The Thomson Corporation (NYSE: TOC; TSX: TOC), one of the world's leading information services providers, today reported strong financial results for the second quarter ended June 30, 2006.
Consolidated Second-Quarter Financial Highlights:
- Revenues increased 7%, to $2.10 billion, primarily as a result of organic growth of 6%. Currency translation had no material impact in the quarter
- Operating profit increased 15%, to $305 million. Operating margin continued to improve, increasing 100 basis points from the ago period. Operating profit improvement was the result of growth and the continued success of efficiency initiatives. Included the results are $15 million of costs associated with the business optimization program
- Earnings attributable to common shares were $171 million, or $0.26 diluted earnings per share, compared with $301 million, or $0.46 diluted earnings per share, in the second quarter of 2005. Earnings in the prior-year period included a one-time gain of $137 million from the release of tax credits. Earnings in the 2006 period included $15 million of costs associated with THOMSONplus. After adjusting for these items, the results of discontinued operations and the normalization of the quarterly effective tax rate, earnings were $220 million, or $0.34 per share, compared with $149 million, or $0.23 per share, in the year-ago period
- Net cash provided by operations of $467 million was generated by company, compared with $397 million in the second quarter of 2005. Free cash flow was $315 million, versus $242 million in 2005. The increase was largely due to higher operating profit in the second quarter of 2006.
Thomson President and Chief Executive Officer Richard J. Harrington said, "We are pleased to report strong results for the second quarter. Our performance reflects our continued ability to execute against our three strategic priorities - driving organic growth as well as business and portfolio optimization. Notably, Thomson achieved another solid quarter of organic growth, up 6% over the prior-year period, with each market group contributing to the increase. Further, Thomson continued to translate revenues into profits, growing operating profit margin 100 basis points over the second quarter of last year.
"Our Legal and Regulatory group continued to deliver strong top-line growth, achieving 8% organic growth in the quarter. Thomson Financial delivered another solid quarter of organic revenue growth, which was balanced across its business and geographic segments. Our Learning group also performed well, driving solid revenue and operating profit growth. Our Scientific and Healthcare group gained momentum in the quarter, with increased organic revenue growth and solid operating profit growth.
"Overall, we continue to focus our strategy on enabling our customers to improve their performance by combining information, technology and services that help them make critical decisions faster. In the quarter, revenue from electronic products and services grew 9%. Moreover, we remain on course in 2006 to achieve our long-term objectives of 7% to 9% annual revenue growth, higher margins and strong free cash flow."
Mr. Harrington concluded, "On a separate note, we were deeply saddened by the loss of our dear friend and former chairman, Ken Thomson, who died on June 12. Ken was an exceptionally strong leader and a valued adviser to several generations of management at Thomson. He will be sorely missed."
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