general and administrative expenses" within the consolidated statement of earnings and retained earnings for the three and six months ended June 30, 2004, and is included in the Financial segment.

Note 9: Net Other Income

During the periods, Net other income includes:

	Three months ended June 30,		Six months ended June 30,
	2004	2003	2004	2003
Other income	24	—	24	—
Net gains on disposals of businesses and investments	5	—	5	56
	29	—	29	56

Other income

Other income for the three and six months ended June 30, 2004 primarily relates to a $22 million legal settlement from a competitor that was received in July 2004. In July 2003, Thomson reached a settlement with Skillsoft PLC, a competitor of Thomson Learning, regarding the Company's claims of breach of fiduciary duty, appropriation of trade secrets and patent infringement. Under the terms of the settlement, Skillsoft PLC paid Thomson $44 million in two equal installments, the first of which was received in July 2003.

Net gains on disposals of businesses and investments

The most significant item in 2003 is a $55 million gain recorded upon completion of the sale of the Company's 20% interest in Bell Globemedia Inc. in March 2003. See Note 13.

Note 10: Acquisitions

The number of transactions completed during the three-month and six-month periods ended June 30, 2004 and 2003 was as follows:

	Three months ended June 30,		Six months ended June 30,
Number of transactions	2004	2003	2004	2003
Businesses and identifiable intangible assets acquired	21	6	29	12
Investments in businesses	1	—	1	—

26

The cash consideration for those acquisitions is as follows:

	Three months ended June 30,		Six months ended June 30,
Cash consideration	2004	2003	2004	2003
Businesses and identifiable intangible assets acquired	452	107	652	122
Investments in businesses	3	—	3	—
Total acquisitions of businesses and investments	455	107	655	122

Included in these acquisitions were the purchases of:

•

in May 2004, TradeWeb Group LLC for $385 million plus contingent payments of up to approximately $150 million over the next three years based on the achievement of growth targets. TradeWeb is an online global trading platform for fixed income securities.



•

in March 2004, the 90% of CCBN.com, Inc. ("CCBN") that the Company did not previously own. CCBN provides web-based solutions for the investment community, offering services to enhance the way companies communicate and meet disclosure requirements, and assists investors in managing and leveraging this information.



•

in January 2004, the publishing assets of Biological Abstracts, Inc. and BIOSIS. BIOSIS offers both custom and standard information resources designed to fit the information needs of researchers, students and information professionals worldwide.

Goodwill and identifiable intangible assets acquired are detailed below.

	Three months ended June 30,		Six months ended June 30,
	2004	2003	2004	2003
Goodwill	246	90	394	101
Identifiable intangible assets with finite lives	225	16	311	22

All acquisitions have been accounted for using the purchase method and the results of acquired businesses are included in the consolidated financial statements from the dates of acquisition. For acquisitions made during the six-month period ended June 30, 2004, the majority of the acquired goodwill is deductible for tax purposes. For acquisitions made during the six-month period ended June 30, 2003, the majority of the acquired goodwill is not deductible for tax purposes. Allocations related to certain acquisitions may be subject to adjustment pending completion of final valuations.

As of June 30, 2004, the balance of the reserves for exit costs related to business acquisitions consummated during 2001 through 2004 totaled $26 million. Reserves recorded in connection with businesses acquired during the six-month period ended June 30, 2004 were $22 million. The following table presents the activity in these acquisition reserve accounts, which are included within "Accounts payable and accruals" and "Other non-current liabilities" in the consolidated balance sheet.

Type of cost	Balance December 31, 2003	2004 Utilization		2004 Additions	Balance June 30, 2004
Severance and other employee-related costs	1	(2	)	9	8
Lease cancellation and idle facility costs	4	(1	)	13	16
Other exit costs	1	—		1	2
Total	6	(3	)	23	26

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Note 11: Capital

The following table details the activity in Capital for the six months ended June 30, 2004:

Balance, December 31, 2003	2,639
Common shares issued under dividend reinvestment plan	6
Increase to contributed surplus related to stock based compensation	25
Other common share issuances	3
Balance, June 30, 2004	2,673

Note 12: Preference Share Capital Redemption

On April 14, 2003, Thomson redeemed all of its outstanding Series V Cumulative Redeemable Preference Shares for $308 million, which represented a price of Cdn$25.50 per share plus accrued dividends. The $21 million gain recognized on the redemption represents a foreign exchange gain of $30 million less the premium paid on redemption of $6 million, and taxes of $3 million. This gain was recorded as an increase to contributed surplus, a component of "Capital", and was included in the calculation of earnings attributable to common shares.

Note 13: Bell Globemedia Inc.

On March 17, 2003, the Company sold its 20% interest in Bell Globemedia Inc. ("BGM") to a company that is owned by the Thomson family for $279 million. In the event that BGM is subsequently sold to a third party for a gain prior to February 7, 2005, the Company is entitled to receive half of the gain relative to its former interest, subject to certain adjustments. If no such gains are recognized from a subsequent sale to a third party, the Company is not required to reimburse the former owner for any losses. The Company's Board of Directors appointed a committee of independent directors to review the transaction. The committee retained a financial advisor to provide an opinion to the Company as to the fairness of the transaction from a financial point of view. One of the directors of the Company is also a director of the parent company of the financial advisor, but was not a member of the committee.

In connection with the sale, the Company paid a special dividend, equal to the proceeds received, of $0.428 per common share on March 17, 2003. During the fourth quarter of 2002, the Company had reduced the carrying amount of this investment by $67 million, reflecting its share of a writedown of goodwill recorded by BGM. Upon completion of the sale of the Company's interest, it recognized a gain of $55 million recorded in "Net other income" within the consolidated statement of earnings and retained earnings, largely offsetting the previous non-cash writedown.

Note 14: Long Term Debt

In May 2004, Thomson completed an offering of US$250 million, 4.75% global notes due 2010. The Company entered into an interest rate swap to convert these notes from a fixed rate of interest to a floating rate of interest.

In June 2004, Thomson completed an offering of Cdn$250 million, 4.50% notes due 2009. The Company entered into two currency swaps to convert these notes to an obligation of US$184 million at a floating rate of interest.

The Company used the net proceeds of $432 million from these offerings to repay other existing indebtedness and for other general corporate purposes.

Note 15: Related Party Transactions

As at June 30, 2004, Kenneth R. Thomson, through The Woodbridge Company Limited ("Woodbridge") and its affiliates, controlled approximately 69% of the Company's common shares.

In the normal course of business, a Woodbridge-owned company rents office space from one of the Company's subsidiaries. Additionally, a number of the Company's subsidiaries charge a Woodbridge-owned company fees for various administrative services. In the full year of 2003, the total amount charged to Woodbridge for these rentals and services was approximately $2 million.

The employees of Jane's Information Group, a business sold by the Company to Woodbridge in April 2001, continue to participate in the Company's United States and United Kingdom pension plans as well as the defined contribution plan in the United States. Jane's makes proportional contributions to the pension plans as required, and makes matching contributions in accordance with the provisions of the defined contribution plan.

In 2004, the Company renewed its agreement with Woodbridge to reduce the cost of the Company's directors' and officers' insurance coverage. Under the terms of the agreement, the Company maintains standard directors' and officers' insurance for any amount up to $15 million with a third party insurance company. A separate third party insurer is responsible for the next $75 million of coverage. Woodbridge indemnifies this second insurer. For its agreement to indemnify the insurer, the Company pays Woodbridge an annual premium of $685,000, which is less than the premium that the Company would have paid for commercial insurance.

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In July 2003, the Company announced that Woodbridge had agreed to discontinue its commitment to participate in the Company's dividend reinvestment plan (DRIP). Previously, Woodbridge had agreed to reinvest at least 50% of the quarterly dividends received by it and its subsidiaries in common shares through June 2005.

In March 2003, the Company sold its 20% interest in BGM to a company that is owned by the Thomson family for $279 million. See Note 13.

Note 16: Recently Issued Accounting Standards

The Accounting Standards Board and the EIC of the CICA have recently issued the following accounting standard that is applicable to the Company's activities in future periods.

Accounting Guideline AcG-15, Consolidation of Variable Interest Entities. In June 2003, the CICA issued AcG-15, which requires the consolidation of certain entities that are subject to control on a basis other than the ownership of voting interest. This Guideline provides guidance for determining when an enterprise includes the assets, liabilities and results of operations of a variable interest entity in its consolidated financial statements. The guidance related to consolidation requirements is effective for periods beginning on or after November 1, 2004.

The Company has assessed the impact of AcG-15 and does not expect the adoption to have a material impact on the consolidated financial statements.

Note 17: Segment Information

Thomson is a global provider of integrated information solutions for business and professional customers. Thomson operates in four reportable market segments worldwide. The reportable segments of Thomson are strategic business groups that offer products and services to target markets. The accounting policies applied by the segments are the same as those applied by the Company. The Company's four reportable segments are:

Legal & Regulatory

Providing integrated information solutions to legal, tax, accounting, intellectual property, compliance and other business professionals, as well as government agencies.

Learning

Providing tailored learning solutions to colleges, universities, professors, students, libraries, reference centers, government agencies, corporations and professionals.

Financial

Providing financial products and information solutions to the global financial services industry, including brokers, financial planners and corporate executives.

Scientific & Healthcare

Providing information and services to researchers, physicians and other professionals in the healthcare, academic, scientific, corporate and government marketplaces.

Business Segments

	Three months ended June 30, 2004				Three months ended June 30, 2003
	Revenues		Adjusted operating profit		Revenues		Adjusted operating profit
Legal & Regulatory	833		223		768		200
Learning	428		11		397		9
Financial	416		68		375		59
Scientific & Healthcare	200		47		181		37
Corporate and other1	—		(22	)	—		(27	)
Eliminations	(11	)	—		(12	)	—
Ongoing businesses	1,866		327		1,709		278
Disposals2	—		—		4		1
Total	1,866		327		1,713		279

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Business Segments

	Six months ended June 30, 2004				Six months ended June 30, 2003
	Revenues		Adjusted operating profit		Revenues		Adjusted operating profit
Legal & Regulatory	1,607		383		1,443		308
Learning	779		(43	)	724		(48	)
Financial	805		126		755		108
Scientific & Healthcare	377		70		350		64
Corporate and other1	—		(39	)	—		(41	)
Eliminations	(22	)	—		(22	)	—
Ongoing businesses	3,546		497		3,250		391
Disposals2	2		(3	)	11		3
Total	3,548		494		3,261		394

1

Corporate and other includes corporate costs and costs associated with the Company's stock-related compensation expense.

2

Disposals include the results of businesses sold or held for sale that do not qualify as discontinued operations.

In accordance with CICA Handbook Section 1701, Segment Disclosures, the Company discloses information about its reportable segments based upon the measures used by management in assessing the performance of those reportable segments. Adjusted operating profit is used by the Company to measure the operating performance of its segments. Adjusted operating profit does not have any standardized meaning prescribed by Canadian GAAP.

Adjusted operating profit is operating profit before amortization of intangible assets. The Company uses this measure because management does not consider amortization of intangibles to be a controllable operating cost for purposes of assessing the current performance of its segments.

The following table reconciles adjusted operating profit per the business segment information to operating profit per the consolidated statement of earnings and retained earnings.

		Three months ended June 30,				Six months ended June 30,
		2004		2003		2004		2003
Adjusted operating profit		327		279		494		394
Less:
	Amortization	(70	)	(72	)	(140	)	(141	)
Operating profit		257		207		354		253

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Note 18: Reconciliation of Canadian to U.S. Generally Accepted Accounting Principles

The consolidated financial statements have been prepared in accordance with Canadian GAAP, which differ in some respects from U.S. GAAP. The following schedules present the material differences between Canadian and U.S. GAAP.

		Three months ended June 30,						Six months ended June 30,
		2004			2003			2004			2003
Net earnings under Canadian GAAP			192			115			229			162
Differences in GAAP increasing (decreasing) reported earnings:
	Development costs		—			6			—			12
	Business combinations		4			4			7			5
	Related party transactions		—			—			—			(55	)
	Derivative instruments and hedging activities		2			3			3			6
	Income taxes		(15	)		(4	)		(47	)		(6	)
	Equity in net losses of associates, net of tax		—			—			(6	)		—
Net income under U.S. GAAP			183			124			186			124
Earnings under U.S. GAAP from continuing operations			171			110			178			102
Earnings under U.S. GAAP from discontinued operations			12			14			8			22
Net income under U.S. GAAP			183			124			186			124
Basic and diluted earnings (loss) per common share, under U.S. GAAP, from:
	Continuing operations	$	0.26		$	0.16		$	0.27		$	0.18
	Discontinued operations, net of tax	$	0.02		$	0.02		$	0.01		$	0.03
Basic and diluted earnings per common share1		$	0.28		$	0.18		$	0.28		$	0.21

1 Earnings per common share is calculated after taking into account dividends declared on preference shares and the gain recognized in connection with the redemption of the Series V preference shares in 2003.

Descriptions of the nature of the reconciling differences are provided below:

Development Costs

Under Canadian GAAP, certain costs classified as development are deferred and amortized over their estimated useful lives. Under U.S. GAAP, all development costs are expensed as incurred.

Business Combinations

Prior to January 1, 2001, various differences existed between Canadian and U.S. GAAP for the accounting for business combinations, including the establishment of acquisition-related liabilities. The net increase to income primarily relates to (i) costs that are required to be recorded as operating expenses under U.S. GAAP which, prior to January 1, 2001, were capitalized under Canadian GAAP; (ii) overall decreased amortization charges due to basis differences; and (iii) differences in gain or loss calculations on business disposals resulting from the above factors.

Related Party Transactions

During the six-month period ended June 30, 2003, in accordance with Canadian GAAP, the Company recognized a gain of $55 million from the sale of its 20% interest in BGM to a company that is owned by the Thomson family. See Note 13. Under U.S. GAAP, such related party gains are not recognizable in net earnings, but must be reflected as equity transactions.

Derivative Instruments and Hedging Activities

Prior to January 1, 2004, in accordance with Canadian GAAP, the Company disclosed the fair values of derivative instruments in the notes to the annual consolidated financial statements, but did not record such fair values in the consolidated balance sheet. Effective January 1, 2004, Canadian GAAP requires that derivative instruments that do not qualify as hedges be recorded in the balance sheet at fair value, and the change in fair value subsequent to January 1, 2004 be recorded in the income statement.

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The fair value as of January 1, 2004 is deferred and amortized into earnings in conjunction with the item it previously hedged. Under U.S. Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, all derivative instruments are recognized in the balance sheet at their fair values, and changes in fair value are recognized either immediately in earnings or, if the transaction qualifies for hedge accounting, when the transaction being hedged affects earnings.

Income Taxes

As discussed in Note 4, in the first quarter of 2004, the Company refined the calculation by which it allocates estimated full year income tax expense among interim periods. Under Canadian GAAP, the Company estimates separate annual effective income tax rates for each taxing jurisdiction and individually applies such rates to the interim period's pre-tax income of each jurisdiction. Under U.S. GAAP, the Company estimates the average annual effective income tax rate, excluding jurisdictions that generate net losses where the Company does not expect to receive a tax benefit, and applies that rate to the Company's interim period pre-tax income excluding the interim period pre-tax loss of those loss jurisdictions.

The income tax adjustment consists of the following:

	Three months ended June 30,				Six months ended June 30,
	2004		2003		2004		2003
Additional provision due to different accounting principles described above	(14	)	—		(45	)	—
Tax effect of U.S. GAAP pre-tax reconciling items	(1	)	(4	)	(2	)	(6	)
Total income taxes per reconciliation	(15	)	(4	)	(47	)	(6	)

Equity in Net Losses of Associates, Net of Tax

Under Canadian GAAP, investments in joint ventures are proportionally consolidated. Impairments for long-lived joint venture assets are recognized when the assets are not recoverable. Under U.S. GAAP, investments in joint ventures are accounted for as an equity investment. Impairments for equity investments are recognized when the decline of their fair value below carrying value is considered to be other than temporary. The adjustment relates to a joint venture investment that has long-lived assets that are recoverable, but whose carrying value is greater than its fair value.

Note 19: Pending Acquisition

In June 2004, Thomson announced that it had signed a definitive merger agreement with Information Holdings Inc. ("IHI"), a provider of intellectual property and regulatory information for the scientific, legal and corporate markets. Under this agreement, Thomson plans to acquire all of the outstanding common stock of IHI for $28 per share, for an aggregate cost of approximately $441 million, net of cash and investments currently held by IHI. The transaction is expected to close later this year and is subject to approval by IHI's stockholders and regulatory authorities.

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EX-99.3

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EXHIBIT 99.3

CONTROLS AND PROCEDURES

a.

Evaluation of disclosure controls and procedures.

The Corporation's Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Corporation's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report, have concluded that the Corporation's disclosure controls and procedures are effective to ensure that all information required to be disclosed by the Corporation in reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in U.S. Securities and Exchange Commission rules and forms.

b.

Changes in internal control over financial reporting.

There was no change in the Corporation's internal control over financial reporting that occurred during the Corporation's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

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CONTROLS AND PROCEDURES