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ANNUAL REPORT 2010MARCH 9, 2011
Information in this annual report is provided as of March 1, 2011, unless otherwise indicated.Certain statements in this annual report are forward-looking. These forward-looking statements are based on certainassumptions and reflect our current expectations. As a result, forward-looking statements are subject to a number of risksand uncertainties that could cause actual results or events to differ materially from current expectations. Some of thefactors that could cause actual results to differ materially from current expectations are discussed in the “Risk Factors”section of this annual report as well as in materials that we from time to time file with, or furnish to, the Canadiansecurities regulatory authorities and the U.S. Securities and Exchange Commission. There is no assurance that anyforward-looking statements will materialize. You are cautioned not to place undue reliance on forward-lookingstatements, which reflect expectations only as of the date of this annual report. Except as may be required by applicablelaw, we disclaim any intention or obligation to update or revise any forward-looking statements.The following terms in this annual report have the following meanings, unless otherwise indicated: “Thomson Reuters,” “we,” “us” and “our” each refers to Thomson Reuters Corporation and its consolidatedsubsidiaries, unless the context otherwise requires; “Woodbridge” refers to The Woodbridge Company Limited and other companies affiliated with it; and “ ,” “US ” or “dollars” are to U.S. dollars.For information regarding our disclosure requirements under applicable Canadian and U.S. laws and regulations, pleasesee the “Cross Reference Tables” section of this annual report.Information contained on our website or any other websites identified in this annual report is not part of this annual report.All website addresses listed in this annual report are intended to be inactive, textual references only. The Thomson Reuterslogo and our other trademarks, trade names and service names mentioned in this annual report are the property ofThomson Reuters.TABLE OF CONTENTS2Business18Risk Factors23Management’s Discussion and Analysis74Consolidated Financial Statements133Executive Officers and Directors139Additional Information147Cross Reference TablesThomson Reuters Annual Report 20101
BUSINESSOVERVIEWWe are the leading source of intelligent information for the world’s businesses and professionals, providing customers withcompetitive advantage. Intelligent information is a unique synthesis of human intelligence, industry expertise andinnovative technology that provides decision-makers with the knowledge to act, enabling them to make better decisionsfaster. Through over 55,000 employees across more than 100 countries, we deliver this must-have insight to the financial,legal, tax and accounting, healthcare, science and media markets, powered by the world’s most trusted news organization.We are organized in two divisions: Professional, which consists of our legal, tax and accounting, healthcare and science businesses; and Markets, which consists of our financial and media businesses.BUSINESS MODEL AND KEY OPERATING CHARACTERISTICSWe serve a wide variety of customers with a single, tested business model. We derive the majority of our revenues fromselling electronic content and services to professionals, primarily on a subscription basis. The table below describes someof our key operating characteristics.Industry leader #1 or #2 in most of the market segments that we serveBalanced and diversified Five distinct core customer groupsGeographical diversity – our revenues in 2010 were 59% from theAmericas, 30% from Europe, the Middle East and Africa (EMEA) and11% from AsiaOur largest single customer accounts for approximately 1% of revenuesAttractive business model 86% of our 2010 revenues were recurringStrong and consistent cash flow generating abilitiesStrong technology platforms andvaluable content Proprietary databases and deeply embedded workflow tools andsolutions91% of our 2010 revenues were from information deliveredelectronically, software and services Reuters acquisition and legacysavings program benefits Substantial cost savings from acquisition and operationalimprovements, which have exceeded initial targetsDisciplined financial policies Invest to drive long-term growth and returnsFocus on free cash flowSupport business objectives with a robust capital strategyThomson Reuters Annual Report 20102
2010 ACCOMPLISHMENTSIn 2010, our two key strategic objectives were growth and efficiency. While we are proud of what we accomplished in 2010,we are aware that more remains to be done and we are focused on accelerating the pace of change. Last year, we furtherintegrated our operations, strengthened essential infrastructure and launched major new product platforms. The followingtable provides information about our progress against last year’s priorities.2010 PrioritiesGrowthEfficiency2010 ProgressWe returned to revenue growth in the second half of the year. In 2010, we continued investing ingrowth initiatives and we launched a number of major new product platforms, including: WestlawNext, our next generation legal research platform; Thomson Reuters Eikon, our new flagship financial information platform which incorporates theinnovative Reuters Insider multimedia news service; ONESOURCE, our global tax workstation; Advantage Suite 5.0, our redesigned, state-of-the-art tools to support healthcare decisionmaking; and Thomson Reuters Elektron, an ultra-low latency infrastructure for electronic trading and datadistribution.We acquired a number of key foundational assets to support new initiatives. We investedapproximately 0.9 billion in the acquisition of companies that included Complinet to support our newGovernance, Risk and Compliance (GRC) business; Point Carbon for our Commodities & Energybusiness; Serengeti, Pangea3, Canada Law Book and Revista dos Tribunais in Legal for GlobalGeneral Counsel; GeneGo for Life Sciences; and Aegisoft in Sales & Trading.We continued to target rapidly developing economies (RDEs) that we believe will be majorcontributors to future global growth.We made significant progress on a number of efficiency and capability-enhancing initiatives,including: Consolidating and integrating technology platforms to achieve cost savings and increaseflexibility and scalability; Transforming the technology infrastructure of our data centers through standardization,virtualization and automation; and Rolling out new customer administration platforms, including a consolidated order-to-cashsystem which will streamline our interaction with customers and provide us with better usagedata.Our Reuters integration plus legacy savings initiatives achieved approximately 1.4 billion ofannualized run-rate savings as of the end of 2010.In 2010, we returned to revenue growth. We were able to raise our growth targets during the year as the markets began toimprove, and we ended the year with good momentum. Our 2010 revenues from ongoing businesses before currency were 13.1 billion; Revenue growth before currency was 1%; Our underlying operating profit margin was 19.6% (20.0% before currency and acquisitions); and Our underlying free cash flow, which enables us to keep investing in the business and pay dividends, was 2.0billion.Our new investments in product launches and acquisitions contributed to a 7% decline in underlying operating profit.However, our period of heavy investment is now nearly completed.Thomson Reuters Annual Report 20103
2011 PRIOORITIESIn 2011, our toop priorities remmain focused on growth and efficciency. Our key business activitiies in 2011 to acccelerate growthand capture efficiencieseare too: Maxximize the growwth of our core businesses,bsuch as the U.S. Leggal subscription business, Saless & Trading andInveestment & Advissory; Accelerate our investments in fasster growing innternational markets, with a particularpemphasis on rapidlymies;developing econom Reaallocate investment to faster groowing segmentss of our businesss, such as Goverrnance, Risk & ComplianceCandCommmodities & Eneergy; and Streeamline producct lines, consolidate platformss, reduce technnology costs and accelerate the sharing ofinfoormation across the corporation.PROFESSSIONALL DIVISIONThe Professioonal division connsists of our bussinesses in the LLegal, Tax & Accounting and Healthcare & Scieence sectors. In2010, the Proofessional divisioon launched a numbernof new products, focussed on global exxpansion outside of the UnitedStates and acchieved net savinngs through efficciency initiativess.Profeessional2010 Revenues 5.6B2010 Segment Opeerating Profit 1.5B LegalTax & AccountingAHealthcare & Science20110 Revenues 3.7B2010 Reveenues 1.1B2010 Revenuess 0.8BLEGALLegal is a leeading provider of critical inforrmation, decisioon support toolss, software andd services to leggal, intellectualproperty (IP),, compliance, bbusiness and goovernment proffessionals arounnd the world. LegalLoffers a broadbrange ofproducts andd services that uutilize our electronic databasess of legal, regulatory, news and business infoormation. Theseproducts andd services incluude legal reseaarch solutions, software-basedd workflow sollutions, compliaance solutions,marketing, finnance and operaations technologgy and consulting services and leegal process outtsourcing servicees.Westlaw is Legal’s primaryy online deliveery platform. WWestlaw offers authoritative content,cpowerfful search andavigation tools thattenable custtomers to find anda share speciffic points of law,, build tables ofcollaboration features and naauthorities and search for topically-related commentary. IIn 2010, Legal launched WestlawNext in the United States.oved search, reesearch organizzation and neww collaboration capabilities. Wee believe theseWestlawNextt delivers improcapabilities help researchers get answers fasster and provide higher quality, moremcost efficieent advice.Thomson Reuuters Annual Report 20104
In 2010, we launched country-specific versions of Westlaw in India and Hong Kong. We also provide versions of Westlawfor legal professionals in Canada, Chile, China, Ireland, Japan, Spain, the United Kingdom and other countries. Legal alsohas country-specific online legal research services, some of which are sold under brand names other than Westlaw,including services in Argentina, Australia, Brazil, Denmark, France, New Zealand, Sweden and the United Kingdom. In2010, Legal acquired Revista dos Tribunais, a leading provider of legal research services in Brazil, and plans to launch anew online service this year.Through Westlaw International, we offer our online products and services to customers in markets where we may not havean existing publishing presence or have not yet developed a fully customized Westlaw service. As of December 31, 2010,Westlaw International was used by practitioners in 65 countries.Westlaw Litigator is a complete workflow solution that assists lawyers with all phases of litigation by combining relevantlegal research materials with practical tools and services for case evaluation, pre-trial investigation, e-discovery, expertwitness selection, settlement negotiation and trial preparation and presentation.Legal also has a leading collection of assets that support IP lawyers and business professionals across the IP lifecycle, fromideation and maintenance to protection and commercialization.Legal also is a leading provider of educational information, textbooks and solutions to law students, librarians andprofessors in the United States. West LegalEdcenter offers one of the largest online collections of continuing legaleducation (CLE) programs.In 2010, Legal formed a new Governance, Risk and Compliance (GRC) business unit following the acquisition of Complinet,a leading provider of global compliance information solutions for financial services institutions. The new GRC business unitalso includes a number of other Thomson Reuters assets. GRC connects business transactions, strategy and operations tothe ever-changing regulatory environment for firms in highly regulated markets.In 2010, Legal’s acquisitions also included Serengeti, a provider of electronic billing and matter management software,and Pangea3, a leading provider of legal process outsourcing services. Both of these acquisitions expand Legal’s positionin the general counsel market, and also complement our existing legal offerings.The following table provides information about Legal’s major brands.Major BrandsWestWestlawNextWestlawWestlaw BusinessComplinetFoundation PressWest Law School PublishingWest LegalEdcenterSweet & MaxwellAranzadiBrookersLa LeyLawtelRevista dos TribunaisCanada Law BookType of Product/ServiceLegal, regulatory and complianceinformation-based products and servicesTarget CustomersLawyers, law students, law librarians andother legal professionalsTextbooks, study aids, continuingeducation materials and seminarsLaw students, lawyers and legalprofessionalsLegal information-based products andservicesLawyers, law students, law librarians,corporate legal professionals, governmentagencies and trademark professionalsThomson Reuters Annual Report 20105
Major BrandsCarswellThomson CompuMarkSAEGISDerwent World Patents IndexThomson InnovationThomson IP ManagementServicesEliteElite 3EProLawFindLawHubbard OneHildebrandt Baker RobbinsWestlaw LitigatorWest Case NotebookWest LiveNoteWestlaw CaseLogistixWestlaw Round Table GroupSerengetiPangea3CLEARPeopleMapType of Product/ServiceLegal, regulatory and complianceinformation-based products and servicesTrademark research and protectionTarget CustomersLawyers, law students, law librarians andother legal professionalsTrademark attorneys and agentsPatent research and analysisLegal, intellectual property, research &development and business professionalsLegal and intellectual propertyprofessionalsLawyers, law firm finance and operationsIntellectual asset managementSuite of software applications that assistwith front- and back-office managementfunctions, including documentmanagement, case management, generalledger accounting, timekeeping, billingand records managementOnline legal directory, website creationand hosting services and law firmmarketing solutionsStrategic, technology, operations andinformation consulting advisory servicesOnline research tools, case analysissoftware, deposition technology, as wellas expert witness and document reviewservices to support each stage of thelitigation workflowElectronic billing and mattermanagement softwareLegal process outsourcing servicesPublic records products and servicesLawyers and legal professionalsLawyers and law firm finance, operationsand business development professionalsLawyers, paralegals, courts and courtreportersCorporate counsel and law firmprofessionalsCorporate and law firm legal professionalsGovernment, law enforcement, legal andcorporate investigative professionalsCOMPETITIONLegal’s primary global competitors are Reed Elsevier (which operates LexisNexis) and Wolters Kluwer. Legal alsocompetes with other companies that provide legal and regulatory information, as well as practice and mattermanagement software, client development and other services to support legal professionals.TAX & ACCOUNTINGTax & Accounting is a leading global provider of technology and information solutions, as well as integrated taxcompliance and accounting software and services, to accounting, tax and corporate finance professionals in accountingfirms, corporations, law firms and government. Tax & Accounting has two global businesses – Workflow & ServiceSolutions and Business Compliance & Knowledge Solutions.Workflow & Service Solutions provides tax compliance, accounting and practice management software solutions tocorporate tax departments and accounting firms around the world.Business Compliance & Knowledge Solutions provides tax and accounting research and guidance information, onlinemedia and CPA certification services to corporations, accounting firms and law firms around the world.In 2010, Tax & Accounting began to execute its strategy to expand globally, which included launching the ONESOURCEglobal tax workstation. Tax & Accounting’s global expansion strategy also extends to content research and certification,including plans to offer its flagship product Checkpoint in more countries around the world, and plans to grow severalonline products and authoritative information for tax and accounting professionals outside the U.S., with brands such asCarswell in Canada, Brookers in New Zealand and La Ley in Argentina.Thomson Reuters Annual Report 20106
The following table provides information about Tax & Accounting’s major brands.Major BrandsType of Product/ServiceTarget CustomersGlobal tax workstation that integratesexisting global tax compliance softwarewith local tax compliance tools in agrowing number of countries and canmanage a company’s entire tax workflow– linking global staff, controllers, finance,and even tax advisors and auditors on onesystem, and provides the solutionsneeded to handle tax planning, transferpricing compliance, tax return complianceand global tax reporting needs. Theproducts or services can be soldseparately or as a suiteSuite of products and related businessoperations that offer corporate incometax software products to customers inHong Kong, Ireland, The Netherlands,New Zealand and the U.K. and supplyVAT compliance software for 19 countriesacross Europe and Asia-PacificSoftware solution that brings together arange of products to help taxprofessionals in Australia and NewZealand manage corporate tax, trust andproperty compliance and managementreportingSoftware and related services coveringtax requirements for more than 170countries, which are used to determine,calculate and record sales tax, VAT,excise tax and industry specific taxesIntegrated series of software applicationsthat encompass every aspect of a firm'soperations, from collecting client dataand posting finished tax returns to theongoing management of engagementsand an accountant’s entire practiceIntegrated set of solutions covering taxpreparation, engagement, practicemanagement and document andworkflow management that includeGoSystem Tax and GoFileRoomIntegrated U.K. tax compliance andaccounting software and servicesCorporate, legal, bank and trust market andlarge accounting firmsWorkflow & Service SolutionsONESOURCEONESOURCE WorkflowManagerONESOURCE Income TaxONESOURCE Tax ProvisionONESOURCE Transfer PricingONESOURCE Sales & Use TaxONESOURCE Property TaxONESOURCE Trust TaxONESOURCE 1099AbacusPowerTaxSabrixCS Professional SuiteEnterprise SuiteDigitaCorporate tax departments and largeaccounting firmsCorporate tax departments and largeaccounting firmsCorporate tax departments and largeaccounting firmsSmall to medium accounting firmsLarge accounting firmsAccounting firms, corporate tax, finance andaccounting departments, law firms andgovernmentsBusiness Compliance & Knowledge SolutionsCheckpointIntegrated platform that includesinformation-based solutions, expertguidance and workflow tools fromvarious Tax & Accounting products,such as RIA, WG&L and PPCThomson Reuters Annual Report 2010Accounting firms, corporate tax, finance andaccounting departments, law firms andgovernments7
Major BrandsCheckpoint LearningRIAPaisleyPPCWG&LQuickfinderBrookers OnlineCarswellLa LeyType of Product/ServiceIntegrated online offering that combinesglobal research, training and certificationwith course and credit-tracking capabilityfor individuals and large groups, andincludes continuing professionaleducation and training solutions fromvarious products such as PPC, PASSOnline, GearUp, MicroMash, Reqwired,and AuditWatchExpert guidance and research fromaround the globe available on theCheckpoint platform or in printTarget CustomersAccounting firms and corporate finance,accounting and tax departm
In 2010, Legal’s acquisitions also included Serengeti, a provider of electronic billing and matter management software, and Pangea3, a leading provider of legal process outsourcing services. Both of these acquisitions expand Legal’s position in the general counsel market, and also complement our existing legal offerings.
