Investor Fact Book at Thomson, We Create Value by Leveraging Knowledge, Expertise and Technology Across Markets That Are Fundamental to the Global Economy
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07 THE THOMSON CORPORATION INVESTOR FACT BOOK AT THOMSON, WE CREATE VALUE BY LEVERAGING KNOWLEDGE, EXPERTISE AND TECHNOLOGY ACROSS MARKETS THAT ARE FUNDAMENTAL TO THE GLOBAL ECONOMY. OUR CUSTOMERS BENEFIT FROM THOMSON SOLUTIONS THAT ENABLE THEM TO WORK MORE EFFECTIVELY AND EFFICIENTLY, AND PROVIDE THEM WITH TOOLS FOR CREATING NEW VALUE. WE BELIEVE THE MOST POWERFUL SOLUTIONS ARE THOSE THAT TRANSFORM INFORMATION INTO KNOWLEDGE. TABLE OF CONTENTS The 2007 Investor Fact Book Financial Data and Metrics Segment Detail is intended to provide a broad- Revenue & Profitability Metrics Thomson Legal based information set to new investors interested 12 Metrics: 24 Overview Revenue 25 Structure & Financial Metrics in learning the Thomson Operating Profit 26 Products & Services investment story, and also Operating Profit Margin 29 Competition to serve as a detailed Adjusted EBITDA Thomson Financial reference guide for our Adjusted EBITDA Margin long-term shareholders. Cash Flow 30 Overview 13 Metrics: 31 Structure & Financial Metrics The Investor Fact Book provides Earnings per Common Share 32 Products & Services an introduction to The Thomson Free Cash Flow/Revenue 35 Competition Corporation, from its overarching Capital Expenditures/Revenue Thomson Tax & Accounting strategy to its investment Return on Invested Capital 36 Overview Total Debt highlights. It also provides 37 Structure & Financial Metrics Net Debt to Adjusted summary and detailed 38 Products & Services EBITDA Ratio information regarding the 39 Competition company’s operating segments Revenue & Profitability Detail Thomson Scientific and financial metrics. 14 Revenue by Segment 40 Overview 15 Operating Profit by Segment 41 Structure & Financial Metrics 16 Adjusted EBITDA by Segment Introduction to Thomson 42 Products & Services 17 2005/2006 Quarterly Revenue, 45 Competition Overview of Business Operating Profit and Earnings 2 General Overview 18 Cash Flow Thomson Healthcare 5 Investment Highlights Acquisitions 46 Overview 47 Structure & Financial Metrics Corporate Strategy 19 Schedule of Significant 48 Products & Services Acquisitions 6 Overarching Strategy 49 Competition 7 Financial Priorities Financial Position & Ratings Corporate Highlights 20 Liquidity and Capital Resources Corporate Information 8 Proposed Reuters Acquisition 20 Normal Course Issuer Bid/ 50 General Information & Contacts 8 Thomson Learning Sale Share Buyback 51 Senior Management 9 The THOMSONplus Program 21 Debt Ratings 21 Long-term Debt 52 Board of Directors Segment Overview 53 Cautionary Note and Share Information 10 Thomson Legal Non-GAAP Financial Measures 10 Thomson Financial 22 Share Price Charts 10 Thomson Tax & Accounting 23 Dividend Schedule Appendix 11 Thomson Scientific 11 Thomson Healthcare 54 Reconciliations Note: All dollar values are stated in US dollars except where noted. All financial information excludes July 2007 discontinued operations through Q1, 2007. The Thomson Corporation 2007 Investor Fact Book 1 Introduction to Thomson OVERVIEW OF BUSINESS General Overview Thomson is one of the world’s leading information services providers to business and professional customers. Our target customers are knowledge workers whose expertise in particular markets is critical to the success of economies throughout the world. As economies evolve and become more global, we believe that the needs of knowledge workers will continue to grow. We generate revenues by supplying knowledge workers with business-critical information solutions and services. We make our information more valuable by adding expert analysis, insight and commentary, and couple it with software tools and applications that our customers can use to search, compare, synthesize and communicate the information. To further enhance our customers’ workflows, we deliver information and services electronically, integrate our solutions with our customers’ own data and tailor the delivery of information to meet specific customer needs. As we integrate critical information with analysis, tools and applications, we place greater focus on the way our customers use our content, rather than simply on selling the content itself, and are moving from just informing our customers to enabling their decisions. 2 The Thomson Corporation 2007 Investor Fact Book Introduction to Thomson OVERVIEW OF BUSINESS Vision We serve customers principally in the following sectors: •law Be the leading global • tax provider of integrated • accounting • financial services information-based • scientific research solutions to business and • healthcare We believe these sectors are fundamental to economic professional customers. development globally and consequently have strong potential for consistent long-term growth. We have a leading market position and well recognized and respected brands in each of our principal markets. Mission Our revenues in 2006 were approximately $6.6 billion and we derived approximately 83% of our revenues Deliver superior from subscription and other similar contractual arrangements, which are generally recurring in nature. shareholder value by In 2006, 83% of our revenues were generated by our operations in North America. empowering our people We deliver information electronically over the Internet, through dedicated transmission lines, CDs and wireless to provide indispensable handheld devices. Electronic delivery improves our ability to rapidly provide additional products and services to our information, insight, existing customers and to access new customers around the world. In 2006, electronic, software and services productivity tools and comprised 80% of our revenues. We also deliver some of services that help our our products and services in print format. customers succeed. The Thomson Corporation 2007 Investor Fact Book 3 Introduction to Thomson OVERVIEW OF BUSINESS 2006 Revenue Highlights Revenue by Revenue by Revenue by Segment Media Region 46% 20% Legal Print 83% North America 80% 30% Electronic, 14% 6% Europe Financial Healthcare software & services 9% 3% Scientific Asia Pacific 9% Tax & Accounting Thomson Structure We organize our operations in five segments that are structured on the basis of the customers they serve: Legal 1 Financial 1 Tax & Accounting 1 Scientific 1 Healthcare 1 $3.0 billion revenue $2.0 billion revenue $0.6 billion revenue $0.6 billion revenue $0.4 billion revenue 14,600 employees 9,300 employees 3,000 employees 2,400 employees 2,600 employees 22 countries 24 countries 1 country 19 countries 10 countries Our corporate center supports our business operations. our corporate center oversees the planning processes By centralizing key functions in our corporate center, of our segments and their implementation of strategy we foster a company-wide approach while allowing our and assesses their performance. Our corporate center segments sufficient operational flexibility and scope for develops and executes capital strategy, including initiative in dealing with customers. In addition to tax planning, and determines our overall direction identifying new business opportunities and acquisitions, on technology. 1 As of December 31, 2006 4 The Thomson Corporation 2007 Investor Fact Book Introduction to Thomson OVERVIEW OF BUSINESS Investment Highlights Industry Leadership Operational Leadership Financial Leadership • #1 or #2 in most sectors • Business model and • High renewal rates and technology platform built 83% recurring revenues • Strong brands for a global marketplace in 2006 • Deep and broad industry • Multiple and diverse • Strong and growing free expertise in each revenue streams provide cash flow, up 21% in 2006 segment balance • 11% dividend increase • “Must-have” products • Electronic, software & in 2007 and services targeted services revenue was to professionals 80% of 2006 revenue • Share buyback program With our strong, well-known brands, Through careful investment, we Our high renewal rates and the Thomson holds the #1 or #2 position have built a company with strong recurring nature of our revenues in most of the sectors that we serve technology and operating platforms added further stability to Thomson’s globally. Deep knowledge of our that serve the global marketplace. 2006 revenues. We have been able customer segments allows Thomson The diverse revenue streams from to expand operating margins by to provide critical, customer-desired our portfolio of businesses have 180bps in the last 4 years (excluding solutions to professionals. Thomson’s provided balance, stability and THOMSONplus costs) and free cash ability to continually reframe our growth. Electronic, software & flow has increased by 47% over this markets allows us to develop tailored services comprised 80% of our time period to $1.4B. This strong solutions that meet our customers’ 2006 revenues. performance has enabled us to increase daily needs and increase their dividends for the past 6 years, productivity. including an 11% increase for 2007. The Thomson Corporation 2007 Investor Fact Book 5 Overarching Strategy information industry, and a key to our company’s sustained growth. A simple way to think about the value chain is to imagine three sources, or levels, of value. Generated Higher Recurring Revenue, Greater Leverage and Higher Margins Enable results Enable results he thirdconsists and highest of high-end level of analytics, value T s t l decision support and transaction u tools, services and consulting. s e R changing markets. g These increaseofferings their help productivity,our customers boost n remain competitive in their i Platform