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TRIGoldman2.13.131.pdf
February 13, 2013
COMPANY UPDATE Thomson Reuters Corp. (TRI)
Sell Equity Research
Higher multiple off a lower base too early to be compelling
What's changed
Thomson Reuters reported 4Q12 results and its preliminary 2013 guide. Its
4Q revenue and EPS were $3.40bn and $0.60 compared to our estimates of
$3.42bn and $0.48. Guidance was inline with our view for revenue growth
(up low single digits yoy) and margin expansion (about flat ex-charges)
but, due to restatements and disposed businesses, resulted in a base
significantly lower than our prior expectation. We lower our 2013/14E EPS
to $1.76/ $1.99 from $2.00 / $2.23 and introduce 2015E EPS of $2.11.
Implications
We remain Sell rated, with low single digit revenue growth likely for two
or more years. Even with 2014 margin expansion, we see 7% EPS growth
ex-reorganization charges, not warranting 17x 2013E P/E (16x ex-
reorganization of about $0.10).
Broad weakness a concern. Persistent low single digit organic growth for
all of Thomson Reuters segments illustrates, in our view, its greater
exposure to challenged segments vs. peers – financial services and
government. We believe recent Legal weakness is a reflection of financial
service sector weakness spilling over, with slower reaction due to the
privately held nature of most law firms.
Eikon a positive. One-third of Eikon placements as competitive wins is
notable, though note greater user value of Eikon isn’t being matched by
significantly higher pricing. Our sense is meaningful share potential is on
a 2-3 year horizon given sales cycles and pending rollouts.
Valuation
Our unchanged $25 6-month price target is based on 14x 2013E EPS of
$1.76. We raise our target multiple from 12.5x to 14x to reflect stabilization
of yoy organic revenue declines.
Key risks
Share taking, asset sales, global financial services recovery.
INVESTMENT LIST MEMBERSHIP
Americas Sell List
Coverage View: Neutral
Brian Karimzad (212) 357-1745 [email protected] Goldman, Sachs & Co. Goldman Sachs does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non- US affiliates are not registered/qualified as research analysts with FINRA in the U.S.
Michelle Lee (917) 343-8745 [email protected] Goldman, Sachs & Co.
The Goldman Sachs Group, Inc. Global Investment Research
Growth
Returns *
Multiple
Volatility Volatility
Multiple
Returns *
Growth
Investment Profile
Low High
Percentile 20th 40th 60th 80th 100th
* Returns = Return on Capital For a complete description of the
investment profile measures please refer to
the disclosure section of this document.
Thomson Reuters Corp. (TRI)
Americas Information Services Peer Group Average
Key data Current
Price ($) 29.96
6 month price target ($) 25.00
Market cap ($ mn) 24,782.2
12/12 12/13E 12/14E 12/15E
Revenue ($ mn) New 12,822.0 12,774.0 13,063.3 13,390.4
Revenue ($ mn) Old 13,298.5 13,390.5 13,873.5 --
EPS ($) New 1.89 1.76 1.99 2.11
EPS ($) Old 2.00 2.00 2.23 --
P/E (X) 15.9 17.0 15.0 14.2
EV/EBITDA (X) 8.9 8.7 7.7 7.1
ROE (%) 9.1 5.7 6.8 7.3
12/12 3/13E 6/13E 9/13E
EPS ($) 0.54 0.29 0.48 0.45
Price performance chart
26.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
30.0
30.5
31.0
Feb-12 May-12 Aug-12 Nov-12
1,250
1,300
1,350
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
Thomson Reuters Corp. (L) S&P 500 (R)
Share price performance (%) 3 month 6 month 12 month Absolute 7.9 2.6 11.0
Rel. to S&P 500 (2.4) (5.2) (1.3)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 2/13/2013 close.
February 13, 2013 Thomson Reuters Corp. (TRI)
Thomson Reuters Corp.: Summary Financials
Analyst Contributors
Brian Karimzad
Michelle Lee
Goldman Sachs Global Investment Research 2
Profit model ($ mn) 12/12 12/13E 12/14E 12/15E Balance sheet ($ mn) 12/12 12/13E 12/14E 12/15E
Total revenue 12,822.0 12,774.0 13,063.3 13,390.4 Cash & equivalents 1,301.0 2,141.1 3,212.7 4,340.0
Cost of goods sold (9,762.0) (9,372.0) (9,410.2) (9,614.3) Accounts receivable 1,835.0 2,183.0 2,246.8 2,413.0
SG&A 0.0 0.0 0.0 0.0 Inventory 72.0 119.2 121.0 123.5
R&D -- -- -- -- Other current assets 943.0 943.0 943.0 943.0
Other operating profit/(expense) 264.0 (500.0) (500.0) (500.0) Total current assets 4,151.0 5,386.4 6,523.5 7,819.5
ESO expense -- -- -- -- Net PP&E 3,105.0 5,601.4 6,172.7 6,755.9
EBITDA 3,324.0 2,902.0 3,153.1 3,276.1 Net intangibles 24,391.0 22,656.3 21,376.3 20,096.3
Depreciation & amortization (1,129.0) (1,220.0) (1,253.8) (1,268.0) Total investments 0.0 0.0 0.0 0.0
EBIT 2,195.0 1,682.0 1,899.3 2,008.1 Other long-term assets 925.0 925.0 925.0 925.0
Net interest income/(expense) (453.0) (480.5) (480.5) (480.5) Total assets 32,572.0 34,569.1 34,997.4 35,596.6
Income/(loss) from associates (23.0) (23.0) (23.0) (23.0)
Others 40.0 0.0 0.0 0.0 Accounts payable 2,633.0 2,846.1 2,699.7 2,684.6
Pretax profits 1,759.0 1,178.5 1,395.8 1,504.7 Short-term debt 1,008.0 1,008.0 1,008.0 1,008.0
Provision for taxes (157.0) (144.2) (170.3) (183.3) Other current liabilities 1,354.0 1,354.0 1,354.0 1,354.0
Minority interest (53.0) (56.0) (56.0) (56.0) Total current liabilities 4,995.0 5,208.1 5,061.7 5,046.6
Net income pre-preferred dividends 1,549.0 978.4 1,169.5 1,265.3 Long-term debt 6,223.0 6,223.0 6,223.0 6,223.0
Preferred dividends 0.0 0.0 0.0 0.0 Other long-term liabilities 3,856.0 5,700.2 6,143.9 6,531.4
Net income (pre-exceptionals) 1,549.0 978.4 1,169.5 1,265.3 Total long-term liabilities 10,079.0 11,923.2 12,366.9 12,754.4
Post tax exceptionals 2.0 0.0 0.0 0.0 Total liabilities 15,074.0 17,131.3 17,428.6 17,801.0
Net income (post-exceptionals) 1,551.0 978.4 1,169.5 1,265.3
Preferred shares 0.0 0.0 0.0 0.0
EPS (basic, pre-except) ($) 1.87 1.19 1.45 1.59 Total common equity 17,145.0 17,084.8 17,215.8 17,442.6
EPS (diluted, pre-except) ($) 1.87 1.18 1.43 1.57 Minority interest 353.0 353.0 353.0 353.0
EPS (basic, post-except) ($) 1.87 1.19 1.45 1.59
EPS (diluted, post-except) ($) 1.87 1.18 1.43 1.57 Total liabilities & equity 32,572.0 34,569.1 34,997.4 35,596.6
Common dividends paid (1,021.0) (1,094.5) (1,094.5) (1,094.5)
DPS ($) 1.23 1.34 1.36 1.38
Dividend payout ratio (%) 65.9 111.9 93.6 86.5 Additional financials 12/12 12/13E 12/14E 12/15E
Net debt/equity (%) 33.9 29.2 22.9 16.2
Interest cover (X) NM NM NM NM
Growth & margins (%) 12/12 12/13E 12/14E 12/15E Inventory days 3.2 3.7 4.7 4.6
Sales growth (7.1) (0.4) 2.3 2.5 Receivable days 54.4 57.4 61.9 63.5
EBITDA growth (1.3) (12.7) 8.7 3.9 BVPS ($) 20.72 20.84 21.32 21.92
EBIT growth (3.3) (23.4) 12.9 5.7
Net income (pre-except) growth (2.0) (36.8) 19.5 8.2 ROA (%) 4.8 2.9 3.4 3.6
EPS growth (1.1) (36.2) 21.3 9.8 CROCI (%) 8.4 7.9 8.2 8.2
Gross margin 23.9 26.6 28.0 28.2
EBITDA margin 25.9 22.7 24.1 24.5 Dupont ROE (%) 8.9 5.6 6.7 7.1
EBIT margin 17.1 13.2 14.5 15.0 Margin (%) 12.1 7.7 9.0 9.4
Turnover (X) 0.4 0.4 0.4 0.4
Cash flow statement ($ mn) 12/12 12/13E 12/14E 12/15E Leverage (X) 1.9 2.0 2.0 2.0
Net income 2,070.0 982.4 1,173.5 1,269.3
D&A add-back (incl. ESO) 1,129.0 1,220.0 1,253.8 1,268.0 Free cash flow per share ($) 2.09 2.34 2.66 2.77
Minority interest add-back 53.0 56.0 56.0 56.0 Free cash flow yield (%) 7.3 7.8 8.9 9.3
Net (inc)/dec working capital (159.0) 182.2 211.9 183.8
Other operating cash flow (389.0) 500.0 500.0 500.0
Cash flow from operations 2,704.0 2,940.6 3,195.2 3,277.1
Capital expenditures (977.0) (1,021.9) (1,045.1) (1,071.2)
Acquisitions (1,301.0) 0.0 0.0 0.0
Divestitures 1,991.0 0.0 0.0 0.0
Others 13.0 20.0 20.0 20.0
Cash flow from investing (274.0) (1,001.9) (1,025.1) (1,051.2)
Dividends paid (common & pref) (1,021.0) (1,094.5) (1,094.5) (1,094.5)
Inc/(dec) in debt (424.0) 0.0 0.0 0.0
Other financing cash flows (106.0) (4.0) (4.0) (4.0)
Cash flow from financing (1,551.0) (1,098.5) (1,098.5) (1,098.5)
Total cash flow 879.0 840.1 1,071.6 1,127.3
Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 3
Estimate summary
Exhibit 1: Actuals vs. estimates $ in millions, except per share amounts
Source: Company reports, Goldman Sachs Research estimates.
Dec-11 Sep-12
Actual Estimate Variance Percent Actual Variance Percent Actual Variance Percent
Revenues Trading 830.0 940.7 -110.7 -13.3% 869.0 -39.0 -4.5% 816.0 14.0 1.7% Investors 601.0 544.1 56.9 9.5% 606.0 -5.0 -0.8% 604.0 -3.0 -0.5% Marketplaces 320.0 309.9 10.1 3.2% 290.0 30.0 10.3% 303.0 17.0 5.6% Governance, Risk & Compliance 61.0 55.4 5.6 9.1% 50.0 11.0 22.0% 55.0 6.0 10.9% Financial & Risk 1812.0 1850.2 -38.2 -2.1% 1815.0 -3.0 -0.2% 1778.0 34.0 1.9% Growth rate -0.2% 1.9% -2.1% 1273.0% 0.0% -0.2% N/A -3.3% 3.2% -95.0%
Legal 861.0 867.1 -6.1 -0.7% 843.0 18.0 2.1% 830.0 31.0 3.7% Tax & Accounting 351.0 381.5 -30.5 -8.7% 341.0 10.0 2.9% 262.0 89.0 34.0% Intellectual Property and Science 250.0 235.9 14.1 5.6% 225.0 25.0 11.1% 219.0 31.0 14.2% Corporate & Other (Includes Media) 87.0 87.8 -0.8 -0.9% 87.0 0.0 0.0% 79.0 8.0 10.1% Eliminations -3.0 -3.0 0.0 -0.9% -3.0 0.0 0.0% -3.0 0.0 0.0%
Revenues from ongoing businesses 3358.0 3419.5 -61.5 -1.8% 3308.0 50.0 1.5% 3165.0 193.0 6.1%
yoy 1.5% 3.4% -1.9% -122.9% 0.0% 1.5% N/A -1.0% 2.5% -251.0%
Other Business 41.0 0.0 41.0 100.0% 269.0 -228.0 -84.8% 51.0 -10.0 -19.6%
Total Revenues 3399.0 3419.5 -20.5 -0.6% 3577.0 -178.0 -5.0% 3216.0 183.0 5.7% yoy -5.0% -4.4% -0.6% 11.5% 0.0% -5.0% N/A -6.9% 1.9% -27.5%
Expenses
Operating Expenses -2473.0 -2527.1 54.1 -2.2% -2604.0 131.0 -5.0% -2371.0 -102.0 4.3% Depreciation -106.0 -114.0 8.0 -7.5% -114.0 8.0 -7.0% -104.0 -2.0 1.9% Amortization of computer software -184.0 -175.0 -9.0 4.9% -178.0 -6.0 3.4% -175.0 -9.0 5.1% Amortization of other intangibles -160.0 -100.0 -60.0 37.5% -166.0 6.0 -3.6% -158.0 -2.0 1.3% Goodwill impairment 0.0 0.0 0.0 N/A -3010.0 3010.0 -100.0% 0.0 0.0 N/A Other operating gains (losses), net 81.0 0.0 81.0 100.0% -98.0 179.0 -182.7% -18.0 99.0 -550.0%
Operating (loss) profit 557.0 503.3 53.7 9.6% -2593.0 3150.0 -121.5% 390.0 167.0 42.8%
margin 17% 15% 2% 11.3% -78% 95% -121.2% 12% 4% 34.6%
Underlying operating profit 658.0 603.3 54.7 8.3% 646.0 12.0 1.9% 585.0 73.0 12.5%
margin 19.6% 17.6% 2.0% 10.0% 19.5% 0.1% 0.3% 18.5% 1.1% 6.0% Integration programs expenses 0.0 0.0 0.0 N/A -64.0 64.0 -100.0% 0.0 0.0 N/A D&A excluding other business 290.0 289.0 1.0 0.3% 270.0 20.0 7.4% 279.0 11.0 3.9%
Adjusted EBITDA 948.0 892.3 55.7 5.9% 852.0 96.0 11.3% 864.0 84.0 9.7%
Margin 28.2% 26.1% 2.1% 7.6% 25.8% 2.5% 9.6% 27.3% 0.9% 3.4%
Depreciation and amortization of computer software 0.0 0.0 0.0 N/A 0.0 0.0 N/A 0.0 0.0 N/A
D & A from ongoing businesses -290.0 -289.0 -1.0 0.3% -270.0 -20.0 7.4% -279.0 -11.0 3.9%
Growth rate 7.4% 7.0% 0.4% 5.0% 0.0% 7.4% N/A 7.3% 0.1% 1.4%
Finance Costs Net interest expense -95.0 -89.8 -5.2 5.5% -95.0 0.0 0.0% -90.0 -5.0 5.6% Other finance (costs) income -4.0 0.0 -4.0 100.0% 4.0 -8.0 -200.0% 30.0 -34.0 -113.3%
(Loss) income before tax and equity method investees 458.0 413.5 44.5 9.7% -2684.0 3142.0 -117.1% 330.0 128.0 38.8% share of post-tax earnings in equity method investees -22.0 0.0 -22.0 100.0% 2.0 -24.0 -1200.0% 2.0 -24.0 -1200.0% Tax Expense -51.0 -78.6 27.6 -54.1% 78.0 -129.0 -165.4% 140.0 -191.0 -136.4% Tax Rate 0.1 0.2 -0.1 -70.6% 0.0 0.1 283.2% -0.4 0.5 -126.2%
(Loss) earnings from continuing operations 385.0 335.0 50.0 13.0% -2604.0 2989.0 -114.8% 472.0 -87.0 -18.4% Earnings from discontinued operations, net of tax 3.0 0.0 3.0 100.0% 2.0 1.0 50.0% 2.0 1.0 50.0%
Net (loss) earnings 388.0 335.0 53.0 13.7% -2602.0 2990.0 -114.9% 474.0 -86.0 -18.1% non-controlling interests -16.0 -20.0 4.0 -25.0% 30.0 -46.0 -153.3% -12.0 -4.0 33.3%
(Loss) earnings attributable to Common shareholders 372.0 315.0 57.0 15.3% -2572.0 2944.0 -114.5% 462.0 -90.0 -19.5%
Basic (loss) earnings per share $0.45 $0.38 $0.07 14.9% -$3.11 $3.56 -114.5% $0.56 -$0.11 -19.6%
Diluted (loss) earnings per share $0.45 $0.38 $0.07 15.3% -$3.11 $3.55 -114.4% $0.56 -$0.11 -19.6%
Adjusted earnings from continuing operations 497.0 395.0 102.0 20.5% 445.0 52.0 11.7% 445.0 52.0 11.7%
Adjusted EPS from continuing operations $0.60 $0.48 $0.12 20.2% $0.54 $0.06 11.8% $0.54 $0.06 11.6%
Pro Forma Diluted Weighted average Common Shares 829.2 825.4 3.8 0.5% 829.7 -0.5 -0.1% 828.4 0.8 0.1%
GS
Change
YoY Comparison
Dec-12
QoQ Comparison
Change Change
February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 4
Exhibit 2: GS 2013 estimates vs. guidance $ in millions, except per share amounts (constant currency basis)
Note: The 2012 numbers follow the restatements provided by the company. Restatements were made to reflect two new accounting
pronouncements (Joint Venture and Pension-related) and the reclassification of businesses to be disposed.
Source: Company reports, Goldman Sachs Research estimates.
2012 Base Guidance GS 2013E Low High
Ongoing Revenue 12,443 Low single-digit growth 12,567 12,941 12,545 % yoy 1% 4% 1%
Adjusted EBITDA 3,310 26-27% 3,268 3,494 3,277 % yoy -1% 6% -1% Margin 26.6% 26.0% 27.0% 26.1%
Underlying OI 2,205 16.5-17.5% 2,074 2,265 2,071 % yoy -6% 3% -6% Margin 17.7% 16.5% 17.5% 16.5%
Interest Expense 470-490 480 480 480
Tax Rate 11-13% 12% 12% 12%
Share Count Estimate 829.2
Implied Adj. EPS Guidance $1.69 $1.89 $1.69
Implied Adj. EPS Guidance (with FX impact, based on current rates) $1.76 $1.98 $1.76
$0.07 $0.08 $0.07
2013E Guide
February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 5
Exhibit 3: Estimate revisions $ in millions, except per share amounts
Source: Goldman Sachs Research estimates.
Current Prior Variance Percent Current Prior Variance Percent Current
Revenues Trading 2,648.4 3,492.1 -843.7 -31.9% 2,687.1 3,596.8 -909.8 -33.9% 2,754.4 Investors 2,237.2 2,378.4 -141.2 -6.3% 2,265.1 2,443.8 -178.7 -7.9% 2,327.3 Marketplaces 1,868.4 1,261.1 607.3 32.5% 1,943.2 1,324.2 619.0 31.9% 2,001.4 Governance, Risk & Compliance 245.1 230.1 15.0 6.1% 262.3 234.7 27.6 10.5% 267.5 Financial & Risk 6,999.1 7,361.7 -362.6 -5.2% 7,157.6 7,599.4 -441.9 -6.2% 7,350.7
Growth rate 2.9% 1.8% 0.0 37.7% 2.3% 3.2% 0.0 -42.6% 2.7% Legal 3,314.8 3,434.7 -119.9 -3.6% 3,347.9 3,546.8 -198.9 -5.9% 3,414.9 Tax & Accounting 1,213.3 1,326.9 -113.6 -9.4% 1,274.0 1,406.5 -132.5 -10.4% 1,312.2 Intellectual Property and Science 925.2 935.6 -10.4 -1.1% 962.2 982.4 -20.2 -2.1% 991.1 Corporate & Other (Includes Media) 332.6 342.8 -10.2 -3.1% 332.6 349.7 -17.0 -5.1% 332.6 Eliminations -11.1 -11.3 0.2 -2.1% -11.1 -11.3 0.2 -2.1% -11.1
Revenues from ongoing businesses 12,774.0 13,390.5 -616.5 -4.8% 13,063.3 13,873.5 -810.2 -6.2% 13,390.4
Growth rate 2.7% 3.3% 0.0 -24.7% 2.3% 3.6% 0.0 -59.3% 2.5% Other Business 0.0 0.0 0.0 N/A 0.0 0.0 0.0 N/A 0.0
Total Revenues 12,774.0 13,390.5 -616.5 -4.8% 13,063.3 13,873.5 -810.2 -6.2% 13,390.4 yoy -0.4% 0.7% 0.0 284.7% 2.3% 3.6% 0.0 -59.3% 2.5%
Underlying operating profit 2,182.0 2,411.0 -229.0 -10.5% 2,399.3 2,613.2 -213.9 -8.9% 2,508.1
Margin 17.1% 18.0% 0.0 -5.4% 18.4% 18.8% 0.0 -2.6% 18.7% Integration programs expenses 0.0 0.0 0.0 N/A 0.0 0.0 0.0 N/A 0.0 D&A excluding other business 1,220.0 1,145.5 74.5 6.1% 1,253.8 1,159.1 94.7 7.6% 1,268.0
Adjusted EBITDA 3,402.0 3,556.5 -154.5 -4.5% 3,653.1 3,772.3 -119.2 -3.3% 3,776.1
Margin 26.6% 26.6% 0.0 0.3% 28.0% 27.2% 0.0 2.8% 28.2%
Depreciation and amortization of computer software
D & A from ongoing businesses -1,220.0 -1,145.5 -74.5 6.1% -1,253.8 -1,159.1 -94.7 7.6% -1,268.0
Growth rate 10.4% 2.0% 0.1 80.8% 2.8% 1.2% 0.0 57.0% 1.1%
Finance Costs Net interest expense -480.5 -361.4 -119.0 24.8% -480.5 -363.1 -117.4 24.4% -480.5 Other finance (costs) income 0.0 0.0 0.0 N/A 0.0 0.0 0.0 N/A 0.0
(Loss) income before tax and equity method investees 1,201.5 1,549.6 -348.1 -29.0% 1,418.8 1,750.1 -331.3 -23.4% 1,527.7 share of post-tax earnings in equity method investees -23.0 -1.0 -22.0 95.7% -23.0 -1.0 -22.0 95.7% -23.0 Tax Expense -144.2 -263.4 119.2 -82.7% -170.3 -297.5 127.3 -74.8% -183.3 Tax Rate 12.0% 17.0% -0.1 -41.7% 12.0% 17.0% -0.1 -41.7% 12.0%
(Loss) earnings from continuing operations 1,034.4 1,285.2 -250.8 -24.2% 1,225.5 1,451.6 -226.1 -18.4% 1,321.3 Earnings from discontinued operations, net of tax 0.0 0.0 0.0 N/A 0.0 0.0 0.0 N/A 0.0
Net (loss) earnings 1,034.4 1,285.2 -250.8 -24.2% 1,225.5 1,451.6 -226.1 -18.4% 1,321.3 non-controlling interests -56.0 -56.0 0.0 0.0% -56.0 -56.0 0.0 0.0% -56.0
(Loss) earnings attributable to Common shareholders 978.4 1,229.2 -250.8 -25.6% 1,169.5 1,395.6 -226.1 -19.3% 1,265.3
Basic (loss) earnings per share $1.19 $1.51 -0.31 -26.2% $1.45 $1.74 -0.29 -19.9% $1.59
Diluted (loss) earnings per share $1.18 $1.49 -0.30 -25.5% $1.43 $1.71 -0.28 -19.3% $1.57
Adjusted earnings from continuing operations 1,459.8 1,634.4 -174.6 -12.0% 1,651.0 1,800.8 -149.8 -9.1% 1,746.8
Adjusted EPS from continuing operations $1.76 $2.00 -0.24 -13.5% $1.99 $2.23 -0.24 -12.2% $2.11
Pro Forma Diluted Weighted average Common Shares 829.2 817.9 11.3 1.4% 829.2 805.9 23.3 2.8% 829.2
Variance Variance 2015E2014E2013E
February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 6
Exhibit 4: Income Statement summary $ in millions, except per share amounts
Note: The 2012 numbers follow the restatements provided by the company. Restatements were made to reflect two new accounting
pronouncements (Joint Venture and Pension-related) and the reclassification of businesses to be disposed.
Source: Company reports, Goldman Sachs Research estimates.
2012A 2012A 2013E 2013E 2014E 2015E 1QA 2QA 3QA 4QA YEAR 1QE 2QE 3QE 4QE YEAR YEAR YEAR
30-Mar 30-Jun 30-Sep 31-Dec 31-Dec 30-Mar 30-Jun 30-Sep 31-Dec 31-Dec 31-Dec 31-Dec
Revenues Trading 673 657 637 657 2,624 684 673 642 649 2,648 2,687 2,754 Investors 549 552 550 544 2,195 558 565 560 554 2,237 2,265 2,327 Marketplaces 440 432 440 452 1,764 465 460 465 478 1,868 1,943 2,001 Governance, Risk & Compliance 51 52 55 61 219 57 58 61 68 245 262 267 Financial & Risk 1,713 1,693 1,682 1,714 6,802 1,765 1,757 1,729 1,749 6,999 7,158 7,351
Growth rate -5% -8% -9% -6% -7% 3.0% 3.8% 2.8% 2.0% 3% 2% 3% Legal 771 812 825 858 3,266 782 825 837 871 3,315 3,348 3,415 Tax & Accounting 299 273 250 339 1,161 309 283 264 357 1,213 1,274 1,312 Intellectual Property and Science 209 216 219 250 894 216 224 227 259 925 962 991 Corporate & Other (Includes Media) 82 83 79 87 331 82 84 79 87 333 333 333 Eliminations (2) (3) (3) (3) (11) (2) (3) (3) (3) (11) (11) (11)
Revenues from ongoing businesses 3,072 3,074 3,052 3,245 12,443 3,152 3,169 3,132 3,320 12,774 13,063 13,390
Growth rate 0% -3% -5% -2% -2% 3% 3% 3% 2% 3% 2% 3%
Other Business 167 120 51 41 379
Total Revenues 3,239 3,194 3,103 3,286 12,822 3,152 3,169 3,132 3,320 12,774 13,063 13,390 yoy -3% -7% -10% -8% -7% -3% -1% 1% 1% 0% 2% 3%
Expenses
Operating Expenses (2,553) (2,365) (2,371) (2,473) (9,762) (2,431) (2,282) (2,274) (2,385) (9,372) (9,410) (9,614) Depreciation (110) (109) (104) (106) (429) (115) (115) (115) (115) (460) (474) (488) Amortization of computer software (175) (166) (175) (184) (700) (190) (190) (190) (190) (760) (780) (780) Amortization of other intangibles (152) (149) (158) (160) (619) (125) (125) (125) (125) (500) (500) (500) Goodwill impairment - - - - 0 - - - - 0 0 0 Other operating gains (losses), net 22 798 (18) 81 883 - - - - 0 0 0
Operating (loss) profit 271 1,203 277 444 2,195 292 457 428 505 1,682 1,899 2,008
margin 8.8% 39.1% 9.1% 13.7% 17.6% 9.2% 14.4% 13.7% 15.2% 13.2% 14.5% 15.0%
Depreciation and amort. of computer software (285) (275) (279) (290) (1,129) (305) (305) (305) (305) (1,220) (1,254) (1,268)
Ongoing businesses (275) (269) (275) (286) (1,105) (305) (305) (305) (305) (1,220) (1,254) (1,268)
Other businesses (10) (6) (4) (4) (24) - - - - - - -
Underlying operating profit 497 567 534 607 2,205 417 582 553 630 2,182 2,399 2,508 margin 16.2% 18.4% 17.5% 18.7% 17.7% 13.2% 18.4% 17.6% 19.0% 17.1% 18.4% 18.7%
Integration programs expenses - - - - 0 - - - - 0 0 0 D&A excluding other business 275 269 275 286 1,105 305 305 305 305 1,220 1,254 1,268
Adjusted EBITDA 772 836 809 893 3,310 722 887 858 935 3,402 3,653 3,776
Margin 25.1% 27.2% 26.5% 27.5% 26.6% 22.9% 28.0% 27.4% 28.2% 26.6% 28.0% 28.2%
Adjusted earnings from continuing operations 320 402 395 450 1,567 241 395 369 455 1,460 1,651 1,747
Adjusted EPS from continuing operations $0.39 $0.48 $0.48 $0.54 $1.89 $0.29 $0.48 $0.45 $0.55 $1.76 $1.99 $2.11
Pro Forma Diluted Weighted average Common Shares 830 831 828 829 830 829 829 829 829 829 829 829
February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 7
Disclosure Appendix
Reg AC
I, Brian Karimzad, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or
companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report.
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Disclosures
Coverage group(s) of stocks by primary analyst(s)
Brian Karimzad: America-Information Services & Video Games.
America-Information Services & Video Games: Activision Blizzard, Inc., Apollo Group Inc., DeVry Inc., Electronic Arts, Inc., FactSet Research
Systems Inc., Financial Engines, Inc., GameStop Corp., Gartner, Inc., IHS Inc., Nielsen Holdings N.V., RPX, Solera Holdings, Inc., Strayer Education,
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February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 8
Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global coverage universe
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Buy Hold Sell Buy Hold Sell
Global 31% 55% 14% 48% 41% 36%
As of January 1, 2013, Goldman Sachs Global Investment Research had investment ratings on 3,523 equity securities. Goldman Sachs assigns
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Price target and rating history chart(s)
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Thom s on Re uters Corp. (TRI)
25
24 25
28 31
33
38
40
44 45
40 43
39 40
37
20
25
30
35
40
45
1,000
1,100
1,200
1,300
1,400
1,500
Goldman Sachs rating and stock price target history
Stock Price Currency : U.S. Dollar
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 12/31/2012.
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
Rating
Price target
Price target at removal
Covered by Brian Karimzad
Not covered by current analyst
S&P 500
In d e x P
ri c e
S to
c k P
ri c e Jan 26
N F
S M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2010 2011 2012
February 13, 2013 Thomson Reuters Corp. (TRI)
Goldman Sachs Global Investment Research 9
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Goldman Sachs Global Investment Research 10
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