For the month of May 2014
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Commission File Number: 1-31349
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THOMSON REUTERS CORPORATION
(Registrant)
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By:
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/s/ Marc E. Gold
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Name: Marc E. Gold
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Title: Assistant Secretary
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Date: May 2, 2014
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Exhibit Number
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Description
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Management's Discussion and Analysis
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Unaudited Consolidated Financial Statements
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Page
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· |
Overview – a brief discussion of our business
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1
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· |
Results of Operations – a comparison of our current and prior period results
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3
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Liquidity and Capital Resources – a discussion of our cash flow and debt
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12
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· |
Outlook – our current financial outlook for 2014
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17
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Related Party Transactions – a discussion of transactions with our principal and controlling shareholder, The Woodbridge Company Limited (Woodbridge), and others
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18
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Subsequent Events – a discussion of material events occurring after March 31, 2014 and through the date of this management’s discussion and analysis
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19
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Changes in Accounting Policies - a discussion of changes in our accounting policies and recent accounting pronouncements
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19
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· |
Critical Accounting Estimates and Judgments – a discussion of critical estimates and judgments made by our management in applying accounting policies
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19
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Additional Information – other required disclosures
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19
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Appendices – supplemental information and discussion
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21
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KEY HIGHLIGHTS
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First quarter performance:
Our first quarter performance was consistent with our full-year expectations. Revenues from ongoing businesses increased 1% before currency(1), reflecting 5% combined growth from our Legal, Tax & Accounting and Intellectual Property & Science businesses, which was partially offset by a 1% decline in our Financial & Risk business. The increase in revenues from ongoing businesses before currency included a 1% contribution from acquisitions. Revenues from existing businesses were essentially unchanged.
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·
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Financial & Risk’s revenues decreased 1% reflecting the lag effect of negative net sales over the past 12 months on our revenue. A 2% contribution from acquisitions was more than offset by a 3% decline in existing businesses. Although net sales were negative for the first quarter of 2014, net sales improved compared to the prior-year period and the fourth quarter of 2013. The business continued to make progress in its operational priorities, which included the launch of Eikon 4.0 and the implementation of a unified technology platform.
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·
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Legal’s revenues rose 2% driven by the contribution from acquisitions. Revenues from existing businesses were essentially unchanged as a 4% increase in our growth businesses was offset by a decline in U.S. print and U.S. online legal information.
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·
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Tax & Accounting revenues increased 13%, of which 10% was from existing businesses driven by the continued strength of our offerings and healthy conditions prevailing in the global tax and accounting markets.
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·
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Intellectual Property & Science revenues increased 4% driven by 3% growth from existing businesses, which reflected growth in both recurring and transaction revenues.
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·
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Our Global Growth & Operations (GGO) unit, which works across our businesses to combine our global capabilities, increased revenues 7%, of which 3% was from existing businesses. On an annualized basis, GGO comprises about $1.2 billion of our company’s total revenues.
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Adjusted EBITDA(1) increased 8% and the related margin increased 180bp to 26.2% reflecting lower severance charges associated with our simplification initiatives. Excluding charges from both periods, our consolidated adjusted EBITDA margin declined 50bp to 26.5% in the first quarter of 2014 compared to the prior-year period. The impact of lower revenues on our adjusted EBITDA margin was somewhat mitigated by benefits from our earlier simplification initiatives, but as expected, these benefits were not enough to fully mitigate the impact of the 3% decline in revenues from existing businesses within our Financial & Risk segment in the quarter. Underlying operating profit(1) increased 14%, and the related margin increased 200bp reflecting the same factors that impacted adjusted EBITDA as well as lower depreciation and amortization expense. Adjusted EPS(1) was $0.46 per share, which represented an $0.08 increase compared to the prior-year period, driven by higher underlying operating profit.
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During 2014, we are focused on:
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·
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Transforming from a portfolio company to an enterprise model to realize more benefits from simplification and greater scale;
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·
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Shifting our growth focus towards organic initiatives (rather than acquisitions), with greater emphasis on innovation and investing organically in high growth opportunities; and
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·
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Delivering strong and consistent cash flow growth to reinvest in our growth businesses while returning capital to our shareholders both through dividends and increased share repurchases.
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2014 Outlook:
We recently reaffirmed our 2014 full-year business outlook that we originally communicated in February. For 2014, we continue to expect revenues to be comparable to 2013(1), adjusted EBITDA margin(1) between 26.0% and 27.0%, underlying operating profit margin(1) between 17.0% and 18.0%, and free cash flow(1) between $1.3 billion and $1.5 billion.
Our 2014 outlook includes the impact of an estimated $120 million of previously announced charges expected to be incurred this year. The free cash flow outlook for 2014 reflects the estimated cash impact of the charges incurred in 2013 and expected to be incurred in 2014, as well as the impact of the loss of free cash flow from Other Businesses (approximately $375 million in the aggregate). Additional information is provided in the “Outlook” section of this management’s discussion and analysis.
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(1)
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Refer to Appendix A for additional information on non-IFRS financial measures.
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· | Revenues from ongoing businesses; |
· | Revenues at constant currency (before currency or revenues excluding the effects of foreign currency); |
· | Underlying operating profit and the related margin; |
· | Adjusted EBITDA and the related margin; |
· | Adjusted EBITDA less capital expenditures and the related margin; |
· | Adjusted earnings and adjusted earnings per share; |
· | Net debt; |
· | Free cash flow; and |
· | Free cash flow from ongoing businesses. |
· | Corporate & Other includes expenses for corporate functions, certain share-based compensation costs and the Reuters News business, which is comprised of the Reuters News Agency and consumer publishing. |
· | 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. The results of Other Businesses are not comparable from period to period as the composition of businesses changes due to the timing of completed divestitures. |
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Three months ended
March 31,
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||||||||||
(millions of U.S. dollars, except per share amounts)
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2014
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2013
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Change
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|||||||||
IFRS Financial Measures
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||||||||||||
Revenues
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3,130
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3,175
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(1
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%)
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Operating profit
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359
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390
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(8
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%)
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Diluted earnings (loss) per share
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$
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0.34
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$
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(0.04
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)
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n/
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m
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|||||
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||||||||||||
Non-IFRS Financial Measures
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||||||||||||
Revenues from ongoing businesses
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3,129
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3,097
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1
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%
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||||||||
Adjusted EBITDA
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820
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757
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8
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%
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||||||||
Adjusted EBITDA margin
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26.2
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%
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24.4
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%
|
180
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bp
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||||||
Adjusted EBITDA less capital expenditures
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572
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407
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41
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%
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||||||||
Adjusted EBITDA less capital expenditures margin
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18.3
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%
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13.1
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%
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520
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bp
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Underlying operating profit
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528
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462
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14
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%
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Underlying operating profit margin
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16.9
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%
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14.9
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%
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200
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bp
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Adjusted earnings per share
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$
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0.46
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$
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0.38
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21
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%
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Three months ended
March 31,
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Percentage change: | ||||||||||||||||||||||||||
(millions of U.S. dollars)
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2014
|
2013
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Existing
businesses
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Acquired
businesses
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Constant currency
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Foreign
currency
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Total
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|||||||||||||||||||||
Revenues from ongoing businesses
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3,129
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3,097
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-
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1%
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1%
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-
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1%
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Other Businesses
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1
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78
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n/m
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n/m
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n/m
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n/m
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n/m
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Revenues
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3,130
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3,175
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n/m
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n/m
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n/m
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n/m
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(1%)
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Three months ended
March 31,
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(millions of U.S. dollars)
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2014
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2013
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Change
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|||||||||
Operating profit
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359
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390
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(8
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%)
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||||||||
Adjustments to remove:
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||||||||||||
Amortization of other identifiable intangible assets
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163
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160
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Fair value adjustments
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2
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(62
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)
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Other operating losses, net
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3
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6
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||||||||||
Operating loss (profit) from Other Businesses
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1
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(32
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)
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|||||||||
Underlying operating profit
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528
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462
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14
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%
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||||||||
Remove: depreciation and amortization of computer software (excluding Other Businesses)
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292
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295
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||||||||||
Adjusted EBITDA(1)
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820
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757
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8
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%
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||||||||
Remove: capital expenditures, less proceeds from disposals (excluding Other Businesses)
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248
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350
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||||||||||
Adjusted EBITDA less capital expenditures(1)
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572
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407
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41
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%
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Underlying operating profit margin
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16.9
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%
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14.9
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%
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200
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bp
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Adjusted EBITDA margin
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26.2
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%
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24.4
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%
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180
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bp
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Adjusted EBITDA less capital expenditures margin
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18.3
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%
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13.1
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%
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520
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bp
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(1)
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See Appendix B for a reconciliation of earnings (loss) to adjusted EBITDA and adjusted EBITDA less capital expenditures.
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Three months ended
March 31,
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(millions of U.S. dollars)
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2014
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2013
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Change
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|||||||||
Operating expenses
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2,313
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2,324
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-
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|||||||||
Adjustments to remove:
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||||||||||||
Fair value adjustments(1)
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(2
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)
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62
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|||||||||
Other Businesses
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(2
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)
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(46
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)
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Operating expenses, excluding fair value adjustments and Other Businesses
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2,309
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2,340
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(1
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%)
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(1)
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Fair value adjustments primarily represent non-cash accounting adjustments from the revaluation of embedded foreign exchange derivatives within certain customer contracts due to fluctuations in foreign exchange rates and mark-to-market adjustments from certain share-based awards.
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Three months ended
March 31,
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||||||||||
(millions of U.S. dollars)
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2014
|
2013
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Change
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|||||||||
Depreciation
|
98
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107
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(8
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%)
|
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Amortization of computer software
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194
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188
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3
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%
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||||||||
Subtotal
|
292
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295
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(1
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%)
|
||||||||
Amortization of other identifiable intangible assets
|
163
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160
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2
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%
|
· | Depreciation and amortization of computer software on a combined basis decreased as the completion of depreciation of fixed assets acquired in previous years was partly offset by higher amortization reflecting our investments in products, such as Thomson Reuters Eikon, and the amortization of assets from recently acquired businesses. |
· | Amortization of other identifiable intangible assets increased due to amortization from newly-acquired assets, which more than offset decreases from the completion of amortization for certain identifiable intangible assets acquired in previous years. |
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Three months ended
March 31,
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|
||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
Change
|
|||||||||
Net interest expense
|
108
|
115
|
(6
|
%)
|
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Other finance income (costs)
|
28
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(55
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)
|
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Share of post-tax earnings in equity method investments
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-
|
10
|
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Tax benefit (expense)
|
13
|
(247
|
)
|
Benefit (expense)
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Discrete tax items:
|
|
|
||||||
Consolidation of technology and content assets(1)
|
-
|
(235
|
)
|
|||||
Uncertain tax positions(2)
|
3
|
2
|
||||||
Corporate tax rates(3)
|
2
|
1
|
||||||
Other(4)
|
9
|
11
|
||||||
Subtotal
|
14
|
(221
|
)
|
|||||
Tax related to:
|
||||||||
Sale of businesses
|
-
|
(8
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)
|
|||||
Operating profit of Other Businesses
|
-
|
(8
|
)
|
|||||
Fair value adjustments
|
(1
|
)
|
(9
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)
|
||||
Other items
|
1
|
3
|
||||||
Subtotal
|
-
|
(22
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)
|
|||||
Total
|
14
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(243
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)
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(1)
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Relates to the consolidation of the ownership and management of our technology and content assets.
|
(2)
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Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.
|
(3)
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Relates to the net reduction of deferred tax liabilities due to changes in corporate tax rates that were substantively enacted in certain jurisdictions.
|
(4)
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Primarily relates to the recognition of deferred tax benefits in connection with acquisitions.
|
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Tax benefit (expense)
|
13
|
(247
|
)
|
|||||
Remove: Items from above impacting comparability
|
(14
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)
|
243
|
|||||
Other adjustments:
|
||||||||
Interim period effective tax rate normalization(1)
|
(12
|
)
|
(7
|
)
|
||||
Tax charge amortization(2)
|
(22
|
)
|
(8
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)
|
||||
Total tax expense on adjusted earnings
|
(35
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)
|
(19
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)
|
(1)
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Adjustment to reflect income taxes based on estimated full-year effective tax rate. Reported earnings or loss for interim periods reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which we operate. The adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.
|
(2)
|
For the year ended December 31, 2013, we recorded $604 million of deferred tax charges associated with the consolidation of the ownership and management of our technology and content assets. Within our tax expense on adjusted earnings, we amortize these charges on a straight line basis over seven years. We believe this treatment more appropriately reflects our tax position because these charges are expected to be paid over seven years, in varying annual amounts, in conjunction with the repayments of interest-bearing notes that were issued as consideration in the original transactions.
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|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars, except per share amounts)
|
2014
|
2013
|
||||||
Net earnings (loss)
|
292
|
(17
|
)
|
|||||
Diluted earnings (loss) per share
|
$
|
0.34
|
$
|
(0.04
|
)
|
|
Three months ended
March 31,
|
|
||||||||||
(millions of U.S. dollars, except per share amounts and share data)
|
2014
|
2013
|
Change
|
|||||||||
Earnings (loss) attributable to common shareholders
|
282
|
(31
|
)
|
n/m
|
|
|||||||
Adjustments to remove:
|
||||||||||||
Operating loss (profit) from Other Businesses
|
1
|
(32
|
)
|
|||||||||
Fair value adjustments
|
2
|
(62
|
)
|
|||||||||
Other operating losses, net
|
3
|
6
|
||||||||||
Other finance (income) costs
|
(28
|
)
|
55
|
|||||||||
Share of post-tax earnings in equity method investments
|
-
|
(10
|
)
|
|||||||||
Tax on above items(1)
|
-
|
22
|
||||||||||
Discrete tax items(1)
|
(14
|
)
|
221
|
|||||||||
Amortization of other identifiable intangible assets
|
163
|
160
|
||||||||||
Interim period effective tax rate normalization(1)
|
(12
|
)
|
(7
|
)
|
||||||||
Tax charge amortization(1)
|
(22
|
)
|
(8
|
)
|
||||||||
Dividends declared on preference shares
|
(1
|
)
|
(1
|
)
|
||||||||
Adjusted earnings
|
374
|
313
|
19
|
%
|
||||||||
Adjusted earnings per share (adjusted EPS)
|
$
|
0.46
|
$
|
0.38
|
21
|
%
|
||||||
Diluted weighted average common shares (millions)(2)
|
820.9
|
830.4
|
(1) | Refer to “Tax expense” section above. |
(2) | Refer to Appendix B for reconciliation of diluted weighted average common shares at March 31, 2013. |
· | Results from the Reuters News business and Other Businesses are excluded from our reportable segments as they do not qualify as a component of our four reportable segments, nor as a separate reportable segment. |
· | We use segment operating profit to measure the operating performance of our reportable segments. |
o | The costs of centralized support services such as technology, news, real estate, accounting, procurement, legal and human resources are allocated to each segment based on usage or other applicable measures. |
o | We define segment operating profit as operating profit before (i) amortization of other identifiable intangible assets; (ii) other operating gains and losses; (iii) certain asset impairment charges; (iv) corporate-related items; and (v) fair value adjustments. We use this measure because we do not consider these excluded items to be controllable operating activities for purposes of assessing the current performance of our reportable segments. |
o | We also use segment operating profit margin, which we define as segment operating profit as a percentage of revenues. |
o | Our definition of segment operating profit may not be comparable to that of other companies. |
· | As a supplemental measure of segment operating performance, we add back depreciation and amortization of computer software to segment operating profit to arrive at each segment’s EBITDA and the related margin as a percentage of revenues. Refer to Appendix B for additional information. |
|
Three months ended
March 31,
|
Percentage change: | ||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
Existing
businesses
|
Acquired
businesses
|
Constant currency
|
Foreign
currency
|
Total
|
|||||||||||||||||||||
Revenues
|
1,658
|
1,675
|
(3%)
|
|
2%
|
|
(1%)
|
|
-
|
(1%)
|
|
|||||||||||||||||
EBITDA
|
399
|
360
|
11%
|
|
||||||||||||||||||||||||
EBITDA margin
|
24.1
|
%
|
21.5
|
%
|
260bp
|
|
||||||||||||||||||||||
Segment operating profit
|
240
|
200
|
20%
|
|
||||||||||||||||||||||||
Segment operating profit margin
|
14.5
|
%
|
11.9
|
%
|
260bp
|
|
Results by revenue type were:
· Subscription revenues decreased 2% (3% from existing businesses) reflecting the impact of negative, but improved, net sales over the past 12 months;
· Transactions revenues increased 3% as revenues from acquired businesses more than offset a 4% revenue decline from existing businesses due to lower foreign exchange volumes. The decline in volumes was market related and reflective of the performance across the industry; and
· Recoveries revenues (low-margin revenues that we collect and largely pass-through to a third party provider, such as stock exchange fees) decreased 1% primarily due to declines in desktops.
|
|
First Quarter 2014 Revenues
|
|
![]() |
|
Three months ended
March 31,
|
Percentage change: | ||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
Existing
businesses
|
Acquired
businesses
|
Constant currency
|
Foreign
currency
|
Total
|
|||||||||||||||||||||
Revenues
|
803
|
794
|
-
|
2%
|
|
2%
|
|
(1%)
|
|
1%
|
|
|||||||||||||||||
EBITDA
|
284
|
276
|
3%
|
|
||||||||||||||||||||||||
EBITDA margin
|
35.4
|
%
|
34.8
|
%
|
60bp
|
|
||||||||||||||||||||||
Segment operating profit
|
215
|
201
|
7%
|
|
||||||||||||||||||||||||
Segment operating profit margin
|
26.8
|
%
|
25.3
|
%
|
150bp
|
|
Results by line of business were:
· Growth Business revenues include non U.S. legal information and global software and services businesses. Our growth business revenues increased 7% (4% from existing businesses) driven by our U.K. Practical Law, Elite and FindLaw businesses;
· U.S. Online Legal Information revenues are primarily comprised of Westlaw and decreased 2%, all from existing businesses; and
· U.S. Print revenues decreased 3%, all from existing businesses. We expect print revenues to decline by mid-to-high single digits in 2014.
|
First Quarter 2014 Revenues
2% constant currency revenue growth
|
|
![]() |
|
Three months ended
March 31,
|
Percentage change: | ||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
Existing
businesses
|
Acquired
businesses
|
Constant currency
|
Foreign
currency
|
Total
|
|||||||||||||||||||||
Revenues
|
348
|
317
|
10%
|
|
3%
|
|
13%
|
|
(3%)
|
|
10%
|
|
||||||||||||||||
EBITDA
|
115
|
98
|
17%
|
|
||||||||||||||||||||||||
EBITDA margin
|
33.0
|
%
|
30.9
|
%
|
210bp
|
|
||||||||||||||||||||||
Segment operating profit
|
84
|
69
|
22%
|
|
||||||||||||||||||||||||
Segment operating profit margin
|
24.1
|
%
|
21.8
|
%
|
230bp
|
|
Results by line of business were:
· Professional revenues from small, medium and large accounting firms increased 10%, all from existing businesses, primarily from our CS Professional Suite and Enterprise Suite solutions for accounting firms;
· Knowledge Solutions revenues increased 4% (2% from existing businesses) primarily from growth in our U.S. Checkpoint business;
· Corporate revenues increased 22% (14% from existing businesses) primarily from ONESOURCE software and services and strong growth in solutions revenues in Latin America; and
· Government revenues increased 13%, all from existing businesses.
|
First Quarter 2014 Revenues
|
|
![]() |
|
Three months ended
March 31,
|
Percentage change: | ||||||||||||||||||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
Existing
businesses
|
Acquired
businesses
|
Constant currency
|
Foreign
currency
|
Total
|
|||||||||||||||||||||
Revenues
|
243
|
233
|
3%
|
|
1%
|
|
4%
|
|
-
|
4%
|
|
|||||||||||||||||
EBITDA
|
72
|
70
|
3%
|
|
||||||||||||||||||||||||
EBITDA margin
|
29.6
|
%
|
30.0
|
%
|
(40)bp
|
|
||||||||||||||||||||||
Segment operating profit
|
51
|
51
|
-
|
|||||||||||||||||||||||||
Segment operating profit margin
|
21.0
|
%
|
21.9
|
%
|
(90)bp
|
|
Results by line of business were:
· IP Solutions revenues increased 2%, all from existing businesses, due to growth from MarkMonitor partly offset by softness in our Innovation product revenues;
· Scientific & Scholarly Research revenues increased 9% (8% from existing businesses) led by higher subscriptions and discrete sales for Web of Science products; and
· Life Sciences revenues increased 5% (3% from existing businesses) led by our Business of Science solutions.
|
|
First Quarter 2014 Revenues
|
|
![]() |
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Revenues - Reuters News
|
79
|
81
|
||||||
|
||||||||
Reuters News
|
-
|
(4
|
)
|
|||||
Core corporate expenses
|
(62
|
)
|
(55
|
)
|
||||
Total
|
(62
|
)
|
(59
|
)
|
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Revenues
|
1
|
78
|
||||||
Operating (loss) profit
|
(1
|
)
|
32
|
· | Growing free cash flow and balancing the cash generated between reinvestment in the business and returns to shareholders; and |
· | Maintaining a strong balance sheet, solid credit ratings and ample financial flexibility to support the execution of our business strategy. |
|
Three months ended March 31,
|
|
||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
$ Change
|
|||||||||
Net cash provided by operating activities
|
113
|
116
|
(3
|
)
|
||||||||
Net cash used in investing activities
|
(247
|
)
|
(1,046
|
)
|
799
|
|||||||
Net cash (used in) provided by financing activities
|
(523
|
)
|
76
|
(599
|
)
|
|||||||
Decrease in cash and bank overdrafts
|
(657
|
)
|
(854
|
)
|
197
|
|||||||
Translation adjustments
|
-
|
(11
|
)
|
11
|
||||||||
Cash and bank overdrafts at beginning of period
|
1,312
|
1,276
|
36
|
|||||||||
Cash and bank overdrafts at end of period
|
655
|
411
|
244
|
|||||||||
Cash and bank overdrafts at end of period comprised of:
|
||||||||||||
Cash and cash equivalents
|
667
|
423
|
244
|
|||||||||
Bank overdrafts
|
(12
|
)
|
(12
|
)
|
-
|
· | Commercial paper programs. Our $2.0 billion commercial paper programs provide cost-effective and flexible short-term funding to balance the timing of completed acquisitions, dividend payments and debt repayments. We had no short-term notes outstanding at March 31, 2014. Issuances of commercial paper reached a peak of $0.1 billion during the three-month period of 2014. |
· | Credit facility. We have a $2.5 billion syndicated credit facility agreement which matures in May 2018. The facility may be utilized to provide liquidity for general corporate purposes (including support for our commercial paper programs). There were no borrowings during the first quarter of 2014. In the first quarter of 2013, we borrowed and repaid $440 million under the credit facility. |
· | Debt shelf prospectus. In March 2014, we filed a new debt shelf prospectus under which we may issue up to $3.0 billion principal amount of debt securities from time to time through April 2016. No debt securities have been issued under this prospectus as of the date of this management’s discussion and analysis. |
· | Credit ratings. Our access to financing depends on, among other things, suitable market conditions and the maintenance of suitable long-term credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demand, increased competition, a further deterioration in general economic and business conditions and adverse publicity. Any downgrades in our credit ratings may impede our access to the debt markets or result in significantly higher borrowing rates. |
|
Moody’s
|
Standard &
Poor’s
|
DBRS
Limited
|
Fitch
|
||||
Long-term debt
|
Baa2
|
BBB+
|
BBB (high)
|
BBB+
|
||||
Commercial paper
|
P-2
|
A-2 (1)
|
R-2 (high)
|
F2
|
||||
Trend/Outlook
|
Stable
|
Stable
|
Stable
|
Stable
|
(1)
|
The A-2 rating represents the global short-term/commercial paper rating from Standard & Poor’s. This A-2 global short-term/ commercial paper rating, taken together with our global long-term debt rating of BBB+, corresponds to a Canadian market commercial paper rating of A-1 (low) per Standard & Poor’s ratings criteria.
|
· | Dividends. In February 2014, our board of directors approved a $0.02 per share increase in the annualized dividend rate to $1.32 per common share. Dividends paid on our common shares were as follows for the periods presented: |
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Dividends declared
|
270
|
269
|
||||||
Dividends reinvested
|
(8
|
)
|
(10
|
)
|
||||
Dividends paid
|
262
|
259
|
· | Share repurchases. We may buy back shares (and subsequently cancel them) from time to time as part of our capital strategy. In October 2013, we announced that we plan to repurchase up to $1.0 billion of our shares by the end of 2014. Under our current normal course issuer bid (NCIB), we may repurchase up to 30 million common shares between May 22, 2013 and May 21, 2014 in open market transactions on the TSX, the New York Stock Exchange (NYSE) and/or other exchanges and alternative trading systems, if eligible, or by such other means as may be permitted by the TSX. During the three months ended March 31, 2014, we repurchased approximately 8.0 million common shares for approximately $279 million, of which $15 million was payable to the broker at March 31, 2014. The average price per share that we repurchased in the first quarter of 2014 was $35.07. As of March 31, 2014, we have cumulatively repurchased $579 million of common shares as part of the up to $1.0 billion targeted to be repurchased by the end of 2014. We did not repurchase any shares during the three months ended March 31, 2013. |
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Net cash provided by operating activities
|
113
|
116
|
||||||
Capital expenditures, less proceeds from disposals
|
(248
|
)
|
(350
|
)
|
||||
Other investing activities
|
1
|
4
|
||||||
Dividends paid on preference shares
|
(1
|
)
|
(1
|
)
|
||||
Free cash flow
|
(135
|
)
|
(231
|
)
|
||||
Remove: Other Businesses
|
-
|
7
|
||||||
Free cash flow from ongoing businesses
|
(135
|
)
|
(224
|
)
|
|
As at
|
|||||||
(millions of U.S. dollars)
|
March 31, 2014
|
December 31, 2013
|
||||||
Current indebtedness
|
580
|
596
|
||||||
Long-term indebtedness
|
7,379
|
7,470
|
||||||
Total debt
|
7,959
|
8,066
|
||||||
Swaps
|
13
|
(86
|
)
|
|||||
Total debt after swaps
|
7,972
|
7,980
|
||||||
Remove fair value adjustments for hedges
|
(13
|
)
|
(27
|
)
|
||||
Total debt after hedging arrangements
|
7,959
|
7,953
|
||||||
Remove transaction costs and discounts included in the carrying value of debt
|
77
|
78
|
||||||
Less: cash and cash equivalents (2)
|
(667
|
)
|
(1,316
|
)
|
||||
Net debt
|
7,369
|
6,715
|
(1)
|
Net debt is a non-IFRS financial measure, which we define in Appendix A.
|
(2)
|
Includes cash and cash equivalents of $87 million and $105 million at March 31, 2014 and December 31, 2013, respectively, which was 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 our company.
|
· | We monitor the financial strength of financial institutions with which we have banking and other commercial relationships, including those that hold our cash and cash equivalents as well as those which are counterparties to derivative financial instruments and other arrangements; and |
· | We expect to continue to have access to funds held by our subsidiaries outside the U.S. in a tax efficient manner to meet our liquidity requirements. |
Revenues to be comparable to 2013
|
||
Material assumptions
|
|
Material risks
|
— Gradual improvement in Financial & Risk’s net sales performance during the year
— Gross domestic product (GDP) growth in the countries where we operate
— Continued increase in the number of professionals around the world and their demand for high quality information and services
— Continued operational improvement in the Financial & Risk business and the successful execution of new sales initiatives, ongoing product release programs, our globalization strategy and other growth and efficiency initiatives
· A mid-to-high single digit decline in our U.S. print revenues within the Legal segment
|
|
— Uneven economic growth or recession across the markets we serve may result in reduced spending levels by our customers
— Demand for our products and services could be reduced by changes in customer buying patterns, competitive pressures or our inability to execute on key product or customer support initiatives
— Implementation of regulatory reform, including further Dodd-Frank legislation and similar financial services laws around the world, may limit business opportunities for our customers, lowering their demand for our products and services
— Pressure on our customers, in developed markets in particular, to constrain the number of professionals employed due to regulatory and economic uncertainty
· Competitive pricing actions could impact our revenues
|
Adjusted EBITDA margin expected to be between 26.0% and 27.0%
|
||
Material assumptions
|
|
Material risks
|
— Revenues expected to be comparable to 2013
— Business mix continues to shift to higher-growth, lower margin offerings
— Realization of expected benefits from simplification initiatives, primarily in our Financial & Risk segment, relative to reductions in workforce, platform consolidation and operational simplification
|
|
— Refer to the risks above related to the revenue outlook
— Revenues from higher margin businesses may be lower than expected
— The costs of required investments exceed expectations or actual returns are below expectations
· Acquisition and disposal activity may dilute margins
· Simplification initiatives may cost more than expected, be delayed or may not produce the expected level of savings
|
Underlying operating profit margin expected to be between 17.0% and 18.0%
|
||
Material assumptions
|
|
Material risks
|
· Adjusted EBITDA margin expected to be between 26.0% and 27.0%
— Depreciation and software amortization expense expected to be approximately 9.5% of revenues
— Capital expenditures expected to be approximately 8% of revenues
|
|
— Refer to the risks above related to adjusted EBITDA margin outlook
— Capital expenditures may be higher than currently expected, resulting in higher in-period depreciation and amortization
|
Free cash flow is expected to be between $1.3 billion and $1.5 billion
|
||
Material assumptions
|
|
Material risks
|
— Revenues expected to be comparable to 2013
— Adjusted EBITDA margin expected to be between 26.0% and 27.0%
— Capital expenditures expected to be approximately 8% of revenues
|
|
— Refer to 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
— Capital expenditures may be higher than currently expected resulting in higher cash outflows
· The timing and amount of tax payments to governments may differ from our expectations
|
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 Reuters News 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. 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 (loss) from continuing operations
|
Adjusted EBITDA less capital expenditures and adjusted EBITDA less capital expenditures margin
|
||||
Adjusted EBITDA less capital expenditures, less proceeds from disposals (excluding Other Businesses). The related margin is expressed as a percentage of revenues from ongoing businesses.
|
|
Provides a basis for evaluating the operating profitability and capital intensity of a business in a single measure. This measure captures investments regardless of whether they are expensed or capitalized.
|
|
Earnings (loss) from continuing operations
|
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
|
||||
Earnings (loss) attributable to common shareholders and per share excluding:
· the pre-tax impacts of amortization of other identifiable intangible assets;
|
|
Provides a more comparable basis to analyze earnings and is also a measure commonly used by shareholders to measure our performance.
|
|
Earnings (loss) attributable to common shareholders and earnings (loss) per share attributable to common shareholders
|
· 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 investments, discontinued operations and other items affecting comparability. We also deduct dividends declared on preference shares; and
|
||||
amortization of the tax charges associated with the consolidation of ownership and management of technology and content assets. For the non-IFRS measure, the majority of the charges are amortized over seven years, the period over which the tax is expected to be paid.
This measure is calculated using diluted weighted-average shares.
|
|
We believe this treatment more accurately reflects our tax position because the tax liability is associated with ongoing tax implications from the consolidation of these assets.
|
|
|
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.
|
|
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.
|
|
|
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 and other investing activities, less capital expenditures 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 businesses
|
||||
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
|
|
Three months ended
March 31,
|
|||||||||||
(millions of U.S. dollars)
|
2014
|
2013
|
Change
|
|||||||||
Net earnings (loss)
|
292
|
(17
|
)
|
n/
|
m
|
|||||||
Adjustments to remove:
|
||||||||||||
Tax (benefit) expense
|
(13
|
)
|
247
|
|||||||||
Other finance (income) costs
|
(28
|
)
|
55
|
|||||||||
Net interest expense
|
108
|
115
|
||||||||||
Amortization of other identifiable intangible assets
|
163
|
160
|
||||||||||
Amortization of computer software
|
194
|
188
|
||||||||||
Depreciation
|
98
|
107
|
||||||||||
EBITDA
|
814
|
855
|
||||||||||
Adjustments to remove:
|
||||||||||||
Share of post-tax earnings in equity method investments
|
-
|
(10
|
)
|
|||||||||
Other operating losses, net
|
3
|
6
|
||||||||||
Fair value adjustments
|
2
|
(62
|
)
|
|||||||||
EBITDA from Other Businesses(1)
|
1
|
(32
|
)
|
|||||||||
Adjusted EBITDA
|
820
|
757
|
8
|
%
|
||||||||
Remove: Capital expenditures, less proceeds from disposals (excluding Other Businesses(1))
|
248
|
350
|
||||||||||
Adjusted EBITDA less capital expenditures
|
572
|
407
|
41
|
%
|
||||||||
Adjusted EBITDA margin
|
26.2
|
%
|
24.4
|
%
|
180
|
bp
|
||||||
Adjusted EBITDA less capital expenditures margin
|
18.3
|
%
|
13.1
|
%
|
520
|
bp
|
|
Three months ended March 31, 2014
|
Three months ended March 31, 2013
|
||||||||||||||||||||||
(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
|
240
|
159
|
399
|
200
|
160
|
360
|
||||||||||||||||||
Legal
|
215
|
69
|
284
|
201
|
75
|
276
|
||||||||||||||||||
Tax & Accounting
|
84
|
31
|
115
|
69
|
29
|
98
|
||||||||||||||||||
Intellectual Property & Science
|
51
|
21
|
72
|
51
|
19
|
70
|
||||||||||||||||||
Corporate & Other (includes Reuters News)(2)
|
(62
|
)
|
12
|
(50
|
)
|
(59
|
)
|
12
|
(47
|
)
|
||||||||||||||
Total
|
528
|
292
|
820
|
462
|
295
|
757
|
(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. Includes Corporate Services, which was sold in the second quarter of 2013.
|
|
Three months ended
March 31,
|
|||||||
(millions of U.S. dollars)
|
2014
|
2013
|
||||||
Revenues
|
1
|
78
|
||||||
|
||||||||
Operating (loss) profit
|
(1
|
)
|
32
|
|||||
Depreciation and amortization of computer software
|
-
|
-
|
||||||
EBITDA
|
(1
|
)
|
32
|
|||||
Capital expenditures, less proceeds from disposals
|
- | - |
(2)
|
Corporate & Other includes the Reuters News business and expenses for corporate functions and certain share-based compensation costs.
|
(weighted-average common shares)
|
Three months ended
March 31, 2013
|
|||
IFRS: Basic and Diluted
|
828,342,978
|
|||
Effect of stock options and other equity incentive awards
|
2,104,177
|
|||
Non-IFRS Diluted
|
830,447, 155
|
|
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)
|
2014
|
2013
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||||||||||||||||||||
Revenues
|
3,130
|
3,175
|
3,163
|
3,272
|
3,086
|
3,181
|
3,278
|
3,364
|
||||||||||||||||||||||||
Operating profit
|
359
|
390
|
597
|
1,297
|
316
|
372
|
213
|
537
|
||||||||||||||||||||||||
Earnings (loss) from continuing operations
|
292
|
(17
|
)
|
256
|
916
|
283
|
451
|
(347
|
)
|
365
|
||||||||||||||||||||||
Earnings (loss) from discontinued operations, net of tax
|
-
|
-
|
6
|
(1
|
)
|
-
|
2
|
4
|
3
|
|||||||||||||||||||||||
Net earnings (loss)
|
292
|
(17
|
)
|
262
|
915
|
283
|
453
|
(343
|
)
|
368
|
||||||||||||||||||||||
Earnings (loss) attributable to common shareholders
|
282
|
(31
|
)
|
248
|
902
|
271
|
441
|
(351
|
)
|
352
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Dividends declared on preference shares
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
-
|
-
|
(1
|
)
|
(1
|
)
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Basic earnings (loss) per share
|
||||||||||||||||||||||||||||||||
From continuing operations
|
$
|
0.34
|
$
|
(0.04
|
)
|
$
|
0.29
|
$
|
1.09
|
$
|
0.33
|
$
|
0.53
|
$
|
(0.43
|
)
|
$
|
0.41
|
||||||||||||||
From discontinued operations
|
-
|
-
|
0.01
|
-
|
-
|
-
|
-
|
0.01
|
||||||||||||||||||||||||
|
$
|
0.34
|
$
|
(0.04
|
)
|
$
|
0.30
|
$
|
1.09
|
$
|
0.33
|
$
|
0.53
|
$
|
(0.43
|
)
|
$
|
0.42
|
||||||||||||||
Diluted earnings (loss) per share
|
||||||||||||||||||||||||||||||||
From continuing operations
|
$
|
0.34
|
$
|
(0.04
|
)
|
$
|
0.29
|
$
|
1.08
|
$
|
0.33
|
$
|
0.53
|
$
|
(0.43
|
)
|
$
|
0.41
|
||||||||||||||
From discontinued operations
|
-
|
-
|
0.01
|
-
|
-
|
-
|
-
|
0.01
|
||||||||||||||||||||||||
|
$
|
0.34
|
$
|
(0.04
|
)
|
$
|
0.30
|
$
|
1.08
|
$
|
0.33
|
$
|
0.53
|
$
|
(0.43
|
)
|
$
|
0.42
|
|
|
Three months ended March 31,
|
||||||||||
(millions of U.S. dollars, except per share amounts)
|
Notes
|
2014
|
2013
|
|||||||||
Revenues
|
3,130
|
3,175
|
||||||||||
Operating expenses
|
5
|
(2,313
|
)
|
(2,324
|
)
|
|||||||
Depreciation
|
(98
|
)
|
(107
|
)
|
||||||||
Amortization of computer software
|
(194
|
)
|
(188
|
)
|
||||||||
Amortization of other identifiable intangible assets
|
(163
|
)
|
(160
|
)
|
||||||||
Other operating losses, net
|
(3
|
)
|
(6
|
)
|
||||||||
Operating profit
|
359
|
390
|
||||||||||
Finance costs, net:
|
||||||||||||
Net interest expense
|
6
|
(108
|
)
|
(115
|
)
|
|||||||
Other finance income (costs)
|
6
|
28
|
(55
|
)
|
||||||||
Income before tax and equity method investments
|
279
|
220
|
||||||||||
Share of post-tax earnings in equity method investments
|
7
|
-
|
10
|
|||||||||
Tax benefit (expense)
|
8
|
13
|
(247
|
)
|
||||||||
Net earnings (loss)
|
292
|
(17
|
)
|
|||||||||
Earnings (loss) attributable to:
|
||||||||||||
Common shareholders
|
282
|
(31
|
)
|
|||||||||
Non-controlling interests
|
10
|
14
|
||||||||||
|
||||||||||||
Earnings (loss) per share:
|
||||||||||||
Basic and diluted earnings (loss) per share
|
9
|
$
|
0.34
|
$
|
(0.04
|
)
|
|
|
Three months ended March 31,
|
||||||||||
(millions of U.S. dollars)
|
Notes
|
2014
|
2013
|
|||||||||
Net earnings (loss)
|
|
292
|
(17
|
)
|
||||||||
Other comprehensive loss:
|
||||||||||||
Cash flow hedges adjustments to earnings
|
6
|
107
|
43
|
|||||||||
Items that may be subsequently reclassified to net earnings:
|
||||||||||||
Cash flow hedges adjustments to equity
|
(97
|
)
|
(29
|
)
|
||||||||
Foreign currency translation adjustments to equity
|
18
|
(253
|
)
|
|||||||||
|
(79
|
)
|
(282
|
)
|
||||||||
Item that will not be reclassified to net earnings:
|
||||||||||||
Net remeasurement (losses) gains on defined benefit pension plans, net of tax(1)
|
(50
|
)
|
79
|
|||||||||
Other comprehensive loss
|
(22
|
)
|
(160
|
)
|
||||||||
Total comprehensive income (loss)
|
270
|
(177
|
)
|
|||||||||
|
||||||||||||
Comprehensive income (loss) for the period attributable to:
|
||||||||||||
Common shareholders
|
260
|
(191
|
)
|
|||||||||
Non-controlling interests
|
10
|
14
|
(1)
|
The related tax benefit (expense) was $31 million and ($39) million for the three months ended March 31, 2014 and 2013, respectively.
|
(millions of U.S. dollars)
|
Notes
|
March 31,
2014
|
December 31,
2013
|
|||||||||
ASSETS
|
||||||||||||
Cash and cash equivalents
|
10
|
667
|
1,316
|
|||||||||
Trade and other receivables
|
1,825
|
1,751
|
||||||||||
Other financial assets
|
10
|
133
|
183
|
|||||||||
Prepaid expenses and other current assets
|
684
|
650
|
||||||||||
Current assets
|
3,309
|
3,900
|
||||||||||
Computer hardware and other property, net
|
1,241
|
1,291
|
||||||||||
Computer software, net
|
1,569
|
1,622
|
||||||||||
Other identifiable intangible assets, net
|
7,735
|
7,890
|
||||||||||
Goodwill
|
16,911
|
16,871
|
||||||||||
Other financial assets
|
10
|
163
|
192
|
|||||||||
Other non-current assets
|
11
|
599
|
583
|
|||||||||
Deferred tax
|
90
|
90
|
||||||||||
Total assets
|
31,617
|
32,439
|
||||||||||
|
||||||||||||
LIABILITIES AND EQUITY
|
||||||||||||
Liabilities
|
||||||||||||
Current indebtedness
|
10
|
580
|
596
|
|||||||||
Payables, accruals and provisions
|
12
|
2,045
|
2,624
|
|||||||||
Deferred revenue
|
1,427
|
1,348
|
||||||||||
Other financial liabilities
|
10
|
191
|
193
|
|||||||||
Current liabilities
|
4,243
|
4,761
|
||||||||||
Long-term indebtedness
|
10
|
7,379
|
7,470
|
|||||||||
Provisions and other non-current liabilities
|
13
|
1,762
|
1,759
|
|||||||||
Other financial liabilities
|
10
|
205
|
102
|
|||||||||
Deferred tax
|
1,861
|
1,917
|
||||||||||
Total liabilities
|
15,450
|
16,009
|
||||||||||
|
||||||||||||
Equity
|
||||||||||||
Capital
|
14
|
10,266
|
10,347
|
|||||||||
Retained earnings
|
7,086
|
7,303
|
||||||||||
Accumulated other comprehensive loss
|
(1,586
|
)
|
(1,614
|
)
|
||||||||
Total shareholders’ equity
|
15,766
|
16,036
|
||||||||||
Non-controlling interests
|
401
|
394
|
||||||||||
Total equity
|
16,167
|
16,430
|
||||||||||
Total liabilities and equity
|
31,617
|
32,439
|
|
|
Three months ended March 31,
|
||||||||||
(millions of U.S. dollars)
|
Notes
|
2014
|
2013
|
|||||||||
Cash provided by (used in):
|
||||||||||||
OPERATING ACTIVITIES
|
||||||||||||
Net earnings (loss)
|
292
|
(17
|
)
|
|||||||||
Adjustments for:
|
||||||||||||
Depreciation
|
98
|
107
|
||||||||||
Amortization of computer software
|
194
|
188
|
||||||||||
Amortization of other identifiable intangible assets
|
163
|
160
|
||||||||||
Net losses (gains) on disposals of businesses and investments
|
1
|
(14
|
)
|
|||||||||
Deferred tax
|
(40
|
)
|
172
|
|||||||||
Other
|
15
|
34
|
65
|
|||||||||
Changes in working capital and other items
|
15
|
(629
|
)
|
(545
|
)
|
|||||||
Net cash provided by operating activities
|
113
|
116
|
||||||||||
INVESTING ACTIVITIES
|
||||||||||||
Acquisitions, net of cash acquired
|
16
|
-
|
(730
|
)
|
||||||||
Proceeds from disposals of businesses and investments, net of taxes paid
|
-
|
30
|
||||||||||
Capital expenditures, less proceeds from disposals
|
(248
|
)
|
(350
|
)
|
||||||||
Other investing activities
|
1
|
4
|
||||||||||
Net cash used in investing activities
|
(247
|
)
|
(1,046
|
)
|
||||||||
FINANCING ACTIVITIES
|
||||||||||||
Proceeds from debt
|
10
|
-
|
440
|
|||||||||
Repayments of debt
|
10
|
-
|
(440
|
)
|
||||||||
Net borrowings under short-term loan facilities
|
-
|
327
|
||||||||||
Repurchases of common shares
|
14
|
(264
|
)
|
-
|
||||||||
Dividends paid on preference shares
|
(1
|
)
|
(1
|
)
|
||||||||
Dividends paid on common shares
|
14
|
(262
|
)
|
(259
|
)
|
|||||||
Other financing activities
|
4
|
9
|
||||||||||
Net cash (used in) provided by financing activities
|
(523
|
)
|
76
|
|||||||||
Decrease in cash and bank overdrafts
|
(657
|
)
|
(854
|
)
|
||||||||
Translation adjustments
|
-
|
(11
|
)
|
|||||||||
Cash and bank overdrafts at beginning of period
|
1,312
|
1,276
|
||||||||||
Cash and bank overdrafts at end of period
|
655
|
411
|
||||||||||
|
||||||||||||
Cash and bank overdrafts at end of period comprised of:
|
||||||||||||
Cash and cash equivalents
|
667
|
423
|
||||||||||
Bank overdrafts
|
(12
|
)
|
(12
|
)
|
||||||||
|
655
|
411
|
||||||||||
|
||||||||||||
Supplemental cash flow information is provided in note 15.
|
||||||||||||
|
||||||||||||
Interest paid
|
(109
|
)
|
(97
|
)
|
||||||||
Interest received
|
1
|
2
|
||||||||||
Income taxes paid
|
(65
|
)
|
-
|
(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
|
|
|
Total accumulated other comprehensive (loss) income (“AOCL”)
|
|
|
Non-
controlling interests
|
|
|
Total
|
|
|||||||||
Balance, December 31, 2013
|
|
|
10,170
|
|
|
|
177
|
|
|
|
10,347
|
|
|
|
7,303
|
|
|
|
(17
|
)
|
|
|
(1,597
|
)
|
|
|
(1,614
|
)
|
|
|
394
|
|
|
|
16,430
|
|
Comprehensive income(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
232
|
|
|
|
10
|
|
|
|
18
|
|
|
|
28
|
|
|
|
10
|
|
|
|
270
|
|
Distributions to non-controlling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Dividends declared on preference shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
Dividends declared on common shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(270
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(270
|
)
|
Shares issued under Dividend Reinvestment Plan (“DRIP”)
|
|
|
8
|
|
|
|
-
|
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8
|
|
Repurchases of common shares(2)
|
|
|
(101
|
)
|
|
|
-
|
|
|
|
(101
|
)
|
|
|
(178
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(279
|
)
|
Stock compensation plans
|
|
|
35
|
|
|
|
(23
|
)
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
Balance, March 31, 2014
|
|
|
10,112
|
|
|
|
154
|
|
|
|
10,266
|
|
|
|
7,086
|
|
|
|
(7
|
)
|
|
|
(1,579
|
)
|
|
|
(1,586
|
)
|
|
|
401
|
|
|
|
16,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2012
|
|
|
10,201
|
|
|
|
170
|
|
|
|
10,371
|
|
|
|
8,311
|
|
|
|
(56
|
)
|
|
|
(1,481
|
)
|
|
|
(1,537
|
)
|
|
|
353
|
|
|
|
17,498
|
|
Comprehensive income (loss)(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48
|
|
|
|
14
|
|
|
|
(253
|
)
|
|
|
(239
|
)
|
|
|
14
|
|
|
|
(177
|
)
|
Distributions to non- controlling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
Dividends declared on preference shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
Dividends declared on common shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(269
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(269
|
)
|
Shares issued under DRIP
|
|
|
10
|
|
|
|
-
|
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10
|
|
Stock compensation plans
|
|
|
52
|
|
|
|
(31
|
)
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21
|
|
Balance, March 31, 2013
|
|
|
10,263
|
|
|
|
139
|
|
|
|
10,402
|
|
|
|
8,089
|
|
|
|
(42
|
)
|
|
|
(1,734
|
)
|
|
|
(1,776
|
)
|
|
|
363
|
|
|
|
17,078
|
|
(1)
|
Retained earnings for the three months ended March 31, 2014 includes net remeasurement losses on defined benefit pension plans of $50 million, net of tax (2013 - gains of $79 million, net of tax).
|
(2)
|
Includes stated share capital of $36 million and retained earnings of $64 million related to the Company’s pre-defined share repurchase plan. See note 14.
|
IAS 32
|
Financial Instruments: Presentation
|
IAS 32 has been amended to clarify certain requirements for offsetting financial assets and liabilities. The amendment addresses the meaning and application of the concepts of legally enforceable right of set-off and simultaneous realization and settlement.
|
|
IAS 36
|
Impairment of Assets
|
IAS 36 has been amended to require disclosure of the recoverable amount of an asset (including goodwill) or a cash generating unit when an impairment loss has been recognized or reversed in the period. When the recoverable amount is based on fair value less costs of disposal, the valuation techniques and key assumptions must also be disclosed.
|
|
IAS 39
|
Financial Instruments: Recognition and Measurement
|
IAS 39 has been amended to allow hedge accounting to continue when, as a result of laws or regulations, the counterparty to a derivative designated as a hedging instrument is replaced by a central clearing counterparty.
|
|
IFRIC 21
|
Levies
|
IFRIC 21 addresses the recognition requirements for a liability to pay a levy imposed by a government, other than an income tax. The interpretation requires the recognition of a liability when the event, identified by the legislation, triggering the obligation to pay the levy occurs.
|
IAS 19
|
Employee Benefits
|
IAS 19 amendment, Defined Benefit Plans: Employee Contributions, clarifies the accounting for contributions from employees. Employee contributions, which are often a fixed percentage of salary, may be recognized as a reduction in the service cost component of pension expense in the same period the employee provides services. However, if the employee contribution rate varies based on years of service, the reduction in expense must be allocated over future service periods, mirroring the service cost recognition pattern. The amendment is not anticipated to have a material impact on the Company’s results and financial position.
|
|
IFRS 7
|
Financial Instruments: Disclosures
|
IFRS 7 has been amended to require disclosures that are either permitted or required on the basis of the entity’s date of adoption of IFRS 9 and whether the entity elects to restate prior periods under IFRS 9. IFRS 7 is not anticipated to have a material impact on the Company’s results and financial position.
|
|
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.
|
|
Financial Instruments (Hedge Accounting)
|
· Much of the guidance on hedge accounting in IAS 39 - Financial Instruments - Recognition and Measurement. The new standard (a) no longer requires the use of a specific quantitative threshold to determine if the hedging relationship is highly effective in order to qualify for hedge accounting; (b) removes restrictions that prevented some economically rational hedging strategies from qualifying for hedge accounting; and (c) allows purchased options, forwards and non-derivative financial instruments to be hedging instruments in applicable circumstances.
IFRS 9 is being assessed to determine its impact on the Company’s results and financial position.
|
· | Corporate & Other includes expenses for corporate functions, certain share-based compensation costs and the Reuters News 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. |
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Revenues
|
||||||||
Financial & Risk
|
1,658
|
1,675
|
||||||
Legal
|
803
|
794
|
||||||
Tax & Accounting
|
348
|
317
|
||||||
Intellectual Property & Science
|
243
|
233
|
||||||
Reportable segments
|
3,052
|
3,019
|
||||||
Corporate & Other (includes Reuters News)
|
79
|
81
|
||||||
Eliminations
|
(2
|
)
|
(3
|
)
|
||||
Revenues from ongoing businesses
|
3,129
|
3,097
|
||||||
Other Businesses(1)
|
1
|
78
|
||||||
Consolidated revenues
|
3,130
|
3,175
|
||||||
|
||||||||
Operating profit
|
||||||||
Segment operating profit
|
||||||||
Financial & Risk
|
240
|
200
|
||||||
Legal
|
215
|
201
|
||||||
Tax & Accounting
|
84
|
69
|
||||||
Intellectual Property & Science
|
51
|
51
|
||||||
Reportable segments
|
590
|
521
|
||||||
Corporate & Other (includes Reuters News)
|
(62
|
)
|
(59
|
)
|
||||
Underlying operating profit
|
528
|
462
|
||||||
Other Businesses(1)
|
(1
|
)
|
32
|
|||||
Fair value adjustments (see note 5)
|
(2
|
)
|
62
|
|||||
Amortization of other identifiable intangible assets
|
(163
|
)
|
(160
|
)
|
||||
Other operating losses, net
|
(3
|
)
|
(6
|
)
|
||||
Consolidated operating profit
|
359
|
390
|
(1)
|
Includes Investor Relations, Public Relations and Multimedia Solutions business (“Corporate Services”), a provider of tools and solutions that help companies communicate with investors and media, sold in the second quarter of 2013.
|
· | Results from the Reuters News 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. |
o | The costs of centralized support services such as technology, news, real estate, accounting, procurement, legal, and human resources are allocated to each segment based on usage or other applicable measures. |
o | 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; (iv) corporate-related items; and (v) fair value adjustments. Management uses this measure because the Company does not consider these excluded items to be controllable operating activities for purposes of assessing the current performance of the reportable segments. |
o | 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 Reuters News. 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. |
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Salaries, commissions and allowances
|
1,180
|
1,280
|
||||||
Share-based payments
|
17
|
18
|
||||||
Post-employment benefits
|
70
|
75
|
||||||
Total staff costs
|
1,267
|
1,373
|
||||||
Goods and services(1)
|
535
|
502
|
||||||
Data
|
245
|
245
|
||||||
Telecommunications
|
149
|
147
|
||||||
Real estate
|
115
|
119
|
||||||
Fair value adjustments(2)
|
2
|
(62
|
)
|
|||||
Total operating expenses
|
2,313
|
2,324
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Interest expense:
|
||||||||
Debt
|
(97
|
)
|
(103
|
)
|
||||
Derivative financial instruments - hedging activities
|
1
|
4
|
||||||
Other
|
(3
|
)
|
(2
|
)
|
||||
Fair value gains (losses) on financial instruments:
|
||||||||
Debt
|
1
|
2
|
||||||
Cash flow hedges, transfer from equity
|
(107
|
)
|
(51
|
)
|
||||
Fair value hedges
|
(7
|
)
|
(5
|
)
|
||||
Net foreign exchange gains on debt
|
113
|
54
|
||||||
Net interest expense - debt
|
(99
|
)
|
(101
|
)
|
||||
Net interest expense - pension and other post-employment benefit plans
|
(10
|
)
|
(16
|
)
|
||||
Interest income
|
1
|
2
|
||||||
Net interest expense
|
(108
|
)
|
(115
|
)
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Net gains (losses) due to changes in foreign currency exchange rates
|
28
|
(71
|
)
|
|||||
Net gains on derivative instruments
|
-
|
16
|
||||||
Other finance income (costs)
|
28
|
(55
|
)
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Share of post-tax earnings in equity method investees
|
-
|
4
|
||||||
Share of post-tax earnings in joint ventures
|
-
|
6
|
||||||
Share of post-tax earnings in equity method investments
|
-
|
10
|
|
Three months ended March 31,
|
|||||||
Benefit (expense)
|
2014
|
2013
|
||||||
Sale of businesses
|
-
|
(8
|
)
|
|||||
|
||||||||
Discrete tax items:
|
||||||||
Consolidation of technology and content assets(1)
|
-
|
(235
|
)
|
|||||
Uncertain tax positions(2)
|
3
|
2
|
||||||
Corporate tax rates(3)
|
2
|
1
|
||||||
Other(4)
|
9
|
11
|
(1)
|
Relates to the consolidation of the ownership and management of the Company’s technology and content assets.
|
(2)
|
Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.
|
(3)
|
Relates to the net reduction of deferred tax liabilities due to changes in corporate tax rates that were substantively enacted in certain jurisdictions.
|
(4)
|
Primarily relates to the recognition of deferred tax benefits in connection with acquisitions.
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Net earnings (loss)
|
292
|
(17
|
)
|
|||||
Less: Earnings attributable to non-controlling interests
|
(10
|
)
|
(14
|
)
|
||||
Dividends declared on preference shares
|
(1
|
)
|
(1
|
)
|
||||
Earnings (loss) used in consolidated earnings per share
|
281
|
(32
|
)
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Weighted-average number of shares outstanding
|
817,338,851
|
827,761,601
|
||||||
Vested DSUs
|
584,084
|
581,377
|
||||||
Basic
|
817,922,935
|
828,342,978
|
||||||
Effect of stock options and TRSUs
|
3,023,051
|
-
|
||||||
Diluted
|
820,945,986
|
828,342,978
|
March 31, 2014
|
Cash, trade and other receivables
|
Assets/ (liabilities) at fair value through earnings
|
Derivatives used for hedging
|
Available for sale
|
Other financial liabilities
|
Total
|
||||||||||||||||||
Cash and cash equivalents
|
667
|
-
|
-
|
-
|
-
|
667
|
||||||||||||||||||
Trade and other receivables
|
1,825
|
-
|
-
|
-
|
-
|
1,825
|
||||||||||||||||||
Other financial assets - current
|
27
|
48
|
58
|
-
|
-
|
133
|
||||||||||||||||||
Other financial assets - non-current
|
59
|
16
|
55
|
33
|
-
|
163
|
||||||||||||||||||
Current indebtedness
|
-
|
-
|
-
|
-
|
(580
|
)
|
(580
|
)
|
||||||||||||||||
Trade payables (see note 12)
|
-
|
-
|
-
|
-
|
(302
|
)
|
(302
|
)
|
||||||||||||||||
Accruals (see note 12)
|
-
|
-
|
-
|
-
|
(1,299
|
)
|
(1,299
|
)
|
||||||||||||||||
Other financial liabilities - current(1)
|
-
|
(43
|
)
|
-
|
-
|
(148
|
)
|
(191
|
)
|
|||||||||||||||
Long-term indebtedness
|
-
|
-
|
-
|
-
|
(7,379
|
)
|
(7,379
|
)
|
||||||||||||||||
Other financial liabilities - non current
|
-
|
(27
|
)
|
(127
|
)
|
-
|
(51
|
)
|
(205
|
)
|
||||||||||||||
Total
|
2,578
|
(6
|
)
|
(14
|
)
|
33
|
(9,759
|
)
|
(7,168
|
)
|
December 31, 2013
|
Cash, trade and other receivables
|
Assets/ (liabilities) at fair value through earnings
|
Derivatives used for hedging
|
Available for sale
|
Other financial liabilities
|
Total
|
||||||||||||||||||
Cash and cash equivalents
|
1,316
|
-
|
-
|
-
|
-
|
1,316
|
||||||||||||||||||
Trade and other receivables
|
1,751
|
-
|
-
|
-
|
-
|
1,751
|
||||||||||||||||||
Other financial assets - current
|
38
|
66
|
79
|
-
|
-
|
183
|
||||||||||||||||||
Other financial assets - non-current
|
59
|
27
|
80
|
26
|
-
|
192
|
||||||||||||||||||
Current indebtedness
|
-
|
-
|
-
|
-
|
(596
|
)
|
(596
|
)
|
||||||||||||||||
Trade payables (see note 12)
|
-
|
-
|
-
|
-
|
(406
|
)
|
(406
|
)
|
||||||||||||||||
Accruals (see note 12)
|
-
|
-
|
-
|
-
|
(1,626
|
)
|
(1,626
|
)
|
||||||||||||||||
Other financial liabilities - current(1)
|
-
|
(48
|
)
|
-
|
-
|
(145
|
)
|
(193
|
)
|
|||||||||||||||
Long-term indebtedness
|
-
|
-
|
-
|
-
|
(7,470
|
)
|
(7,470
|
)
|
||||||||||||||||
Other financial liabilities - non current
|
-
|
(29
|
)
|
(73
|
)
|
-
|
-
|
(102
|
)
|
|||||||||||||||
Total
|
3,164
|
16
|
86
|
26
|
(10,243
|
)
|
(6,951
|
)
|
(1)
|
Includes $100 million related to the Company’s pre-defined plan with its broker for the repurchase of up to $100 million of the Company’s shares during its internal trading blackout period. See note 14.
|
Carrying amount
|
Fair value
|
|||||||||||||||
March 31, 2014
|
Primary debt instruments
|
Derivative instruments (asset) liability
|
Primary debt instruments
|
Derivative instruments (asset) liability
|
||||||||||||
Bank and other
|
33
|
-
|
33
|
-
|
||||||||||||
C$600, 5.20% Notes, due 2014
|
547
|
(58
|
)
|
557
|
(58
|
)
|
||||||||||
C$600, 5.70% Notes, due 2015
|
542
|
63
|
571
|
63
|
||||||||||||
C$750, 6.00% Notes due 2016
|
677
|
(55
|
)
|
732
|
(55
|
)
|
||||||||||
C$500, 3.369% Notes due 2019
|
451
|
20
|
464
|
20
|
||||||||||||
C$750, 4.35% Notes due 2020
|
675
|
44
|
726
|
44
|
||||||||||||
$500, 0.875% Notes, due 2016
|
496
|
-
|
499
|
-
|
||||||||||||
$550, 1.30% Notes, due 2017
|
546
|
-
|
547
|
-
|
||||||||||||
$1,000, 6.50% Notes, due 2018
|
994
|
-
|
1,165
|
-
|
||||||||||||
$500, 4.70% Notes due 2019
|
497
|
-
|
545
|
-
|
||||||||||||
$350, 3.95% Notes due 2021
|
347
|
-
|
356
|
-
|
||||||||||||
$600, 4.30% Notes due 2023
|
593
|
-
|
614
|
-
|
||||||||||||
$350, 4.50% Notes due 2043
|
340
|
-
|
316
|
-
|
||||||||||||
$350, 5.65% Notes due 2043
|
340
|
-
|
369
|
-
|
||||||||||||
$400, 5.50% Debentures, due 2035
|
393
|
-
|
408
|
-
|
||||||||||||
$500, 5.85% Debentures, due 2040
|
488
|
-
|
533
|
-
|
||||||||||||
Total
|
7,959
|
14
|
8,435
|
14
|
||||||||||||
Current portion
|
580
|
(58
|
)
|
|||||||||||||
Long-term portion
|
7,379
|
72
|
Carrying amount
|
Fair value
|
|||||||||||||||
December 31, 2013
|
Primary debt instruments
|
Derivative instruments (asset) liability
|
Primary debt instruments
|
Derivative instruments (asset) liability
|
||||||||||||
Bank and other
|
24
|
-
|
28
|
-
|
||||||||||||
C$600, 5.20% Notes, due 2014
|
569
|
(79
|
)
|
583
|
(79
|
)
|
||||||||||
C$600, 5.70% Notes, due 2015
|
564
|
45
|
597
|
45
|
||||||||||||
C$750, 6.00% Notes due 2016
|
704
|
(80
|
)
|
764
|
(80
|
)
|
||||||||||
C$500, 3.369% Notes due 2019
|
469
|
6
|
470
|
6
|
||||||||||||
C$750, 4.35% Notes due 2020
|
701
|
22
|
731
|
22
|
||||||||||||
$500, 0.875% Notes, due 2016
|
497
|
-
|
501
|
-
|
||||||||||||
$550, 1.30% Notes, due 2017
|
546
|
-
|
530
|
-
|
||||||||||||
$1,000, 6.50% Notes, due 2018
|
994
|
-
|
1,159
|
-
|
||||||||||||
$500, 4.70% Notes due 2019
|
497
|
-
|
540
|
-
|
||||||||||||
$350, 3.95% Notes due 2021
|
347
|
-
|
347
|
-
|
||||||||||||
$600, 4.30% Notes due 2023
|
593
|
-
|
595
|
-
|
||||||||||||
$350, 4.50% Notes due 2043
|
340
|
-
|
295
|
-
|
||||||||||||
$350, 5.65% Notes due 2043
|
340
|
-
|
352
|
-
|
||||||||||||
$400, 5.50% Debentures, due 2035
|
393
|
-
|
387
|
-
|
||||||||||||
$500, 5.85% Debentures, due 2040
|
488
|
-
|
503
|
-
|
||||||||||||
Total
|
8,066
|
(86
|
)
|
8,382
|
(86
|
)
|
||||||||||
Current portion
|
596
|
(79
|
)
|
|||||||||||||
Long-term portion
|
7,470
|
(7
|
)
|
· | Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; |
· | Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and |
· | Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). |
March 31, 2014
|
Total
|
|||||||||||||||
Assets
|
Level 1
|
Level 2
|
Level 3
|
Balance
|
||||||||||||
Embedded derivatives(1)
|
-
|
48
|
-
|
48
|
||||||||||||
Forward exchange contracts(2)
|
-
|
16
|
-
|
16
|
||||||||||||
Financial assets at fair value through earnings
|
-
|
64
|
-
|
64
|
||||||||||||
Fair value hedges(3)
|
-
|
18
|
-
|
18
|
||||||||||||
Cash flow hedges(4)
|
-
|
95
|
-
|
95
|
||||||||||||
Derivatives used for hedging
|
-
|
113
|
-
|
113
|
||||||||||||
Available for sale investments(5)
|
33
|
-
|
-
|
33
|
||||||||||||
Total assets
|
33
|
177
|
-
|
210
|
||||||||||||
Liabilities
|
||||||||||||||||
Embedded derivatives(1)
|
-
|
(56
|
)
|
-
|
(56
|
)
|
||||||||||
Forward exchange contracts(2)
|
-
|
(14
|
)
|
-
|
(14
|
)
|
||||||||||
Financial liabilities at fair value through earnings
|
-
|
(70
|
)
|
-
|
(70
|
)
|
||||||||||
Cash flow hedges(4)
|
-
|
(127
|
)
|
-
|
(127
|
)
|
||||||||||
Derivatives used for hedging
|
-
|
(127
|
)
|
-
|
(127
|
)
|
||||||||||
Total liabilities
|
-
|
(197
|
)
|
-
|
(197
|
)
|
December 31, 2013
|
Total
|
|||||||||||||||
Assets
|
Level 1
|
Level 2
|
Level 3
|
Balance
|
||||||||||||
Embedded derivatives(1)
|
-
|
66
|
-
|
66
|
||||||||||||
Forward exchange contracts(2)
|
-
|
27
|
-
|
27
|
||||||||||||
Financial assets at fair value through earnings
|
-
|
93
|
-
|
93
|
||||||||||||
Fair value hedges(3)
|
-
|
24
|
-
|
24
|
||||||||||||
Cash flow hedges(4)
|
-
|
135
|
-
|
135
|
||||||||||||
Derivatives used for hedging
|
-
|
159
|
-
|
159
|
||||||||||||
Available for sale investments(5)
|
26
|
-
|
-
|
26
|
||||||||||||
Total assets
|
26
|
252
|
-
|
278
|
||||||||||||
Liabilities
|
||||||||||||||||
Embedded derivatives(1)
|
-
|
(58
|
)
|
-
|
(58
|
)
|
||||||||||
Forward exchange contracts(2)
|
-
|
(19
|
)
|
-
|
(19
|
)
|
||||||||||
Financial liabilities at fair value through earnings
|
-
|
(77
|
)
|
-
|
(77
|
)
|
||||||||||
Cash flow hedges(4)
|
-
|
(73
|
)
|
-
|
(73
|
)
|
||||||||||
Derivatives used for hedging
|
-
|
(73
|
)
|
-
|
(73
|
)
|
||||||||||
Total liabilities
|
-
|
(150
|
)
|
-
|
(150
|
)
|
(1)
|
Largely related to U.S. dollar pricing of vendor or customer agreements by foreign subsidiaries.
|
(2)
|
Used to manage foreign exchange risk on cash flows excluding indebtedness.
|
(3)
|
Comprised of fixed-to-floating cross-currency interest rate swaps on indebtedness.
|
(4)
|
Comprised of fixed-to-fixed cross-currency swaps on indebtedness.
|
(5)
|
Investments in entities over which the Company does not have control, joint control or significant influence.
|
· | quoted market prices or dealer quotes for similar instruments; and |
· | the fair value of currency and interest rate swaps and forward foreign exchange contracts is calculated as the present value of the estimated future cash flows based on observable yield curves. |
March 31,
2014
|
December 31,
2013
|
|||||||
Net defined benefit plan surpluses
|
63
|
52
|
||||||
Cash surrender value of life insurance policies
|
274
|
273
|
||||||
Equity method investments:
|
||||||||
Joint ventures
|
19
|
19
|
||||||
Other
|
175
|
178
|
||||||
Other non-current assets
|
68
|
61
|
||||||
Total other non-current assets
|
599
|
583
|
March 31,
2014
|
December 31,
2013
|
|||||||
Trade payables
|
302
|
406
|
||||||
Accruals
|
1,299
|
1,626
|
||||||
Provisions
|
280
|
372
|
||||||
Other current liabilities
|
164
|
220
|
||||||
Total payables, accruals and provisions
|
2,045
|
2,624
|
March 31,
2014
|
December 31,
2013
|
|||||||
Net defined benefit plan obligations
|
965
|
875
|
||||||
Deferred compensation and employee incentives
|
206
|
230
|
||||||
Provisions
|
178
|
183
|
||||||
Unfavorable contract liability
|
37
|
48
|
||||||
Uncertain tax positions
|
286
|
282
|
||||||
Other non-current liabilities
|
90
|
141
|
||||||
Total provisions and other non-current liabilities
|
1,762
|
1,759
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Dividends declared per common share
|
$
|
0.33
|
$
|
0.33
|
|
Three months ended March 31,
|
|||||||
|
2014
|
2013
|
||||||
Dividend reinvestment
|
8
|
10
|
Three months ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Non-cash employee benefit charges
|
62
|
74
|
||||||
Fair value adjustments
|
2
|
(62
|
)
|
|||||
Net (gains) losses on foreign exchange and derivative financial instruments
|
(26
|
)
|
56
|
|||||
Other
|
(4
|
)
|
(3
|
)
|
||||
34
|
65
|
Three months ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Trade and other receivables
|
(69
|
)
|
(127
|
)
|
||||
Prepaid expenses and other current assets
|
(34
|
)
|
(65
|
)
|
||||
Other financial assets
|
10
|
(3
|
)
|
|||||
Payables, accruals and provisions
|
(507
|
)
|
(420
|
)
|
||||
Deferred revenue
|
80
|
78
|
||||||
Other financial liabilities
|
(12
|
)
|
(1
|
)
|
||||
Income taxes
|
(38
|
)
|
54
|
|||||
Other
|
(59
|
)
|
(61
|
)
|
||||
(629
|
)
|
(545
|
)
|
Number of transactions
|
Cash consideration
|
|||||||
Businesses and identifiable intangible assets acquired
|
5
|
752
|
||||||
Less: cash acquired
|
-
|
(26
|
)
|
|||||
Businesses and identifiable intangible assets acquired, net of cash
|
5
|
726
|
||||||
Contingent consideration payments
|
-
|
1
|
||||||
Investments in businesses
|
1
|
3
|
||||||
6
|
730
|
Three months ended
March 31, 2013
|
||||
Cash and cash equivalents
|
26
|
|||
Trade and other receivables
|
42
|
|||
Prepaid expenses and other current assets
|
1
|
|||
Current assets
|
69
|
|||
Computer hardware and other property, net
|
5
|
|||
Computer software, net
|
46
|
|||
Other identifiable intangible assets
|
203
|
|||
Deferred tax
|
6
|
|||
Total assets
|
329
|
|||
Payables, accruals and provisions
|
(48
|
)
|
||
Deferred revenue
|
(59
|
)
|
||
Current liabilities
|
(107
|
)
|
||
Deferred tax
|
(55
|
)
|
||
Total liabilities
|
(162
|
)
|
||
Net assets acquired
|
167
|
|||
Goodwill
|
585
|
|||
Total
|
752
|
1. | I have reviewed this report on Form 6-K of Thomson Reuters Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 2, 2014
|
|
|
|
/s/ James C. Smith
|
|
|
James C. Smith
|
|
|
President and Chief Executive Officer
|
1. | I have reviewed this report on Form 6-K of Thomson Reuters Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 2, 2014
|
||
|
/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
|
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