RNS Number:0934A
Thomson Corporation
7 March 2001
( BW)(THOMSON-CORPORATION) Thomson Reports Full-year and
Fourth-quarter Results 2000 Revenues Grew 20%; Operating Profit Up 19%
Business Editors
TORONTO--(BUSINESS WIRE)--March 7, 2001--
(Unless otherwise stated, all amounts are in US dollars)
The Thomson Corporation (TSE:TOC) today reported 20% growth in
revenues and 19% growth in operating profit for the year ended
December 31, 2000.
"This was an extraordinary year for The Thomson Corporation,"
stated Richard J. Harrington, president and chief executive officer.
"We made a series of strategic acquisitions and divestitures which
accelerated our transformation into a focused e-information and
solutions provider. At the same time, we delivered solid growth in our
core businesses by enhancing our customer offerings and expanding our
Internet-based and proprietary online products. For the first time,
electronic products and services now account for the majority of
Thomson revenues."
Revenues from continuing operations, excluding disposals,
increased 20% to $5.9 billion, supported by key strategic acquisitions
made in 2000. Revenues from core operations, in constant currencies,
increased 8%.
Electronic products and services accounted for 53% of revenues,
led by the doubling of Internet-based revenues, which were
approximately $800 million.
EBITDA from continuing operations increased 17% to $1.5 billion,
and operating profit grew 19% to $1.1 billion for the year.
Earnings from continuing operations increased 40% to $571 million,
or $0.92 per common share, compared with $0.66 per common share in
1999. These earnings include one-time tax benefits principally
associated with the sale of The Globe and Mail in January 2001.
Excluding tax benefits and one-time items, earnings were $468 million,
or $0.75 per common share, in line with 1999.
Fourth-quarter revenues from continuing operations increased 23%
to $1.9 billion over the comparable 1999 period. Operating profit from
continuing operations increased 16% to $488 million and earnings
increased 41% to $371 million, or $0.59 per common share. Excluding
the one-time benefits previously mentioned, earnings were $286
million, or $0.46 per common share, in line with last year.
PERFORMANCE BY MARKET GROUP
LEGAL & REGULATORY
Thomson Legal & Regulatory revenues for 2000 increased 12% to $2.6
billion. The increase was primarily attributable to newly acquired
businesses, double-digit growth in the Westlaw online service and
increased trademark search volume in Europe. Revenue gains were partly
offset by adverse currency translation effects. Operating profit for
the year increased 11% to $647 million.
Revenues for the fourth quarter were $813 million, an increase of
10%. Operating profit for the quarter increased 13% to $259 million.
FINANCIAL
Thomson Financial revenues for 2000 increased to $1.3 billion, up
31% over 1999. The strong revenue gain was driven by double-digit
growth in core operations and the acquisition of Primark, which was
completed in September. Operating profit for the year increased 19% to
$230 million, despite lower initial operating margins of recently
acquired businesses and higher technology-related investments.
Revenues for the fourth quarter increased 68% to $427 million
reflecting a full quarter of Primark results. Operating profit
increased 34% to $83 million in the fourth quarter.
In February 2001, Thomson announced its intention to sell certain
non-core businesses within the Thomson Financial market group. The
businesses being sold include several publications, print directories,
and business products and services targeted primarily to the
commercial banking sector, as well as several niche markets. The sale
of these businesses is expected to be completed by the end of the
year.
LEARNING
Thomson Learning revenues for 2000 were $1.4 billion, an increase
of 40% over 1999. Higher revenues were primarily attributable to the
strategic acquisitions made during the year and above-market growth in
the higher education sector. Operating profit for the year increased
56% to $233 million.
Revenues for the fourth quarter increased 31% to $438 million and
operating profit increased 25% to $110 million.
On October 27, 2000, Thomson announced its intention to acquire
select Harcourt businesses from Reed Elsevier for $2.06 billion in
cash. These businesses will become part of the Thomson Learning market
group. This acquisition will expand the company's higher education
portfolio, strengthen its leadership position in the corporate
training market, and accelerate its ability to provide end-to-end
e-learning solutions to customers worldwide. Thomson has completed its
submission for additional information requested by the U.S. Department
of Justice and anticipates completing the transaction in the third
quarter.
Also in the fourth quarter of 2000, Gale Group was moved from the
Scientific, Reference & Healthcare market group into the Academic
business group within Thomson Learning. This reorganization will
enable the businesses to develop enhanced electronic solutions for the
education market by capitalizing on shared content and technology
platforms.
SCIENTIFIC & HEALTHCARE
Thomson Scientific & Healthcare revenues for 2000 were $697
million, an increase of 7% over 1999. Operating profit for the year
increased 30% to $146 million. The growth was attributable to
increased global Internet-based sales at the Institute for Scientific
Information (ISI), improved performance in Healthcare, and the
leveraging of initiatives across the market group.
Revenues for the fourth quarter increased 7% to $216 million, and
operating profit increased 21% to $70 million.
OTHER FINANCIAL ITEMS
Corporate and other expenses doubled to $34 million in the fourth
quarter due to increased costs associated with stock appreciation
rights.
Acquisitions resulted in earnings dilution of approximately $0.12
per common share for the full year, and $0.06 per common share for the
fourth quarter, due to the amortization and financing costs associated
with their purchase.
In January 2001, Thomson, BCE Inc., and The Woodbridge Company
Limited (the Thomson family holding company) announced the creation of
Bell Globemedia -- Canada's premier multimedia company. Thomson
contributed certain assets to this new company, including The Globe
and Mail, Globe Interactive, and 50% of ROBTv, in exchange for a 20%
interest in Bell Globemedia.
The results of Thomson interests in newspapers and related gain on
sale are reflected as discontinued operations in the consolidated
statements of earnings and cash flow.
OUTLOOK FOR 2001
Excluding Harcourt, but including the full-year effects of
acquisitions made in 2000, revenues and EBITDA from continuing
operations are expected to increase about in line with the growth
experienced in 2000. Earnings growth will be offset by higher
amortization and financing costs associated with the acquisitions made
in 2000.
"This year, we will concentrate on fully integrating the
outstanding businesses we have acquired as we strive to continue to
expand our suite of product offerings, tools and electronic solutions
for our global client base. We continue to make substantial
investments in our businesses in line with last year," said Mr.
Harrington.
About The Thomson Corporation
The Thomson Corporation, with 2000 revenues of approximately $6.0
billion, is a leading, global e-information and solutions company in
the business and professional marketplace. The Corporation's common
shares are listed on the Toronto and London stock exchanges. For more
information, visit The Thomson Corporation Internet address at
www.thomson.com.
This news release includes forward-looking statements, which are based
on the Corporation's current expectations and assumptions, and are
subject to a number of risks and uncertainties that could cause actual
results to materially differ from those anticipated. Such risks and
uncertainties include, among others, general business and economic
conditions and competitive actions.
Note: The Thomson Corporation will webcast a discussion of
fourth-quarter and full-year results beginning at 10:30 am EST today.
To participate in the webcast, please visit www.thomson.com and click
on the appropriate link located in the Thomson News box.
-0-
CONSOLIDATED STATEMENT OF EARNINGS
(millions of US dollars, except per common share data)
(unaudited)
3 months ended Dec. 31
----------------------
2000 1999
---- ----
Revenues 2,024 1,721
Cost of sales,
selling, marketing,
general and
administrative expenses (1,415) (1,165)
------ ------
Earnings before
interest, tax, depreciation,
amortization, restructuring
charges and Year 2000 costs 609 556
Depreciation (111) (105)
------ ------
Operating profit before
amortization, restructuring
charges and
Year 2000 costs 498 451
Amortization (note 5) (106) (59)
Restructuring charges (note 1) (11) (17)
Year 2000 costs - (16)
------ ------
Operating profit after
amortization, restructuring charges
and Year 2000 costs 381 359
Net (losses) gains
on disposals of
businesses and investments (14) 1
Net interest expense
and other financing costs (49) (50)
Income taxes (note 5) 60 (39)
------ ------
Earnings before dividends
declared on preference shares 378 271
Dividends declared
on preference shares (7) (7)
------ ------
Earnings from
continuing operations 371 264
Earnings from
discontinued operations (note 2) 99 42
------ ------
Earnings attributable
to common shares 470 306
====== ======
Earnings per
common share (note 3):
- from continuing operations $ 0.59 $ 0.43
- from discontinued operations $ 0.16 $ 0.06
------ ------
$ 0.75 $ 0.49
====== ======
Supplemental earnings
information (unaudited):
Earnings from continuing
operations, as above 371 264
Add back (deduct):
Restructuring charges,
net gains on disposals of
businesses & investments,
and Year 2000 costs, net of tax 20 23
Tax benefits (note 5) (105) -
------ ------
Adjusted earnings
from continuing operations 286 287
====== ======
Adjusted earnings
per common
share from
continuing operations (note 3) $ 0.46 $ 0.46
====== ======
Year ended Dec. 31
------------------
2000 1999
---- ----
Revenues 6,514 5,752
Cost of sales,
selling, marketing,
general and
administrative expenses (4,980) (4,345)
------ ------
Earnings before
interest, tax, depreciation,
amortization, restructuring
charges and Year 2000 costs 1,534 1,407
Depreciation (416) (386)
------ ------
Operating profit before
amortization, restructuring
charges and
Year 2000 costs 1,118 1,021
Amortization (note 5) (327) (258)
Restructuring charges (note 1) (37) (38)
Year 2000 costs (4) (91)
------ ------
Operating profit after
amortization, restructuring charges
and Year 2000 costs 750 634
Net (losses) gains
on disposals of
businesses and investments 38 52
Net interest expense
and other financing costs (204) (186)
Income taxes (note 5) 15 (63)
------ ------
Earnings before dividends
declared on preference shares 599 437
Dividends declared
on preference shares (28) (28)
------ ------
Earnings from
continuing operations 571 409
Earnings from
discontinued operations (note 2) 652 123
------ ------
Earnings attributable
to common shares 1,223 532
====== ======
Earnings per
common share (note 3):
- from continuing operations $ 0.92 $ 0.66
- from discontinued operations $ 1.04 $ 0.20
------ ------
$ 1.96 $ 0.86
====== ======
Supplemental earnings
information (unaudited):
Earnings from continuing
operations, as above 571 409
Add back (deduct):
Restructuring charges,
net gains on disposals of
businesses & investments,
and Year 2000 costs, net of tax 2 52
Tax benefits (note 5) (105) -
------ ------
Adjusted earnings
from continuing operations 468 461
====== ======
Adjusted earnings
per common
share from
continuing operations (note 3) $ 0.75 $ 0.75
====== ======
(see notes after Consolidated Statement of Cash Flow)
CONSOLIDATED STATEMENT OF CASH FLOW
(millions of US dollars)
Year ended December 31
2000 1999
----------------------------------------------------------------------
Cash provided by (used for):
Operations
Earnings from
continuing operations 571 409
Add back (deduct) items
not involving cash:
Amortization of development costs 99 93
Depreciation 416 386
Amortization (note 5) 327 258
Net gains on disposals
of businesses and investments (38) (52)
Deferred income taxes (note 5) (71) (58)
Other, net 22 78
Changes in working capital
and other items (331) (86)
----------------------------------------------------------------------
995 1,028
----------------------------------------------------------------------
Investing activities
Acquisitions of businesses
and investments (2,824) (337)
Proceeds from disposals of
businesses and investments 387 412
Additions to property
and equipment (585) (472)
Other investing activities (226) (162)
Proceeds from disposal of
newspaper operations, net of tax 1,868 -
----------------------------------------------------------------------
(1,380) (559)
----------------------------------------------------------------------
Financing activities
Proceeds from debt 990 13
Repayments of debt (425) (273)
Dividends paid on
common shares (note 4) (271) (255)
----------------------------------------------------------------------
294 (515)
----------------------------------------------------------------------
Translation adjustments (2) (8)
----------------------------------------------------------------------
Decrease in cash and
cash equivalents (93) (54)
Discontinued operations (note 2) 101 89
Cash and cash equivalents
at beginning of period 329 294
----------------------------------------------------------------------
Cash and cash equivalents
at end of period 337 329
----------------------------------------------------------------------
(see notes below)
Notes to consolidated statements of earnings and cash flow:
(1) Restructuring charges include mainly employee severance and other
exit costs arising principally from the realignment of businesses
within Thomson Legal & Regulatory and Thomson Financial.
(2) On February 15, 2000, Thomson announced its intention to sell the
newspaper interests of Thomson Newspapers (TN), excluding The
Globe and Mail. For all periods presented, the results and cash
flows of the interests being divested have been accounted for as
discontinued operations. In 2000, discontinued operations includes
gains on disposals of $590 million and $86 million, net of tax,
for the full year and fourth quarter, respectively.
(3) Earnings per common share calculations are based on the weighted
average number of common shares for the twelve months of
623,242,191 (1999 - 618,092,000) and for the three months of
624,850,946 (1999 - 620,046,317). As of March 7, 2001, 625,768,585
common shares were outstanding as well as options to purchase
4,455,730 common shares under the 2000 Stock Incentive Plan. As
the effect of including stock options is anti-dilutive, there is
no need to report fully diluted earnings per common share.
(4) Dividends paid on common shares are shown net of $9 million (1999
- $15 million) reinvested in common shares issued under the
dividend reinvestment plan and $147 million (1999 - $136 million)
by way of private placements of common shares to Thomson's major
shareholders. These private placements, together with common
shares acquired under the dividend reinvestment plan, discharged
the commitment of Thomson's major shareholders to participate in
the plan to the extent of at least 50% of the dividends received
on the common shares directly and indirectly owned by them.
(5) (a) The income tax credit in 2000 reflects the recognition of $105
million of tax benefits principally associated with the sale of
The Globe and Mail in January 2001. (b) Effective January 1, 2000,
Thomson adopted the new accounting recommendations for income
taxes in accordance with the Canadian Institute of Chartered
Accountants (CICA) Handbook. The revised tax accounting standard
has the effect of lowering the effective book tax rates for both
the current and prior periods, with no effect on cash taxes paid.
Under the new income tax standard, goodwill and deferred income
taxes have each been increased by approximately $1.3 billion to
account for the cumulative differences between the book and tax
values of all assets and liabilities, excluding goodwill, which
were not previously recorded. The principal impact of the new
standard arises from restating business combinations where, as a
result of purchasing stock, the excess purchase price over the tax
basis of the net assets acquired is not deductible for tax
purposes. The comparative earnings for 1999 have been restated to
reflect the amortization of the additional goodwill and the
release of the related additional deferred income tax resulting
from the retroactive adoption of the revised income tax standard.
(6) Effective January 1, 2000, Thomson adopted the new accounting
recommendations for employee future benefits in accordance with
the CICA Handbook. The employee future benefits standard has been
adopted without restatement.
(7) Comparative figures have been reclassified where necessary to
conform to the current period's presentation.
BUSINESS SEGMENT INFORMATION
(millions of US dollars)
(unaudited)
3 months ended Dec. 31
2000 1999 change
---- ---- ------
CONTINUING OPERATIONS:
Revenues:
Legal & Regulatory 813 739 10%
Financial 427 255 68%
Learning 438 335 31%
Scientific & Healthcare 216 202 7%
Intergroup revenues (14) -
----------- -----------
Total ongoing operations 1,880 1,531 23%
Disposals (1) 144 190
----------- -----------
2,024 1,721 18%
=========== ===========
EBITDA: (2)
Legal & Regulatory 289 264 10%
Financial 121 85 42%
Learning 146 121 21%
Scientific & Healthcare 75 63 19%
Corporate and other (3) (34) (17)
----------- -----------
Total ongoing operations 597 516 16%
Disposals (1) 12 40
----------- -----------
609 556 10%
=========== ===========
Operating profit before
amortization, restructuring
charges and
Year 2000 costs: (4) (5)
Legal & Regulatory 259 230 13%
Financial 83 62 34%
Learning 110 88 25%
Scientific & Healthcare 70 58 21%
Corporate and other (3) (34) (17)
----------- -----------
Total ongoing operations 488 421 16%
Disposals (1) 10 30
----------- -----------
498 451 10%
=========== ===========
Year ended Dec. 31
2000 1999 change
---- ---- ------
CONTINUING OPERATIONS:
Revenues:
Legal & Regulatory 2,619 2,347 12%
Financial 1,260 960 31%
Learning 1,389 989 40%
Scientific & Healthcare 697 652 7%
Intergroup revenues (29) -
----------- ------------
Total ongoing operations 5,936 4,948 20%
Disposals (1) 578 804
----------- ------------
6,514 5,752 13%
=========== ============
EBITDA: (2)
Legal & Regulatory 775 709 9%
Financial 348 289 20%
Learning 358 248 44%
Scientific & Healthcare 172 139 24%
Corporate and other (3) (141) (95)
------------ -----------
Total ongoing operations 1,512 1,290 17%
Disposals (1) 22 117
------------ -----------
1,534 1,407 9%
=========== ============
Operating profit before
amortization, restructuring
charges and
Year 2000 costs: (4) (5)
Legal & Regulatory 647 581 11%
Financial 230 194 19%
Learning 233 149 56%
Scientific & Healthcare 146 112 30%
Corporate and other (3) (141) (95)
----------- ------------
Total ongoing operations 1,115 941 19%
Disposals (1) 3 80
----------- ------------
1,118 1,021 10%
=========== ============
Notes to business segment information for continuing operations
1) Disposals includes the results of businesses sold or held for sale.
2) EBITDA is earnings before interest, tax, depreciation,
amortization, restructuring charges and Year 2000 (Y2K) costs.
3) Corporate and other principally comprises corporate costs,
minority interests and costs associated with Thomson's Stock
Appreciation Rights.
4) Restructuring charges were incurred in 2000 principally within
Legal & Regulatory and Financial and were $37 million (1999 - $38
million) for the twelve months and $11 million (1999 - $17
million) for the fourth quarter.
5) Y2K compliance costs were $4 million (1999 - $91 million) for the
twelve months and nil (1999 - $16 million) for the fourth quarter.
--30--
CONTACT: The Thomson Corporation
(Investor)
John Kechejian, 203/328-9470
john.kechejian@thomson.com
or (Media)
Janey Loyd
203/328-8342
janey.loyd@thomson.com
or Jason Stewart
203/328-8339
jason.stewart@thomson.com
END
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