form6k.htm

2012 Outlook	Material assumptions	Material risks
Underlying operating profit margin expected to be between 18% and 19%	— Adjusted EBITDA margin expected to be between 27% and 28% in 2012 — Depreciation and amortization expense expected to represent 9% of revenues reflecting prior investments — Capital expenditures expected to be between 7.5% and 8.0% of revenues	— See the risks above related to adjusted EBITDA margin outlook — 2012 capital expenditures may be higher than currently expected, resulting in higher in-period depreciation and amortization
Free cash flow expected to increase 5% to 10% and free cash flow from ongoing operations expected to grow 15% to 20%	— Revenues expected to grow low single digits in 2012 — Adjusted EBITDA margin expected to be between 27% and 28% — Capital expenditures expected to be between 7.5% to 8.0% of revenues	— See the risks above related to the revenue outlook and adjusted EBITDA margin outlook — A weaker macroeconomic environment and unanticipated disruptions from new order-to-cash applications could negatively impact working capital performance — 2012 capital expenditures may be higher than currently expected resulting in higher cash outflows — The timing of completing divestitures may vary from our expectations resulting in actual free cash flow performance below our expectations

Additionally, in 2012, we expect interest expense to be $400 million to $425 million, assuming no significant change in our level of indebtedness. We also expect that our 2012 effective tax rate (as a percentage of post-amortization adjusted earnings) will be between 21% to 23%, assuming no material changes in current tax laws or treaties to which we are subject.

RELATED PARTY TRANSACTIONS

As of July 30, 2012, Woodbridge beneficially owned approximately 55% of our shares.

TRANSACTIONS WITH WOODBRIDGE

From time to time, in the normal course of business, we enter into transactions with Woodbridge and certain of its affiliates. These transactions involve providing and receiving product and service offerings, are negotiated at arm’s length on standard terms, including price, and are not significant to our results of operations or financial condition either individually or in the aggregate.

In May 2012, as part of our efforts to expand our mutual fund data and strategic research capabilities, we acquired a Canadian mutual fund database, fund fact sheet business and mutual fund and equity data feed business for approximately C$9 million from The Globe and Mail (The Globe), which is majority owned by Woodbridge. We paid approximately C$8 million in cash and issued a C$1 million promissory note to The Globe that will be due in May 2016. In connection with the acquisition, we licensed the acquired database to The Globe over a four year term, valued at approximately C$250,000 per year. The Globe issued four promissory notes to us, each for the value of the annual license. Amounts due each year under the notes issued by The Globe will be offset against the note issued by us. Our board of directors’ Corporate Governance Committee approved the transaction.

In the normal course of business, certain of our subsidiaries charge a Woodbridge-owned company fees for various administrative services. In 2011, the total amount charged to Woodbridge for these services was approximately $69,000.

We purchase property and casualty insurance from third party insurers and retain the first $500,000 of each and every claim under the programs via our captive insurance subsidiaries. Woodbridge is included in these programs and pays us a premium commensurate with its exposures. Premiums relating to 2011 were $58,000, which would approximate the premium charged by a third party insurer for such coverage.

We 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 our current and former directors and officers or by our company in providing indemnification to these individuals on substantially the same terms and conditions as would apply under an arm’s length, commercial arrangement. We were 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, we replaced this agreement with a conventional insurance agreement. We are 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 ASSOCIATES AND JOINT VENTURES

From time to time, we enter into transactions with our investments in associates and joint ventures. These transactions typically involve providing or receiving services and are entered into in the normal course of business and on an arm’s length basis.

We and The Depository Trust & Clearing Corporation (DTCC) each have a 50% interest in Omgeo, a provider of trade management services. Omgeo pays us for use of a facility and technology and other services which were valued at approximately $5 million for the six months ended June 30, 2012.

We 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. We provide the joint venture with technology and other services which were valued at approximately $400,000 for the six months ended June 30, 2012.

In connection with the 2008 acquisition of Reuters, we assumed a lease agreement with 3XSQ Associates, an entity now owned by Thomson Reuters and Rudin Times Square Associates LLC that was formed to build and operate the 3 Times Square property and building in New York, New York that now serves as our corporate headquarters. We follow the equity method of accounting for our investment in 3XSQ Associates. The lease provides us with over 690,000 square feet of office space until 2021 and includes provisions to terminate portions early and various renewal options. Our costs under this lease arrangement for rent, taxes and other expenses were approximately $19 million for the six months ended June 30, 2012.

OTHER TRANSACTIONS

In October 2010, we acquired Serengeti, a provider of electronic billing and matter management systems for corporate legal departments. As a result of a prior investment in a venture lending firm, Peter Thomson, one of our directors, may have the right to receive 10% of the purchase consideration paid by our company. Mr. Thomson did not participate in negotiations related to the acquisition of Serengeti and refrained from deliberating and voting on the acquisition.

SUBSEQUENT EVENTS

ACQUISITIONS

In July 2012, we commenced a tender offer to acquire all of the outstanding common shares of FX Alliance Inc., a global provider of electronic foreign exchange trading solutions to corporations and asset managers, for $22.00 per share. We estimate that the aggregate purchase price will be approximately $680 million. The transaction is expected to close in the third quarter of 2012.

In July 2012, we signed a definitive agreement to acquire MarkMonitor, a provider of online brand protection. The transaction is expected to close in the third quarter of 2012.

CHANGES IN ACCOUNTING POLICIES

Please refer to the “Changes in Accounting Policies” section of our 2011 annual management’s discussion and analysis, which is contained in our 2011 annual report, as well as note 2 of our interim financial statements for the six months ended June 30, 2012, for information regarding changes in accounting policies.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements requires management to make estimates and judgments about the future. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Please refer to the “Critical Accounting Estimates and Judgments” section of our 2011 annual management’s discussion and analysis, which is contained in our 2011 annual report, for additional information. Since the date of our 2011 annual management’s discussion and analysis, there have not been any significant changes to our critical accounting estimates and judgments.

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 that we are required to disclose in reports that we file or furnish under the U.S. Securities Exchange Act and applicable Canadian securities law is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and Canadian securities regulatory authorities and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. A multi-year phased implementation of order-to-cash (OTC) applications and related workflow processes is in progress. Key elements of the OTC solutions are order management, billing, cash management and collections functionality. We expect to reduce the number of applications and to streamline processes across our organization through this initiative. We continue to modify the design and documentation of the related internal control processes and procedures as the phased implementation progresses.

Except as described above, there was no change in our internal control over financial reporting during the last fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

SHARE CAPITAL

As of July 30, 2012, we had outstanding 825,428,235 common shares, 6,000,000 Series II preference shares, 12,548,768 stock options and a total of 7,894,287 time-based restricted share units and performance restricted share units. We have also issued a Thomson Reuters Founders Share which enables Thomson Reuters Founders Share Company to exercise extraordinary voting power to safeguard the Thomson Reuters Trust Principles.

PUBLIC SECURITIES FILINGS AND REGULATORY ANNOUNCEMENTS

You may access other information about our company, including our 2011 annual report (which contains information required in an 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.

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain statements in this management’s discussion and analysis, including, but not limited to statements in the ”Outlook” section are forward-looking. These forward-looking statements are based on certain assumptions and reflect our company’s current expectations. As a result, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Certain factors that could cause actual results or events to differ materially from current expectations are discussed in the “Outlook“ section above. Additional factors are discussed in the “Risk Factors” section of our 2011 annual report and in materials that we from time to time file with, or furnish to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. There is no assurance that any forward-looking statement will materialize. Our outlook is provided for the purpose of providing information about current expectations for 2012. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this management’s discussion and analysis. Except as may be required by applicable law, we disclaim any obligation to update or revise any forward-looking statements.

APPENDIX A

NON-IFRS FINANCIAL MEASURES

The following table sets forth our non-IFRS financial measures, including an explanation of why we believe they are useful measures of our performance. Reconciliations for the most directly comparable IFRS measure are reflected in our management’s discussion and analysis.

Non-IFRS Financial Measure	How We Define It	Why We Use It and Why It Is Useful to Investors	Most Directly Comparable IFRS Measure/Reconciliation
Revenues from ongoing businesses	Revenues from reportable segments and Corporate & Other (which includes the Media business), less eliminations.	Provides a measure of our ability to grow our ongoing businesses over the long term.	Revenues
Revenues at constant currency (before currency or revenues excluding the effects of foreign currency)	Revenues applying the same foreign currency exchange rates for the current and equivalent prior period. To calculate the foreign currency impact between periods, we convert the current and equivalent prior period’s local currency revenues using the same foreign currency exchange rate.	Provides a measure of underlying business trends, without distortion from the effect of foreign currency movements during the period. Our reporting currency is the U.S. dollar. However, we conduct a significant amount of our activities in currencies other than the U.S. dollar. We manage our operating segments on a constant currency basis, and we manage currency exchange risk at the corporate level.	Revenues
Underlying operating profit and underlying operating profit margin	Operating profit from reportable segments and Corporate & Other. The related margin is expressed as a percentage of revenues from ongoing businesses.	Provides a basis to evaluate operating profitability and performance trends, excluding the impact of items which distort the performance of our operations.	Operating profit
Adjusted EBITDA and adjusted EBITDA margin	Underlying operating profit excluding the related depreciation and amortization of computer software. In 2011, this measure also included expenses associated with the final year of the Reuters integration program. The related margin is expressed as a percentage of revenues from ongoing businesses.	Provides a measure commonly reported and widely used by investors as an indicator of a company’s operating performance and ability to incur and service debt, and as a valuation metric.	Earnings from continuing operations

Non-IFRS Financial Measure		How We Define It		Why We Use It and Why It Is Useful to Investors		Most Directly Comparable IFRS Measure/Reconciliation
Adjusted earnings and adjusted earnings per share from continuing operations		Earnings attributable to common shareholders and per share excluding the pre-tax impacts of amortization of other identifiable intangible assets and the post-tax impacts of fair value adjustments, other operating gains and losses, certain impairment charges, the results of Other businesses, other net finance costs or income, our share of post-tax earnings or losses in equity method investees, discontinued operations and other items affecting comparability. We also deduct dividends declared on preference shares. This measure is calculated using diluted weighted average shares. In interim periods, we also adjust our reported earnings and earnings per share to reflect a normalized effective tax rate. Specifically, the normalized effective rate is computed as the estimated full-year effective tax rate applied to adjusted pre-tax earnings of the interim period. The reported effective tax rate is based on separate annual effective income tax rates for each taxing jurisdiction that are applied to each interim period’s pre-tax income.		Provides a more comparable basis to analyze earnings and is also a measure commonly used by shareholders to measure our performance. Because the geographical mix of pre-tax profits and losses in interim periods distorts the reported effective tax rate within an interim period, we believe that using the expected full-year effective tax rate provides more comparability among interim periods. The adjustment to normalize the effective tax rate reallocates estimated full-year income taxes between interim periods, but has no effect on full year tax expense or on cash taxes paid.		Earnings attributable to common shareholders and earnings per share attributable to common shareholders

Non-IFRS Financial Measure	How We Define It	Why We Use It and Why It Is Useful to Investors	Most Directly Comparable IFRS Measure/Reconciliation
Net debt	Total indebtedness, including the associated fair value of hedging instruments on our debt, but excluding unamortized transaction costs and premiums or discounts associated with our debt, less cash and cash equivalents.	Provides a commonly used measure of a company’s leverage. Given that we hedge some of our debt to reduce risk, we include hedging instruments as we believe it provides a better measure of the total obligation associated with our outstanding debt. However, because we intend to hold our debt and related hedges to maturity, we do not consider certain components of the associated fair value of hedges in our measurements. We reduce gross indebtedness by cash and cash equivalents.	Total debt (current indebtedness plus long-term indebtedness)
Free cash flow	Net cash provided by operating activities less capital expenditures, other investing activities and dividends paid on our preference shares.	Helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and new acquisitions.	Net cash provided by operating activities
Free cash flow from ongoing operations	Free cash flow excluding businesses that have been or are expected to be exited through sale or closure, which we refer to as “Other businesses”.	Provides a supplemental measure of our ability, over the long term, to create value for our shareholders because it represents free cash flow generated by our operations excluding businesses that have been or are expected to be exited through sale or closure.	Net cash provided by operating activities

APPENDIX B

This appendix provides reconciliations that are not presented elsewhere in this management’s discussion and analysis for certain non-IFRS measures to the most directly comparable IFRS measure, for the periods presented.

RECONCILIATION OF EARNINGS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA

	Three months ended June 30,									Six months ended June 30,
(millions of U.S. dollars)	2012			2011			Change			2012			2011			Change
Earnings from continuing operations		936			572			64	%		1,264			827			53	%
Adjustments:
Tax expense		279			174						246			226
Other finance costs (income)		16			(9	)					(14	)		(16	)
Net interest expense		91			98						205			199
Amortization of other identifiable intangible assets		149			150						301			294
Amortization of computer software		166			162						341			326
Depreciation		109			110						219			217
EBITDA		1,746			1,257			39	%		2,562			2,073			24	%
Adjustments:
Share of post tax (earnings) losses in equity method investees		(4	)		(2	)					3			(7	)
Other operating gains, net		(798	)		(286	)					(820	)		(319	)
Fair value adjustments		(43	)		(8	)					(13	)		(10	)
EBITDA from Other businesses (1)		(9	)		(73	)					(15	)		(132	)
Adjusted EBITDA		892			888			-			1,717			1,605			7	%
Adjusted EBITDA margin		28.0	%		28.1	%		(10	)bp		26.9	%		25.7	%		120	bp

RECONCILIATION OF UNDERLYING OPERATING PROFIT TO ADJUSTED EBITDA BY SEGMENT

	Three months ended June 30, 2012								Three months ended June 30, 2011
(millions of U.S. dollars)	Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA			Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA
Financial & Risk		306			154		460			377			149		526
Legal		251			68		319			250			68		318
Tax & Accounting		56			28		84			47			22		69
Intellectual Property & Science		59			16		75			57			14		71
Corporate & Other (includes Media) (2)		(55	)		9		(46	)		(62	)		8		(54	)
Integration programs expenses	na			na			-		na			na			(42	)
Total		617			275		892			669			261		888

**	Excludes Other businesses (1)

RECONCILIATION OF UNDERLYING OPERATING PROFIT TO ADJUSTED EBITDA BY SEGMENT (CONTINED)

	Six months ended June 30, 2012								Six months ended June 30, 2011
(millions of U.S. dollars)	Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA			Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA
Financial & Risk		608			311		919			704			287		991
Legal		451			138		589			440			135		575
Tax & Accounting		124			56		180			90			43		133
Intellectual Property & Science		114			33		147			109			28		137
Corporate & Other (includes Media) (2)		(135	)		17		(118	)		(138	)		19		(119	)
Integration programs expenses	na			na			-		na			na			(112	)
Total		1,162			555		1,717			1,205			512		1,605

**	Excludes Other businesses (1)

(1)

Other businesses are businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. Significant businesses in this category include: BARBRI (legal education provider, sold in the second quarter of 2011); Trade and Risk Management (trade and risk management solutions provider to financial institutions sold in the first quarter of 2012); Healthcare (data, analytics and performance benchmarking solutions provider, sold in the second quarter of 2012); and Property Tax Consulting (property tax outsourcing and compliance services provider in the U.S., currently held for sale).

	Three months ended June 30,				Six months ended June 30,
(millions of U.S. dollars)	2012		2011		2012		2011
Revenues		120		286		287		539

Operating profit		9		62		10		101
Depreciation and amortization of computer software		-		11		5		31
EBITDA		9		73		15		132

(2)	Corporate & Other includes the Media business and expenses for corporate functions and certain share-based compensation costs.

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	2012			2011			2012			2011
Revenues			3,309			3,447			6,663			6,777
Operating expenses	5		(2,365	)		(2,478	)		(4,918	)		(5,030	)
Depreciation			(109	)		(110	)		(219	)		(217	)
Amortization of computer software			(166	)		(162	)		(341	)		(326	)
Amortization of other identifiable intangible assets			(149	)		(150	)		(301	)		(294	)
Other operating gains, net	6		798			286			820			319
Operating profit			1,318			833			1,704			1,229
Finance costs, net:
Net interest expense	7		(91	)		(98	)		(205	)		(199	)
Other finance (costs) income	7		(16	)		9			14			16
Income before tax and equity method investees			1,211			744			1,513			1,046
Share of post tax earnings (losses) in equity method investees			4			2			(3	)		7
Tax expense	8		(279	)		(174	)		(246	)		(226	)
Earnings from continuing operations			936			572			1,264			827
(Loss) earnings from discontinued operations, net of tax			(1	)		-			(3	)		2
Net earnings			935			572			1,261			829
Earnings attributable to:
Common shareholders			922			563			1,236			813
Non-controlling interests			13			9			25			16

Earnings per share:	9
Basic and diluted earnings per share:
From continuing operations			$1.11			$0.67			$1.49			$0.97
From discontinued operations			-			-			-			-
Basic and diluted earnings per share			$1.11			$0.67			$1.49			$0.97

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	2012			2011			2012			2011
Net earnings			935			572			1,261			829
Other comprehensive (loss) income:
Cash flow hedges adjustments to equity			(49	)		34			(31	)		84
Cash flow hedges adjustments to earnings	7		50			(21	)		3			(76	)
Foreign currency translation adjustments to equity			(166	)		192			(85	)		408
Foreign currency translation adjustments to earnings			-			1			-			2
Net actuarial losses on defined benefit pension plans, net of tax(1)			(155	)		(22	)		(199	)		(3	)
Other comprehensive (loss) income			(320	)		184			(312	)		415
Total comprehensive income			615			756			949			1,244

Comprehensive income for the period attributable to:
Common shareholders			602			747			924			1,228
Non-controlling interests			13			9			25			16

(1)	The related tax benefit (expense) was $85 million and $15 million for the three months ended June 30, 2012 and 2011, respectively, and $95 million and ($3) million for the six months ended June 30, 2012 and 2011, 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, 2012			December 31, 2011
ASSETS
Cash and cash equivalents	10		1,801			422
Trade and other receivables			1,733			1,984
Other financial assets	10		91			100
Prepaid expenses and other current assets			513			641
Current assets excluding assets held for sale			4,138			3,147
Assets held for sale	11		140			767
Current assets			4,278			3,914
Computer hardware and other property, net			1,355			1,509
Computer software, net			1,608			1,640
Other identifiable intangible assets, net			8,077			8,471
Goodwill			15,706			15,932
Other financial assets	10		317			425
Other non-current assets	12		540			535
Deferred tax			43			50
Total assets			31,924			32,476

LIABILITIES AND EQUITY
Liabilities
Current indebtedness	10		8			434
Payables, accruals and provisions	13		2,476			2,675
Deferred revenue			1,220			1,379
Other financial liabilities	10		63			81
Current liabilities excluding liabilities associated with assets held for sale			3,767			4,569
Liabilities associated with assets held for sale	11		17			35
Current liabilities			3,784			4,604
Long-term indebtedness	10		7,158			7,160
Provisions and other non-current liabilities	14		2,681			2,513
Other financial liabilities	10		32			27
Deferred tax			1,218			1,422
Total liabilities			14,873			15,726

Equity
Capital	15		10,292			10,288
Retained earnings			8,041			7,633
Accumulated other comprehensive loss			(1,629	)		(1,516	)
Total shareholders’ equity			16,704			16,405
Non-controlling interests			347			345
Total equity			17,051			16,750
Total liabilities and equity			31,924			32,476

Contingencies (note 18)

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	2012			2011			2012			2011
Cash provided by (used in):
OPERATING ACTIVITIES
Net earnings			935			572			1,261			829
Adjustments for:
Depreciation			109			110			219			217
Amortization of computer software			166			162			341			326
Amortization of other identifiable intangible assets			149			150			301			294
Net gains on disposals of businesses			(789	)		(382	)		(826	)		(386	)
Deferred tax			53			(142	)		(119	)		(174	)
Other	16		(68	)		129			24			164
Changes in working capital and other items	16		315			280			(58	)		(191	)
Net cash provided by operating activities			870			879			1,143			1,079
INVESTING ACTIVITIES
Acquisitions, net of cash acquired	17		(101	)		(672	)		(260	)		(726	)
Proceeds from disposals			1,369			495			1,983			510
Capital expenditures, less proceeds from disposals			(211	)		(247	)		(494	)		(541	)
Other investing activities			2			2			7			37
Investing cash flows from continuing operations			1,059			(422	)		1,236			(720	)
Investing cash flows from discontinued operations			90			18			90			39
Net cash provided by (used in) investing activities			1,149			(404	)		1,326			(681	)
FINANCING ACTIVITIES
Repayments of debt			(2	)		(48	)		(2	)		(53	)
Net repayments under short-term loan facilities			(287	)		(63	)		(423	)		(20	)
Repurchases of common shares	15		(144	)		-			(168	)		-
Dividends paid on preference shares			(1	)		(1	)		(2	)		(2	)
Dividends paid on common shares	15		(256	)		(248	)		(512	)		(465	)
Other financing activities			12			(14	)		20			(14	)
Net cash used in financing activities			(678	)		(374	)		(1,087	)		(554	)
Translation adjustments on cash and cash equivalents			(7	)		1			(3	)		5
Increase (decrease) in cash and cash equivalents			1,334			102			1,379			(151	)
Cash and cash equivalents at beginning of period			467			611			422			864
Cash and cash equivalents at end of period			1,801			713			1,801			713

Supplemental cash flow information is provided in note 16.

Interest paid			(81	)		(60	)		(197	)		(193	)
Interest received			2			2			3			3
Income taxes paid			(43	)		(155	)		(104	)		(157	)

Amounts paid and received for interest and taxes are reflected as operating cash flows. 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 loss on cash flow hedges			Foreign currency translation adjustments			Total accumulated other comprehensive (loss) income (“AOCL”)			Non- controlling interests			Total
Balance, December 31, 2011		10,134			154		10,288			7,633			(22	)		(1,494	)		(1,516	)		345			16,750
Comprehensive income (loss) (1)		-			-		-			1,037			(28	)		(85	)		(113	)		25			949
Distributions to non-controlling interest		-			-		-			-			-			-			-			(23	)		(23	)
Dividends declared on preference shares		-			-		-			(2	)		-			-			-			-			(2	)
Dividends declared on common shares		-			-		-			(531	)		-			-			-			-			(531	)
Shares issued under Dividend Reinvestment Plan (“DRIP”)		19			-		19			-			-			-			-			-			19
Repurchases of common shares		(72	)		-		(72	)		(96	)		-			-			-			-			(168	)
Stock compensation plans		54			3		57			-			-			-			-			-			57
Balance, June 30, 2012		10,135			157		10,292			8,041			(50	)		(1,579	)		(1,629	)		347			17,051


(millions of U.S. dollars)	Stated share capital			Contributed surplus		Total capital			Retained earnings			Unrecognized (loss) gain on cash flow hedges			Foreign currency translation adjustments			AOCL			Non- controlling interests			Total
Balance, December 31, 2010		10,077			207		10,284			10,518			(43	)		(1,437	)		(1,480	)		353			19,675
Comprehensive income (1)		-			-		-			810			8			410			418			16			1,244
Distributions to non- controlling interest		-			-		-			-			-			-			-			(19	)		(19	)
Dividends declared on preference shares		-			-		-			(2	)		-			-			-			-			(2	)
Dividends declared on common shares		-			-		-			(518	)		-			-			-			-			(518	)
Shares issued under DRIP		53			-		53			-			-			-			-			-			53
Stock compensation plans		69			1		70			-			-			-			-			-			70
Balance, June 30, 2011		10,199			208		10,407			10,808			(35	)		(1,027	)		(1,062	)		350			20,503

(1)	Retained earnings for the six months ended June 30, 2012 includes net actuarial losses of $199 million, net of tax (2011 - $3 million).

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

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, 2011, 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, 2011. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2011, which are included in the Company’s 2011 annual report.

The accompanying interim financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

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

Note 2: Changes in accounting policies

Certain pronouncements were issued by the IASB or International Financial Reporting Interpretations Committee that will be effective for accounting periods beginning on or after January 1, 2013. Many of these updates are not applicable or consequential to the Company and have been excluded from the discussion below.

IAS 19, Employee Benefits

IAS 19, Employee Benefits, has been amended for annual accounting periods beginning January 1, 2013, with retrospective application. The new standard introduces a measure of ‘net interest income (expense)’ computed on the net pension asset (obligation) that will replace separate measurement of the expected return on plan assets and interest expense on the benefit obligation. The new standard also requires immediate recognition of past service costs associated with benefit plan changes. Under the current standard, past service costs are recognized over the vesting period.

Upon retrospective application of the new standard, the Company expects restated net earnings for 2012 to be lower than originally reported under the current accounting standard. The decrease is expected to arise under the new standard because net interest income (expense) will be calculated using the discount rate used to value the benefit obligation. As the discount rate is lower than the expected rate of return on assets, net earnings are expected to decrease as net interest attributable to plan assets will decline.

Consolidation, Joint Ventures and Separate Financial Statements

The following pronouncements and related amendments must be adopted together no later than January 1, 2013 with earlier application permitted:

IFRS 10	Consolidated Financial Statements	IFRS 10 replaces the guidance on ‘consolidation’ in IAS 27 - Consolidated and Separate Financial Statements and Standing Interpretations Committee (“SIC”) 12 - Consolidation - Special Purpose Entities. The new standard contains a single consolidation model that identifies control as the basis for consolidation for all types of entities, including special purpose entities. The new standard also sets out requirements for situations when control is difficult to assess, including circumstances in which voting rights are not the dominant factor in determining control.
IFRS 11	Joint Arrangements	IFRS 11 replaces the guidance on ‘joint ventures’ in IAS 31 - Interests in Joint Ventures and SIC 13 - Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The new standard introduces a principles-based approach to accounting for joint arrangements that requires a party to a joint arrangement to recognize its rights and obligations arising from the arrangement. The new standard requires that joint ventures be accounted for under the equity method and eliminates the option to proportionally consolidate.
IAS 27	Separate Financial Statements	IAS 27 has been amended for the issuance of IFRS 10, but retains the current guidance for separate financial statements.
IAS 28	Investments in Associates and Joint Ventures	IAS 28 has been amended for conforming changes based on issuance of IFRS 10 and IFRS 11. The amendment requires that where a joint arrangement is determined to be a joint venture under IFRS 11, it should be accounted for using the equity method guidance provided in this standard.

The adoptions of the pronouncements and amendments described above are not anticipated to have a material impact on the Company’s results and financial position. Upon the adoptions of these changes, the Company will no longer proportionately consolidate its joint arrangements in (i) Omgeo, a provider of trade management services within its Financial & Risk segment and (ii) Westlaw Japan K.K., a provider of legal information and solutions to the Japanese legal market, within its Legal segment. Instead, the Company will apply the equity method to these joint ventures which will reduce consolidated revenues and reclassify the operating profit of each joint venture from consolidated operating profit to income from equity method investees. There will be no impact on net earnings.

The following pronouncements, listed by applicable annual accounting period effective date, are being assessed to determine their impact on the Company’s results and financial position.

Effective – January 1, 2013, earlier application is permitted
IFRS 13	Fair Value Measurement	IFRS 13 defines 'fair value' and sets out in a single standard a framework for measuring fair value and requires disclosures about fair value measurements. The new standard reduces complexity and improves consistency by clarifying the definition of fair value and requiring its application to all fair value measurements.
2009 – 2011 Cycle	Annual Improvements to IFRSs	The Annual Improvements to IFRSs for the 2009 – 2011 Cycle (the “Annual Improvements”) make non-urgent but necessary amendments to several IFRSs. Among several changes, the Annual Improvements: (a) amend IAS 16, Property, Plant and Equipment to clarify the classification of servicing equipment; (b) amend IAS 32, Financial Instruments: Presentation to clarify the treatment of income tax relating to distributions and transaction costs; and (c) amend IAS 34, Interim Financial Reporting to clarify the disclosure requirements for segment assets and liabilities in interim financial statements.

Effective – January 1, 2015
IFRS 9	Financial Instruments (Classification and Measurement)	IFRS 9 replaces the guidance on ‘classification and measurement’ of financial instruments in IAS 39 - Financial Instruments - Recognition and Measurement. The new standard requires a consistent approach to the classification of financial assets and replaces the numerous categories of financial assets in IAS 39 with two categories, measured at either amortized cost or at fair value. For financial liabilities, the standard retains most of the IAS 39 requirements, but where the fair value option is taken, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

The following pronouncements and related amendments, which relate to presentation and disclosure, are applicable to the Company for annual accounting periods effective from January 1, 2013 (unless otherwise noted) and are not anticipated to have a material impact on the Company’s results and financial position.

IFRS 7 - Financial Instruments: Disclosures (amendments effective January 1, 2013 and 2015);

IFRS 12 - Disclosure of Interests in Other Entities;

IAS 1 - Presentation of Financial Statements; and

IAS 32 - Financial Instruments: Presentation (amendment effective January 1, 2014).

Note 3: Segment information

Effective January 1, 2012, the Company is organized as four reportable segments reflecting how the businesses are managed: Financial & Risk, Legal, Tax & Accounting and Intellectual Property & Science. The Company was previously organized as two divisions: Professional (consisting of the Legal, Tax & Accounting and Intellectual Property & Science segments) and Markets, also a reportable segment (consisting of the financial and media businesses). The Financial & Risk unit consists of the financial businesses that were previously part of the Markets division and most of the Governance, Risk & Compliance businesses that were previously included within the Legal segment.

The accounting policies applied by the segments are the same as those applied by the Company. Segment information for 2011 was restated to reflect the current presentation.

The reportable segments offer products and services to target markets as described below.

Financial & Risk

The Financial & Risk segment is a provider of critical news, information and analytics, enabling transactions and bringing together communities of trading, investing, financial and corporate professionals. Financial & Risk also provides regulatory and operational risk management solutions.

Legal

The Legal segment is a provider of critical information, decision support tools, software and services to legal, investigation, business and government professionals around the world.

Tax & Accounting

The Tax & Accounting segment is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government.

Intellectual Property & Science

The Intellectual Property & Science segment is a provider of comprehensive intellectual property and scientific resources that enable governments, academia, publishers, corporations and law firms to discover, develop and deliver innovations.

The Company also reports “Corporate & Other” and “Other businesses”. These categories do not qualify as a component of another reportable segment, nor as a separate reportable segment.

Corporate & Other includes expenses for corporate functions, certain share-based compensation costs and the Media business, which is comprised of the Reuters News Agency and consumer publishing; and

Other businesses is an aggregation of businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. See notes 6 and 11.


	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Revenues
Financial & Risk		1,792			1,839			3,603			3,643
Legal		818			803			1,595			1,557
Tax & Accounting		283			229			593			467
Intellectual Property & Science		216			211			425			412
Reportable segments		3,109			3,082			6,216			6,079
Corporate & Other (includes Media)		83			84			165			166
Eliminations		(3	)		(5	)		(5	)		(7	)
Revenues from ongoing businesses		3,189			3,161			6,376			6,238
Other businesses (1)		120			286			287			539
Consolidated revenues		3,309			3,447			6,663			6,777

Operating profit
Segment operating profit
Financial & Risk		306			377			608			704
Legal		251			250			451			440
Tax & Accounting		56			47			124			90
Intellectual Property & Science		59			57			114			109
Reportable segments		672			731			1,297			1,343
Corporate & Other (includes Media)		(55	)		(62	)		(135	)		(138	)
Underlying operating profit		617			669			1,162			1,205
Other businesses (1)		9			62			10			101
Integration programs expenses (see note 5)		-			(42	)		-			(112	)
Fair value adjustments (see note 5)		43			8			13			10
Amortization of other identifiable intangible assets		(149	)		(150	)		(301	)		(294	)
Other operating gains, net		798			286			820			319
Consolidated operating profit		1,318			833			1,704			1,229

(1)

Significant businesses in this category include: BARBRI (legal education provider, sold in the second quarter of 2011); Trade and Risk Management (trade and risk management solutions provider to financial institutions, sold in the first quarter of 2012); Healthcare (data, analytics and performance benchmarking solutions provider, sold in the second quarter of 2012); and Property Tax Consulting (property tax outsourcing and compliance services provider in the U.S., currently held for sale).

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. By definition, results from the Media business and Other businesses are excluded from reportable segments as they do not qualify as a component of the Company’s four reportable segments, nor as a separate reportable segment. The Company uses segment operating profit to measure the operating performance of its reportable segments. The costs of centralized support services such as technology, news, 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 identifiable intangible assets; (ii) other operating gains and losses; (iii) certain asset impairment charges; and (iv) corporate-related items (including corporate expense, expenses associated with the Reuters integration program that was completed in 2011, and fair value adjustments). Management uses this measure because amortization of other identifiable intangible assets, other operating gains and losses, certain asset impairment charges and corporate-related items are not considered to be controllable operating activities for purposes of assessing the current performance of the reportable segments. While in accordance with IFRS, the Company’s definition of segment operating profit may not be comparable to that of other companies.

Management also uses revenues from ongoing businesses and underlying operating profit to measure its consolidated performance, which includes Media. Revenues from ongoing businesses are revenues from reportable segments and Corporate & Other, less eliminations. Underlying operating profit is comprised of operating profit from reportable segments and Corporate & Other. Other businesses are excluded from both measures as they are not fundamental to the Company’s strategy. Revenues from ongoing businesses and underlying operating profit do not have standardized meaning under IFRS, and therefore may not be comparable to similar measures of other companies.

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 (other than expenses associated with the Reuters integration program that was completed in 2011) 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,
	2012			2011			2012			2011
Salaries, commissions and allowances		1,253			1,240			2,551			2,550
Share-based payments		23			28			57			62
Post-employment benefits		61			63			126			126
Total staff costs		1,337			1,331			2,734			2,738
Goods and services (1)		545			604			1,150			1,215
Data		254			260			511			509
Telecommunications		150			160			294			320
Real estate		122			131			242			258
Fair value adjustments (2)		(43	)		(8	)		(13	)		(10	)
Total operating expenses		2,365			2,478			4,918			5,030

(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 mark-to-market impacts on embedded derivatives and certain share-based awards.

Operating expenses include costs incurred in the ordinary course of business. Operating expenses for the six months ended June 30, 2012 included $43 million of severance charges, most of which was incurred in the first quarter of 2012. The majority of these costs were included in the Corporate & Other category.

In 2011, operating expenses included the final year of integration expenses from the 2008 acquisition of Reuters Group PLC (“Reuters”) and other legacy efficiency initiatives. In the three and six months ended June 30, 2011, $42 million and $112 million, respectively, of integration expenses were incurred, primarily comprised of severance, consulting and technology-related expenses. Because the integration and legacy efficiency programs were corporate initiatives, the related expenses were excluded from segment operating profit and reported separately in the segment information disclosures in note 3.

Severance charges are reported within “Salaries, commissions and allowances”. Consulting and technology-related expenses associated with the integration programs are reported within “Goods and services”.

Note 6: Other operating gains, net

Other operating gains, net, were $798 million and $820 million for the three and six months ended June 30, 2012, respectively. The six months ended June 30, 2012 included approximately a:

$745 million gain from the sale of the Healthcare business;

$45 million gain from the sale of the Trade and Risk Management business; and

$40 million gain from the sale of the Portia business.

Other operating gains, net, were $286 million and $319 million for the three and six months ended June 30, 2011, respectively, and were primarily comprised of gains from the sales of the BARBRI legal education business and the Scandinavian legal, tax and accounting business.

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,
	2012			2011			2012			2011
Interest expense:
Debt		(102	)		(109	)		(205	)		(216	)
Derivative financial instruments - hedging activities		4			11			8			21
Other		5			(4	)		(13	)		(14	)
Fair value gains (losses) on financial instruments:
Debt		1			2			3			7
Cash flow hedges, transfer from equity		(50	)		21			(3	)		76
Fair value hedges		(4	)		4			(3	)		15
Net foreign exchange gains (losses) on debt		53			(27	)		3			(98	)
		(93	)		(102	)		(210	)		(209	)
Interest income		2			4			5			10
Net interest expense		(91	)		(98	)		(205	)		(199	)


	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Net (losses) gains due to changes in foreign currency exchange rates		(32	)		24			(9	)		46
Net gains (losses) on derivative instruments		15			(15	)		22			(30	)
Other		1			-			1			-
Other finance (costs) income		(16	)		9			14			16

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

Net (losses) gains due to changes in foreign currency exchange rates were principally comprised of amounts related to certain intercompany funding arrangements.

Net gains (losses) on derivative instruments

Net gains (losses) on derivative instruments were principally comprised of amounts relating to freestanding derivative instruments.

Note 8: Taxation

Tax expense for the three and six months ended June 30, 2012 and 2011 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. The following items also affected tax expense in 2012:


Expense (benefit)	Three months ended June 30, 2012			Six months ended June 30, 2012
Sale of businesses
Healthcare(1)		224			137
Trade and Risk Management		-			33
Portia		14			14

Discrete tax items
Uncertain tax positions(2)		(80	)		(84	)
Corporate tax rates(3)		-			(14	)
Other		(3	)		(11	)

(1)	The three months ended June 30, 2012 included an $87 million tax expense to write-off a deferred tax asset that was recognized in the first quarter of 2012.

(2)	Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.

(3)	Relates to the impact on deferred tax liabilities due to lower corporate tax rates that were substantively enacted in certain jurisdictions outside the U.S.

The three and six months ended June 30, 2011 included a $46 million tax benefit as a result of recognizing tax losses that arose in a prior year from the sale of an investment to the Company’s principal and controlling shareholder, The Woodbridge Company Limited (“Woodbridge”). As a result of Woodbridge selling its interest in that investment to a third party in April 2011, the tax losses became available to the Company for use for tax purposes.

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 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 time-based restricted share units (“TRSUs”). 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 period.

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,
	2012			2011			2012			2011
Net earnings		935			572			1,261			829
Less: Earnings attributable to non-controlling interests		(13	)		(9	)		(25	)		(16	)
Dividends declared on preference shares		(1	)		(1	)		(2	)		(2	)
Earnings used in consolidated earnings per share		921			562			1,234			811
Less: Loss (earnings) from discontinued operations, net of tax		1			-			3			(2	)
Earnings used in earnings per share from continuing operations		922			562			1,237			809

Earnings used in determining earnings per share from discontinued operations are the (loss) 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,
	2012		2011		2012		2011
Weighted average number of shares outstanding		827,795,420		835,970,808		828,034,828		835,026,682
Vested DSUs and PRSUs		687,251		1,125,909		626,937		1,102,701
Basic		828,482,671		837,096,717		828,661,765		836,129,383
Effect of stock options and TRSUs		2,262,142		2,749,518		1,845,462		2,896,202
Diluted		830,744,813		839,846,235		830,507,227		839,025,585

Note 10: Financial instruments

Financial assets and liabilities

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

June 30, 2012	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		1,801		-			-			-		-			1,801
Trade and other receivables		1,733		-			-			-		-			1,733
Other financial assets - current		26		65			-			-		-			91
Other financial assets - non-current		70		-			221			24		2			317
Current indebtedness		-		-			-			-		(8	)		(8	)
Trade payables (see note 13)		-		-			-			-		(336	)		(336	)
Accruals (see note 13)		-		-			-			-		(1,509	)		(1,509	)
Other financial liabilities - current		-		(18	)		-			-		(45	)		(63	)
Long term indebtedness		-		-			-			-		(7,158	)		(7,158	)
Other financial liabilities - non-current		-		-			(32	)		-		-			(32	)
Total		3,630		47			189			24		(9,054	)		(5,164	)

December 31, 2011	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		422		-			-			-		-			422
Trade and other receivables		1,984		-			-			-		-			1,984
Other financial assets - current		27		73			-			-		-			100
Other financial assets - non-current		154		-			251			20		-			425
Current indebtedness		-		-			-			-		(434	)		(434	)
Trade payables (see note 13)		-		-			-			-		(508	)		(508	)
Accruals (see note 13)		-		-			-			-		(1,756	)		(1,756	)
Other financial liabilities - current		-		(32	)		-			-		(49	)		(81	)
Long term indebtedness		-		-			-			-		(7,160	)		(7,160	)
Other financial liabilities - non-current		-		-			(27	)		-		-			(27	)
Total		2,587		41			224			20		(9,907	)		(7,035	)

Cash and cash equivalents

At June 30, 2012, there was $1.2 billion of cash and cash equivalents held in money market accounts (December 31, 2011 - $110 million). Of total cash and cash equivalents, $139 million and $147 million at June 30, 2012 and December 31, 2011, respectively, were held in subsidiaries which have regulatory restrictions, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and are therefore not available for general use by the Company.

Debt-related activity

Current indebtedness included nil and $390 million of outstanding commercial paper at June 30, 2012 and December 31, 2011, respectively.

The Company has a $2.0 billion unsecured revolving credit facility that currently expires in August 2016. The facility may be used to provide liquidity in connection with the Company’s commercial paper program and for general corporate purposes. There were no amounts drawn against this facility as of June 30, 2012.

Note 11: Businesses held for sale

The Company intends to sell certain businesses that are no longer fundamental to its strategy. The results of operations from these businesses are reported within the “Other business” category. See note 3. The most significant of those businesses classified as held for sale at June 30, 2012 was Property Tax Consulting, a provider of property tax outsourcing and compliance services in the U.S., formerly in the Tax & Accounting segment.

The assets and liabilities associated with all businesses classified as held for sale in the statement of financial position are as follows:

	June 30, 2012		December 31, 2011
Trade and other receivables		21		12
Computer software, net		5		76
Other identifiable intangible assets, net		36		-
Goodwill		64		659
Other assets		14		20
Total assets held for sale		140		767

Payables, accruals and provisions		14		14
Deferred revenue		2		13
Other liabilities		1		8
Total liabilities associated with assets held for sale		17		35

The balances classified as held for sale at December 31, 2011 primarily related to the Trade & Risk management business, which was sold in the first quarter of 2012.

These businesses do not qualify for discontinued operations classification.

Note 12: Other non-current assets

	June 30, 2012		December 31, 2011
Net defined benefit plan surpluses		3		13
Cash surrender value of life insurance policies		250		241
Investments in equity method investees		246		253
Other non-current assets		41		28
Total other non-current assets		540		535

Note 13: Payables, accruals and provisions

	June 30, 2012		December 31, 2011
Trade payables		336		508
Accruals		1,509		1,756
Provisions		231		232
Other current liabilities		400		179
Total payables, accruals and provisions		2,476		2,675

Note 14: Provisions and other non-current liabilities

	June 30, 2012		December 31, 2011
Net defined benefit plan obligations		1,705		1,438
Deferred compensation and employee incentives		221		218
Provisions		172		176
Unfavorable contract liability		122		147
Uncertain tax positions		372		446
Other non-current liabilities		89		88
Total provisions and other non-current liabilities		2,681		2,513

Note 15: Capital

Share repurchases

The Company may buy back shares (and subsequently cancel them) from time to time as part of its capital management strategy. In May 2012, the Company renewed its normal course issuer bid (“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 22, 2012 and May 21, 2013.

During the three and six months ended June 30, 2012, the Company repurchased 5,097,400 and 5,948,600 of its common shares for approximately $144 million and $168 million, respectively. The average price per share for 2012 repurchases was $28.26. The Company has repurchased 4,332,200 of its common shares under the current NCIB. Decisions regarding any future repurchases will be based on market conditions, share price and other factors including opportunities to invest capital for growth.

Dividends

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


	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Dividends declared per common share		$0.32		$0.31		$0.64		$0.62

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


	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Dividend reinvestment		10		11		19		53

Note 16: 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,
	2012			2011		2012			2011
Non-cash employee benefit charges		47			62		121			135
Other(1)		(115	)		67		(97	)		29
		(68	)		129		24			164

(1)	The 2012 periods include non-cash reversals of uncertain tax positions. See note 8.

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


	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Trade and other receivables		37			75			154			72
Prepaid expenses and other current assets		28			125			(21	)		44
Other financial assets		(9	)		3			-			7
Payables, accruals and provisions		90			83			(378	)		(454	)
Deferred revenue		(8	)		(78	)		(15	)		34
Other financial liabilities		(36	)		(1	)		(15	)		(7	)
Income taxes		246			139			308			204
Other		(33	)		(66	)		(91	)		(91	)
		315			280			(58	)		(191	)

Note 17: Acquisitions

Acquisitions primarily comprise the purchase of businesses that are integrated into existing operations to broaden the Company’s range of offerings to customers as well as its presence in global markets.

Acquisition activity

The number of acquisitions completed, and the related cash consideration, during the three and six months ended June 30, 2012 and 2011 were as follows:


	Three months ended June 30,				Six months ended June 30,
Number of transactions	2012		2011		2012		2011
Businesses and identifiable intangible assets acquired		9		8		17		17
Investments in businesses		-		-		-		-
		9		8		17		17


	Three months ended June 30,				Six months ended June 30,
Cash consideration	2012		2011		2012		2011
Businesses and identifiable intangible assets acquired(1)		89		671		232		724
Contingent consideration payments		11		-		25		-
Investments in businesses		1		1		3		2
		101		672		260		726

(1)	Cash consideration is net of cash acquired of nil and $7 million for the three months ended June 30, 2012 and 2011, respectively, and $2 million and $9 million for the six months ended June 30, 2012 and 2011, respectively.

The following provides a brief description of certain acquisitions completed during the six months ended June 30, 2012 and 2011:

Date	Company	Acquiring segment	Description
January 2012	Dr. Tax Software	Tax & Accounting	A Canadian based developer of income tax software
May 2011	Mastersaf	Tax & Accounting	A Brazilian provider of tax and accounting solutions
May 2011	World-Check	Legal	A provider of financial crime and corruption prevention information

Purchase price allocation

Each business combination has been accounted for using the acquisition 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,
	2012			2011			2012			2011
Cash and cash equivalents		-			7			2			9
Trade and other receivables		4			33			7			39
Prepaid expenses and other current assets		1			40			2			43
Current assets		5			80			11			91
Computer hardware and other property, net		-			3			1			3
Computer software, net		7			63			24			66
Other identifiable intangible assets		38			240			89			276
Other non-current assets		-			-			-			1
Total assets		50			386			125			437
Current indebtedness		-			(50	)		-			(50	)
Payables, accruals and provisions		(10	)		(29	)		(11	)		(44	)
Deferred revenue		(11	)		(39	)		(16	)		(43	)
Current liabilities		(21	)		(118	)		(27	)		(137	)
Provisions and other non-current liabilities		-			(5	)		(3	)		(6	)
Deferred tax		(5	)		(63	)		(17	)		(65	)
Total liabilities		(26	)		(186	)		(47	)		(208	)
Net assets acquired		24			200			78			229
Goodwill		65			478			156			504
Total		89			678			234			733

The excess of the purchase price over the net tangible and identifiable intangible assets acquired and assumed liabilities was recorded as goodwill and reflects synergies and the value of the acquired workforce. The majority of goodwill for acquisitions completed in 2012 and 2011 is not expected to be deductible for tax purposes.

Acquisition transactions were completed by acquiring all equity interests or the net assets of the acquired business. The revenues and operating profit of acquired businesses since the date of acquisition were not material to the Company’s results of operations.

Note 18: 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). RIC symbols are specifically designed to help financial professionals retrieve news and information on financial instruments (such as prices and other data on stocks, bonds, currencies and commodities) from Thomson Reuters financial data services. While the Company does not believe that it has engaged in any anti-competitive behavior related to RIC symbols, it offered to allow customers to license additional usage rights for RICs and to provide them with information needed to cross reference RICs with other data. Following initial feedback from market testing (as prescribed by European Union law), the Company entered into further discussions with the European Commission and subsequently produced a revised set of commitments which the European Commission is currently market testing.

In addition to the matter 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 the matter 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 during the course of business for which the ultimate tax determination is uncertain. The Company maintains provisions for uncertain tax positions that it believes appropriately reflect its risk. 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 reviews the adequacy of these provisions at the end of the reporting period. It is possible that at some future date, liabilities in excess of the Company’s provisions could result from audits by, or litigation with, the IRS or other relevant taxing authorities. Management believes that such additional liabilities would not have a material adverse impact on the Company’s financial condition taken as a whole.

Note 19: Related party transactions

As of June 30, 2012, Woodbridge beneficially owned approximately 55% of the Company’s shares.

Transactions with Woodbridge

From time to time, in the normal course of business, the Company enters into transactions with Woodbridge and certain of its affiliates. These transactions involve providing and receiving product and service offerings, 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 May 2012, as part of its efforts to expand its mutual fund data and strategic research capabilities, the Company acquired a Canadian mutual fund database, fund fact sheet business and mutual fund and equity data feed business for approximately C$9 million from The Globe and Mail (“The Globe”), which is majority owned by Woodbridge. The Company paid approximately C$8 million in cash and issued a C$1 million promissory note to The Globe that will be due in May 2016. In connection with the acquisition, the Company licensed the acquired database to The Globe over a four year term, valued at approximately C$250,000 per year. The Globe issued four promissory notes to the Company, each for the value of the annual license. Amounts due each year under the notes issued by The Globe will be offset against the note issued by the Company. The board of directors’ Corporate Governance Committee approved the transaction.

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 $69,000 for the year ended December 31, 2011.

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 subsidiaries. Woodbridge is included in these programs and pays the Company a premium commensurate with its exposures. Premiums relating to the year ended December 31, 2011 were $58,000, 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 associates and joint ventures

From time to time, the Company enters into transactions in connection with its investments in associates and joint ventures. These transactions typically 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 which were valued at approximately $5 million for the six months ended June 30, 2012.

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 $400,000 for the six months ended June 30, 2012.

In connection with the 2008 acquisition of Reuters, the Company assumed a lease agreement with 3XSQ Associates, an entity now owned by the Company and Rudin Times Square Associates LLC that was formed to build and operate the 3 Times Square property and building in New York, New York that now serves as the Company’s corporate headquarters. 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 under this lease arrangement for rent, taxes and other expenses were approximately $19 million for the six months ended June 30, 2012.

Other transactions

In October 2010, the Company acquired Serengeti, a provider of electronic billing and matter management systems for corporate legal departments. As a result of a prior investment in a venture lending firm, Peter Thomson, one of the Company’s directors, may have the right to receive 10% of the purchase consideration paid by the Company. Mr. Thomson did not participate in negotiations related to the acquisition of Serengeti and refrained from deliberating and voting on the acquisition.

Note 20: Subsequent events

Acquisitions

In July 2012, the Company commenced a tender offer to acquire all of the outstanding common shares of FX Alliance Inc., a global provider of electronic foreign exchange trading solutions to corporations and asset managers, for $22.00 per share. The Company estimates that the aggregate purchase price will be approximately $680 million. The transaction is expected to close in the third quarter of 2012.

In July 2012, the Company signed a definitive agreement to acquire MarkMonitor, a provider of online brand protection. The transaction is expected to close in the third quarter of 2012.

	THOMSON REUTERS CORPORATION (Registrant)

	By:	/s/ Marc E. Gold
		Name: Marc E. Gold
		Title: Assistant Secretary

Date: August 2, 2012

Exhibit Number		Description

99.1		Management's Discussion and Analysis

99.2		Unaudited Consolidated Financial Statements

99.3		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.4		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.5		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.6		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

By revenue type:		Second Quarter 2012 Revenues

· Subscription revenues were unchanged in the three and six-month periods as acquisitions and the benefit from a price increase were offset by desktop cancellations. Excluding acquisitions, subscription revenues decreased 1% reflecting the negative net sales performance of the last several quarters. Financial & Risk continued to make progress with the rollout of Thomson Reuters Eikon and Thomson Reuters Elektron. Thomson Reuters Eikon active desktops totaled over 19,000 at the end of the second quarter of 2012, an increase of approximately 20% from the end of the first quarter of 2012, and Thomson Reuters Elektron has 15 hosting centers around the world. · Recoveries revenues (low-margin revenues that we collect and largely pass-through to a third party provider, such as stock exchange fees) increased 1% and 2% for the three and six-month periods, respectively, as a result of increased demand for specialist data. · Transaction revenues increased 4% in both periods, led by Tradeweb and acquisitions, which offset lower foreign exchange volumes. Excluding acquisitions, revenues declined 3% for the three and six-month periods. · Outright revenues, which are primarily discrete sales of software and services and represent a small portion of Financial & Risk’s revenues declined 3% in the three-month period and increased 3% in the six-month period.		_____________________________

Business	Status	Former Segment	Description
BARBRI	Sold - Q2 2011	Legal	A provider of bar exam preparatory workshops, courses, software, lectures and other tools in the U.S.
Healthcare	Sold - Q2 2012	Healthcare & Science	A provider of data, analytics and performance benchmarking solutions and services to companies, government agencies and healthcare professionals
Property Tax Consulting	Held for sale	Tax & Accounting	A provider of property tax outsourcing and compliance services in the U.S.
Trade and Risk Management	Sold - Q1 2012	Financial & Risk	A provider of risk management solutions to financial institutions, including banks, broker-dealers and hedge funds

	As at
(millions of U.S. dollars)	June 30, 2012			December 31, 2011
Current indebtedness		8			434
Long-term indebtedness		7,158			7,160
Total debt		7,166			7,594
Swaps		(189	)		(224	)
Total debt after swaps		6,977			7,370
Other derivatives (2)		-			(2	)
Remove fair value adjustments for hedges		(47	)		(19	)
Total debt after hedging arrangements		6,930			7,349
Remove transaction costs and discounts included in the carrying value of debt		55			60
Less: cash and cash equivalents (3)		(1,801	)		(422	)
Net debt		5,184			6,987

	Three months ended June 30,			Percentage change:
(millions of U.S. dollars)		2012	2011		Existing businesses	Acquired businesses	Constant currency	Foreign currency	Total
Revenues from ongoing businesses		3,189	3,161		1%	2%	3%	(2%)	1%
Other businesses		120	286		n/m	n/m	n/m	n/m	n/m
Revenues		3,309	3,447		n/m	n/m	n/m	n/m	(4%)

(millions of U.S. dollars)
Balance at December 31, 2011	16,750
Net earnings	1,261
Share issuances	73
Share repurchases	(168	)
Effect of share-based compensation plans on contributed surplus	3
Dividends declared on common shares	(531	)
Dividends declared on preference shares	(2	)
Change in unrecognized net loss on cash flow hedges	(28	)
Change in foreign currency translation adjustment	(85	)
Net actuarial losses on defined benefit pension plans, net of tax	(199	)
Distributions to non-controlling interests	(23	)
Balance at June 30, 2012	17,051

	Moody’s	Standard & Poor’s	DBRS Limited	Fitch
Long-term debt	Baa1	A-	A (low)	A-
Commercial paper	-	A-1 (low)	R-1 (low)	F2
Trend/Outlook	Stable	Negative	Stable	Stable

	Year ended December 31,						Percentage change:
(millions of U.S. dollars)	2011			2010			Existing businesses			Acquired businesses			Constant currency			Foreign currency			Total
Revenues
Trading		3,537			3,400			-			-			-			4	%		4	%
Investors		2,472			2,432			(1	%)		-			(1	%)		3	%		2	%
Marketplaces		1,134			997			4	%		7	%		11	%		3	%		14	%
Governance Risk & Compliance		154			73			14	%		94	%		108	%		3	%		111	%
Financial & Risk		7,297			6,902			1	%		2	%		3	%		3	%		6	%
Legal		3,221			3,027			2	%		3	%		5	%		1	%		6	%
Tax & Accounting		1,050			907			6	%		9	%		15	%		1	%		16	%
Intellectual Property & Science		852			789			5	%		2	%		7	%		1	%		8	%
Reportable segments		12,420			11,625			2	%		3	%		5	%		2	%		7	%
Corporate & Other (includes Media) (2)		336			324			-			-			-			4	%		4	%
Eliminations		(13	)		(12	)		-			-			-			-			-
Revenues from ongoing businesses		12,743			11,937			2	%		3	%		5	%		2	%		7	%
Other businesses (1)		1,064			1,133			n/m			n/m			n/m			n/m			n/m
Consolidated revenues		13,807			13,070			n/m			n/m			n/m			n/m			6	%

Operating (loss) profit					Margin
Segment operating profit					2011			2010
Financial & Risk	1,396		1,270			19.1	%		18.4	%
Legal	941		892			29.2	%		29.5	%
Tax & Accounting	237		203			22.6	%		22.4	%
Intellectual Property & Science	237		209			27.8	%		26.5	%
Reportable segments	2,811		2,574			22.6	%		22.1	%
Corporate & Other (includes Media) (2)	(270	)	(257	)		-			-
Underlying operating profit	2,541		2,317			19.9	%		19.4	%
Other businesses (1)	238		243
Integration programs expenses	(215	)	(463	)
Fair value adjustments	149		(117	)
Amortization of other identifiable intangible assets	(612	)	(545	)
Goodwill impairment	(3,010	)	-
Other operating gains (losses), net	204		(16	)
Consolidated operating (loss) profit	(705	)	1,419

	Year ended December 31, 2011								Year ended December 31, 2010
(millions of U.S. dollars)	Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA			Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA
Financial & Risk		1,396			576		1,972			1,270			520		1,790
Legal		941			269		1,210			892			254		1,146
Tax & Accounting		237			95		332			203			81		284
Intellectual Property & Science		237			59		296			209			54		263
Corporate & Other (includes Media) (2)		(270	)		43		(227	)		(257	)		46		(211	)
Integration programs expenses	na			na			(215	)	na			na			(463	)
Total		2,541			1,042		3,368			2,317			955		2,809

	Year ended December 31,
(millions of U.S. dollars)	2011		2010
Revenues		1,064		1,133

Operating profit		238		243
Depreciation and amortization of computer software		55		74
EBITDA		293		317

	Quarter ended March 31,						Quarter ended June 30,						Quarter ended September 30,					Quarter ended December 31,
(millions of U.S. dollars, except per share amounts)	2012			2011			2012			2011			2011		2010			2011			2010
Revenues		3,354			3,330			3,309			3,447			3,453		3,256			3,577			3,458
Operating profit (loss)		386			396			1,318			833			659		356			(2,593	)		307
Earnings (loss) from continuing operations		328			255			936			572			381		271			(2,604	)		225
(Loss) earnings from discontinued operations, net of tax		(2	)		2			(1	)		-			-		6			2			-
Net earnings (loss)		326			257			935			572			381		277			(2,602	)		225
Earnings (loss) attributable to common shares		314			250			922			563			369		268			(2,572	)		224

Dividends declared on preference shares		(1	)		(1	)		(1	)		(1	)		-		(1	)		(1	)		(1	)

Basic earnings per share
From continuing operations		$0.38			$0.30			$1.11			$0.67			$0.44		$0.31			$(3.11	)		$0.27
From discontinued operations		-			-			-			-			-		0.01			-			-
		$0.38			$0.30			$1.11			$0.67			$0.44		$0.32			$(3.11	)		$0.27
Diluted earnings per share
From continuing operations		$0.38			$0.30			$1.11			$0.67			$0.44		$0.31			$(3.11	)		$0.27
From discontinued operations		-			-			-			-			-		0.01			-			-
		$0.38			$0.30			$1.11			$0.67			$0.44		$0.32			$(3.11	)		$0.27

Date: August 2, 2012
	/s/ James C. Smith
	James C. Smith
	President and Chief Executive Officer

	/s/ Stephane Bello
	Stephane Bello
	Executive Vice President and Chief Financial Officer

	/s/ James C. Smith
	James C. Smith President and Chief Executive Officer

	/s/ Stephane Bello
	Stephane Bello Executive Vice President and Chief Financial Officer