The company reported revenues from ongoing businesses of $3.1 billion, a 2% increase before currency. Adjusted EBITDA declined 2% and the corresponding margin was 24.4% versus 25.1% in the prior-year period. Underlying operating profit decreased 7% and the corresponding margin was 14.9% versus 16.2% in the prior-year period.

First-quarter adjusted earnings per share (EPS) were $0.38, down $0.01 from the prior-year period.

"The first-quarter performance was consistent with our full-year expectations and I am pleased with the positive trajectory of the business as we begin the year," said James C. Smith, chief executive officer of Thomson Reuters.

"We are executing more effectively, launching better products, simplifying our systems and processes and managing with more rigor and discipline, which is why our confidence continues to build and we can affirm our full-year 2013 Outlook."

As Thomson Reuters simplifies and consolidates technology and content assets in order to achieve greater efficiencies, the company took a $235 million tax charge in the first quarter of 2013 which was the primary driver resulting in an IFRS loss of $0.04 per share in the quarter compared to $0.35 of EPS in the prior-year period.

For IFRS purposes, the entire charge was recorded in the first quarter. The charge will be amortized within the non-IFRS measure 'adjusted earnings' on a straight-line basis over the seven-year period that the company expects to pay the tax.

Revenues from ongoing businesses were $3.1 billion, a 2% increase before currency.
Adjusted EBITDA declined 2%, and the corresponding margin was 24.4% versus 25.1% in the prior-year period. The decline was entirely due to severance expense.
Underlying operating profit decreased 7% and the corresponding margin was 14.9% versus 16.2% in the prior-year period primarily due to severance expense and an increase of $20 million in depreciation and amortization expense, which had a 60 basis point impact miense, which had a 60 basis point impact million in depreciation and amortization expense, which had a 60 basis point impact on the margin.
Adjusted EPS was $0.38 compared to $0.39 in the prior-year period. The impact of higher severance expense was partially offset by lower interest expense and a lower tax rate.
Severance expense of $78 million was incurred in the quarter ($65 million of which was in Financial & Risk) compared to $28 million ($22 million in Corporate and $6 million in Financial & Risk) incurred in the first quarter of 2012.
Excluding severance expense from both periods:
Adjusted EBITDA was up 4% and the related margin was up 100 basis points to 27.0% (140 basis points before currency).
Underlying operating profit was up 3% and the related margin was up 30 basis points (90 basis points before currency).
Adjusted EPS was $0.46.
Free cash flow was negative $231 million versus negative $4 million in the prior-year period. The decline was primarily due to timing of higher capital expenditures, loss of free cash flow from disposals and working capital requirements. For the full year, the company continues to expect to achieve free cash flow of between $1.7 billion and $1.8 billion.

First-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency as Thomson Reuters believes this provides the best basis to measure the performance of its business.

Financial & Risk

Revenues were down 1% as the benefit from acquisitions was more than offset by a 3% decline in organic growth due to the impact of negative net sales in 2012. Growth in Governance, Risk & Compliance and the transactions platforms of Marketplaces was offset by a decline in Trading desktop revenues. Investors revenues were essentially unchanged from the prior-year period.
Recurring subscription-related revenues decreased 3% as a result of negative net sales in 2012. Transactions-related revenues increased 17% (2% organic) primarily due to the acquisition of FXall. Recoveries revenues were down 4% and Outright revenues increased 4%.
By geography, revenues in Europe, Middle East and Africa (EMEA) were down 3%, revenues in the Americas were up 2% (down 3% organic), while revenues in Asia declined 2%.
EBITDA was $360 million, down 15%, with a related margin of 21.5%. The EBITDA margin decreased 320 basis points from the prior-year period primarily due to the impact of severance expense of $65 million (compared to $6 million in first quarter of 2012). Excluding severance expense from both periods, the margin rose 40 basis points from the prior-year period.
Operating profit was $200 million, down 26%, with a related margin of 11.9%. Operating profit margin decreased 390 basis points due to severance expense and higher depreciation and amortization expense ($7 million). Excluding severance expenses from both periods, the margin declined 30 basis points from the prior-year period. Currency had a negative impact of approximately 100 basis points on operating profit margin for the quarter (-110 basis points excluding severance expense).
Eikon desktops totaled nearly 47,000 at the end of the first quarter, up 38% from December 31, 2012.

Trading

Revenues decreased 6% with growth in Feeds & Analytics and Elektron Managed Services offset by legacy desktop cancellations primarily in Equities and Fixed Income.
Recoveries revenues were down 6%.

Investors

Revenues were essentially unchanged versus the prior-year period. Enterprise Content increased 6%, while Asset Management (Investment Management, Lipper and Datafeeds) declined 1%, including a 3% decline in Investment Management (versus a 10% decline in the first quarter of 2012). Banking & Research declined 3% and Wealth Management was flat.

Marketplaces

Revenues increased 4% driven by the acquisition of FXall. Tradeweb was up 1%, impacted by a difficult prior-year period comparable when revenues grew 32% (11% organic).

Governance, Risk & Compliance

Revenues grew 8% to $55 million driven by new sales and continued strong demand across all risk and compliance segments.

Legal

Revenues increased 4% (flat organic). US Law Firm Solutions declined 1% as a 6% increase in Business of Law (FindLaw and Elite) was offset by a 3% decline in research-related revenues. Corporate, Government & Academic revenues increased 4%. Global businesses grew 17% (1% organic).
US print revenues declined 2% as firms continued to control discretionary spending. Excluding US print, revenues grew 5% (1% organic).
EBITDA increased 2% and the corresponding margin was 34.8% compared to 35.0% in the prior-year period.
Operating profit was flat and the corresponding margin was 25.3% compared to 26.1% in the prior-year period. Depreciation and amortization expense increased $6 million related to recent acquisitions.
78% of Westlaw revenue has been converted to WestlawNext as of the end of the first quarter.

Tax & Accounting

Revenues increased 7% (5% organic) driven by 11% growth in subscription revenues and greater than 4% organic growth across all business segments except Government.
EBITDA increased 8% and the related margin increased 50 basis points to 30.9%, driven by flow-through of higher revenues.
Operating profit increased 10% and the related margin increased 70 basis points to 21.8%.
Small movements in the timing of revenues and expenses can impact margins in any given quarter for the Tax & Accounting business. Full-year margins are more reflective of the segment's underlying performance.

Intellectual Property & Science

Revenues were up 13% (4% organic), driven by 18% subscription growth (5% organic). IP Solutions grew 22% (3% organic) driven by MarkMonitor, Life Sciences increased 2% and Scientific & Scholarly Research increased 5%. Transaction revenues (25% of total) were flat for the quarter.
EBITDA decreased 3% with the corresponding margin declining 440 basis points to 30.0% with half of the decline related to the dilutive impact of the MarkMonitor acquisition and approximately 100 basis points of the decline due to $3 million of severance expense.
Operating profit decreased 7% with the corresponding margin declining 440 basis points to 21.9%. The decline in the margin reflected the same items that impacted the EBITDA margin.
The MarkMonitor acquisition is expected to be about 100 basis points dilutive to Intellectual Property & Science's operating margin in 2013.
Small movements in the timing of revenues and expenses can impact margins in any given quarter for the Intellectual Property & Science business. Full-year margins are more reflective of the segment's underlying performance.

Corporate & Other (Including Reuters News)

Reuters News revenues for the first quarter were $81 million, up 1% from the prior-year period. Corporate & Other costs for the quarter were $59 million, down $33 million compared to the prior-year period, driven mainly by lower severance expense ($22 million in the first quarter of 2012). For the full year 2013, the company expects Corporate & Other costs to be roughly in line with the previous year.

Business Outlook (Before Currency)

Thomson Reuters today reaffirmed its business outlook for 2013. The company expects:

revenues to grow low single digits;
adjusted EBITDA margin to range between 26% and 27%;
underlying operating profit margin to range between 16.5% and 17.5%; and
free cash flow to range between $1.7 billion and $1.8 billion in 2013.

The company's 2013 Outlook includes the impact of an expected $100 million of severance expense in 2013, $78 million of which was incurred in the first quarter. The Outlook is based on expectations including adjustments for two new accounting pronouncements as well as the reclassification of certain businesses into disposals.