- Milestone year marked by strong growth, operating performance and
strategic repositioning of portfolio through sale of Thomson
Learning and proposed acquisition of Reuters STAMFORD, Conn., Feb.
7 /PRNewswire-FirstCall/ -- The Thomson Corporation (NYSE: TOC;
TSX: TOC), a leading provider of information solutions to business
and professional customers worldwide, today reported that 2007
revenues increased 11%, to $7.3 billion, and 2007 operating profit
increased 4%, to $1.3 billion. Underlying operating profit grew 14%
excluding special items (see note below in Consolidated Financial
Highlights). Fourth-quarter revenues increased 10%, to $2.0
billion, and, while operating profit declined 3%, underlying
operating profit increased 8%. In the fourth quarter, diluted
earnings per share increased to $0.67, from $0.61 in the prior year
period. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020227/NYW014LOGO ) "The
fourth quarter was a strong finish to a milestone year in which we
delivered strong growth and operating performance while
repositioning our portfolio through the sale of Thomson Learning
and the proposed acquisition of Reuters," said Richard J.
Harrington, Thomson President and Chief Executive Officer. "We were
particularly pleased with our 2007 organic revenue growth rates of
7% at Legal and 10% at Tax and Accounting. Thomson Financial
recorded fourth-quarter organic revenue growth of 6% and achieved
very strong sales, while continuing to advance the integration
planning associated with the proposed Reuters acquisition." "Our
results reflect our success in developing critical information
solutions and decision-support tools that enhance our business and
professional customers' productivity," said Mr. Harrington. "Among
our initiatives to expand our global footprint in 2007 were the
launch of a Japanese version of Thomson ONE and the establishment
of online legal businesses in Japan and China." "Thomson solutions
such as Westlaw, FindLaw, Thomson ONE, Checkpoint, Web of Science
and Medstat remain at the core of our customers' day-to-day
operations," Mr. Harrington said. "We also continued to drive
operational efficiency and effectiveness across the company, which
contributed to double- digit underlying operating profit growth for
the year." "I remain convinced that our acquisition of Reuters will
be approved given the complementary nature of our businesses, and I
continue to expect the transaction to close early in the second
quarter," said Mr. Harrington. "Integration planning efforts are
proceeding on course. At the same time, our plans to streamline our
operations and improve efficiencies at Thomson, which we began in
2006 and which will be completed ahead of schedule, have put us in
a strong position for the successful integration of Reuters."
"After the acquisition closes, Thomson Reuters will be the leading
global provider of information and related applications to
knowledge workers who need intelligent information to fulfill their
professional obligations and do their jobs successfully," said Mr.
Harrington. "As we enter a time of economic uncertainty, I believe
Thomson has never been stronger, strategically, financially and
operationally," Mr. Harrington said. Proposed Acquisition of
Reuters Group PLC Thomson is confident that its proposed
acquisition of Reuters Group PLC will be approved by the European
Commission, U.S. Department of Justice and Canadian Competition
Bureau in the next few weeks, and the transaction is expected to be
completed early in the second quarter of 2008. When the acquisition
closes, Thomson Reuters will be the global leader in electronic
information services, trading systems and news. For the last
several months, Thomson and Reuters have been working closely on
permitted integration planning initiatives to ensure that the right
organization is in place when the transaction closes. Thomson plans
to provide a 2008 outlook when it reports first quarter earnings on
May 1, 2008. Consolidated Financial Highlights Note: Underlying
operating profit for 2007 excludes the following special items. For
the year 2007: Investment in THOMSONplus efficiency initiatives in
both periods ($153 million for 2007 and $60 million for 2006),
Reuters acquisition costs of $76 million and the benefit of a $34
million gain on the settlement of a pension plan. For the fourth
quarter 2007: Investment in THOMSONplus efficiency initiatives in
both periods ($68 million for Q4 2007 and $29 million for Q4 2006),
Reuters acquisition costs of $45 million and the benefit of a $34
million gain on the settlement of a pension plan. Fourth Quarter
2007 -- Revenues increased 10%, to $2.0 billion, led by strong
growth in the Legal, Financial, Tax & Accounting and Scientific
business segments. Organic revenue growth was 6%. -- Operating
profit decreased 3%, to $410 million in the fourth quarter.
Operating profit margin was 20.2%, compared with 22.8% in the
prior- year period. Underlying operating profit increased 8% and
the underlying operating margin was 24.1%, compared with 24.4% in
the fourth quarter of 2006. This decline was primarily due to the
initial dilutive impact from acquisitions and the timing of
expenses. -- Earnings attributable to common shares were $432
million, or $0.67 diluted earnings per share, compared to $390
million, or $0.61 diluted earnings per share, in the fourth quarter
of 2006. Adjusted earnings for the period were $384 million, or
$0.60 per share, compared with $320 million, or $0.50 per share, in
the prior-year period, after adjusting for discontinued operations,
costs related to the proposed Reuters transaction, other expenses,
the gain on the settlement of a pension plan, tax expenses
associated with these items, and the normalization of the tax rate.
For the Full Year 2007 -- Revenues increased 11%, to $7.3 billion,
driven by strong growth across all business segments. Organic
revenue growth was 6%. -- Operating profit increased 4%, to $1.3
billion. Operating profit margin was 17.8% compared with 18.9% in
2006. Underlying operating profit increased 14%, to $1.5 billion,
and underlying operating profit margin increased 60 basis points,
to 20.4%. -- Earnings attributable to common shares were $4.0
billion, or $6.20 diluted earnings per share, compared to $1.1
billion, or $1.73 diluted earnings per share, in 2006. Earnings in
2007 included $2.9 billion related to discontinued operations, net
of tax, primarily related to the gain from the sale of Thomson
Learning's higher education assets, completed in the third quarter.
Adjusted earnings were $1.1 billion, or $1.69 per share, compared
with $857 million, or $1.33 per share, in 2006, after adjusting for
the items noted above. -- Net cash provided by operations was $1.8
billion, compared with $2.1 billion in 2006. Free cash flow was
$1.1 billion, compared with $1.4 billion in 2006, reflecting
discontinued operations, interest income earned on the proceeds
from the sale of Thomson Learning, and the special items. Excluding
these, free cash flow increased 12%. Fourth Quarter and Full Year
Operational Highlights -- In 2007, approximately 82% of revenue was
derived from electronic, software and services which grew 13%, and
more than 80% of revenue was recurring in nature. -- In October
2007, Thomson Financial announced a strategic partnership with nine
of the world's leading global dealers to further expand electronic
trading using the TradeWeb platform. This partnership will help to
drive the expansion of electronic trading, utilizing TradeWeb's
leading multi-dealer-to-client marketplace for fixed income and
derivatives to create a global multi-asset class execution venue
for clients. In January 2008, the dealers invested approximately
$180 million to purchase a 15% stake in TradeWeb's established
markets. In addition, Thomson and the dealers agreed to fund
additional investment in order to expand the TradeWeb platform to
new asset classes, including equities and derivatives, such as
interest rate and credit default swaps. -- Thomson's accelerated
efforts to increase operational efficiency through a series of
initiatives (THOMSONplus) continued in the fourth quarter. As a
result, at the end of the fourth quarter, Thomson achieved
annualized run-rate savings of $120 million, investing $153 million
in 2007. The aggregate amount expected to be spent on THOMSONplus
remains unchanged at $250 million. However Thomson expects to
achieve annualized run-rate savings of $160 million by the middle
of 2008, six months ahead of schedule, and in excess of its
original target of $150 million. Fourth Quarter and Full-Year
Business Segment Highlights Legal -- Revenues increased 10% in both
the fourth quarter and full year, to $875 million and $3.3 billion,
respectively. Organic revenue growth was 7% for both the fourth
quarter and full year 2007, with acquisitions contributing 1% and
foreign exchange adding 2% in each period. -- In the fourth
quarter, organic revenue growth was driven by Westlaw, which
increased 8%, with solid growth across all customer segments,
including strong demand for Westlaw Litigator and FindLaw. Revenues
from the segment's international online legal business grew at a
double-digit rate for the third consecutive quarter. --
Fourth-quarter segment operating profit grew 7%, to $272 million.
Operating profit growth reflected investments in developing online
legal businesses in Japan and China, and some expense timing. As a
result, operating margin for the quarter decreased 100 basis
points, to 31.1%. -- For the full year, operating profit grew 11%,
with the related margin increasing 20 basis points, to 31.5%.
Financial -- Fourth-quarter revenues grew 9%, to $575 million, with
organic growth of 6%, acquisitions contributing 1%, and foreign
exchange adding 2%. Organic revenue growth was driven by strength
across multiple customer segments, including Investment Management,
Omgeo and Corporate Services. Investment Management growth was
driven by continued demand for Thomson ONE and StreetEvents.
International growth was also strong as Europe and Asia each
recorded double-digit organic revenue increases. -- For the full
year, revenues grew 8%, to $2.2 billion. Organic growth was 5%,
acquisitions added 1%, and foreign exchange contributed 2%. --
Fourth-quarter segment operating profit grew 22%, to $135 million,
and the related margin increased 250 basis points, to 23.5%, driven
by strong revenue growth, operating efficiency initiatives and
integration-related savings. -- For the full year 2007, operating
profit increased 19%, to $454 million, with operating margins
increasing 200 basis points, to 20.8%. Tax & Accounting --
Fourth-quarter revenues increased 18%, to $248 million. Organic
revenues grew 8% in the quarter, and growth from acquisitions was
10%. Tax and Accounting's revenue growth in the quarter benefited
from the successful integration of its CrossBorder Solutions and
Deloitte Property Tax Services acquisitions. Organic revenue growth
in the quarter was due to strong performances from Checkpoint and
core software products targeted to accountants and corporations,
including UltraTax and InSource, reflecting strong new sales and
high retention rates. -- For the full-year 2007, revenues rose 18%,
to $705 million, with organic revenues up 10% and acquisitions
adding 8%. -- Fourth-quarter segment operating profit declined, as
expected, by 6%, to $89 million, primarily due to the dilutive
effect of several acquisitions largely caused by the initial
accounting for revenue. In total, acquisitions affected
fourth-quarter margins by roughly 600 basis points, leading to a
decline in the operating margin in the quarter to 35.9%, compared
with 45% in the prior-year period. As the business integrates these
acquisitions in 2008 and the requisite accounting treatment is
normalized, the operating margin is expected to return to
historical averages by the end of 2008. -- For the full year,
operating profit increased 10% to $184 million, while operating
profit margin decreased 200 basis points, to 26.1%, due to the
dilutive effect of acquisitions mentioned above. Scientific -- For
the fourth quarter, revenues grew 11%, to $180 million, with
organic growth of 5%, acquisitions adding 4%, and foreign exchange
adding 2%. Organic revenue was driven by strong growth from
information solutions, led by ISI Web of Knowledge and Web of
Science, and solutions targeted to corporate customers. Software
solutions also contributed solid organic growth in the quarter.
Revenue growth was partly offset by declines in legacy online
products. -- For the full year, revenues grew 8% to $651 million.
Organic growth was 4%, acquisitions contributed 2%, and foreign
exchange 2%. -- Segment operating profit in the quarter increased
20%, to $55 million, while operating margin increased 220 basis
points, to 30.6%, compared with the prior year. Fourth-quarter
operating income growth was mainly due to the flow-through of
increased revenue and efficiency savings. -- For 2007, operating
profit grew 16% to $175 million, compared to 2006, with the related
margin increasing 180 basis points, to 26.9%. Healthcare --
Fourth-quarter revenues were $158 million, unchanged from the
prior- year period. The Payer segment (25% of total revenue) was up
8%, reflecting strong renewals and new business, and, the Provider
segment (40% of total revenue) was up 13% led by Solucient.
However, a decline in PDR (Physicians' Desk Reference) revenue
offset revenue growth in the Payer and Provider segments, as well
as 3% growth attributable to acquisitions. -- For the full year,
revenue increased 21%, to $452 million, entirely from acquisitions.
-- For the quarter, segment operating profit decreased 7%, to $57
million, and the operating profit margin decreased 250 basis
points, to 36.1%. -- For 2007, operating profit increased 5% to $85
million and the related margin decreased 290 basis points, to
18.8%. Corporate and Other Corporate and Other expenses in the
fourth quarter were $131 million, a $47 million increase, from $84
million in the prior-year period. The rise was primarily due to a
$39 million increase in investments in THOMSONplus-related
initiatives and $45 million of costs related to the proposed
Reuters transaction. These costs were offset, in part, by a $34
million gain on the settlement of a pension plan. For the full year
2007, Corporate and Other expenses were $389 million, a $154
million increase from $235 million in 2006. The rise was primarily
due to a $93 million increase in investments in THOMSONplus-related
initiatives and $76 million of costs related to the proposed
Reuters transaction, offset in part by the $34 million gain on the
settlement of a pension plan. Discontinued Operations The gain on
the sale of the Thomson Learning businesses accounted for the
majority of results in Discontinued Operations for the full year.
Share Buyback Program Thomson repurchased shares under its buyback
program (normal course issuer bid) during November and December.
Thomson temporarily suspended repurchases prior to its announcement
of the proposed Reuters acquisition in May 2007. In the fourth
quarter of 2007, Thomson repurchased approximately 2.4 million
common shares, for a total cost of approximately $91 million.
During all of 2007, Thomson repurchased approximately 4.17 million
common shares for a total cost of approximately $167 million. As of
February 1, 2008, Thomson had approximately 638.9 million issued
and outstanding common shares. Decisions regarding the timing of
future repurchases will be based on market conditions, share price
and other factors. Thomson may elect to suspend or discontinue the
program at any time. Shares repurchased are cancelled. Dividend The
Board of Directors approved an annual 2008 dividend of $1.08 per
common share, an increase of $0.10 per common share, or 10%, over
2007. The new quarterly dividend rate of $0.27 per share is payable
on March 17, 2008, to common shareholders of record as of February
21, 2008. This marks the third consecutive year of double-digit
dividend growth. Over the course of 2008, Thomson's controlling
shareholder, The Woodbridge Company Limited, plans to reinvest the
equivalent of 50% of the dividends that it receives in the first
three quarters of the year. Woodbridge's dividend reinvestment in
additional Thomson common shares will be in accordance with the
terms of Thomson's dividend reinvestment plan. Woodbridge's
reinvestment decision reinforces Thomson's commitment to a strong
capital structure and balance sheet. The Thomson Corporation The
Thomson Corporation (http://www.thomson.com/) is a global leader in
providing essential electronic workflow solutions to business and
professional customers. With operational headquarters in Stamford,
Conn., Thomson provides value-added information, software tools and
applications to professionals in the fields of law, tax,
accounting, financial services, scientific research and healthcare.
The Corporation's common shares are listed on the New York and
Toronto stock exchanges (NYSE: TOC; TSX: TOC). The Thomson
Corporation will webcast a discussion of fourth-quarter and
full-year results beginning at 8:30 am ET today. To participate in
the webcast, please visit http://www.thomson.com/ and click the
"Investor Relations" link located at the top of the page. The
Corporation's financial statements are prepared in accordance with
Canadian generally accepted accounting principles (GAAP) and are
reported in U.S. dollars. When applicable, prior periods are
restated for discontinued operations. This news release includes
certain non-GAAP financial measures. We use these non-GAAP
financial measures as supplemental indicators of our operating
performance and financial position. These measures do not have any
standardized meanings prescribed by GAAP and therefore are unlikely
to be comparable to the calculation of similar measures used by
other companies, and should not be viewed as alternatives to
measures of financial performance calculated in accordance with
GAAP. These non-GAAP financial measures are defined and reconciled
to the most directly comparable GAAP measures in the following
tables. CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE
RESULTS This news release, in particular the discussion of the
proposed acquisition of Reuters, includes forward-looking
statements. These statements are based on certain assumptions and
reflect the Corporation's current expectations. Forward-looking
statements also include statements about the Corporation's beliefs
and expectations related to its anticipated run-rate savings and
costs related to THOMSONplus as well as the timing for the
achievement of savings from the program, its beliefs that the
Reuters acquisition will be approved and close early in the second
quarter, and that its partnership with the global dealers will
expand electronic trading using TradeWeb. While Thomson believes
that the proposed transaction with Reuters will be approved by
antitrust/competition authorities, there can be no assurance that
required approvals will be obtained, how long it will take to
obtain such approvals or what conditions, if any, such authorities
may impose. All forward-looking statements in this news release are
subject to a number of risks and uncertainties that could cause
actual results or events to differ materially from current
expectations. These risks and uncertainties include the failure of
Reuters shareholders to approve the proposed transaction; the
effect of regulatory conditions, if any, imposed by regulatory
authorities; the reaction of Thomson's and Reuters' customers,
employees and suppliers to the proposed transaction; the ability to
promptly and effectively integrate the businesses of Thomson and
Reuters after the transaction closes; and the diversion of
management time on transaction-related issues. Some of the other
factors that could cause actual results or events to differ
materially from current expectations are actions of competitors;
failure to fully derive anticipated benefits from acquisitions and
divestitures; failure to develop additional products and services
to meet customers' needs, attract new customers or expand into new
geographic markets; and changes in the general economy. In
addition, Thomson does not control Woodbridge and Woodbridge is not
obligated to reinvest its dividends in Thomson shares. Additional
factors are discussed in the Corporation's materials filed with the
securities regulatory authorities in Canada and the United States
from time to time, including the Corporation's latest annual
information form, which is also contained in its most recently
filed annual report on Form 40-F. The Corporation disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, other than as required by applicable law, rule or
regulation. ADDITIONAL INFORMATION This document does not
constitute an offer for sale of any securities or an offer or an
invitation to purchase any such securities. Following satisfaction
or waiver of the pre-conditions to the proposed Reuters
transaction, documents relating to the proposed transaction will be
furnished to or filed with the SEC. Shareholders are urged to read
such documents regarding the proposed transaction if and when they
become available, because they will contain important information.
Shareholders will be able to obtain free copies of these documents,
as well as other filings containing information about the
companies, without charge, at the SEC's website at
http://www.sec.gov/, at the Canadian securities regulatory
authorities' website at http://www.sedar.com/ and from Thomson.
These documents will also be available for inspection and copying
at the public reference room maintained by the SEC at 100 F Street,
N.E., Washington, D.C. 20549, United States. For further
information about the public reference room, call the SEC at +1
800-732-0330. Consolidated Statement of Earnings (millions of U.S.
dollars, except per common share data) (unaudited) Three Months
Ended Twelve Months Ended ------------------ -------------------
December 31, December 31, ------------ ------------ 2007 2006 2007
2006 ---- ---- ---- ---- Revenues 2,033 1,850 7,296 6,591 Cost of
sales, selling, marketing, general and administrative expenses
(1,436) (1,250) (5,275) (4,665) Depreciation (120) (116) (468)
(438) Amortization (67) (62) (256) (240) ------------ ------------
------------ ------------ Operating profit 410 422 1,297 1,248 Net
other (expense) income (40) (35) (34) 1 Net interest income
(expense) and other financing costs 52 (53) (12) (221) Income taxes
(111) (29) (155) (116) ------------ ------------ ------------
------------ Earnings from continuing operations 311 305 1,096 912
Earnings from discontinued operations, net of tax 123 86 2,908 208
------------ ------------ ------------ ------------ Net earnings
434 391 4,004 1,120 Dividends declared on preference shares (2) (1)
(6) (5) ------------ ------------ ------------ ------------
Earnings attributable to common shares 432 390 3,998 1,115 Basic
earnings per common share $0.67 $0.61 $6.24 $1.73 ============
============ ============ ============ Diluted earnings per common
share $0.67 $0.61 $6.20 $1.73 ============ ============
============ ============ Basic weighted average common shares
641,393,907 641,551,065 641,157,718 644,131,524 ============
============ ============ ============ Diluted weighted average
common shares 644,516,692 643,936,859 644,430,796 646,026,345
============ ============ ============ ============ Reconciliation
of Earnings Attributable to Common Shares to Adjusted Earnings from
Continuing Operations(1) (millions of U.S. dollars, except per
common share data) (unaudited) Three Months Twelve Months
------------ ------------- Ended Ended ----- ----- December 31,
December 31, ------------ ------------ 2007 2006 2007 2006 ----
---- ---- ---- Earnings attributable to common shares 432 390 3,998
1,115 Adjustments: One-time items: Net other expense (income) 40 35
34 (1) Reuters transaction costs 45 - 76 - Settlement of pension
plan (34) - (34) - Tax on above items (9) (15) (17) (16) Tax
charges (benefits) 1 (12) (60) (33) Interim period effective tax
rate normalization (2) 32 8 - - Discontinued operations, net of tax
(123) (86) (2,908) (208) ------ ------ ------- ------ Adjusted
earnings from continuing operations 384 320 1,089 857 ====== ======
======= ====== Adjusted diluted earnings per common share from
continuing operations $0.60 $0.50 $1.69 $1.33 ====== ====== =======
====== Notes (1) Adjusted earnings from continuing operations and
adjusted earnings per common share from continuing operations are
earnings attributable to common shares and per share amounts after
adjusting for non-recurring items, discontinued operations, and
other items affecting comparability. Thomson uses these measures to
assist in comparisons from one period to another. Adjusted earnings
per common share from continuing operations do not represent actual
earnings per share attributable to shareholders. (2) Adjustment to
reflect income taxes based on the estimated full-year effective tax
rate of the consolidated group. Reported earnings for interim
periods reflect income taxes based on estimated effective tax rates
of each of the group's jurisdictions. The adjustment reallocates
estimated full-year income taxes between interim periods, but has
no effect on full-year income taxes. Reconciliation of Operating
Profit to Underlying Operating Profit(1) (millions of U.S. dollars)
(unaudited) Three Months Twelve Months ------------ -------------
Ended Ended ----- ----- December 31, December 31, ------------
------------ 2007 2006 2007 2006 ---- ---- ---- ---- Operating
profit 410 422 1,297 1,248 Adjustments: THOMSONplus costs 68 29 153
60 Reuters transaction costs 45 - 76 - Settlement of pension plan
(34) - (34) - ------ ------ ------ ------ Underlying operating
profit 489 451 1,492 1,308 ====== ====== ====== ====== Underlying
operating profit margin 24.1% 24.4% 20.4% 19.8% ====== ======
====== ====== Notes (1) Underlying operating profit is operating
profit adjusted for items affecting comparability and costs
associated with Thomson's corporate efficiency initiatives.
Underlying operating profit margin is the underlying operating
profit expressed as a percentage of revenues. Thomson uses these
measures to assist in comparisons from one period to another.
Thomson's definition of underlying operating profit may not be
directly comparable to that of another company. Consolidated
Balance Sheet (millions of U.S. dollars) (unaudited) December 31,
December 31, 2007 2006 -------------------------- Assets Cash and
cash equivalents 7,497 334 Accounts receivable, net of allowances
1,565 1,364 Prepaid expenses and other current assets 508 368
Deferred income taxes 104 153 Current assets of discontinued
operations 4 1,046 -------------------------- Current assets 9,678
3,265 Computer hardware and other property, net 731 624 Computer
software, net 721 647 Identifiable intangible assets, net 3,438
3,451 Goodwill 6,935 6,538 Other non-current assets 1,322 1,092
Non-current assets of discontinued operations 6 4,525
-------------------------- Total assets 22,831 20,142
========================== Liabilities and shareholders' equity
Liabilities Short-term indebtedness 183 333 Accounts payable and
accruals 1,532 1,305 Deferred revenue 1,108 954 Current portion of
long-term debt 412 264 Current liabilities of discontinued
operations 4 883 -------------------------- Current liabilities
3,239 3,739 Long-term debt 4,264 3,681 Other non-current
liabilities 783 785 Deferred income taxes 974 1,007 Non-current
liabilities of discontinued operations - 449
-------------------------- Total liabilities 9,260 9,661
Shareholders' equity Capital 2,932 2,799 Retained earnings 10,355
7,169 Accumulated other comprehensive income 284 513
-------------------------- Total shareholders' equity 13,571 10,481
-------------------------- Total liabilities and shareholders'
equity 22,831 20,142 ========================== Consolidated
Statement of Cash Flow (millions of U.S. dollars) (unaudited) Three
Months Ended Twelve Months Ended ------------------
------------------- December 31, December 31, ------------
------------ 2007 2006 2007 2006 ---------------- ----------------
Cash provided by (used in): Operating activities Net earnings 434
391 4,004 1,120 Remove earnings from discontinued operations (123)
(86) (2,908) (208) Add back (deduct) items not involving cash:
Depreciation 120 116 468 438 Amortization 67 62 256 240 Net gains
on disposals of businesses and investments - (3) (8) (47) Deferred
income taxes (54) (118) (124) (121) Other, net 58 39 258 204
Pension contributions - (14) (3) (23) Changes in working capital
and other items 71 101 (133) (50) Cash provided by operating
activities - discontinued operations 86 308 6 572 ----------------
---------------- Net cash provided by operating activities 659 796
1,816 2,125 ---------------- ---------------- Investing activities
Acquisitions (173) (336) (488) (744) Proceeds from disposals 7 28
18 88 Capital expenditures, less proceeds from disposals (225)
(182) (608) (452) Other investing activities (4) - (37) (26)
Capital expenditures of discontinued operations - (55) (97) (185)
Other investing activities of discontinued operations - (4) (2)
(17) Proceeds from disposals of discontinued operations, net of
income taxes paid (899) (24) 7,151 81 Acquisitions by discontinued
operations - - (54) (35) ---------------- ---------------- Net cash
(used in) provided by investing activities (1,294) (573) 5,883
(1,290) ---------------- ---------------- Financing activities
Proceeds from debt 794 - 794 - Repayments of debt - (15) (249) (88)
Net borrowings (repayments) under short-term loan facilities 190
(191) (180) 108 Premium on foreign currency hedge - - (76) -
Repurchase of common shares (93) (54) (168) (412) Dividends paid on
preference shares (2) (1) (6) (5) Dividends paid on common shares
(153) (138) (612) (553) Other financing activities, net 14 17 33 38
---------------- ---------------- Net cash provided by (used in)
financing activities 750 (382) (464) (912) ----------------
---------------- Translation adjustments (73) 2 (72) 4
---------------- ---------------- Increase (decrease) in cash and
cash equivalents 42 (157) 7,163 (73) Cash and cash equivalents at
beginning of period 7,455 491 334 407 ----------------
---------------- Cash and cash equivalents at end of period 7,497
334 7,497 334 ---------------- ---------------- Reconciliation of
Net Cash Provided by Operating Activities to Free Cash Flow(1) And
Analysis of Free Cash Flow (millions of U.S. dollars) (unaudited)
Three Months Ended Twelve Months Ended ------------------
------------------- December 31, December 31, ------------
------------ 2007 2006 2007 2006 ---- ---- ---- ---- Net cash
provided by operating activities 659 796 1,816 2,125 Capital
expenditures (225) (182) (608) (452) Other investing activities (4)
- (37) (26) Capital expenditures of discontinued operations - (55)
(97) (185) Other investing activities of discontinued operations -
(4) (2) (17) Dividends paid on preference shares (2) (1) (6) (5)
-------------------------------- Free cash flow 428 554 1,066 1,440
Items affecting comparability: Cash used in (provided by) operating
and investing activities of discontinued operations (86) (249) 93
(370) Interest on proceeds from sale of Thomson Learning, net of
taxes (86) - (155) - Spending on THOMSONplus initiatives 44 30 162
69 Spending on Reuters related costs 47 - 73 - Settlement of
lawsuit - - 36 - -------------------------------- 347 335 1,275
1,139 ================================ Notes (1) Free cash flow is
net cash provided by operating activities less capital
expenditures, other investing activities and dividends paid on
preference shares. Thomson uses free cash flow as a performance
measure because it represents cash available to repay debt, pay
common dividends and fund new acquisitions. Business Segment
Information (millions of U.S. dollars) (unaudited) Three Months
Ended Twelve Months Ended ------------------ -------------------
December 31, December 31, ------------ ------------ 2007 2006
Change 2007 2006 Change ---- ---- ------ ---- ---- ------ Revenues:
Legal 875 795 10% 3,318 3,008 10% Financial 575 528 9% 2,186 2,025
8% Tax & Accounting 248 211 18% 705 598 18% Scientific 180 162
11% 651 602 8% Healthcare 158 158 0% 452 374 21% Intercompany
eliminations (3) (4) (16) (16) ------- ------- ------- -------
Total revenues 2,033 1,850 10% 7,296 6,591 11% ======= =======
======= ======= Operating Profit: Segment operating profit Legal
272 255 7% 1,044 943 11% Financial 135 111 22% 454 380 19% Tax
& Accounting 89 95 -6% 184 168 10% Scientific 55 46 20% 175 151
16% Healthcare 57 61 -7% 85 81 5% Corporate and other (1) (131)
(84) (389) (235) ------- ------- ------- ------- Total segment
operating profit 477 484 -1% 1,553 1,488 4% Amortization (67) (62)
(256) (240) Operating profit 410 422 -3% 1,297 1,248 4% =======
======= ======= ======= Notes (1) Corporate and Other includes
THOMSONplus costs, corporate costs, Reuters transaction costs and
certain costs associated with the company's stock incentive and
phantom stock plans. Detail of depreciation by segment: Three
Months Ended Twelve Months Ended ------------------
------------------- December 31, December 31, ------------
------------ 2007 2006 2007 2006 ------------------
------------------ Legal (52) (50) (205) (187) Financial (42) (45)
(172) (180) Tax & Accounting (6) (5) (21) (22) Scientific (9)
(7) (32) (23) Healthcare (7) (5) (24) (16) Corporate and Other (4)
(4) (14) (10) ------------------ ------------------ (120) (116)
(468) (438) ================== ==================
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The Thomson Corporation CONTACT: Media: Fred Hawrysh, Global
Director, External Communications, +1-203-539-8314, , Investor:
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