ex99_2.htm

THOMSON REUTERS CORPORATION

CONSOLIDATED INCOME STATEMENT

(unaudited)


		Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars, except per share amounts)	Notes	2010			2009			2010			2009
Revenues			3,216			3,293			6,356			6,424
Operating expenses	5		(2,377	)		(2,452	)		(4,789	)		(4,819	)
Depreciation			(105	)		(113	)		(243	)		(242	)
Amortization of computer software			(133	)		(129	)		(274	)		(269	)
Amortization of other intangible assets			(132	)		(124	)		(261	)		(243	)
Other operating losses, net	6		(34	)		-			(33	)		-
Operating profit			435			475			756			851
Finance costs, net:
Net interest expense	7		(95	)		(104	)		(188	)		(200	)
Other finance income (costs)	7		39			(34	)		(24	)		(57	)
Income before tax and equity method investees			379			337			544			594
Share of post tax earnings in equity method investees			3			-			3			1
Tax expense	8		(79	)		(14	)		(110	)		(83	)
Earnings from continuing operations			303			323			437			512
(Losses) earnings from discontinued operations, net of tax			(6	)		2			(6	)		6
Net earnings			297			325			431			518
Earnings attributable to:
Common shareholders			290			315			417			505
Non-controlling interests			7			10			14			13

Earnings per share:	9
Basic earnings per share:
From continuing operations		$	0.36		$	0.38		$	0.51		$	0.60
From discontinued operations			(0.01	)		-			(0.01)			0.01
Basic earnings per share		$	0.35		$	0.38		$	0.50		$	0.61

Diluted earnings per share:
From continuing operations		$	0.36		$	0.38		$	0.51		$	0.60
From discontinued operations			(0.01	)		-			(0.01	)		-
Diluted earnings per share		$	0.35		$	0.38		$	0.50		$	0.60

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

THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(unaudited)


		Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars)	Notes	2010			2009			2010			2009
Net earnings			297			325			431			518
Other comprehensive (loss) income:
Net (loss) gain on cash flow hedges			(110	)		115			(72	)		73
Net loss (gain) on cash flow hedges transferred to earnings			81			(135	)		24			(110	)
Foreign currency translation adjustments to equity			(291	)		917			(622	)		591
Foreign currency translation adjustments to earnings			(2	)		(6	)		(8	)		(14	)
Actuarial losses on defined benefit pension plans, net of tax(1)	13		(270	)		(54	)		(273	)		(14	)
Other comprehensive (loss) income			(592	)		837			(951	)		526
Total comprehensive (loss) income			(295	)		1,162			(520	)		1,044

Comprehensive (loss) income for the period attributable to:
Common shareholders			(302	)		1,152			(534	)		1,031
Non-controlling interests			7			10			14			13

(1)	The related tax benefit was $136 million and $22 million for the three months ended June 30, 2010 and 2009, respectively, and $137 million and $5 million for the six months ended June 30, 2010 and 2009, respectively.

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

THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited)

(millions of U.S. dollars)	Notes	June 30, 2010			December 31, 2009
ASSETS
Cash and cash equivalents			508			1,111
Trade and other receivables			1,620			1,742
Other financial assets	10		122			76
Prepaid expenses and other current assets			783			734
Current assets			3,033			3,663
Computer hardware and other property, net			1,434			1,546
Computer software, net			1,532			1,495
Other identifiable intangible assets, net			8,412			8,694
Goodwill			17,961			18,130
Other financial assets	10		314			383
Other non-current assets	11		617			649
Deferred tax			46			13
Total assets			33,349			34,573

LIABILITIES AND EQUITY
Liabilities
Current indebtedness	10		648			782
Payables, accruals and provisions	12		2,367			2,651
Deferred revenue			1,211			1,187
Other financial liabilities	10		191			92
Current liabilities			4,417			4,712
Long-term indebtedness	10		6,573			6,821
Provisions and other non-current liabilities	13		2,268			1,878
Other financial liabilities	10		75			42
Deferred tax			1,603			1,785
Total liabilities			14,936			15,238
Equity
Capital	14		10,276			10,177
Retained earnings			10,221			10,561
Accumulated other comprehensive loss			(2,149	)		(1,471	)
Total shareholders’ equity			18,348			19,267
Non-controlling interests			65			68
Total equity			18,413			19,335
Total liabilities and equity			33,349			34,573

Contingencies (note 17)

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

THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOW

(unaudited)


		Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars)	Notes	2010			2009			2010			2009
Cash provided by (used in):
OPERATING ACTIVITIES
Net earnings			297			325			431			518
Adjustments for:
Depreciation			105			113			243			242
Amortization of computer software			133			129			274			269
Amortization of other intangible assets			132			124			261			243
Deferred tax			(28	)		(75	)		(66	)		(66	)
Loss from redemption of debt securities	7		-			-			62			-
Other	15		82			204			162			259
Changes in working capital and other items	15		167			186			(264	)		(208	)
Operating cash flows from continuing operations			888			1,006			1,103			1,257
Operating cash flows from discontinued operations			-			-			(6	)		-
Net cash provided by operating activities			888			1,006			1,097			1,257
INVESTING ACTIVITIES
Acquisitions, less cash acquired	16		(415	)		(25	)		(478	)		(45	)
Proceeds from other disposals			4			3			18			3
Capital expenditures, less proceeds from disposals			(248	)		(268	)		(462	)		(466	)
Other investing activities			4			-			3			(1	)
Investing cash flows from continuing operations			(655	)		(290	)		(919	)		(509	)
Investing cash flows from discontinued operations			-			-			-			22
Net cash used in investing activities			(655	)		(290	)		(919	)		(487	)
FINANCING ACTIVITIES
Proceeds from debt	10		147			-			638			609
Repayments of debt	10		(442	)		(189	)		(913	)		(192	)
Net (repayments) borrowings under short-term loan facilities			(14	)		2			(14	)		(8	)
Dividends paid on preference shares			-			-			(1	)		(1	)
Dividends paid on common shares	14		(232	)		(226	)		(463	)		(454	)
Other financing activities			-			(3	)		(6	)		(5	)
Net cash used in financing activities			(541	)		(416	)		(759	)		(51	)
Translation adjustments on cash and cash equivalents			(12	)		21			(22	)		12
(Decrease) increase in cash and cash equivalents			(320	)		321			(603	)		731
Cash and cash equivalents at beginning of period			828			1,251			1,111			841
Cash and cash equivalents at end of period			508			1,572			508			1,572

Supplemental cash flow information is provided in note 15

Interest paid			(55	)		(73	)		(204	)		(230	)
Interest received			3			4			4			7
Income taxes (paid) refunded			(33	)		9			(98	)		(19	)

Amounts paid and received for interest and taxes are reflected as operating cash flows in the consolidated statement of cash flow. Interest paid is net of debt related hedges.

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

THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(unaudited)

(millions of U.S. dollars)	Stated share capital		Contributed surplus		Total capital		Retained earnings			Unrecognized gain (loss) on cash flow hedges			Foreign currency translation adjustments			Total accumulated other comprehensive (loss) income (“AOCI”)			Non-controlling interests			Total
Balance, December 31, 2009		9,957		220		10,177		10,561			(33	)		(1,438	)		(1,471	)		68			19,335
Comprehensive income (loss) (1)		-		-		-		144			(48	)		(630	)		(678	)		14			(520	)
Distributions to non-controlling interest		-		-		-		-			-			-			-			(17	)		(17	)
Dividends declared on preference shares		-		-		-		(1	)		-			-			-			-			(1	)
Dividends declared on common shares		-		-		-		(483	)		-			-			-			-			(483	)
Shares issued under Dividend Reinvestment Plan (“DRIP”)		20		-		20		-			-			-			-			-			20
Effect of stock compensation plans		47		32		79		-			-			-			-			-			79
Balance, June 30, 2010		10,024		252		10,276		10,221			(81	)		(2,068	)		(2,149	)		65			18,413

(millions of U.S. dollars)	Stated share capital		Contributed surplus		Total capital		Retained earnings			Unrecognized gain (loss) on cash flow hedges			Foreign currency translation adjustments			AOCI			Non-controlling interests			Total
Balance, December 31, 2008		3,050		6,984		10,034		10,650			21			(2,289	)		(2,268	)		72			18,488
Comprehensive income (loss) (2)		-		-		-		491			(37	)		577			540			13			1,044
Distributions to non-controlling interest		-		-		-		-			-			-			-			(15	)		(15	)
Dividends declared on preference shares		-		-		-		(1	)		-			-			-			-			(1	)
Dividends declared on common shares		-		-		-		(462	)		-			-			-			-			(462	)
Shares issued under DRIP		8		-		8		-			-			-			-			-			8
Effect of stock compensation plans		43		14		57		-			-			-			-			-			57
Balance, June 30, 2009		3,101		6,998		10,099		10,678			(16	)		(1,712	)		(1,728	)		70			19,119

(1)	Retained earnings for the six months ended June 30, 2010 includes actuarial losses of $273 million, net of tax.

(2)	Retained earnings for the six months ended June 30, 2009 includes actuarial losses of $14 million, net of tax.

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

THOMSON REUTERS CORPORATION

Notes to Consolidated Financial Statements (unaudited)

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

Note 1: Business description and basis of preparation

General business description

Thomson Reuters Corporation (the “Company” or “Thomson Reuters”) is an Ontario, Canada corporation with common shares listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”) and Series II preference shares listed on the TSX.

Basis of preparation

The unaudited consolidated interim financial statements (“interim financial statements”) were prepared using the same accounting policies and methods as those used in the Company’s consolidated financial statements for the year ended December 31, 2009, except as described in note 2. The interim financial statements are in compliance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board ("IASB"), have been omitted or condensed. The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements have been set out in note 2 of the Company’s consolidated financial statements for the year ended December 31, 2009. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2009, which are included in the Company’s 2009 annual report.

References to “$” are to U.S. dollars and references to “C$” are to Canadian dollars.

Note 2: Changes in accounting policies

Pronouncements effective January 1, 2010

IAS 21, The Effects of Changes in Foreign Exchange Rates

Effective January 1, 2010, the Company adopted an amendment to IAS 21, The Effects of Changes in Foreign Exchange Rates, as a consequential amendment of IAS 27 (2008), Consolidated and Separate Financial Statements. The amendment requires that accumulated foreign exchange differences are reclassified from equity to the income statement upon loss of control, significant influence or joint control of an entity. Additionally, the amendment provides guidance on the reclassification of accumulated foreign exchange differences to the income statement when a partial disposal of an interest in a foreign entity occurs. As a result of this new guidance, the Company no longer reclassifies accumulated foreign exchange differences from equity to the income statement upon settlement of intercompany loan balances when there is no change in the Company’s ownership interest in the subsidiary.

IFRS 3, Revision to IFRS 3, Business Combinations

Effective January 1, 2010, the Company adopted IFRS 3, Revision to IFRS 3, Business Combinations. Most significantly, the revised standard requires:

directly attributable transaction costs to be expensed rather than included in the acquisition purchase price;

the measurement of contingent consideration at fair value on the acquisition date, with subsequent changes in the fair value recorded through the income statement; and

that upon gaining control in a step acquisition, an entity re-measures its existing ownership interest to fair value through the income statement.

The revised standard did not have a material impact on the Company’s business combination-related activity for the six months ended June 30, 2010.

Certain other interpretations, amendments and improvements to existing standards were issued by the IASB or International Financial Reporting Interpretations Committee (“IFRIC”) that are mandatory for accounting periods beginning after January 1, 2010 or later periods. There was no material impact to the Company’s net earnings or financial position as at and for the six months ended June 30, 2010 as a result of adopting these pronouncements. See note 3 of the Company’s consolidated financial statements for the year ended December 31, 2009 for additional information.

Pronouncements effective January 1, 2011

Certain pronouncements were issued by the IASB or IFRIC that are mandatory for accounting periods beginning after January 1, 2011 or later periods. Many of these updates are not applicable or are not consequential to the Company and have been excluded from the table below. The following pronouncements are being assessed to determine their impact on the Company’s results and financial position.

Improvements to IFRS	The IASB’s improvements to IFRS contain 7 amendments that result in accounting changes for presentation, recognition or measurement purposes. The effective date for all of the amendments is January 1, 2011 although early application is permitted. Transitional requirements are set out on a standard by standard basis.	The most significant features of the IASB’s annual improvements project published in May 2010 are included under the specific revisions to standards discussed below.
IFRS 3	Revision to IFRS 3, Business Combinations	Clarification on the following areas:
			·	contingent consideration arrangements arising from business combinations with acquisition dates preceding the application of the new IFRS 3 (as revised in 2008) should continue to be accounted for in accordance with the previous IFRS 3 (as issued in 2004).

			·	the choice of measuring non-controlling interests at fair value or at the proportionate share of the acquiree’s net assets applies only to instruments that represent present ownership interests and entitle their holders to a proportionate share of the net assets in the event of liquidation. All other components of non-controlling interest are measured at fair value unless another measurement basis is required by IFRS.

			·	application guidance relating to the accounting for share-based payments in IFRS 3 applies to all share-based payment transactions that are part of a business combination, including un-replaced awards (i.e., unexpired awards over acquiree shares that remain outstanding rather than being replaced by the acquirer) and voluntarily replaced share-based payment awards.
IFRS 7	Amendment to IFRS7, Financial Instruments: Disclosure	Multiple clarifications related to the disclosure of financial instruments.
IAS 1	Amendment to IAS 1, Presentation of financial statements	Entities may present the analysis of the components of other comprehensive income either in the statement of changes in equity or within the notes to the financial statements.
IAS 27	Amendment to IAS 27, Consolidated and Separate Financial Statements	The 2008 revisions to this standard resulted in consequential amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates, IAS 28, Investments in Associates, and IAS 31, Interests in Joint Ventures. IAS 27 now provides that these amendments are to be applied prospectively.
IAS 34	Amendment to IAS 34, Interim Financial Reporting	The amendments place greater emphasis on the disclosure principles for interim financial reporting involving significant events and transactions, including changes to fair value measurements and the need to update relevant information from the most recent annual report.

Note 3: Segment information

The Company provides intelligent information to businesses and professionals. Its offerings combine industry expertise with innovative technology to deliver critical information to decision makers.

The Company is organized in two divisions: Markets, which consists of financial and media businesses, and Professional, which is comprised of the Legal, Tax & Accounting, and Healthcare & Science segments. The reportable segments are strategic business groups that offer products and services to target markets, as described below. The accounting policies applied by the segments are the same as those applied by the Company.

Legal

The Legal segment provides critical information, decision support tools and services to legal, intellectual property, compliance, business and government professionals throughout the world. The Legal segment offers a broad range of products and services that utilize its electronic databases of legal, regulatory and business information.

Tax & Accounting

The Tax & Accounting segment provides technology and information solutions, as well as integrated tax compliance software and services, to accounting, tax and corporate finance professionals in accounting firms, corporations, law firms and government.

Healthcare & Science

The Healthcare & Science segment provides information, tools, analytics and decision support solutions that help organizations improve healthcare efficiency and quality and speed scientific discovery.

Markets

The Markets segment serves financial services and corporate professionals globally, with Reuters Media serving a broader professional and consumer media market. The Markets segment delivers intelligent information, supporting technology and infrastructure to a diverse set of customers. These solutions are designed to help its customers generate superior returns, improve risk management, increase access to liquidity and create efficient, reliable infrastructures in increasingly global, electronic and multi-asset class markets.

	Three months ended June 30, 2010						Three months ended June 30, 2009
Reportable segments	Revenues			Segment Operating Profit			Revenues			Segment Operating Profit
Legal		936			306			934			341
Tax & Accounting		243			32			225			36
Healthcare & Science		214			48			228			53
Professional		1,393			386			1,387			430

Markets		1,825			319			1,908			424
Segment totals		3,218			705			3,295			854
Corporate & Other (1)		-			(104	)		-			(255	)
Eliminations		(2	)		-			(2	)		-
Total		3,216			601			3,293			599

	Six months ended June 30, 2010						Six months ended June 30, 2009
Reportable segments	Revenues			Segment Operating Profit			Revenues			Segment Operating Profit
Legal		1,761			516			1,766			582
Tax & Accounting		505			67			470			77
Healthcare & Science		423			92			429			78
Professional		2,689			675			2,665			737

Markets		3,671			642			3,762			761
Segment totals		6,360			1,317			6,427			1,498
Corporate & Other (1)		-			(267	)		-			(404	)
Eliminations		(4	)		-			(3	)		-
Total		6,356			1,050			6,424			1,094

(1)	Corporate & Other operating profit includes corporate expenses, certain share-based compensation costs, certain fair value adjustments and integration programs expenses (including legacy transformational initiatives).

In accordance with IFRS 8, Operating Segments, the Company discloses information about its reportable segments based upon the measures used by management in assessing the performance of those reportable segments. The Company uses segment operating profit to measure the operating performance of its segments. The costs of centralized support services such as technology, accounting, procurement, legal, human resources and strategy are allocated to each segment based on usage or other applicable measures. Segment operating profit is defined as operating profit before (i) amortization of other intangible assets; (ii) other operating gains and losses; and (iii) asset impairment charges. Management uses this measure because amortization of other intangible assets, other operating gains and losses and asset impairment charges are not considered to be controllable operating activities for purposes of assessing the current performance of the segments. While in accordance with IFRS, the Company’s definition of segment operating profit may not be comparable to that of other companies.

The following table reconciles segment operating profit per the reportable segment information to operating profit per the consolidated income statement. Amounts below operating profit are not allocated to the segments.

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Segment operating profit		601			599			1,050			1,094
Amortization of other intangible assets		(132	)		(124	)		(261	)		(243	)
Other operating losses, net		(34	)		-			(33	)		-
Operating profit		435			475			756			851

Note 4: Seasonality

The Company’s consolidated revenues and operating profits do not tend to be significantly impacted by seasonality as it records a large portion of its revenues ratably over a contract term and its costs, excluding integration programs expenses, are generally incurred evenly throughout the year. However, non-recurring revenues can cause changes in the Company’s performance from quarter to consecutive quarter. Additionally, the release of certain print-based offerings can be seasonal as can certain product releases for the regulatory markets, which tend to be concentrated at the end of the year.

Note 5: Operating expenses

The components of operating expenses include the following:

	Three months ended June 30,					Six months ended June 30,
	2010			2009		2010			2009
Salaries, commission and allowances		1,183			1,155		2,354			2,301
Share-based payments		34			30		60			57
Post-employment benefits		50			59		105			111
Total staff costs		1,267			1,244		2,519			2,469
Goods and services (1)		644			611		1,275			1,227
Data		239			253		483			509
Telecommunications		153			136		312			291
Real estate		110			121		227			235
Fair value adjustments (2)		(36	)		87		(27	)		88
Total operating expenses		2,377			2,452		4,789			4,819

(1)	Goods and services include professional fees, consulting services, contractors, technology-related expenses, selling and marketing, and other general and administrative costs.

(2)	Fair value adjustments primarily represent the impact from embedded derivatives.

In 2008, the Company commenced integration programs directed at integrating the acquired Reuters business with the Thomson Financial business and capturing cost synergies across the new organization, including shared services and corporate functions. The Company also incurred expenses for legacy transformational initiatives pursued prior to the acquisition. Because these are corporate initiatives, incremental expenses directed at capturing cost savings are reported within the Corporate & Other segment. The various initiatives are expected to be completed in 2011. The Company will continue to incur restructuring costs, including severance and losses on lease terminations and other cancellations of contracts until the various initiatives are completed.

The total expenses incurred for the integration programs were as follows:

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
Integration programs expenses		90		107		187		195

The costs incurred primarily related to severance, consulting expenses and technology initiatives as well as branding expenses in the 2009 period. Severance costs were included within the “Salaries, commissions and allowances” component of “Operating expenses”. Consulting, branding and technology-related expenses were included within the “Goods and services” component of “Operating expenses”.

Note 6: Other operating losses, net

Other operating losses, net, were $34 million and $33 million for the three and six months ended June 30, 2010, respectively. These amounts were principally comprised of a settlement in connection with a vendor dispute.

Note 7: Finance costs, net

The components of finance costs, net, include interest (expense) income and other finance (costs) income as follows:

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Interest expense:
Debt		(107	)		(115	)		(216	)		(220	)
Derivative financial instruments - hedging activities		13			9			27			16
Other		(8	)		(2	)		(11	)		(3	)
Fair value gains (losses) on financial instruments:
Debt		11			11			20			9
Cash flow hedges, transfer from equity		(81	)		135			(24	)		110
Fair value hedges		(107	)		89			(133	)		33
Net foreign exchange gains (losses) on debt		177			(235	)		137			(152	)
		(102	)		(108	)		(200	)		(207	)

Interest income		7			4			12			7
Net interest expense		(95	)		(104	)		(188	)		(200	)

	Three months ended June 30,					Six months ended June 30,
	2010		2009			2010			2009
Net gains (losses) due to changes in foreign currency exchange rates		13		(29	)		8			(37	)
Net gains (losses) on derivative instruments		24		(4	)		28			(19	)
Loss from redemption of debt securities		-		-			(62	)		-
Other		2		(1	)		2			(1	)
Other finance income (costs)		39		(34	)		(24	)		(57	)

Net gains (losses) due to changes in foreign currency exchange rates

In all periods, net gains or net losses were realized from changes in foreign currency exchange rates on certain intercompany funding arrangements. Foreign currency gains and losses on intercompany arrangements are recognized in earnings when such arrangements are not considered permanent in nature.

Net gains (losses) on derivative instruments

In all periods, net gains or net losses were recognized on derivative instruments related to freestanding derivatives and ineffectiveness on certain hedging derivative instruments.

Loss from redemption of debt securities

This amount represents the loss incurred in connection with the early redemption of debt securities. The loss primarily represents premiums paid for early extinguishment and non-cash write-offs of transaction costs and discounts included in the carrying value of debt. See note 10 for additional information.

Note 8: Taxation

Tax expense for the three and six months ended June 30, 2010 and 2009 reflected the mix of taxing jurisdictions in which pre-tax profits and losses were recognized. However, because the geographical mix of pre-tax profits and losses in interim periods may not be reflective of full year results, this distorts the Company’s interim period effective tax rate.

Note 9: Earnings per share

Basic earnings per share was calculated by dividing earnings attributable to common shares less dividends declared on preference shares by the sum of the weighted average number of shares outstanding during the period plus vested deferred share units (“DSUs”) and vested equity-based performance restricted share units (“PRSUs”). DSUs represent the amount of common shares that certain employees have elected to receive in the future in lieu of cash compensation.

Diluted earnings per share were calculated using the denominator of the basic calculation described above, adjusted to include the potentially dilutive effect of outstanding stock options and other securities. The denominator is: (1) increased by the total number of additional common shares that would have been issued by the Company assuming exercise of all stock options with exercise prices below the average market price for the period; and (2) decreased by the number of shares that the Company could have repurchased if it had used the assumed proceeds from the exercise of stock options to repurchase them on the open market at the average share price for the year. Other securities are comprised of unvested time-based restricted share units.

Earnings used in determining consolidated earnings per share and earnings per share from continuing operations are consolidated net earnings reduced by (1) earnings attributable to non-controlling interests and (2) dividends declared on preference shares as presented below:

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Net earnings		297			325			431			518
Less: Earnings attributable to non-controlling interests		(7	)		(10	)		(14	)		(13	)
Dividends declared on preference shares		-			-			(1	)		(1	)
Earnings used in consolidated earnings per share		290			315			416			504
Less: Losses (earnings) from discontinued operations, net of tax		6			(2	)		6			(6	)
Earnings used in earnings per share from continuing operations		296			313			422			498

Earnings used in determining earnings per share from discontinued operations are the earnings from discontinued operations as reported within the income statement.

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

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
Weighted average number of shares outstanding		831,148,735		828,598,424		830,672,197		828,171,500
Vested DSUs and PRSUs		813,675		467,143		757,061		519,808
Basic		831,962,410		829,065,567		831,429,258		828,691,308
Effect of stock and other incentive plans		3,864,879		7,427,837		3,906,034		6,885,899
Diluted		835,827,289		836,493,404		835,335,292		835,577,207

Note 10: Financial instruments

Financial assets and liabilities

Financial assets and liabilities in the statement of financial position were as follows:

June 30, 2010	Cash, loans and receivables		Assets/ (liabilities) at fair value through earnings			Derivatives used for hedging			Available for sale		Other financial liabilities			Total
Cash and cash equivalents		508		-			-			-		-			508
Trade and other receivables		1,620		-			-			-		-			1,620
Other financial assets – current		28		88			6			-		-			122
Other financial assets – non-current		155		-			143			16		-			314
Current indebtedness		-		-			-			-		(648	)		(648	)
Trade payables (see note 12)		-		-			-			-		(329	)		(329	)
Accruals (see note 12)		-		-			-			-		(1,564	)		(1,564	)
Other financial liabilities – current		-		(48	)		(128	)		-		(15	)		(191	)
Long term indebtedness		-		-			-			-		(6,573	)		(6,573	)
Other financial liabilities – non current		-		-			(75	)		-		-			(75	)
Total		2,311		40			(54	)		16		(9,129	)		(6,816	)

December 31, 2009	Cash, loans and receivables		Assets/ (liabilities) at fair value through earnings			Derivatives used for hedging			Available for sale		Other financial liabilities			Total
Cash and cash equivalents		1,111		-			-			-		-			1,111
Trade and other receivables		1,742		-			-			-		-			1,742
Other financial assets – current		44		12			20			-		-			76
Other financial assets – non-current		163		-			199			21		-			383
Current indebtedness		-		-			-			-		(782	)		(782	)
Trade payables (see note 12)		-		-			-			-		(422	)		(422	)
Accruals (see note 12)		-		-			-			-		(1,685	)		(1,685	)
Other financial liabilities – current		-		(26	)		(41	)		-		(25	)		(92	)
Long term indebtedness		-		-			-			-		(6,821	)		(6,821	)
Other financial liabilities – non current		-		-			(42	)		-		-			(42	)
Total		3,060		(14	)		136			21		(9,735	)		(6,532	)

Debt-related activity

Six months ended June 30, 2010

In March and April 2010, the Company repurchased its $700 million principal amount of outstanding 6.20% notes due January 2012. The repurchase of all the notes was funded by the net proceeds from the March 2010 issuance of $500 million principal amount of 5.85% notes due 2040 and from available cash resources.

The Company has issued approximately $1.6 billion principal amount of debt securities under its existing debt shelf prospectus, which expires in January 2011. Approximately $1.4 billion of additional debt securities may be issued under the prospectus.

The Company maintains a $2.5 billion unsecured revolving credit facility that expires in August 2012. The facility may be used to provide liquidity in connection with the Company’s commercial paper program and for general corporate purposes. In June 2010, the Company borrowed and repaid $147 million under the revolving credit facility. There were no amounts drawn against this credit facility as of June 30, 2010.

Six months ended June 30, 2009

In March 2009, the Company issued C$750 million principal amount of 6.0% notes due in March 2016. Upon completion of this offering, the Company entered into two fixed-to-fixed cross-currency swap agreements which converted the notes to $610 million principal amount at an interest rate of 6.915%. These swaps were designated as cash flow hedges. The net proceeds from this issuance were used to repay the following notes upon their maturity:

C$250 million principal amount of 4.50% notes, in June 2009;

$200 million principal amount of 4.25% notes, in August 2009; and

C$300 million principal amount of 4.35% notes, in December 2009.

Foreign exchange risk management

The Company’s operations are diverse and global in nature and therefore expose it to foreign exchange risk related to cash flows in currencies other than the U.S. dollar, in particular to the British pound sterling and the Euro.

In 2010, the Company implemented a program to mitigate its foreign exchange exposure by entering into a series of foreign exchange contracts to purchase or sell certain currencies in the future at fixed amounts. These instruments have not been designated as hedges for accounting purposes. As such, gains of $26 million and $28 million reflecting the change in the fair value of these contracts were recorded within “Other finance income (costs)” in the income statement for the three and six months ended June 30, 2010, respectively. The cumulative notional amounts of contracts outstanding at June 30, 2010 were $390 million to sell Euros, $274 million to buy British pounds sterling and $108 million to sell Japanese yen. These arrangements settle at various dates over the next 12 months and had a net asset fair value of $26 million at June 30, 2010, which was included within “Other financial assets – current” and “Other financial liabilities-current” in the statement of financial position. See note 20 of the Company’s 2009 annual financial statements for additional information.

Note 11: Other non-current assets

	June 30, 2010		December 31, 2009
Net defined benefit plan surpluses		13		64
Cash surrender value of life insurance policies		263		259
Investments in equity method investees		315		298
Other non-current assets		26		28
Total other non-current assets		617		649

Note 12: Payables, accruals and provisions

	June 30, 2010		December 31, 2009
Trade payables		329		422
Accruals		1,564		1,685
Provisions		179		277
Other current liabilities		295		267
Total payables, accruals and provisions		2,367		2,651

Note 13: Provisions and other non-current liabilities

	June 30, 2010		December 31, 2009
Net defined benefit plan obligations		1,190		833
Deferred compensation and employee incentives		193		192
Provisions		121		144
Unfavorable contract liability		237		290
Uncertain tax positions		425		332
Other non-current liabilities		102		87
Total provisions and other non-current liabilities		2,268		1,878

Net defined benefit plan obligations increased due to lower discount rates applied to benefit obligations and a decline in the fair values of plan assets.

Note 14: Capital

In September 2009, Thomson Reuters completed the unification of its dual listed company (“DLC”) structure that it previously operated under from April 2008 with shareholders in two listed entities, the Company and Thomson Reuters PLC. As a result of the unification, the Company is now the sole parent company. Unification had no impact on the number of shares outstanding, as Thomson Reuters PLC ordinary shares and Thomson Reuters PLC American Depositary Shares were exchanged for an equivalent number of common shares of the Company. Additionally, unification had no impact on total capital as the carrying values of the then outstanding Thomson Reuters PLC stated share capital and contributed surplus were transferred into the stated share capital of the Company.

In March 2010, the Company completed an intercompany reorganization that included the amalgamation of the Company and Thomson Reuters UK Limited (formerly known as Thomson Reuters PLC), which had become a wholly owned subsidiary of the Company upon unification. This placed creditors of the Company in the same position that they would have been in had Thomson Reuters previously operated under a single parent company structure. These changes in corporate structure had no impact on the Company’s global businesses, operations, strategy, financial position and employees.

Normal course issuer bid (“NCIB”) renewal

In May 2010, the Company renewed its NCIB share repurchase facility for an additional 12-month period. Under the NCIB, up to 15 million common shares (representing less than 2% of the total outstanding shares) may be repurchased in open market transactions on the TSX or the NYSE between May 13, 2010 and May 12, 2011. Although the Company has not repurchased any shares since 2008, it may buy back shares (and subsequently cancel them) from time to time as part of its capital management strategy.

Dividends

Dividends are declared in U.S. dollars. Details of dividends declared per share are as follows:

(U.S. per share amounts)	Three months ended June 30,				Six months ended June 30,
Dividends declared per share	2010		2009		2010		2009
Thomson Reuters Corporation common shares	$	0.29	$	0.28	$	0.58	$	0.56
Thomson Reuters PLC ordinary shares (1)		-	$	0.28		-	$	0.56

(1)	On September 10, 2009, all Thomson Reuters PLC ordinary shares were exchanged for an equivalent number of common shares of the Company in connection with the unification of the DLC structure.

In the statement of cash flow, dividends paid on shares are shown net of amounts reinvested through the Company’s dividend reinvestment plan. Details of dividend reinvestment are as follows:

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
Dividend reinvestment		10		4		20		8

Note 15: Supplemental cash flow information

Details of “Other” in the statement of cash flow are as follows:

	Three months ended June 30,					Six months ended June 30,
	2010			2009		2010			2009
Non-cash employee benefit charges		53			59		111			105
Net (gains) losses on foreign exchange and derivative financial instruments		(40	)		51		(38	)		62
Embedded derivatives fair value adjustments		(32	)		71		(27	)		71
Other		101			23		116			21
		82			204		162			259

Other is primarily comprised of movements in non-current liabilities.

Details of “Changes in working capital and other items” are as follows:

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Trade and other receivables		75			100			56			100
Prepaid expenses and other current assets		52			(37	)		(21	)		37
Other financial assets		1			18			14			9
Payables, accruals and provisions		164			252			(245	)		(276	)
Deferred revenue		(62	)		(142	)		70			(56	)
Other financial liabilities		2			(19	)		(5	)		(10	)
Income taxes		(5	)		70			(14	)		96
Other		(60	)		(56	)		(119	)		(108	)
		167			186			(264	)		(208	)

Note 16: Acquisitions

Acquisitions primarily relate to the purchase of business that contain information, products or services that are integrated into existing operations to broaden the range of offerings to customers and to extend the Company’s presence in global markets. The number of acquisitions completed during the three and six months ended June 30, 2010 and 2009 and the related cash consideration were as follows:

	Three months ended June 30,				Six months ended June 30,
Number of transactions	2010		2009		2010		2009
Businesses and identifiable intangible assets acquired		6		6		9		13
Investments in businesses		-		-		1		-
		6		6		10		13

	Three months ended June 30,				Six months ended June 30,
Cash consideration	2010		2009		2010		2009
Businesses and identifiable intangible assets acquired		412		25		461		44
Investments in businesses		3		-		17		1
		415		25		478		45

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. Purchase price allocations related to certain acquisitions may be subject to adjustment pending completion of final valuations. The details of net assets acquired were as follows:

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Cash and cash equivalents		11			1			11			1
Trade and other receivables		19			1			23			2
Prepaid expenses and other current assets		25			1			26			1
Current assets		55			3			60			4
Computer hardware and other property, net		2			-			2			-
Computer software, net		24			7			33			8
Other identifiable intangible assets		131			14			159			29
Other non-current assets		-			-			-			1
Total assets		212			24			254			42
Payables, accruals and provisions		(19	)		(1	)		(22	)		(3	)
Deferred revenue		(27	)		(2	)		(29	)		(3	)
Current liabilities		(46	)		(3	)		(51	)		(6	)
Provisions and other non-current liabilities		(2	)		-			(5	)		-
Deferred tax		(44	)		-			(44	)		-
Total liabilities		(92	)		(3	)		(100	)		(6	)
Net assets acquired		120			21			154			36
Goodwill		303			5			318			9
Total		423			26			472			45

The excess of the purchase price over the net tangible and identifiable intangible assets and assumed liabilities was recorded as goodwill and reflects the synergies and the value of the acquired workforce. For acquisitions made in 2010, the majority of acquired goodwill is not expected to be deductible for tax purposes, whereas for 2009 acquisitions, the majority of acquired goodwill is expected to be deductible.

The following provides a brief description of major acquisitions completed during 2010:

Date	Company	Acquiring segment	Description
June 2010	Complinet	Legal	A provider of global compliance information solutions for financial services institutions and their advisers
June 2010	Point Carbon	Markets	A provider of essential trading analytics, news and content for the energy and environmental markets
May 2010	Revista dos Tribunais	Legal	A leading Brazilian legal publisher

As acquired businesses are integrated into the Company’s operations, it is impractical to separately disclose revenue and operating profit contributed by these businesses after acquisition.

Note 17: Contingencies

Lawsuits and legal claims

In November 2009, the European Commission initiated an investigation relating to the use of the Company’s Reuters Instrument Codes (“RIC symbols”), which is at a preliminary stage. RIC symbols help financial professionals retrieve news and information on financial instruments (such as prices and other data on stocks, bonds, currencies and commodities). The Company has responded to the Commission’s questionnaires and is fully cooperating with the investigation. The Company does not believe that it has engaged in any anti-competitive activity related to RIC symbols.

In February 2008, a purported class action complaint alleging violations of U.S. federal antitrust laws was filed in the United States District Court for the Central District of California against West Publishing Corporation, d/b/a BAR/BRI and Kaplan Inc. In April 2008, this case was dismissed with prejudice. The plaintiffs have appealed this dismissal.

In addition to the matters described above, the Company is engaged in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all of the proceedings and claims against the Company, including those described above, is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole.

Uncertain tax positions

The Company is subject to taxation in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company maintains provisions for uncertain tax positions that it believes appropriately reflect its risk with respect to tax positions under discussion, audit, dispute, or appeal with tax authorities, or which are otherwise considered to involve uncertainty. These provisions are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company regularly assesses the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by, or litigation with, the relevant taxing authorities.

In April 2008, upon the completion of a routine tax audit for the years 2003 to 2005, the Internal Revenue Service (“IRS”) notified the Company that it would challenge certain positions taken on its tax returns. Since notification, the Company has held ongoing discussions with the IRS relative to this challenge. The Company disagrees with the IRS position. Given that this challenge has not been resolved through the IRS administrative appeals process, the Company intends to initiate action in the United States Tax Court to contest the challenge. While the Company expects to initiate court action in the fourth quarter of 2010, it is likely to take multiple years to resolve the case. In June 2010, the IRS indicated it will challenge positions taken in the Company’s tax returns for the years 2006 and 2007 as well. If the IRS prevailed in all of these challenges, which the Company believes is unlikely, it is estimated that the tax, penalties and interest, net of federal tax relief, relative to the issues subject to these challenges would be approximately $500 million. Because the Company believes that its positions are supported by the weight of law, it does not believe that the resolution of these matters will have a material adverse effect on the Company’s financial statements. The Company is vigorously defending its positions.

Note 18: Related party transactions

As of June 30, 2010, The Woodbridge Company Limited (“Woodbridge”) beneficially owned approximately 55% of the Company’s shares.

Transactions with Woodbridge

From time to time, in the normal course of business, Woodbridge and certain of its affiliates purchase some of the Company’s product and service offerings. These transactions are negotiated at arm’s length on standard terms, including price, and are not significant to the Company’s results of operations or financial condition either individually or in the aggregate.

In the normal course of business, certain of the Company’s subsidiaries charge a Woodbridge-owned company fees for various administrative services. The total amount charged to Woodbridge for these services was approximately $360,000 for the year ended December 31, 2009.

The Company purchases property and casualty insurance from third party insurers and retains the first $500,000 of each and every claim under the programs via the Company’s captive insurance subsidiary. Woodbridge is included in these programs and pays the Company a premium commensurate with its exposures. These premiums were approximately $73,000 for the year ended December 31, 2009, which would approximate the premium charged by a third party insurer for such coverage.

The Company maintained an agreement with Woodbridge until April 17, 2008 (the closing date of the Reuters acquisition) under which Woodbridge agreed to indemnify up to $100 million of liabilities incurred either by the Company’s current and former directors and officers or by the Company in providing indemnification to these individuals on substantially the same terms and conditions as would apply under an arm’s length, commercial arrangement. The Company was required to pay Woodbridge an annual fee of $750,000, which was less than the premium that would have been paid for commercial insurance. In 2008, the Company replaced this agreement with a conventional insurance agreement. The Company is entitled to seek indemnification from Woodbridge for any claims arising from events prior to April 17, 2008, so long as the claims are made before April 17, 2014.

Transactions with affiliates and joint ventures

The Company enters into transactions with its investments in affiliates and joint ventures. These transactions involve providing or receiving services and are entered into in the normal course of business and on an arm’s length basis.

The Company and The Depository Trust & Clearing Corporation (“DTCC”) each have a 50% interest in Omgeo, a provider of trade management services. Omgeo pays the Company for use of a facility and technology and other services. For the six months ended June 30, 2010, these services were valued at approximately $4 million.

The Company and Shin Nippon Hoki Shuppan K.K. each own 50% of Westlaw Japan K.K., a provider of legal information and solutions to the Japanese legal market. The Company provides the joint venture with technology and other services, which were valued at approximately $1 million for the six months ended June 30, 2010.

The Company’s Tradeweb Markets business provides services, including use of its trading platform and various back office functions, to Tradeweb New Markets, in which it has a 20% ownership stake. The Company recognized revenues of approximately $10 million related to these services for the six months ended June 30, 2010.

The Company has a lease agreement with 3XSQ Associates for a facility located at 3 Times Square in New York, New York, which serves as its corporate headquarters and as a Markets division operating location. 3XSQ Associates, which is an entity owned by Thomson Reuters and Rudin Times Square Associates LLC, was formed to build and operate the 3 Times Square property. The Company follows the equity method of accounting for its investment in 3XSQ Associates. The lease provides the Company with over 690,000 square feet of office space until 2021 and includes provisions to terminate portions early and various renewal options. The Company’s costs related to 3XSQ Associates for the six months ended June 30, 2010 were approximately $19 million for rent, taxes and other expenses.

Other transactions

In February 2010, the Company acquired Super Lawyers from an entity controlled by Vance Opperman, one of the Company’s directors, for approximately $15 million. The acquisition helps expand FindLaw’s product offerings. Mr. Opperman’s son is the CEO of the acquired business and has agreed to stay on with the business until later this year. The Company’s board of directors reviewed and approved the transaction. Mr. Opperman refrained from deliberating and voting on the matter.

In February 2005, the Company entered into a contract with Hewitt Associates Inc. (“Hewitt”) to outsource certain human resources administrative functions in order to improve operating and cost efficiencies. Under the current contract terms, the Company expects to pay Hewitt an aggregate of approximately $165 million over a 10-year period that began in 2006. In 2009, the Company paid Hewitt $8 million for its services. Steven A. Denning, one of the Company’s directors and chairman of the board’s Human Resources Committee, was a director of Hewitt until February 2009. Mr. Denning has not participated in negotiations related to the contract and has refrained from deliberating and voting on any matters relating to Hewitt by the Human Resources Committee and the board of directors.

See note 32 in the Company’s consolidated financial statements for the year ended December 31, 2009 for additional information.