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Hsbc Bk. 21 | LSE:11PT | London | Medium Term Loan |
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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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