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6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934


For the month of November 2018		Commission File Number: 1-31349

THOMSON REUTERS CORPORATION

(Translation of registrant’s name into English)

333 Bay Street, Suite 400

Toronto, Ontario M5H 2R2, Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐ Form 40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

The information contained in Exhibits 99.1 and 99.2 of this Form 6-K is incorporated by reference into, or as additional exhibits to, as applicable, the registrant’s outstanding registration statements.

Thomson Reuters Corporation is voluntarily furnishing certifications by its Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 99.3-99.6 of this Form 6-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


THOMSON REUTERS CORPORATION (Registrant)

By:	/s/ Marc E. Gold
	Name:	Marc E. Gold
	Title:	Assistant Secretary

Date: November 8, 2018

EXHIBIT INDEX


Exhibit Number		Description

99.1		Management’s Discussion and Analysis

99.2		Unaudited Consolidated Financial Statements

99.3		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.4		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.5		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.6		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 99.1 - MANAGEMENT'S DISCUSSION AND ANALYSIS

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Exhibit 99.1

Management’s Discussion and Analysis

This management’s discussion and analysis is designed to provide you with a narrative explanation through the eyes of our management of how we performed, as well as information about our financial condition and future prospects. We recommend that you read this in conjunction with our consolidated interim financial statements for the three and nine months ended September 30, 2018, our 2017 annual consolidated financial statements and our 2017 annual management’s discussion and analysis. This management’s discussion and analysis contains forward-looking statements, which are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. Forward-looking statements include, but are not limited to, our 2018 outlook, statements regarding the new Refinitiv strategic partnership that we formed in connection with the closing of the Financial & Risk (F&R) transaction, and our expectations related to general economic conditions and market trends and their anticipated effects on our business segments. For additional information related to forward-looking statements and material risks associated with them, please see the “Outlook” and “Additional Information – Cautionary Note Concerning Factors That May Affect Future Results” sections of this management’s discussion and analysis. This management’s discussion and analysis is dated as of November 5, 2018.

We have organized our management’s discussion and analysis in the following key sections:


^●	Executive Summary – a brief overview of our business, a summary of the F&R strategic partnership transaction and key financial highlights	2

^●	Results of Operations – a comparison of our current and prior-year period results	8

^●	Liquidity and Capital Resources – a discussion of our cash flow and debt	16

^●	Outlook – our current financial outlook for 2018	22

^●	Related Party Transactions – a discussion of transactions with our principal and controlling shareholder, The Woodbridge Company Limited (Woodbridge), and others	23

^●	Subsequent Events – a discussion of material events occurring after September 30, 2018 and through the date of this management’s discussion and analysis	23

^●	Changes in Accounting Policies – a discussion of changes in our accounting policies and recent accounting pronouncements	25

^●	Critical Accounting Estimates and Judgments – a discussion of critical estimates and judgments made by our management in applying accounting policies	25

^●	Additional Information – other required disclosures	25

^●	Appendix – supplemental information and discussion	27

Unless otherwise indicated or the context otherwise requires, references in this discussion to “we,” “our,” “us” and “Thomson Reuters” are to Thomson Reuters Corporation and our subsidiaries.

Basis of presentation

We prepare our consolidated financial statements in U.S. dollars in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

In this management’s discussion and analysis, we discuss our results from continuing operations on both an IFRS and non-IFRS basis. Both bases, except for cash flow, exclude the results of our former F&R business, which was reported as a discontinued operation for the third quarter and first nine months of 2018, and include the results of acquired businesses from the date of purchase.

Use of non-IFRS financial measures

We use non-IFRS measures as supplemental indicators of our operating performance and financial position as well as for internal planning purposes and our 2018 business outlook. We believe non-IFRS financial measures provide more insight into our performance. Non-IFRS measures do not have standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial performance calculated in accordance with IFRS.

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Our non-IFRS financial measures include:

^●

Adjusted EBITDA and the related margin;

^●

Adjusted EBITDA less capital expenditures and the related margin;

^●

Adjusted earnings and adjusted earnings per share (EPS);

^●

Net debt; and

^●

Free cash flow.

We also report changes in our revenues, operating expenses, adjusted EBITDA and the related margin, and adjusted EPS before the impact of foreign currency or at “constant currency”. These measures remove the impacts from changes in foreign currency exchange rates in order to provide better comparability of our business trends from period to period.

See Appendix A of this management’s discussion and analysis for a description of our non-IFRS financial measures, including an explanation of why we believe they are useful measures of our performance, including our ability to generate cash flow. Refer to sections of this management’s discussion and analysis entitled “Results of Operations-Continuing Operations”, “Liquidity and Capital Resources” and Appendix B for reconciliations of our non-IFRS financial measures to the most directly comparable IFRS measures.

Glossary of key terms

We use the following terms in this management’s discussion and analysis.


Term		Definition
bp		Basis points – one basis point is equal to 1/100^th of 1%; “100bp” is equivalent to 1%
constant currency		A measure derived by applying the same foreign currency exchange rates to the financial results of the current and equivalent prior-year period
EPS		Earnings (loss) per share
F&R		Our former Financial & Risk business, now known as Refinitiv
F&R transaction or F&R strategic partnership transaction		Our sale of a 55% interest in F&R to private equity funds managed by Blackstone, which closed on October 1, 2018
n/a		Not applicable
n/m		Not meaningful
organic or organically		A measure expressing growth of our existing businesses excluding impacts from acquisitions, dispositions and IFRS 15*
Refinitiv		The new name of our former F&R business as of the closing of the F&R transaction
$ and US$		U.S. dollars

*	We adopted IFRS 15 in 2018 without restatement of prior periods. For the purpose of our organic growth calculation, we remove the distortive impact of this adoption methodology,

Executive Summary

Our company

We are a leading source of news and information for professional markets. Our customers rely on us to deliver the intelligence, technology and expertise they need to find trusted answers. Our worldwide network of journalists and specialist editors keep customers up to speed on global developments, with a particular focus on legal, regulatory and tax changes.

We live at a time when the amount of data is overwhelming, the regulatory environment is complex, markets move at breakneck speed and connectivity is expanding around the world. Our customers count on the accuracy of our information, the reliability of our systems and the relevance of our insights to help them navigate the changing worlds of commerce and regulation. We believe our workflow solutions make our customers more productive, by streamlining how they operate. Reuters is renowned for the integrity of its news. The principles of freedom from bias and access to information govern everything that we do.

We derive the majority of our revenues from selling solutions to our customers, primarily electronically and on a subscription basis. Many of our customers utilize our solutions as part of their workflows. We believe this is a significant competitive advantage as it has led to strong customer retention. Over the years, our business model has proven to be capital efficient and cash flow generative, and it has enabled us to maintain leading and scalable positions in our chosen market segments.

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As of September 30, 2018, our continuing business was organized as three reportable segments supported by a corporate center:		Third Quarter 2018 Revenues
	Legal A provider of critical online and print information, decision tools, software and services that support legal, investigation, business and government professionals around the world.
	Tax & Accounting A provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government.
	Reuters News A provider of real-time, multimedia news and information services to newspapers, television and cable networks, radio stations and websites around the globe, as well as to our F&R business, which was classified as a discontinued operation (see the “F&R Strategic Partnership Transaction” section below).

We also operated:

^●

A Global Growth Organization (GGO) that worked across our business units to combine our global capabilities and to expand our local presence and development in countries and regions where we believe the greatest growth opportunities exist. GGO supported our businesses in: Latin America, China, India, the Middle East, Africa, the Association of Southeast Asian Nations, North Asia, Russia and countries comprising the Commonwealth of Independent States and Turkey. We included the results of GGO within our reportable segments.

^●

An Enterprise Technology & Operations (ET&O) group that drives the transformation of our company into a more integrated enterprise by unifying infrastructure across our organization, including technology platforms, data centers, real estate, products and services.

Recent Organizational Changes

Effective October 1, 2018, we transitioned from a product-centric structure to a customer-centric structure. This marks a substantive change in our approach to move decision making closer to the customer so we can better serve our customers with our full suite of offerings. We appointed a Co-Chief Operating Officer to oversee our customer-facing operations, and we remapped our businesses into the following reportable segments, which we will begin to present with our fourth-quarter 2018 results:

^●

Legal Professionals

^●

Tax Professionals

^●

Corporates

^●

Global Print

^●

Reuters News

We also appointed a Co-Chief Operating Officer with responsibility for Operations & Enablement, who manages commercial and technology operations, including those around our sales capabilities, digital customer experience and product and content development.

F&R Strategic Partnership Transaction

On October 1, 2018, we closed the sale of a 55% interest in our F&R business to private equity funds managed by Blackstone. An affiliate of Canada Pension Plan Investment Board and an affiliate of GIC invested alongside Blackstone. The F&R business is now known as Refinitiv. We received approximately $17 billion in gross cash proceeds at the closing, which remain subject to future purchase price adjustments, and retained a 45% interest in the business. Beginning with our results for the fourth quarter of 2018, Thomson Reuters’ IFRS results will include the company’s 45% share of Refinitiv’s results reported in a single line item on the company’s consolidated income statement titled “Share of post-tax earnings in equity method investments”. Thomson Reuters’ non-IFRS measures, including adjusted earnings, will exclude its share of post-tax earnings in equity method investments.

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We maintained full ownership of our Legal, Tax & Accounting and Reuters News businesses. The F&R transaction enables us to focus on expanding our business and accelerating revenue growth in the legal, tax and accounting and regulatory market segments.

We are in the process of returning $10 billion of the proceeds of the F&R transaction to our shareholders.

^●

In October 2018, we returned approximately $6.5 billion to shareholders pursuant to a substantial issuer bid/tender offer, under which we purchased and cancelled approximately 138 million common shares at U.S. $47.00 per share. Our principal shareholder (Woodbridge) participated pro rata in the substantial issuer bid/tender offer, maintaining its equity ownership in Thomson Reuters at approximately 64% upon completion of the SIB.

^●

Since announcing the F&R transaction on January 30, 2018, we have returned approximately $1 billion to shareholders through open market share repurchases under our normal course issuer bid.

^●

We also plan to return approximately $2.5 billion to shareholders through a return of capital transaction, which was announced on October 8, 2018 and is expected to be completed on or about November 27, 2018. The transaction, which is subject to shareholder and court approval, consists of a cash distribution of $4.45 per common share and a share consolidation, or “reverse stock split”, which will reduce the number of outstanding common shares on a basis that is proportional to the cash distribution.

In October, we used approximately $4 billion of the F&R transaction cash proceeds to repay debt, allowing us to remain substantially below our target leverage ratio (net debt/adjusted EBITDA) of 2.5:1).

Refer to the “Subsequent Events” section of this management’s discussion and analysis for additional information about these transactions.

We intend to use $2 billion of the proceeds from the F&R transaction to fund strategic, targeted acquisitions to bolster our positions in key growth segments of our Legal Professionals, Tax Professionals and Corporate businesses. We expect to use the remaining $1 billion for cash taxes, pension contributions, bond redemption costs and other fees and outflows related of the transaction. These funds include $500 million to $600 million of spend to eliminate stranded costs as well as investments to reposition the company following the separation of the business.

Effective October 1, 2018, Reuters News and Refinitiv entered into a 30-year agreement for Reuters News to supply news and editorial content to the Refinitiv partnership for a minimum of $325 million per year. For the duration of the news agreement, we will grant the Refinitiv partnership a license to permit it to brand its products/services and company name with the “Reuters” mark, subject to applicable limitations and restrictions set forth in a trademark license agreement.

When the F&R transaction closed, we split our global workforce of 47,000 employees between Thomson Reuters and Refinitiv with approximately 20,000 employees transferred from Thomson Reuters to Refinitiv, including staff from our Corporate functions. Corporate staff was primarily from ET&O and GGO, but also included staff from our Finance, Human Resources, Legal, Strategy and Communications functions. To facilitate the separation, Refinitiv and Thomson Reuters are providing certain transition services to each other for a specified period, including technology and administrative services.

The strategic partnership highlights our efforts and the success that we have had investing to stabilize and grow our financial services business over the last several years. We believe that our 45% equity stake in a well-positioned financial business with a strong strategic partner will also allow us to participate in the future upside for the business. We believe that Blackstone brings a deep understanding of the financial services ecosystem and a global footprint, and that it is well-positioned to identify and shape trends in the financial services industry, navigate ongoing industry consolidation and drive further efficiencies in the Refinitiv business. We also believe that Blackstone has capacity and flexibility to invest for the long-term, both organically and inorganically. Blackstone and the Refinitiv partnership believe that through adoption of innovative technologies to increase automation, other efficiency initiatives and effective cost management, they can achieve a cost savings run rate of up to $650 million by the end of 2020. Additionally, Refinitiv expects to invest in growth initiatives.

The information in this section is forward-looking and should be read in conjunction with the section entitled “Cautionary Note Concerning Factors That May Affect Future Results”.

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Future Growth Opportunities for Thomson Reuters

As mentioned above, we recently began to transition from a product-centric structure to a customer-centric structure. One of our strategic priorities is to position new Thomson Reuters for accelerated growth. This will require fundamental changes to how we operate.

We believe that we have significant opportunities to grow our new Legal Professionals, Tax Professionals and Corporates businesses by blending deep domain knowledge with cutting edge software and automation tools. Many of our customers operate on a global scale and their work continues to get more complex, time pressured and economically constrained. We are focused on empowering them with the content, technology and solutions that they need to thrive and become more efficient, enabling them to focus on higher value activities and provide high quality advice and insight to their colleagues and customers. We believe that many of our customers have longstanding relationships with Thomson Reuters and trust us because of our history and dependability, our deep understanding of their businesses and industries, and our provision of services that they can rely on for navigating a rapidly changing, and increasingly complex, digital world.

By redefining our customer segments, we are identifying the key areas where we believe we can create additional and meaningful value for our customers. We are building a dynamic, customer-centric organization and operating model with an aligned talent strategy to better inform how we design our offerings and our go-to-market approach. To become more time and cost efficient, we plan to pursue new internal process and customer-facing simplification initiatives. We are also focused on developing a greater platform approach for our various products and services and are increasingly utilizing artificial intelligence, analytics and the cloud to increase leverage, efficiency, speed and scale, both for our company and our customers. As part of these efforts, we are also concentrating on providing our customers with more digital opportunities to interact and work with us, as well as to improve retention, sales efficiency and the overall customer experience. In line with the new operating model, we are also building a flatter and more productive organization with talent that is expected to be more agile.

Our Legal Professionals, Tax Professionals and Corporates segments comprised approximately 80% of our 2017 revenues from continuing operations and collectively grew 4% organically. To effectively serve our customers and empower their success, we plan to increase investment both organically and through acquisitions in our Legal Professionals, Tax Professionals and Corporate segments. Our already strong positions in these segments, together with increased investment, should result in these segments comprising an increasing percentage of our total revenues, which is expected to lead to higher overall revenue growth for Thomson Reuters.

The information in this section is forward-looking and should be read in conjunction with the section in this document entitled “Cautionary Note Concerning Factors That May Affect Future Results”.

Discontinued Operations

F&R was classified as a discontinued operation for the third quarter and first nine months of the year. To facilitate a comparison with our 2017 results, prior-year period amounts in this management’s discussion and analysis have been restated to conform to the current period’s presentation. See the “Results of Discontinued Operations” section of this management’s discussion and analysis for additional information.

Seasonality

Our revenues and operating profit on a consolidated basis do not tend to be significantly impacted by seasonality as we record a large portion of our revenues ratably over a contract term and our costs are generally incurred evenly throughout the year. However, the performance of the Tax & Accounting segment from quarter to consecutive quarter can be impacted by the release of certain tax products, which tend to be concentrated in the fourth quarter and, to a lesser extent, in the first quarter of the year. Additionally, the seasonality of our operating profit may be further impacted by the timing of our corporate costs, as we expect to incur significant costs to reposition our business following the closing of the F&R transaction (see the “Outlook” section of this management’s discussion and analysis).

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Key Financial Highlights

Below are financial highlights from our third-quarter 2018 results, which are on a continuing operations basis, except where otherwise noted.


	Three months ended September 30,
					Change
(millions of U.S. dollars, except per share amounts and margins)	2018		2017		Total		Constant Currency
IFRS Financial Measures
Revenues		1,292		1,272		2%
Operating profit		162		288		(44%)
Diluted EPS (includes discontinued operations)	$	0.37	$	0.46		(20%)
Cash flow from operations (includes discontinued operations)		850		808		5%
Non-IFRS Financial Measures⁽¹⁾
Revenues		1,292		1,272		2%		3%
Adjusted EBITDA		302		388		(22%)		(21%)
Adjusted EBITDA margin		23.4%		30.5%		(710)bp		(710)bp
Adjusted EPS		$0.11	$	0.27		(59%)		(59%)
Free cash flow (includes discontinued operations)		599		531		13%

(1)	Refer to Appendix A for additional information on non-IFRS financial measures.

Our revenues increased 2% in total and 3% in constant currency, due to higher recurring revenues. Operating profit, adjusted EBITDA and the related margin declined due to higher expenses, which included investments to reposition our business following the separation of the F&R business from the rest of the company as well as additional expenses within the business segments. Operating profit was further impacted by higher depreciation and because the prior period included a gain on the sale of a portion of an investment. Diluted EPS decreased as lower operating profit and higher income tax expense from continuing operations more than offset higher net earnings from the F&R business, which increased primarily because F&R assets held for sale are not depreciated. Adjusted EPS, which excludes discontinued operations among other items, decreased primarily due to lower adjusted EBITDA.

The increase in cash flow from operations was primarily due to favorable working capital movements within discontinued operations. The increase in free cash flow reflected the same factor as well as lower capital expenditures.

Our 2018 priorities have been to:

^●

Separate the F&R business from Thomson Reuters. On October 1, 2018 we closed the F&R transaction, separating the F&R business (now known as Refinitiv) and Thomson Reuters. Thomson Reuters and Refinitiv are now operating as two stand-alone businesses, facilitated by certain transitional service arrangements from each company to the other for a specified period.

^●

Reposition Thomson Reuters. As part of our efforts to accelerate the revenue growth of our continuing business, we are repositioning our company by building a more customer-centric operating model. We are focusing on delivering solutions that can apply advanced analytics to the combined data of our company, customers and third parties. We will continue to automate knowledge work by incorporating artificial intelligence, machine learning and cognitive computing. Effective October 1, 2018, we are operating in our new customer-centric operating model. Additionally, as a result of the F&R transaction, we have started to realign our cost base for our remaining smaller company.

^●

Grow through Digital Evolution. We believe that we can drive revenue growth from improved customer analytics and a more effective digital sales model. We plan to build a digital customer experience and sales channel for smaller tax and legal firms that make up a significant portion of our customer base. We are focused on making it easier for customers to buy our products and services. We also are prioritizing investing and expanding our position in the corporate market segment.

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2018 Outlook:

We recently reaffirmed our 2018 full-year business outlook that we originally communicated in May 2018, except for an update to our adjusted EBITDA and full year effective tax rate on adjusted earnings. The following table sets forth our 2018 full-year business outlook for our continuing operations. For comparative purposes, 2017 actual amounts provided below have been restated to exclude the F&R business, which was classified as a discontinued operation for the third quarter and first nine months of the year.

Total Corporate costs are expected to be between $500 million and $600 million in 2018. In addition to core corporate costs, we expect to incur the following as part of our overall corporate costs:

^●

Stranded costs, which we define as costs that will not be eliminated with the sale of the 55% interest in the F&R business, as well as costs due to dis-synergies from losing certain benefits of scale from the transaction; and

^●

Costs and investments to reposition the ongoing Thomson Reuters business following the separation of the F&R business from the rest of the company.

Non-IFRS Financial Measures⁽¹⁾

2017 Actual⁽²⁾

2018 Outlook

Revenues

$5.3 billion

Low single digit growth (excludes any fourth quarter 2018 payments to Reuters News from Refinitiv following the closing of the F&R transaction)

Adjusted EBITDA

$1.6 billion

Approximately $1.3 billion including the corporate costs referred to below (previously between $1.2 billion and $1.3 billion)

Total Corporate costs

$244 million

Between $500 million and $600 million (including stranded costs and investments to reposition our company following the separation of the F&R business from the company)

Depreciation and amortization of computer software

$496 million

Between $500 million and $525 million

Capital expenditures, as a percentage of revenues

9.9%

Approximately 10% of revenues

Effective tax rate on adjusted earnings

11.4%

Between 17% and 19% (previously between 14% and 16%)

(1)	Refer to Appendix A for additional information on non-IFRS financial measures.

(2)	Refer to Appendix C for details of our 2017 revenues and adjusted EBITDA as reported in our 2017 annual management’s discussion and analysis, and as revised to exclude our F&R business.

Our 2018 outlook assumes constant currency rates relative to 2017. The 2018 outlook does not factor in the impact of any acquisitions or divestitures that may occur during the year except for our sale of a 55% interest in the F&R business.

Additional information is provided in the “Outlook” section of this management’s discussion and analysis.

The information in this section is forward-looking and should also be read in conjunction with the section of this management’s discussion and analysis entitled “Cautionary Note Concerning Factors That May Affect Future Results”.

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Results of Operations—Continuing Operations

Consolidated results


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
(millions of U.S. dollars, except per share amounts and margins)	2018		2017		Total		Constant Currency		2018		2017		Total		Constant Currency
IFRS Financial Measures
Revenues		1,292		1,272		2%				3,982		3,883		3%
Operating profit		162		288		(44%)				634		780		(19%)
Diluted EPS from continuing operations		($0.08)		$0.20		n/m				$0.36		$0.46		(22%)
Non-IFRS Financial Measures⁽¹⁾
Revenues		1,292		1,272		2%		3%		3,982		3,883		3%		3%
Adjusted EBITDA		302		388		(22%)		(21%)		1,080		1,183		(9%)		(9%)
Adjusted EBITDA margin		23.4%		30.5%		(710)bp		(710)bp		27.1%		30.5%		(340)bp		(330)bp
Adjusted EBITDA less capital expenditures		192		228		(16%)				660		791		(17%)
Adjusted EBITDA less capital expenditures margin		14.9%		17.9%		(300)bp				16.6%		20.4%		(380)bp
Adjusted EPS		$0.11		$0.27		(59%)		(59%)		$0.55		$0.71		(23%)		(23%)

(1)	Refer to Appendix A for additional information on non-IFRS financial measures. Refer to Appendix B for a reconciliation of earnings of continuing operations to adjusted EBITDA and adjusted EBITDA less capital expenditures.

Foreign currency effects

As set forth in the table above, fluctuations in foreign exchange rates impact our results given our currency mix of revenues and expenses around the world. Average foreign exchange rates for the most significant foreign currencies that we transact in were as follows:


	Three months ended September 30,						Nine months ended September 30,
(U.S. dollars per unit)	2018		2017		U.S. Dollar Strengthened/ (Weakened) vs. Foreign Currency		2018		2017		U.S. Dollar Strengthened/ (Weakened) vs. Foreign Currency
British pound sterling		1.303		1.309		0.5%		1.352		1.276		(6.0%)
Euro		1.163		1.175		1.0%		1.195		1.113		(7.4%)
Canadian dollar		0.765		0.798		4.1%		0.777		0.766		(1.4%)
Argentine peso		0.032		0.058		44.8%		0.042		0.062		32.3%
Brazilian real		0.253		0.316		19.9%		0.280		0.315		11.1%

Revenues

Three months ended September 30,

Nine months ended September 30,

Change

(millions of U.S. dollars)

2018

2017

Total

Constant
Currency

2018

2017

Total

Constant
Currency

Recurring revenues

980

947

2,970

2,846

Transactions revenues

146

147

(1%)

503

509

(1%)

Print revenues

169

180

(6%)

(3%)

516

533

(3%)

Eliminations

(3)

(2)

(7)

(5)

Revenues

1,292

1,272

3,982

3,883

In both periods, revenues increased in total and in constant currency as higher recurring revenues were partly offset by a decline in print revenues. In the nine-month period, transactions revenues declined on both bases.

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Operating profit, adjusted EBITDA and adjusted EBITDA less capital expenditures

Operating profit decreased in both periods as higher expenses and higher depreciation more than offset higher revenues. The prior period also benefited from the sale of a portion of an investment.

Adjusted EBITDA and the related margin declined as higher expenses more than offset higher revenues.

In the third quarter, adjusted EBITDA less capital expenditures and the related margin decreased as lower adjusted EBITDA was partly offset by lower capital expenditures. In the nine-month period, the declines in these measures were due to lower adjusted EBITDA and higher capital expenditures.

Operating expenses


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
(millions of U.S. dollars)	2018		2017		Total		Constant Currency		2018		2017		Total		Constant Currency
Operating expenses		985		888		11%		14%		2,901		2,698		8%		7%
Remove fair value adjustments⁽¹⁾		5		(4)						1		2
Operating expenses, excluding fair value adjustments		990		884		12%		14%		2,902		2,700		7%		7%

(1)	Fair value adjustments primarily represent gains or losses due to changes in foreign currency exchange rates on intercompany balances that arise in the ordinary course of business.

Operating expenses, excluding fair value adjustments, increased in total and on a constant currency basis in the third quarter and nine-month period primarily due to investments to reposition our business following the separation of the F&R business from the rest of the company, including acceleration of digital strategies, replication of capabilities that we lost with the separation from Refinitiv and severance. The increase in expenses also reflected higher employee-related expenses and costs associated with new products. The nine-month period included charges associated with a long-term contract in Tax & Accounting’s Government business.

Depreciation and amortization

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars)

2018

2017

Change

2018

2017

Change

Depreciation

(2%)

Amortization of computer software

26%

294

265

11%

Subtotal

120

21%

377

350

Amortization of other identifiable intangible assets

(21%)

103

(19%)

^●

In the third quarter, $13 million of the increase in depreciation and amortization of computer software on a combined basis reflected a cumulative true-up for our final accounting of the assets transferred with the F&R business. In the nine-month period, the increase was primarily due to higher depreciation and amortization of computer software associated with our investments in digital and customer experience initiatives.

^●

Amortization of other identifiable intangible assets decreased in both periods primarily due to the completion of amortization for certain identifiable intangible assets acquired in previous years.

Other operating gains, net


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		2018		2017
Other operating gains, net		1		36		13		48

In the nine-month period of 2018, other operating gains, net, included a gain on the sale of a Canadian wholly-owned subsidiary to a company affiliated with our principal shareholder, Woodbridge (see the “Related Party Transactions” section of this management’s discussion and analysis for additional information). Both periods in 2017 included a gain from the sale of a portion of an investment.

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Net interest expense


	Three months ended September 30,						Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		Change		2018		2017		Change
Net interest expense		82		89		(8%)		241		270		(11%)

Net interest expense decreased in both periods as certain long-term debt obligations were refinanced with commercial paper and credit facility borrowings, which bear lower interest rates.

Other finance costs (income)


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		2018		2017
Other finance costs (income)		11		57		(10)		145

Other finance costs (income) included gains or losses related to changes in foreign exchange contracts and gains or losses on the impact of fluctuations of foreign currency exchange rates on certain intercompany funding arrangements. The significant change in both periods of 2018 reflects the settlement of certain of these arrangements in the second half of 2017, as well as changes in foreign exchange rates.

Tax expense

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars)

2018

2017

2018

2017

Tax expense

128

152

Tax expense in both periods of 2018 included $95 million of charges associated with the separation of F&R from the rest of our company. The tax expense in each period reflected the mix of taxing jurisdictions in which pre-tax profits and losses were recognized. Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, tax expense or benefit in interim periods is not necessarily indicative of tax expense for the full year.

Additionally, the comparability of our tax expense was impacted by various transactions and accounting adjustments during each period. The following table sets forth certain components within income tax expense (benefit) that impact comparability from period to period, including tax expense (benefit) associated with items that are removed from adjusted earnings:


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		2018		2017
Tax expense (benefit)
Tax items impacting comparability:
Net tax charges related to restructuring⁽¹⁾		95		-		95		-
Corporate tax rates⁽²⁾		19		5		5		6
Deferred tax adjustments		(2)		(10)		-		(5)
Subtotal		112		(5)		100		1
Tax related to:
Fair value adjustments		1		1		1		(1)
Amortization of other identifiable intangible assets		(8)		(9)		(20)		(28)
Other items		-		16		1		17
Subtotal		(7)		8		(18)		(12)
Total		105		3		82		(11)

(1)	Relates to internal restructuring of our existing businesses in preparation for the sale of a 55% interest in our F&R business.

(2)	Relates to changes in U.S. state deferred tax liabilities resulting from changes in apportionment factors and changes associated with the sale of a 55% interest in the F&R business.

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Because the items described above impact the comparability of our tax expense or benefit for each period, we remove them from our calculation of adjusted earnings, along with the pre-tax items to which they relate. The computation of our adjusted tax expense is set forth below:


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		2018		2017
Tax expense		128		-		152		26
Remove: Items from above impacting comparability		(105)		(3)		(82)		11
Other adjustment:
Interim period effective tax rate normalization⁽¹⁾		2		6		-		8
Total tax expense on adjusted earnings		25		3		70		45

(1)

Adjustment to reflect income taxes based on estimated full-year effective tax rate. Earnings or losses for interim periods under IFRS generally reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which we operate. The non-IFRS adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.

(Loss) earnings and diluted EPS from continuing operations


	Three months ended September 30,						Nine months ended September 30,
(millions of U.S. dollars, except per share amounts)	2018		2017		Change		2018		2017		Change
(Loss) earnings from continuing operations		(58)		143		n/m		256		335		(24%)
Diluted EPS from continuing operations	($	0.08)	$	0.20		n/m	$	0.36	$	0.46		(22%)

(Loss) earnings from continuing operations and the related per share amount decreased in the third quarter and the nine-month period as lower operating profit and higher income tax expense were partly offset by benefits from other finance costs and lower interest expense. Additionally, diluted EPS in the nine-month period benefited from lower outstanding common shares due to share repurchases (see the “Liquidity and Capital Resources – Share Repurchases” section of this management’s discussion and analysis for additional information).

Adjusted earnings and adjusted EPS


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
(millions of U.S. dollars, except per share amounts and share data)	2018		2017		Total		Constant Currency		2018		2017		Total		Constant Currency
Net earnings		291		348		(16%)				637		868		(27%)
Adjustments to remove:
Fair value adjustments		(5)		4						(1)		(2)
Amortization of other identifiable intangible assets		26		33						83		103
Other operating gains, net		(1)		(36)						(13)		(48)
Other finance costs (income)		11		57						(10)		145
Share of post-tax (earnings) losses in equity method investments		(1)		(1)						(5)		4
Tax on above items⁽¹⁾		(7)		8						(18)		(12)
Tax items impacting comparability⁽¹⁾		112		(5)						100		1
Earnings from discontinued operations, net of tax		(349)		(205)						(381)		(533)
Interim period effective tax rate normalization⁽¹⁾		(2)		(6)						-		(8)
Dividends declared on preference shares		(1)		(1)						(2)		(2)
Adjusted earnings		74		196		(62%)				390		516		(24%)
Adjusted EPS		$0.11		$0.27		(59%)		(59%)		$0.55		$0.71		(23%)		(23%)
Diluted weighted-average common shares (millions)		702.3		716.9						708.1		722.5

(1)	See the “Tax expense” section above for additional information.

Adjusted earnings and the related per share amount decreased in both periods primarily due to lower adjusted EBITDA. In the nine-month period, adjusted EPS also reflected a benefit from lower outstanding common shares due to share repurchases.

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Segment results

The following is a discussion of our three reportable segments for our continuing business for the three and nine months ended September 30, 2018: Legal, Tax & Accounting and Reuters News. Beginning in the first quarter of 2018, Reuters News became a reportable segment. The Regulatory Intelligence and Compliance Learning businesses, which were previously reported as part of the F&R business and generated approximately $69 million of annual revenues in 2017, were retained after the closing of the F&R strategic partnership transaction and are reported as part of the Legal segment.

We assess the performance of our reportable segments as follows:

Revenues

We present segment revenue growth at both actual foreign exchange rates and in constant currency. We assess revenue performance for each reportable segment, as well as the businesses within each segment, before the impact of currency (or at “constant currency”). We also analyze our revenue by three types, recurring, transactions and print, reflecting the nature of our business model. While much of our print revenues are recurring, we segregate our revenues from print products to highlight that our print revenues are steadily declining due to our customers’ preference for online products.

Segment adjusted EBITDA and segment adjusted EBITDA margin

^●

Segment adjusted EBITDA represents earnings from continuing operations before tax expense or benefit, net interest expense, other finance costs or income, depreciation, amortization of software and other identifiable intangible assets, the company’s share of post-tax earnings or losses in equity method investments, other operating gains and losses, certain asset impairment charges, fair value adjustments, and corporate related items.

^●

The company does not consider these excluded items to be controllable operating activities for purposes of assessing the current performance of the reportable segments.

^●

Each segment includes an allocation of costs for centralized support services such as technology, editorial, real estate and certain global transaction processing functions that are based on usage or other applicable measures.

^●

Segment adjusted EBITDA margin is segment adjusted EBITDA expressed as a percentage of revenues.

Our “Corporate” category includes expenses for corporate functions.

Legal


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
(millions of U.S. dollars, except margins)	2018		2017		Total		Constant Currency		2018		2017		Total		Constant Currency
Recurring revenues		649		618		5%		5%		1,926		1,835		5%		5%
Transactions revenues		78		74		5%		7%		233		228		2%		2%
Print revenues		156		168		(7%)		(4%)		478		496		(4%)		(4%)
Revenues		883		860		3%		4%		2,637		2,559		3%		3%
Segment adjusted EBITDA		327		345		(5%)		(5%)		967		984		(2%)		(2%)
Segment adjusted EBITDA margin		37.0%		40.1%		(310)bp		(330)bp		36.7%		38.5%		(180)bp		(180)bp

On a constant currency basis, revenues increased 4% in the third quarter and 3% in the nine-month period. In both periods, higher recurring and transactions revenues more than offset lower print revenues. An acquisition in the first quarter of 2018 contributed 1% to revenue growth in both periods. Excluding print, Legal’s revenues increased 5% in the third quarter and 4% in the nine-month period.

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Revenue performance by line of business in constant currency was as follows:

Third Quarter 2018 Revenues

by Line of Business

^● Global Solutions revenues include non-U.S. legal information and global software and services businesses. Global Solutions revenues increased 9% in the third quarter driven by 9% growth in recurring revenues (82% of the Global Solutions business) and 10% growth in transactions revenues. In the nine-month period, Global Solutions increased 6% driven by 7% growth in recurring revenues and 2% growth in transactions revenues. In both periods, revenues increased for U.K. Practical Law, FindLaw, Investigative & Public Records, Tracker and Elite, while revenues in Legal Managed Services were lower;

^● U.S. Online Legal Information revenues increased 2% in both periods, due to growth in U.S. Practical Law. Our recent launch of Westlaw Edge continues to be well received by our customers and we expect to continue to enhance its capabilities; and

^● Print revenues, which include U.S. and international print businesses, decreased 4% in both periods, including the contribution from a business acquired in the first quarter of 2018.

LOGO

Legal’s segment adjusted EBITDA and the related margins decreased on a constant currency basis in both periods as higher revenues were more than offset by higher expenses. The increase in expenses included investments related to the July 2018 launch of Westlaw Edge, a new legal research platform that utilizes advanced artificial intelligence, and higher employee-related costs. For the full-year, we expect Legal’s margin to be comparable to the nine-month period of 2018.

Tax & Accounting


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
(millions of U.S. dollars, except margins)	2018		2017		Total		Constant Currency		2018		2017		Total		Constant Currency
Recurring revenues		272		267		2%		5%		859		824		4%		6%
Transactions revenues		56		62		(10%)		(5%)		240		247		(3%)		(2%)
Print revenues		13		12		8%		8%		38		37		3%		3%
Revenues		341		341		-		3%		1,137		1,108		3%		4%
Segment adjusted EBITDA		93		95		(2%)		(2%)		331		339		(2%)		(1%)
Segment adjusted EBITDA margin		27.3%		27.9%		(60)bp		(140)bp		29.1%		30.6%		(150)bp		(160)bp

Revenues increased 3% and 4% on a constant currency basis in the third quarter and nine-month period, respectively, as growth in recurring and print revenues were partly offset by a decline in transactions revenues.

Recurring and total revenue growth in the third quarter included a 1% negative impact from the January 1, 2018 adoption of a new accounting standard, IFRS 15. IFRS 15 did not impact revenue growth in the nine-month period, and we continue to expect a nominal impact from the accounting standard on Tax & Accounting’s revenues for the full year.

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Revenue performance by line of business in constant currency was as follows:

^● Corporate includes revenues from federal, state, local and international tax compliance, planning and management software and services. Corporate revenues increased 3% and 4% in the third quarter and nine-month period, respectively, primarily due to growth in the ONESOURCE global tax compliance solutions, partly offset by lower transactional revenues;

^● Professional includes revenues from tax, accounting, payroll, document management, and practice management software and services. Professional revenues increased 5% and 7% in the third quarter and nine-month period, respectively, primarily from growth in CS Professional Suite solutions for accounting firms and higher revenues in Latin America;

^● Knowledge Solutions includes revenues from information, research, and certified professional education tools for tax and accounting professionals. Knowledge Solutions revenues increased 2% and 1% in the third quarter and nine-month period, respectively, due to growth in Checkpoint and print revenues; and

^● Government, which represents only 3% of Tax & Accounting’s revenues, includes integrated property tax management and land registry solutions. Government revenues increased 3% and 2% in the third quarter and nine-month period, respectively.

Third Quarter 2018 Revenues

by Line of Business

LOGO

Tax & Accounting’s segment adjusted EBITDA and the related margins decreased on a constant currency basis in both periods as the impact of higher expenses more than offset higher revenues. The increase in expenses in both periods included higher employee-related expenses. The nine-month period also included charges associated with a long-term contract in Tax & Accounting’s Government business.

Tax & Accounting is a more seasonal business relative to our other businesses, with a higher percentage of its segment adjusted EBITDA historically generated in the fourth quarter and to a slightly lesser extent, the first quarter, due to the release of certain tax products. Small movements in the timing of revenues and expenses can impact quarterly margins. Full-year margins are more reflective of the segment’s performance. We expect Tax & Accounting’s full-year 2018 margin to be in line with, or marginally higher than the prior year.

Reuters News


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
(millions of U.S. dollars, except margins)	2018		2017		Total		Constant Currency		2018		2017		Total		Constant Currency
Recurring revenues		59		62		(5%)		(5%)		185		187		(1%)		(4%)
Transactions revenues		12		11		9%		-		30		34		(12%)		(12%)
Revenues		71		73		(3%)		(4%)		215		221		(3%)		(5%)
Segment adjusted EBITDA		6		7		(14%)		(17%)		22		29		(24%)		(29%)
Segment adjusted EBITDA margin		8.5%		9.6%		(110)bp		(110)bp		10.2%		13.1%		(290)bp		(310)bp

In both periods, revenues decreased on a constant currency basis primarily due to lower recurring revenues, which comprise the majority of Reuters News’ revenues. Transaction revenues were essentially unchanged in the third quarter and decreased in the nine-month period on a constant currency basis.

Segment adjusted EBITDA and the related margin for Reuters News decreased on a constant currency basis due to lower revenues.

Reuters News supplies news and editorial content to Refinitiv. When we owned all of the F&R business, the costs to produce this content were allocated to the F&R business and therefore included as part of discontinued operations, rather than as a component of Reuters News’ adjusted EBITDA. Beginning in the fourth quarter, Reuters News will report these costs as part of its adjusted EBITDA. At the same time, Reuters News will begin to recognize revenue of $325 million per year under a new 30-year agreement to continue to supply news and editorial content to the Refinitiv strategic partnership. The revenue is expected to be largely offset by the associated expenses within the results of Reuters News.

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Corporate costs

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars)

2018

2017

2018

2017

Corporate costs

124

240

169

The increase in corporate costs reflected investments to reposition our business following the separation of the F&R business from the rest of our company, including acceleration of digital strategies, replication of capabilities that we lost with the separation from Refinitiv and severance.

Results of Discontinued Operations

Earnings from discontinued operations, net of tax, includes the following:

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars)

2018

2017

2018

2017

F&R

358

206

397

532

Intellectual Property & Science (IP & Science)

(9)

(1)

(16)

Earnings from discontinued operations, net of tax

349

205

381

533

In the third quarter of 2018, earnings from the discontinued operations of the F&R business increased primarily because there was no depreciation and amortization expense, as F&R assets held for sale were not depreciated. Earnings from discontinued operations also included a benefit from fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts. These increases were partly offset by an additional tax charge of approximately $90 million associated with the sale of a 55% interest in the F&R business.

In the nine-month period of 2018, earnings from the discontinued operations of the F&R business reflected an $850 million deferred tax charge, most of which was recorded in the first quarter of 2018, associated with the sale of a 55% interest in that business. The $850 million deferred tax charge includes $38 million that was recorded in the third quarter, which resulted from an increase in state tax rates expected to apply to the F&R transaction. These deferred taxes were not required before 2018 as the F&R business was not considered held for sale until January 2018. This deferred tax liability will be remeasured upon closing of the transaction and will remain deferred until such time as we dispose of our 45% interest in the new partnership. The company estimates that cash tax payments of approximately $125 million will be required in connection with the F&R transaction. The majority of these tax payments will be made in the fourth quarter of 2018.

Excluding the impact of the tax charge, the results of discontinued operations increased in the nine-month period reflecting the benefit from the treatment of depreciation and amortization, as well as a benefit from fair value adjustments and higher revenues.

Refer to the “F&R” section below for additional details.

Amounts related to our former IP & Science business include residual expense and income items that were borne by our company following the sale in October 2016.

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F&R

Due to the significance of the F&R business to our company, supplemental information about its performance is provided below. As our retained 45% interest in the Refinitiv partnership will remain significant to our company, we plan to continue to provide information about Refinitiv’s performance and financial condition in future periods.

Three months ended September 30,

Nine months ended September 30,

Change

(millions of U.S. dollars, except margins)

2018

2017

Total

Constant
Currency

2018

2017

Total

Constant
Currency

Recurring revenues

1,186

1,175

3,595

3,486

Transactions revenues

239

230

730

669

Recoveries revenues

116

120

(3%)

352

356

(1%)

(3%)

Revenues

1,541

1,525

4,677

4,511

Segment adjusted EBITDA

482

461

1,480

1,380

Segment adjusted EBITDA margin

31.3%

30.2%

110bp

100bp

31.6%

30.6%

100bp

120bp

Cash flow from operations

583

413

41%

1,244

935

33%

Free cash flow⁽¹⁾

442

296

49%

822

565

45%

Capital expenditures

116

21%

362

318

14%

(1)	Refer to Appendix A for additional information on non-IFRS financial measures.

In the third quarter, revenues increased 2% on a constant currency basis, all of which was organic. In the nine-month period revenues increased 2% on a constant currency basis as 3% organic growth was partly offset by a 1% negative impact from the January 1, 2018 adoption of IFRS 15. The revenue increases in both periods were primarily due to growth in recurring revenues, all of which was organic, and in transactions revenues. In the third quarter, transactions revenues increased 5% on a constant currency basis, comprised of 4% organic growth and 1% from a positive impact from IFRS 15. In the nine-month period, transactions revenues increased 11% organically, which was partly offset by a 2% negative impact from IFRS 15. Both periods reflected growth in Tradeweb and higher foreign exchange trading revenues.

Segment adjusted EBITDA and the related margin increased in both periods as higher revenues and lower technology costs more than offset costs of separating the F&R business from the company. The third quarter of 2018 included $39 million of costs to separate the F&R business from the company. Excluding these costs, segment adjusted EBITDA increased 13% and the margin increased 360bp in the third quarter. In the nine-month period, segment adjusted EBITDA included $83 million of costs to separate the F&R business from Thomson Reuters. Excluding these costs, segment adjusted EBITDA increased 13% and the margin increased 280bp in the nine-month period. Foreign currency positively impacted segment adjusted EBITDA margin by 10bp in the third quarter, but negatively impacted segment adjusted EBITDA margin by 20bp in the nine-month period, compared to the prior-year periods.

Cash flow from operations increased in both periods primarily due to favorable working capital movements. Free cash flow increased in both periods reflecting the same factors as cash flow from operations, which were partly offset by higher capital expenditures.

Liquidity and Capital Resources

Our principal sources of liquidity are cash on hand, cash provided by our operations, our commercial paper programs and credit facilities. From time to time, we also issue debt securities. Our principal uses of cash are for debt repayments, debt servicing costs, dividend payments, capital expenditures, share repurchases and acquisitions. We believe that our existing sources of liquidity will be sufficient to fund our expected cash requirements in the normal course of business for the next 12 months.

On October 1, 2018, we closed the sale of a 55% interest in our F&R business to private equity funds managed by Blackstone. An affiliate of Canada Pension Plan Investment Board and an affiliate of GIC invested alongside Blackstone., The F&R business is now known as Refinitiv. We received approximately $17 billion in gross cash proceeds at the closing, which remain subject to future purchase price adjustments, and retained a 45% interest in the business. We plan to use the proceeds in a balanced manner, as follows:

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We are in the process of returning $10 billion of the F&R transaction proceeds to our shareholders.

^●

In October 2018, we returned approximately $6.5 billion to shareholders pursuant to a substantial issuer bid/tender offer. Our principal shareholder (Woodbridge) participated pro rata in the substantial issuer bid/tender offer.

^●

Since announcing the F&R transaction on January 30, 2018, we have returned approximately $1 billion to shareholders through open market share repurchases under our normal course issuer bid (NCIB).

^●

We plan to return approximately $2.5 billion to shareholders through a return of capital transaction, which was announced on October 8, 2018 and is expected to be completed on or about November 27, 2018. The transaction, which is subject to shareholder and court approval, consists of a cash distribution of $4.45 per common share and a share consolidation, or “reverse stock split”, which will reduce the number of outstanding common shares on a basis that is proportional to the cash distribution.

In October, we used approximately $4 billion of the F&R transaction cash proceeds to repay debt, reducing our debt from approximately $7 billion to $3 billion and allowing us to remain substantially below our target leverage ratio (net debt/adjusted EBITDA) of 2.5:1.

Refer to the “Subsequent Events” section of this management’s discussion and analysis for additional information about these transactions.

Cash flow

Summary of consolidated statement of cash flow

The following discussion relates to the total cash flows of our business, including discontinued operations.


	Three months ended September 30,						Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		$ Change		2018		2017		$ Change
Net cash provided by operating activities		850		808		42		2,072		1,274		798
Net cash used in investing activities		(245)		(218)		(27)		(784)		(813)		29
Net cash used in financing activities		(861)		(468)		(393)		(1,169)		(1,945)		776
Increase (decrease) in cash and bank overdrafts		(256)		122		(378)		119		(1,484)		1,603
Translation adjustments		(9)		4		(13)		(21)		9		(30)
Cash and bank overdrafts at beginning of period		1,231		766		465		868		2,367		(1,499)
Cash and bank overdrafts at end of period		966		892		74		966		892		74
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents		507		898		(391)		507		898		(391)
Cash and cash equivalents in assets held for sale		461		-		461		461		-		461
Bank overdrafts		(2)		(6)		4		(2)		(6)		4

Operating activities. Net cash provided by operating activities increased in the third quarter primarily due to favorable working capital movements in discontinued operations. Net cash provided by operating activities increased in the nine-month period primarily because the prior-year period included a $500 million pension contribution and higher severance payments. Favorable working capital movements in discontinued operations also contributed to the increase.

Investing activities. Net cash used in investing activities increased in the third quarter as higher acquisition spending more than offset lower capital expenditures and proceeds from the disposal of a portion of an investment in the prior period. Net cash used in investing activities decreased in the nine-month period as lower acquisition spending, proceeds from the sale of a building in 2018 and the partial sale of an investment in 2017 more than offset higher capital expenditures. In the nine-month period of 2018, acquisition spending was $60 million compared to $184 million in the prior-year period. The acquisition spending in the prior-year period occurred primarily within the F&R business, which was classified as a discontinued operation.

Financing activities. Net cash used in financing activities increased in the third quarter primarily due to lower net borrowings, partly offset by lower share repurchases. The decrease in net cash used in financing activities in the nine-month period was due to lower net repayments of debt and lower share repurchases. We returned $0.4 billion (2017—$0.5 billion) and $1.2 billion (2017—$1.5 billion) to our common shareholders through dividends and share repurchases in the third quarter and nine-month period, respectively.

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Additional information about our debt, dividends and share repurchases is as follows:

^●

Commercial paper programs. Our $2.0 billion commercial paper programs provide cost-effective and flexible short-term funding. Issuances of commercial paper reached a peak of $2.0 billion during the nine-month period of 2018, of which $1.7 billion was outstanding at September 30, 2018. Refer to the “Subsequent Events” section of this management’s discussion and analysis for commercial paper repayments made in October 2018.

^●

Credit facilities. The company has a $2.4 billion credit facility that matures in November 2021 and may be used to provide liquidity for general corporate purposes (including support for our commercial paper programs). In the nine-month period of 2018, we borrowed and repaid $370 million under this credit facility. There were no borrowings under this credit facility at September 30, 2018. Based on our current credit ratings, the cost of borrowing under the agreement is priced at LIBOR/EURIBOR plus 100 basis points. We may request an increase in the lenders’ commitments up to a maximum amount of $3.0 billion, subject to approval by applicable lenders.

The company had a $1.5 billion credit facility that was comprised of a $0.5 billion term loan facility and a $1.0 billion revolving credit facility, which was cancelled on October 1, 2018. We had no borrowings under either facility at September 30, 2018. During the nine-month period of 2018, we borrowed and repaid $1.0 billion under the revolving credit facility.

In the event that our debt rating is downgraded by Moody’s or Standard & Poor’s, our facility fees and borrowing costs may increase, although availability would be unaffected. Conversely, an upgrade in our ratings may reduce our facility fee and borrowing costs. We monitor the lenders that are party to our facilities and believe they continue to be able to lend to us.

We guarantee borrowings by our subsidiaries under the credit facilities. We must also maintain a ratio of net debt as of the last day of each fiscal quarter to EBITDA as defined in the credit agreements (earnings before interest, income taxes, depreciation and amortization and other modifications described in the credit agreements) for the last four quarters ended of not more than 4.5:1. We were in compliance with this covenant at September 30, 2018.

^●

Debt shelf prospectus. In July 2018, we filed a debt shelf prospectus under which we may issue up to $3.0 billion principal amount of debt securities from time to time through August 2020. We have not issued any debt securities under the prospectus.

^●

Long-term debt. We repaid the following notes in the nine months ended September 30, 2017:


Month/Year	Transaction	Principal Amount (in millions)
	Notes repaid
September 2017	1.65% Notes, due 2017	US$550
February 2017	1.30% Notes, due 2017	US$550

Refer to the “Subsequent Events” section of this management’s discussion and analysis for debt repayments made in October 2018 following the closing of the F&R transaction.

^●

Credit ratings. Our access to financing depends on, among other things, suitable market conditions and the maintenance of suitable long-term credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demand, increased competition, a further deterioration in general economic and business conditions and adverse publicity. Any downgrades in our credit ratings may impede our access to the debt markets or result in significantly higher borrowing rates.

In October 2018 following the closing of the F&R transaction, Standard and Poor’s downgraded our long-term debt from BBB+ to BBB. As of the date of this management’s discussion and analysis, there have been no other changes to our credit ratings. Our credit ratings continue to be subject to change in the future.

The following table sets forth the credit ratings that we have received from rating agencies in respect of our outstanding securities as of the date of this management’s discussion and analysis:


	Moody’s	Standard & Poor’s	DBRS Limited	Fitch
Long-term debt	Baa2	BBB	BBB (high)	BBB+
Commercial paper	P-2	A-2	R-2 (high)	F2
Trend/Outlook	Negative Outlook	Stable	Stable	Stable

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These credit ratings are not recommendations to purchase, hold, or sell securities and do not address the market price or suitability of a specific security for a particular investor.

^●

Dividends. Dividends on our common shares are declared in U.S. dollars. In our consolidated statement of cash flow, dividends paid on common shares are shown net of amounts reinvested in our company under our dividend reinvestment plan (DRIP). Registered holders of common shares may participate in our DRIP, under which cash dividends are automatically reinvested in new common shares.

Details of dividends declared per common share and dividends paid on common shares are as follows:


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars, except per share amounts)	2018		2017		2018		2017
Dividends declared per share	$	0.345	$	0.345	$	1.035	$	1.035
Dividends declared		242		246		732		746
Dividends reinvested		(10)		(9)		(25)		(26)
Dividends paid		232		237		707		720

In October 2018, we increased our annualized dividend rate to $1.40 per common share effective with the quarterly dividend payable in December 2018. Refer to the “Subsequent Events” section of this management’s discussion and analysis for additional information.

^●

Share repurchases. We may buy back shares (and subsequently cancel them) from time to time as part of our capital strategy. Share repurchases are effected under our NCIB. In May 2018, we renewed our NCIB for an additional 12 months. Under the renewed NCIB, we may repurchase up to 35.5 million common shares between May 30, 2018 and May 29, 2019 in open market transactions on the Toronto Stock Exchange (TSX), the New York Stock Exchange (NYSE) and/or other exchanges and alternative trading systems, if eligible, or by such other means as may be permitted by the TSX and/or NYSE or under applicable law, including private agreement purchases if we receive an issuer bid exemption order from applicable securities regulatory authorities in Canada for such purchases. The price that our company will pay for shares in open market transactions under the NCIB will be the market price at the time of purchase or such other price as may be permitted by TSX. There were no private agreement purchases in 2018. In the nine-month period of 2017, we privately repurchased 6.0 million common shares at a discount to the then-prevailing market price.

Details of share repurchases were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Share repurchases (millions of U.S. dollars)		129		230		488		808
Shares repurchased (number in millions)		3.1		5.0		12.2		18.5
Share repurchases—average price per share in U.S. dollars	$	41.13	$	46.03	$	39.95	$	43.60

Decisions regarding any future repurchases will depend on factors such as market conditions, share price and other opportunities to invest capital for growth. We may elect to suspend or discontinue our share repurchases at any time, in accordance with applicable laws. From time to time when we do not possess material nonpublic information about ourselves or our securities, we may enter into a pre-defined plan with our broker to allow for the repurchase of shares at times when we ordinarily would not be active in the market due to our own internal trading blackout periods, insider trading rules or otherwise. Any such plans entered into with our broker will be adopted in accordance with applicable Canadian securities laws and the requirements of Rule 10b5-1 under the U.S. Securities Exchange Act of 1934, as amended. In August 2018, we entered into such a plan with our broker to allow for repurchases following the expiry of the substantial issuer bid/tender offer in October 2018. In connection with entering into this plan, we recorded a $512 million liability in “Other financial liabilities” within current liabilities at September 30, 2018 with a corresponding amount recorded in equity in the consolidated statement of financial position.

Refer to the “Subsequent Events” section of this management’s discussion and analysis for additional details on our NCIB and SIB.

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Free cash flow

The following discussion relates to the total cash flows of our business, including discontinued operations.


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		2018		2017
Net cash provided by operating activities		850		808		2,072		1,274
Capital expenditures		(110)		(160)		(420)		(392)
Proceeds from disposals of property and equipment		-		-		27		-
Capital expenditures from discontinued operations		(116)		(96)		(362)		(318)
Other investing activities		1		1		19		16
Other investing activities from discontinued operations		-		(2)		-		(2)
Dividends paid on preference shares		(1)		(1)		(2)		(2)
Dividends paid to non-controlling interests from discontinued operations		(25)		(19)		(60)		(50)
Free cash flow		599		531		1,274		526

Free cash flow increased in the third quarter primarily due to higher cash flow from operating activities and lower capital expenditures. Despite higher capital expenditures in the nine-month period, free cash flow increased due to significantly higher cash flow from operating activities.

Financial position

Our total assets were $26.7 billion at September 30, 2018, an increase of $0.3 billion from December 31, 2017. The increase was primarily due to capital expenditures, including within our F&R business, which more than offset depreciation of fixed assets and amortization of computer software and identifiable intangible assets. The increase partly reflected that F&R assets held for sale were not depreciated.

At September 30, 2018, the carrying amounts of our total current liabilities (excluding liabilities associated with assets held for sale) exceeded the carrying amounts of our total current assets (excluding assets held for sale) by $3.1 billion. Of this amount, current liabilities included $2.1 billion of current indebtedness, which we repaid with the proceeds from the sale of a 55% interest in our F&R business in October 2018 (refer to the “Subsequent Events” section of this management’s discussion and analysis). Current liabilities also include $0.7 billion of deferred revenue, which arises from the sale of subscription-based products and services that many customers pay for in advance. The cash received from these advance payments is used to currently fund the operating, investing and financing activities of our business. However, for accounting purposes, these advance payments must be deferred and recognized over the term of the subscription. As such, we typically reflect a negative working capital position in our consolidated statement of financial position. In the ordinary course of business, deferred revenue does not represent a cash obligation, but rather an obligation to perform services or deliver products. Therefore, we believe this portion of our negative working capital position at September 30, 2018 was not indicative of a liquidity issue, but rather an outcome of the required accounting for our business model.

Net debt⁽¹⁾

September 30,

December 31,

(millions of U.S. dollars)

2018

2017

Current indebtedness

2,127

1,644

Current indebtedness in liabilities associated with assets held for sale

Long-term indebtedness

4,955

5,382

Total debt

7,083

7,026

Swaps

285

246

Total debt after swaps

7,368

7,272

Remove fair value adjustments for hedges⁽²⁾

Total debt after currency hedging arrangements

7,383

7,281

Remove transaction costs and discounts included in the carrying value of debt

Less: cash and cash equivalents⁽³⁾

(507)

(874)

Less: cash and cash equivalents in assets held for sale⁽⁴⁾

(461)

Net debt

6,466

6,466

(1)	Net debt is a non-IFRS financial measure, which we define in Appendix A of this management’s discussion and analysis.

(2)	Represents the interest-related fair value component of hedging instruments that are removed to reflect net cash outflow upon maturity.

(3)

Includes cash and cash equivalents of $20 million and $126 million at September 30, 2018 and December 31, 2017, respectively, held in subsidiaries which have regulatory restrictions, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and are therefore not available for general use by our company.

(4)	Includes $112 million of cash and cash equivalents at September 30, 2018 that is not available for general use by our company due to the same restrictions described in note (3) above.

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At September 30, 2018, our total debt position (after swaps) was $7.4 billion. The maturity dates for our term debt are well balanced with no significant concentration in any one year. At September 30, 2018, the average maturity of our term debt (total debt excluding commercial paper and credit facilities) was approximately nine years at an average interest rate (after swaps) of less than 5%. In October 2018, we repaid approximately $4 billion of debt using the proceeds from the sale of a 55% interest in the F&R business. Refer to the “Subsequent Events” section of this management’s discussion and analysis for additional information. After these debt repayments, the average maturity of our term debt was approximately twelve years at an average interest rate (after swaps) of less than 5%, all of which is fixed, and we remain well below our target leverage ratio of net debt to adjusted EBITDA of 2.5:1.

Off-balance sheet arrangements, commitments and contractual obligations

For a summary of our other off-balance sheet arrangements, commitments and contractual obligations please see our 2017 annual management’s discussion and analysis. There were no material changes to these arrangements, commitments and contractual obligations during the nine months ended September 30, 2018.

Contingencies

Lawsuits and legal claims

We are engaged in various legal proceedings, claims, audits and investigations that have arisen in the ordinary course of business. These matters include, but are not limited to, employment matters, commercial matters, defamation claims and intellectual property infringement claims. The outcome of all of the matters against us is subject to future resolution, including the uncertainties of litigation. Based on information currently known to us and after consultation with outside legal counsel, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on our financial condition taken as a whole.

Uncertain tax positions

We are subject to taxation in numerous jurisdictions and we are routinely under audit by many different taxing authorities in the ordinary course of business. There are many transactions and calculations during the course of business for which the ultimate tax determination is uncertain, as taxing authorities may challenge some of our positions and propose adjustments or changes to our tax filings.

As a result, we maintain provisions for uncertain tax positions that we believe appropriately reflect our risk. These provisions are made using our best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. We review the adequacy of these provisions at the end of each reporting period and adjust them based on changing facts and circumstances. Due to the uncertainty associated with tax audits, it is possible that at some future date, liabilities resulting from such audits or related litigation could vary significantly from our provisions. However, based on currently enacted legislation, information currently known to us and after consultation with outside tax advisors, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on our financial condition taken as a whole.

For additional information, please see the “Risk Factors” section of our 2017 annual report, which contains further information on risks related to tax matters.

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Outlook

The information in this section is forward-looking and should be read in conjunction with the part of the “Additional Information” section below entitled “Cautionary Note Concerning Factors That May Affect Future Results”.

We recently reaffirmed our 2018 full-year business outlook that was originally communicated in May 2018, except for an update to our adjusted EBITDA and full-year estimated effective tax rate on adjusted earnings. Consistent with prior years, our guidance is provided before currency. Our outlook for revenue growth and adjusted EBITDA:

^●

Assumes constant currency rates relative to 2017;

^●

Excludes the F&R business, which was classified as a discontinued operation through the closing of the F&R transaction; and

^●

Does not factor in the impact of acquisitions or divestitures that may occur during the year except for the sale of a 55% interest in the F&R business.

The following table sets forth our 2018 financial outlook for revenue growth and adjusted EBITDA, as well as the material assumptions and the material risks that may cause actual performance to differ materially from our expectations for those measures.

Revenues expected to grow low single digits (excludes any fourth quarter 2018 payments to Reuters News from Refinitiv following the October 1, 2018 closing of the F&R strategic partnership transaction)

Material assumptions

Material risks

^● Gross domestic product (GDP) growth in most of the countries where we operate

^● Continued demand for products and services that help customers navigate changing geopolitical, economic and regulatory environments

^● An increase in demand for information and workflow solutions

^● Accelerated growth in Legal & Tax & Accounting businesses due to increased focus

^● Global economic uncertainty due to factors including continued regulatory reform around the world, changes in the political environment may limit business opportunities for our customers, lowering their demand for our products and services

^● Demand for our products and services could be reduced by changes in customer buying patterns, or our inability to execute on key product or customer support initiatives

^● Pressure on certain customers, in developed markets in particular, may constrain the number of professionals employed

^● Competitive pricing actions could impact our revenues

^● Our sales and product initiatives may be insufficient to retain customers or generate new sales

Adjusted EBITDA of approximately $1.3 billion, including the corporate costs referred to below (previously between $1.2 billion and $1.3 billion)

Material assumptions

Material risks

^● Revenues expected to grow at low single digits

^● Business mix continues to shift to higher-growth product offerings

^● Continued investment in growth markets, customer service, product development and digital capabilities

^● The costs to separate the F&R business from Thomson Reuters, as well as our ability to reduce our cost base, are in line with our estimates

^● Same as the risks above related to the revenue outlook

^● The costs of required investments exceed expectations or actual returns are below expectations

^● Acquisition and disposal activity may dilute adjusted EBITDA

^● Our estimate of costs to separate our businesses as well as our estimates regarding the reduction of our cost base may be inaccurate

For the full year of 2018, we expect corporate costs to be between $500 million and $600 million and that they will increase over the balance of the year. The 2018 estimate is comprised of:

^●

Approximately $140 million of core corporate costs;

^●

Approximately $150 million of stranded costs, which we define as costs that will not be eliminated with the sale of the 55% interest in the F&R business, as well as costs due to dis-synergies from losing certain benefits of scale from the F&R transaction; and

^●

Between $200 million and $300 million for investments to reposition the ongoing Thomson Reuters business following the separation of the F&R business from the rest of the company, including reducing the stranded costs, replacing operating and technology capabilities lost through the sale of a 55% interest in the F&R business, and investments to better position Thomson Reuters for the future.

Additionally, we expect that our corporate costs in 2019 and 2020 will be impacted by the following:

^●

Stranded costs should gradually decline to approximately $100 million in 2019 and to $50 million or less by the end of 2020; and

^●

In 2019, we expect to spend an additional $250 million to $300 million to separate and reposition the remaining business.

We expect depreciation and amortization of computer software to be between $500 million and $525 million, capital expenditures to approximate 10% of revenues, and our 2018 effective tax rate to be between 17% and 19% (previously between 14% and 16%), assuming no material changes in current tax laws or treaties to which we are subject. Our expectation for the full-year tax rate reflects the impact of anticipated spending in the second half of 2018 to separate and reposition our business in connection with the disposition of a 55% interest in the F&R business.

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Our Outlook contains various non-IFRS financial measures. For Outlook purposes only, we are unable to reconcile these non-IFRS measures to the most comparable IFRS measures because we cannot predict, with reasonable certainty, the 2018 impact of changes in foreign exchange rates which impact (i) the translation of our results reported at average foreign currency rates for the year and (ii) other finance income or expense related to foreign exchange contracts and intercompany financing arrangements. Additionally, we cannot reasonably predict the occurrence or amount of other operating gains and losses, which generally arise from business transactions we do not anticipate.

Related Party Transactions

As of November 5, 2018, Woodbridge beneficially owned approximately 66% of our shares.

In April 2018, we sold a Canadian wholly-owned subsidiary to a company affiliated with Woodbridge for $16 million. The subsidiary’s assets consisted of accumulated losses that management did not expect to utilize against future taxable income prior to their expiry. As such, no tax benefit for the losses had been recognized in our consolidated financial statements. Under Canadian law, certain losses may only be transferred to related companies, such as those affiliated with Woodbridge. We recorded a gain of $16 million within “Other operating gains, net” within the consolidated income statement. In connection with this transaction, our board of directors’ Corporate Governance Committee obtained an independent fairness opinion. We utilized the independent fairness opinion to determine that the negotiated price between us and the purchaser was reasonable. After receiving the recommendation of the Corporate Governance Committee, the board of directors approved the transaction. Directors who were not considered independent because of their positions with Woodbridge refrained from deliberating and voting on the matter at both the committee and board meetings.

In October 2018, we returned approximately $6.5 billion to our shareholders pursuant to a substantial issuer bid/tender offer under which we repurchased approximately 138 million shares at a price of $47 per share. As part of this transaction, Woodbridge sold approximately 88.9 million shares through a proportionate tender which allowed it to maintain its equity ownership in Thomson Reuters of approximately 64%. Refer to the “Subsequent Events” section of this management’s discussion and analysis for additional information.

Except for the above transactions, there were no new significant related party transactions during the nine months ended September 30, 2018. Please refer to the “Related Party Transactions” section of our 2017 annual management’s discussion and analysis, which is contained in our 2017 annual report, as well as note 29 of our 2017 annual consolidated financial statements for information regarding related party transactions.

Subsequent Events

F&R Strategic Partnership Transaction

On October 1, 2018, we closed the sale of a 55% interest in our F&R business to private equity funds managed by Blackstone. An affiliate of Canada Pension Plan Investment Board and an affiliate of GIC invested alongside Blackstone. We retained a 45% interest in the business, which is now known as Refinitiv. Beginning with its results for the fourth quarter of 2018, Thomson Reuters’ IFRS results will include the company’s 45% share of Refinitiv’s results reported in a single line item on the company’s consolidated income statement titled “Share of post-tax earnings in equity method investments”. Thomson Reuters’ non-IFRS measures, including adjusted earnings, will exclude its share of post-tax earnings in equity method investments. To facilitate the separation, Refinitiv and Thomson Reuters are providing certain transition services to each other for a specified period, including technology and administrative services.

We received approximately $17 billion in gross proceeds at closing, which remain subject to purchase price adjustments, and expect to record a post-tax gain of approximately $3.0 billion from the transaction.

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Since the closing of the F&R transaction, we have repaid approximately $4 billion of debt from the proceeds of the F&R transaction, including through a recently completed debt redemption and debt tender offer. The repayments were as follows:

Full / Partial Redemption

Notes Repaid

Principal Amount (in millions)

Full Redemption

3.369% Notes, due 2019

C$500⁽¹⁾

Full Redemption

4.35% Notes, due 2020

C$750⁽²⁾⁽³⁾

Full Redemption

4.70% notes, due 2019

$500⁽³⁾

Partial Redemption

3.95% notes, due 2021

$211 million repaid of $350 million principal amount⁽³⁾

Partial Redemption

3.85% notes, due 2024

$208 million repaid of $450 million principal amount⁽³⁾

Partial Redemption

4.50% notes, due 2043

$231 million repaid of $350 million principal amount⁽³⁾

(1)	Converted to US$478 million principal amount at an interest rate of 2.852% after cross-currency swap agreements that were designated as cash flow hedges.

(2)	Converted to US$731 million principal amount at an interest rate of 3.911% after cross-currency swap agreements that were designated as cash flow hedges.

(3)	The notes were classified as “Long-term indebtedness” within the consolidated statement of financial position at September 30, 2018 based on their maturity date, as the early repayment in October 2018 was contingent on the company’s closing the sale of a 55% interest in its F&R business.

We also repaid approximately $1.7 billion of outstanding commercial paper borrowings.

In October 2018, we returned approximately $6.5 billion to shareholders pursuant to a substantial issuer bid/tender offer under which we repurchased approximately 138 million shares at a price of $47 per share. Our principal shareholder, Woodbridge, made a proportionate tender, which resulted in it tendering the number of shares that allowed it to maintain its 64% proportionate equity ownership in Thomson Reuters following completion of the transaction.

See the section entitled “F&R Strategic Partnership Transaction” for further details about the expected use of proceeds.

In connection with the closing of the F&R transaction, Reuters News and Refinitiv entered into a 30-year agreement for Reuters News to supply news and editorial content to the partnership for a minimum of $325 million per year. For the duration of the news agreement, we have granted the Refinitiv partnership a license to permit it to brand its products/services and company name with the “Reuters” mark, subject to applicable limitations and restrictions set forth in a trademark license agreement.

Share repurchases

In October 2018, we repurchased 11.1 million of our common shares under our NCIB for $512 million at an average price per share of $46.28.

Acquisition

In October 2018, we signed a definitive agreement to acquire Integration Point, a provider of global trade management operations. The completion of the acquisition is subject to customary regulatory approvals and closing conditions.

Dividends

In October 2018, our board of directors approved a $0.02 per share increase in the annualized dividend to $1.40 per common share, which will become effective with our quarterly dividend to be paid in the fourth quarter of 2018. A quarterly dividend of $0.35 will be paid on December 17, 2018 to shareholders of record as of November 15, 2018.

Segment reporting changes

Effective October 1, 2018, we transitioned from a product-centric structure to a customer-centric structure, and remapped our business units into the following reportable segments:

^●

Legal Professionals

^●

Tax Professionals

^●

Corporates

^●

Global Print

^●

Reuters News

We will begin to report on the new segment basis beginning with the fourth-quarter 2018 results.

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Changes in Accounting Policies

Please refer to the “Changes in Accounting Policies” section of our 2017 annual management’s discussion and analysis, which is contained in our 2017 annual report, as well as notes 1 and 2 of our consolidated interim financial statements for the three and nine months ended September 30, 2018, for information regarding changes in accounting policies.

Critical Accounting Estimates and Judgments

The preparation of financial statements requires management to make estimates and judgments about the future. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Please refer to the “Critical Accounting Estimates and Judgments” section of our 2017 annual management’s discussion and analysis, which is contained in our 2017 annual report, for additional information, as well as note 3 of our consolidated interim financial statements for the three and nine months ended September 30, 2018, for information regarding changes on our critical accounting judgments.

Additional Information

Disclosure controls and procedures

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in applicable U.S. and Canadian securities law) as of the end of the period covered by this management’s discussion and analysis, have concluded that our disclosure controls and procedures were effective to ensure that all information that we are required to disclose in reports that we file or furnish under the U.S. Securities Exchange Act and applicable Canadian securities law is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and Canadian securities regulatory authorities and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

We are engaged in the following long-term efficiency initiative which impacts our financial reporting:

^●

We are enhancing our order-to-cash (OTC) applications and related workflow processes in phases over multiple years. Key elements of the OTC solutions are order management, billing, cash management and collections functionality. We expect to reduce the number of applications and to streamline and automate processes across our organization through this initiative.

As we are implementing this initiative in phases over an extended period, the nature and extent of activity will vary by quarter. In certain quarters, we may have limited or no activity.

The initiative could result in material changes to our internal control over financial reporting depending on the nature and volume of work completed as we will continue to modify the design and documentation of the related internal control processes and procedures, as necessary. Except as described above, there was no change in our internal control over financial reporting during the last fiscal quarter of 2018 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Additionally, in connection with the sale of a 55% interest in our F&R business, we have separated the F&R business from the rest of the company. The separation includes the transfer of a significant number of employees who perform accounting and reporting functions. While management does not anticipate material changes in key controls over our financial reporting processes, a number of key controls will be performed under transition service arrangements between Thomson Reuters and the F&R strategic partnership.

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Share capital

As of November 5, 2018, we had outstanding 552,289,711 common shares, 6,000,000 Series II preference shares, 10,435,643 stock options and a total of 3,847,045 time-based restricted share units and performance restricted share units. We have also issued a Thomson Reuters Founders Share which enables Thomson Reuters Founders Share Company to exercise extraordinary voting power to safeguard the Thomson Reuters Trust Principles.

We reduced the number of our outstanding common shares by approximately 19.7% in connection with the closing of the substantial issuer bid/tender offer. We anticipate that the closing of the proposed return of capital transaction will reduce the number of outstanding common shares on a basis that is proportional to the cash distribution.

Public securities filings and regulatory announcements

You may access other information about our company, including our 2017 annual report (which contains information required in an annual information form) and our other disclosure documents, reports, statements or other information that we file with the Canadian securities regulatory authorities through SEDAR at www.sedar.com and in the United States with the SEC at www.sec.gov. These filings also include additional information about the F&R transaction.

Cautionary note concerning factors that may affect future results

Certain statements in this management’s discussion and analysis are forward-looking, including, but not limited to, statements about the F&R transaction (including the expected uses of proceeds from the F&R transaction and fourth quarter of 2018 tax payments required in connection with the transaction), and the newly formed Refinitiv strategic partnership, statements about our 2018 expectations in the “Outlook” and “Executive Summary” sections, the expected timing for the return of capital transaction, and statements regarding our Legal’s and Tax & Accounting segment’s full-year adjusted EBITDA margin and the impact of IFRS 15 on Tax & Accounting’s revenues. The words “expect”, “believe”, “target” and “will” and similar expressions identify forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These forward-looking statements are based on certain assumptions and reflect our company’s current expectations. As a result, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Certain factors that could cause actual results or events to differ materially from current expectations are discussed in the “Outlook” section above. Additional factors are discussed in the “Risk Factors” section of our 2017 annual report and in materials that we from time to time file with, or furnish to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. There is no assurance that the return of capital transaction will be completed or that the events described in any other forward-looking statement will materialize. Our Outlook is provided for the purpose of providing information about current expectations for 2018. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this management’s discussion and analysis. Except as may be required by applicable law, we disclaim any obligation to update or revise any forward-looking statements.

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Appendix A

Non-IFRS Financial Measures

We use non-IFRS financial measures as supplemental indicators of our operating performance and financial position. Additionally, we use non-IFRS measures as performance metrics as the basis for management incentive programs. These measures do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies. Except for free cash flow, all our non-IFRS measures exclude the results of the F&R business, which was reported as a discontinued operation.

The following table sets forth our non-IFRS financial measures, including an explanation of why we believe they are useful measures of our performance. Reconciliations for the most directly comparable IFRS measure are reflected in our management’s discussion and analysis.

How We Define It

Why We Use It and Why It Is Useful to Investors

Most Directly Comparable
IFRS Measure/Reconciliation

Segment adjusted EBITDA, consolidated adjusted EBITDA and the related margins

Segment adjusted EBITDA represents earnings from continuing operations, or for the F&R business, earnings from discontinued operations, before tax expense or benefit, net interest expense, other finance costs or income, depreciation, amortization of software and other identifiable intangible assets, our share of post-tax earnings or losses in equity method investments, other operating gains and losses, certain asset impairment charges, fair value adjustments and corporate related items.

Consolidated adjusted EBITDA is comprised of segment adjusted EBITDA from each reportable segment and Corporate.

The related margins are expressed as a percentage of revenues.

Provides a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose.

Represents a measure commonly reported and widely used by investors as a valuation metric. Additionally, this measure is used to assess our ability to incur and service debt.

Earnings from continuing operations

Adjusted EBITDA less capital expenditures and the related margin

Adjusted EBITDA less capital expenditures. The related margin is expressed as a percentage of revenues.

Provides a basis for evaluating the operating profitability and capital intensity of a business in a single measure. This measure captures investments regardless of whether they are expensed or capitalized.

Earnings from continuing operations

Adjusted earnings and adjusted EPS

Net earnings and per share:

^● excluding the post-tax impacts of fair value adjustments, amortization of other identifiable intangible assets, other operating gains and losses, certain impairment charges, other net finance costs or income, our share of post-tax earnings or losses in equity method investments, discontinued operations and other items affecting comparability. We calculate the post-tax amount of each item excluded from adjusted earnings based on the specific tax rules and tax rates associated with the nature and jurisdiction of each item.

^● We also deduct dividends declared on preference shares.

Adjusted EPS is calculated using diluted weighted-average shares.

Provides a more comparable basis to analyze earnings and is also a measure commonly used by shareholders to measure our performance.

Net earnings and diluted earnings per share

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How We Define It

Why We Use It and Why It Is Useful to Investors

Most Directly Comparable
IFRS Measure/Reconciliation

Adjusted earnings and adjusted EPS (continued)

In interim periods, we also adjust our reported earnings and earnings per share to reflect a normalized effective tax rate. Specifically, the normalized effective rate is computed as the estimated full-year effective tax rate applied to pre-tax adjusted earnings of the interim period. The reported effective tax rate is based on separate annual effective income tax rates for each taxing jurisdiction that are applied to each interim period’s pre-tax income.

Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, our effective tax rate computed in accordance with IFRS may be more volatile by quarter. Therefore, we believe that using the expected full-year effective tax rate provides more comparability among interim periods. The adjustment to normalize the effective tax rate reallocates estimated full-year income taxes between interim periods, but has no effect on full year tax expense or on cash taxes paid.

Net debt

Total indebtedness, including the associated fair value of hedging instruments, but excluding the associated unamortized transaction costs and premiums or discounts and the interest-related fair value component of hedging instruments, less cash and cash equivalents.

Provides a commonly used measure of a company’s leverage.

Given that we hedge some of our debt to reduce risk, we include hedging instruments as we believe it provides a better measure of the total obligation associated with our outstanding debt. However, because we intend to hold our debt and related hedges to maturity, we do not consider the interest components of the associated fair value of hedges in our measurements. We reduce gross indebtedness by cash and cash equivalents.

Total debt (current indebtedness plus long-term indebtedness)

Free cash flow (includes free cash flow from continuing and discontinued operations)

Net cash provided by (used in) operating activities, proceeds from disposals of property and equipment, and other investing activities, less capital expenditures, dividends paid on our preference shares, and dividends paid to non-controlling interests from discontinued operations.

Helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and new acquisitions.

Net cash provided by (used in) operating activities

Changes before the impact of foreign currency or at “constant currency”

Applicable measures where changes are reported before the impact of foreign currency or at “constant currency”

IFRS Measures:

^● Revenues

^● Operating expenses

Non-IFRS Measures:

^● Adjusted EBITDA and adjusted EBITDA margin

^● Adjusted EPS

Provides better comparability of business trends from period to period.

Our reporting currency is the U.S. dollar. However, we conduct a significant amount of our activities in currencies other than the U.S. dollar. We measure our performance before the impact of foreign currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period. To calculate the foreign currency impact between periods, we convert the current and equivalent prior period’s local currency results using the same foreign currency exchange rate.

For each non-IFRS measure, refer to the definitions above for the most directly comparable IFRS measure.

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Appendix B

This appendix provides reconciliations that are not presented elsewhere in this management’s discussion and analysis for certain non-IFRS measures to the most directly comparable IFRS measure for the three and nine months ended September 30, 2018 and 2017.

Reconciliation of (loss) earnings from continuing operations to adjusted EBITDA and adjusted EBITDA less capital expenditures


	Three months ended September 30,						Nine months ended September 30,
(millions of U.S. dollars, except margins)	2018		2017		Change		2018		2017		Change
(Loss) earnings from continuing operations		(58)		143		n/m		256		335		(24%)
Adjustments to remove:
Tax expense		128		-				152		26
Other finance costs (income)		11		57				(10)		145
Net interest expense		82		89				241		270
Amortization of other identifiable intangible assets		26		33				83		103
Amortization of computer software		96		76				294		265
Depreciation		24		23				83		85
EBITDA		309		421				1,099		1,229
Adjustments to remove:
Share of post-tax (earnings) losses in equity method investments		(1)		(1)				(5)		4
Other operating gains, net		(1)		(36)				(13)		(48)
Fair value adjustments		(5)		4				(1)		(2)
Adjusted EBITDA		302		388		(22%)		1,080		1,183		(9%)
Deduct: Capital expenditures		(110)		(160)				(420)		(392)
Adjusted EBITDA less capital expenditures		192		228		(16%)		660		791		(17%)
Adjusted EBITDA margin		23.4%		30.5%		(710)bp		27.1%		30.5%		(340)bp
Adjusted EBITDA less capital expenditures margin		14.9%		17.9%		(300)bp		16.6%		20.4%		(380)bp

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Reconciliation of changes in segment and consolidated revenues, adjusted EBITDA and the related margin, and consolidated operating expenses and adjusted EPS, excluding the effects of foreign currency


	Three months ended September 30,
					Change
(millions of U.S. dollars)	2018		2017		Total		Foreign Currency		Constant Currency
Revenues
Legal		883		860		3%		(1%)		4%
Tax & Accounting		341		341		-		(3%)		3%
Reuters News		71		73		(3%)		1%		(4%)
Eliminations		(3)		(2)
Consolidated revenues		1,292		1,272		2%		(1%)		3%

Three months ended September 30,

Change

(millions of U.S. dollars, except margins)

2018

2017

Total

Foreign
Currency

Constant
Currency

Adjusted EBITDA

Legal

327

345

(5%)

Tax & Accounting

(2%)

Reuters News

(14%)

(17%)

Corporate

(124)

(59)

n/a

Consolidated adjusted EBITDA

302

388

(22%)

(1%)

(21%)

Adjusted EBITDA Margin

Legal

37.0%

40.1%

(310)bp

20bp

(330)bp

Tax & Accounting

27.3%

27.9%

(60)bp

80bp

(140)bp

Reuters News

8.5%

9.6%

(110)bp

Corporate

n/a

n/a

Consolidated adjusted EBITDA margin

23.4%

30.5%

(710)bp


	Three months ended September 30,
					Change
(millions of U.S. dollars, except per share amounts)	2018		2017		Total		Foreign Currency		Constant Currency
Consolidated operating expenses		985		888		11%		(3%)		14%
Consolidated adjusted EPS	$	0.11	$	0.27		(59%)		-		(59%)

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Reconciliation of changes in segment and consolidated revenues, adjusted EBITDA and the related margin, and consolidated operating expenses and adjusted EPS, excluding the effects of foreign currency (continued)


	Nine months ended September 30,
					Change
(millions of U.S. dollars)	2018		2017		Total		Foreign Currency		Constant Currency
Revenues
Legal		2,637		2,559		3%		-		3%
Tax & Accounting		1,137		1,108		3%		(1%)		4%
Reuters News		215		221		(3%)		2%		(5%)
Eliminations		(7)		(5)
Consolidated revenues		3,982		3,883		3%		-		3%

Nine months ended September 30,

Change

(millions of U.S. dollars, except margins)

2018

2017

Total

Foreign
Currency

Constant
Currency

Adjusted EBITDA

Legal

967

984

(2%)

Tax & Accounting

331

339

(2%)

(1%)

Reuters News

(24%)

(29%)

Corporate

(240)

(169)

n/a

Consolidated adjusted EBITDA

1,080

1,183

(9%)

Adjusted EBITDA Margin

Legal

36.7%

38.5%

(180)bp

Tax & Accounting

29.1%

30.6%

(150)bp

10bp

(160)bp

Reuters News

10.2%

13.1%

(290)bp

20bp

(310)bp

Corporate

n/a

n/a

Consolidated adjusted EBITDA margin

27.1%

30.5%

(340)bp

(10)bp

(330)bp


	Nine months ended September 30,
					Change
(millions of U.S. dollars, except per share amounts)	2018		2017		Total		Foreign Currency		Constant Currency
Consolidated operating expenses		2,901		2,698		8%		1%		7%
Consolidated adjusted EPS	$	0.55	$	0.71		(23%)		-		(23%)

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Reconciliation of earnings from discontinued operations to F&R adjusted EBITDA


	Three months ended September 30,						Nine months ended September 30,
(millions of U.S. dollars, except margins)	2018		2017		Change		2018		2017		Change
Earnings from discontinued operations		349		205		70%		381		533		(29%)
Adjustments to remove:
Tax expense (benefit)		135		(22)				1,021		(34)
Other finance costs		3		1				3		31
Net interest expense (income)		1		(5)				7		2
Amortization of other identifiable intangible assets		1		82				29		251
Amortization of computer software		-		95				30		254
Depreciation		3		50				17		137
EBITDA		492		406				1,488		1,174
Adjustments to remove:
Share of post-tax earnings in equity method investments		-		(1)				-		(1)
Other operating losses, net		1		6				61		35
Fair value adjustments		(16)		49				(81)		173
IP & Science discontinued operations		5		1				12		(1)
F&R discontinued operations adjusted EBITDA		482		461		5%		1,480		1,380		7%
Adjusted EBITDA margin		31.3%		30.2%		110bp		31.6%		30.6%		100bp

Reconciliation of operating cash flows from discontinued operations to F&R free cash flow

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars)

2018

2017

2018

2017

Operating cash flows from discontinued operations

583

408

1,244

881

Remove: Operating cash flows – IP & Science discontinued operations

Capital expenditures from discontinued operations

(116)

(96)

(362)

(318)

Other investing activities from discontinued operations

(2)

Dividends paid to non-controlling interests from discontinued operations

(25)

(19)

(60)

(50)

Free cash flow – F&R discontinued operations

442

296

822

565

Reconciliation of weighted-average diluted shares used in adjusted EPS

Because we reported a net loss for continuing operations under IFRS for the three months ended September 30, 2018, the weighted-average number of common shares used for basic and diluted loss per share is the same, as the effect of stock options and other equity incentive awards would reduce the loss per share, and therefore be anti-dilutive. Since our non-IFRS measure “adjusted earnings” is a profit, potential common shares are included, as they lower adjusted EPS and are therefore dilutive.

The following table reconciles IFRS and non-IFRS common share information:

Three months ended September 30,

(weighted-average common shares)

2018

IFRS: Basic and diluted

701,212,419

Effect of stock options and other equity incentive awards

1,132,041

Non-IFRS diluted

702,344,460

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Appendix C

Supplemental Financial Information (unaudited)

The following supplemental financial information provides revised 2017 full-year and quarterly business segment information excluding the F&R business, which was classified as a discontinued operation beginning in the first quarter of 2018. The information provided illustrates our business on a continuing operations basis.

Revised Business Segment Information (Excluding the F&R Segment)


	Year ended December 31, 2017		Adjustments						Year ended December 31, 2017
(millions of U.S. dollars, except for per share amounts)	Previously Reported		Remove F&R Segment Results		Add Back Retained Businesses⁽³⁾		Other Adjustments⁽⁴⁾		Revised Excluding F&R
Revenues
F&R		6,112		(6,112)		-		-		-
Legal		3,390		-		69		-		3,459
Tax & Accounting		1,551		-		-		-		1,551
Reuters News⁽¹⁾		296		-		-		-		296
Eliminations		(16)		7		-		-		(9)
Revenues from continuing operations		11,333		(6,105)		69		-		5,297

Adjusted EBITDA⁽²⁾
F&R		1,916		(1,916)		-		-		-
Legal		1,279		-		28		-		1,307
Tax & Accounting		495		-		-		-		495
Reuters News⁽¹⁾		27		-		-		-		27
Corporate		(280)		-		-		42		(238)
Consolidated adjusted EBITDA		3,437		(1,916)		28		42		1,591

Adjusted earnings⁽²⁾
Adjusted EBITDA		3,437		(1,916)		28		42		1,591
Depreciation and amortization of computer software		(995)		581		(10)		(46)		(470)
Adjustments:
Interest		(362)		-		-		5		(357)
Tax		(205)		121		(2)		(1)		(87)
Non-controlling interests		(64)		-		-		64		-
Dividends declared on preference shares		(2)		-		-		-		(2)
Adjusted earnings		1,809		(1,214)		16		64		675
Adjusted EPS⁽²⁾		$2.51		(1.68)		0.02		0.09		$0.94

(1)	Effective January 1, 2018, Reuters News is a reportable segment.

(2)	Refer to Appendix A for a definition of our non-IFRS measures. Refer to Appendix B of our management’s discussion and analysis in our 2017 annual report for a reconciliation of these non-IFRS financial measure to the most directly comparable IFRS measure.

(3)	Represents the Regulatory Intelligence and Compliance Learning businesses that were retained by our Legal segment following the closing of the F&R transaction.

(4)	Other adjustments include the following:

^●

Adjusted EBITDA contains costs primarily for real estate optimization that relate to properties transferred with the F&R business.

^●

Depreciation and amortization of computer software relates to assets that were transferred with the F&R business.

^●

Non-controlling interests relates to third party shareholdings in Tradeweb that were transferred with the F&R business.

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Revised Business Segment Information (Excluding the F&R Segment) (continued)


			2017
(millions of U.S. dollars, except per share amounts and margins)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year ended December 31,
Revenues
Legal		841		858		860		900		3,459
Tax & Accounting		417		350		341		443		1,551
Reuters News		74		74		73		75		296
Eliminations		(1)		(2)		(2)		(4)		(9)
Revenues from continuing operations		1,331		1,280		1,272		1,414		5,297

Adjusted EBITDA⁽¹⁾
Legal		314		325		345		323		1,307
Tax & Accounting		141		103		95		156		495
Reuters News		13		9		7		(2)		27
Corporate		(53)		(57)		(59)		(69)		(238)
Consolidated adjusted EBITDA		415		380		388		408		1,591

Adjusted earnings⁽¹⁾
Adjusted EBITDA		415		380		388		408		1,591
Depreciation and amortization of computer software		(124)		(127)		(99)		(120)		(470)
Adjustments:
Interest		(92)		(89)		(89)		(87)		(357)
Tax		(18)		(24)		(3)		(42)		(87)
Dividends declared on preference shares		(1)		-		(1)		-		(2)
Adjusted earnings		180		140		196		159		675
Adjusted EPS⁽¹⁾		$0.25		$0.19		$0.27		$0.22		$0.94

Adjusted EBITDA margin⁽¹⁾
Legal		37.3%		37.9%		40.1%		35.9%		37.8%
Tax & Accounting		33.8%		29.4%		27.9%		35.2%		31.9%
Reuters News		17.6%		12.2%		9.6%		n/m		9.1%
Corporate		n/a		n/a		n/a		n/a		n/a
Consolidated adjusted EBITDA margin		31.2%		29.7%		30.5%		28.9%		30.0%

(1)	Refer to Appendix A for a definition of our non-IFRS measures.

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The following supplemental information provides our consolidated income statement and segment information for the years ending December 31, 2017 and 2016, as previously reported and as revised to reflect our F&R business as a discontinued operation.

Consolidated Income Statement


	Year ended December 31, 2017						Year ended December 31, 2016
(millions of U.S. dollars, except per share amounts)	Previously Reported		Adjustments⁽¹⁾		Revised		Previously Reported		Adjustments⁽¹⁾		Revised
CONTINUING OPERATIONS
Revenues		11,333		(6,036)		5,297		11,166		(5,983)		5,183
Operating expenses		(8,079)		4,373		(3,706)		(8,232)		4,389		(3,843)
Depreciation		(296)		183		(113)		(313)		178		(135)
Amortization of computer software		(699)		342		(357)		(711)		349		(362)
Amortization of other identifiable intangible assets		(468)		333		(135)		(528)		343		(185)
Other operating (losses) gains, net		(36)		84		48		8		28		36
Operating profit		1,755		(721)		1,034		1,390		(696)		694
Finance costs, net
Net interest expense		(362)		5		(357)		(403)		1		(402)
Other finance (costs) income		(203)		33		(170)		50		23		73
Income before tax and equity method investments		1,190		(683)		507		1,037		(672)		365
Share of post-tax (losses) earnings in equity method investments		(2)		(2)		(4)		4		(2)		2
Tax benefit (expense)		274		(140)		134		15		(25)		(10)
Earnings from continuing operations		1,462		(825)		637		1,056		(699)		357
(Loss) earnings from discontinued operations, net of tax		(3)		825		822		2,093		699		2,792
Net earnings		1,459		-		1,459		3,149		-		3,149
Earnings attributable to:
Common shareholders		1,395		-		1,395		3,098		-		3,098
Non-controlling interests		64		-		64		51		-		51

Earnings per share
Basic earnings per share
From continuing operations		$1.94		$(1.06)		$0.88		$1.34		$(0.86)	$	0.48
From discontinued operations		-		1.06		1.06		2.80		0.86		3.66
Basic earnings per share		$1.94		-		$1.94		$4.14		-		$4.14

Diluted earnings per share
From continuing operations		$1.94		$(1.06)		$0.88		$1.34		$(0.87)	$	0.47
From discontinued operations		-		1.06		1.06		2.79		0.87		3.66
Diluted earnings per share		$1.94		-		$1.94		$4.13		-		$4.13

(1)	Adjustments include the reclassification of our F&R business to discontinued operations, except for the Regulatory Intelligence and Compliance Learning businesses that were retained by our Legal segment following the closing of the F&R transaction.

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Segment Information


	Year ended December 31, 2017						Year ended December 31, 2016
(millions of U.S. dollars)	Previously Reported		Adjustments⁽¹⁾		Revised		Previously Reported		Adjustments⁽¹⁾		Revised
Revenues
F&R		6,112		(6,112)		-		6,057		(6,057)		-
Legal		3,390		69		3,459		3,367		69		3,436
Tax & Accounting		1,551		-		1,551		1,452		-		1,452
Reuters News		296		-		296		304		-		304
Eliminations		(16)		7		(9)		(14)		5		(9)
Consolidated revenues		11,333		(6,036)		5,297		11,166		(5,983)		5,183

Adjusted EBITDA
F&R		1,916		(1,916)		-		1,629		(1,629)		-
Legal		1,279		28		1,307		1,232		27		1,259
Tax & Accounting		495		-		495		414		-		414
Reuters News		27		-		27		15		-		15
Corporate		(280)		42		(238)		(336)		16		(320)
Adjusted EBITDA		3,437		(1,846)		1,591		2,954		(1,586)		1,368
Fair value adjustments		(183)		183		-		(20)		(8)		(28)
Depreciation		(296)		183		(113)		(313)		178		(135)
Amortization of computer software		(699)		342		(357)		(711)		349		(362)
Amortization of other identifiable intangible assets		(468)		333		(135)		(528)		343		(185)
Other operating (losses) gains, net		(36)		84		48		8		28		36
Consolidated operating profit		1,755		(721)		1,034		1,390		(696)		694
Net interest expense		(362)		5		(357)		(403)		1		(402)
Other finance (costs) income		(203)		33		(170)		50		23		73
Share of post-tax (losses) earnings in equity method investments		(2)		(2)		(4)		4		(2)		2
Tax benefit (expense)		274		(140)		134		15		(25)		(10)
Earnings from continuing operations		1,462		(825)		637		1,056		(699)		357

(1)	Adjustments relate to the reclassification of F&R to discontinued operations, including the reclassification of the Regulatory Intelligence and Compliance Learning businesses from F&R to our Legal Segment, where they were retained following the closing of the F&R transaction.

Appendix D

Depreciation and amortization of computer software by segment


	Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	2018		2017		2018		2017
Legal		67		63		195		190
Tax & Accounting		36		31		110		95
Reuters News		4		4		12		13
Corporate		13		1		60		52
Total		120		99		377		350

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Appendix E

Quarterly information (unaudited)

The following table presents a summary of our consolidated operating results for the eight most recent quarters.


	Quarters ended
(millions of U.S. dollars, except per share amounts)	September 30, 2018		June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016
Revenues		1,292		1,311		1,379		1,414		1,272		1,280		1,331		1,372
Operating profit		162		204		268		254		288		218		274		203
(Loss) earnings from continuing operations		(58)		142		172		302		143		47		145		203
Earnings (loss) from discontinued operations, net of tax		349		515		(483)		289		205		159		169		2,038
Net earnings (loss)		291		657		(311)		591		348		206		314		2,241
Earnings (loss) attributable to common shareholders		261		625		(339)		576		330		192		297		2,226

Basic (loss) earnings per share
From continuing operations	$	(0.08)	$	0.20		$0.24		$0.42		$0.20		$0.07	$	0.20		$0.28
From discontinued operations		0.45		0.68		(0.72)		0.39		0.26		0.20		0.21		2.76
		$0.37	$	0.88	$	(0.48)		$0.81		$0.46		$0.27		$0.41		$3.04
Diluted (loss) earnings per share
From continuing operations	$	(0.08)	$	0.20		$0.24		$0.42		$0.20		$0.07	$	0.20		$0.28
From discontinued operations		0.45		0.68		(0.72)		0.39		0.26		0.20		0.21		2.75
		$0.37	$	0.88	$	(0.48)		$0.81		$0.46		$0.27		$0.41		$3.03

Revenues - Our revenues do not tend to be significantly impacted by seasonality as we record a large portion of our revenues ratably over a contract term. However, our revenues in the fourth quarter tend to be slightly higher than in each of the first three quarters of the year due to the release of certain print-based offerings in our Legal segment and higher revenues from certain tax products in our Tax & Accounting segment. Our revenues were not significantly impacted by foreign currency or acquisitions throughout the eight-quarter period.

Operating profit - Similarly, our operating profit does not tend to be significantly impacted by seasonality. A majority of our operating expenses are fixed. As a result, when our revenues increase, we become more profitable, and when our revenues decline, we become less profitable. Additionally, our operating profit is impacted by timing of our investment spending in our businesses, including those to improve customer experience and reposition our business following the closing of the F&R transaction, as well as gains or losses on the sales of certain equity investments.

Net earnings (loss) The decrease in net earnings in the third quarter of 2018 was primarily due to expenses associated with the separation of F&R from our business including expenses to reposition the business as well as higher income tax expense. The increase in net earnings in the second quarter of 2018 reflected higher net earnings from the F&R business, which is classified as a discontinued operation, primarily because F&R assets held for sale are not depreciated. Earnings from discontinued operations also included a significant benefit of fair value adjustments associated with foreign currency derivatives embedded in certain F&R customer contracts. The net loss in the first quarter of 2018 was due to an $844 million deferred tax charge associated with the sale of a 55% interest in our F&R business. The increase in net earnings in the fourth quarter of 2017 compared to the first three quarters of the year was due to $304 million of tax benefits resulting from the enactment of the U.S. Tax Cuts and Jobs Act of 2017. The fourth quarter of 2016 included a $2.0 billion gain on the sale of our IP & Science business.

Page 37

EXHIBIT 99.2 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

LOGO

Exhibit 99.2

THOMSON REUTERS CORPORATION

CONSOLIDATED INCOME STATEMENT

(unaudited)

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars, except per share amounts)

Notes

2018

2017

2018

2017

CONTINUING OPERATIONS

Revenues

1,292

1,272

3,982

3,883

Operating expenses

(985)

(888)

(2,901)

(2,698)

Depreciation

(24)

(23)

(83)

(85)

Amortization of computer software

(96)

(76)

(294)

(265)

Amortization of other identifiable intangible assets

(26)

(33)

(83)

(103)

Other operating gains, net

Operating profit

162

288

634

780

Finance costs, net:

Net interest expense

(82)

(89)

(241)

(270)

Other finance (costs) income

(11)

(57)

(145)

Income before tax and equity method investments

142

403

365

Share of post-tax earnings (losses) in equity method
investments

(4)

Tax expense

(128)

(152)

(26)

(Loss) earnings from continuing operations

(58)

143

256

335

Earnings from discontinued operations, net of tax

349

205

381

533

Net earnings

291

348

637

868

Earnings attributable to:

Common shareholders

261

330

547

819

Non-controlling interests

Earnings per share:

Basic and diluted earnings (loss) per share:

From continuing operations

($0.08)

$0.20

$0.36

$0.46

From discontinued operations

0.45

0.26

0.41

0.67

Basic and diluted earnings per share

$0.37

$0.46

$0.77

$1.13

The related notes form an integral part of these consolidated financial statements.

Page 38

LOGO

THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(unaudited)


			Three months ended September 30,				Nine months ended September 30,
(millions of U.S. dollars)	Notes		2018		2017		2018		2017
Net earnings				291		348		637		868

Other comprehensive (loss) income:
Items that have been or may be subsequently reclassified to net earnings:
Cash flow hedges adjustments to net earnings		8		(24)		(53)		44		(97)
Cash flow hedges adjustments to equity				20		42		(38)		73
Foreign currency translation adjustments to equity				(38)		221		(239)		605
				(42)		210		(233)		581
Items that will not be reclassified to net earnings:
Remeasurement on defined benefit pension plans				15		64		126		84
Related tax expense on remeasurement on defined benefit pension plans				(2)		(11)		(29)		(22)
				13		53		97		62
Other comprehensive (loss) income				(29)		263		(136)		643
Total comprehensive income				262		611		501		1,511

Comprehensive income (loss) for the period attributable to:
Common shareholders:
Continuing operations				(51)		187		172		420
Discontinued operations				283		406		239		1,042
Non-controlling interests - discontinued operations				30		18		90		49
Total comprehensive income				262		611		501		1,511

The related notes form an integral part of these consolidated financial statements.

Page 39

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THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited)

September 30,

December 31,

(millions of U.S. dollars)

Notes

2018

2017

Cash and cash equivalents

507

874

Trade and other receivables

871

1,457

Other financial assets

Prepaid expenses and other current assets

419

548

Current assets excluding assets held for sale

1,839

2,977

Assets held for sale

14,605

Current assets

16,444

2,977

Computer hardware and other property, net

459

921

Computer software, net

890

1,458

Other identifiable intangible assets, net

3,276

5,315

Goodwill

5,009

15,042

Other financial assets

Other non-current assets

572

605

Deferred tax

Total assets

26,749

26,480

LIABILITIES AND EQUITY

Liabilities

Current indebtedness

2,127

1,644

Payables, accruals and provisions

1,291

2,086

Deferred revenue

718

937

Other financial liabilities

791

129

Current liabilities excluding liabilities associated with assets held for sale

4,927

4,796

Liabilities associated with assets held for sale

1,779

Current liabilities

6,706

4,796

Long-term indebtedness

4,955

5,382

Provisions and other non-current liabilities

1,060

1,740

Other financial liabilities

279

Deferred tax

1,424

708

Total liabilities

14,199

12,905

Equity

Capital

9,311

9,549

Retained earnings

6,618

7,201

Accumulated other comprehensive loss

(3,906)

(3,673)

Total shareholders’ equity

12,023

13,077

Non-controlling interests

527

498

Total equity

12,550

13,575

Total liabilities and equity

26,749

26,480

Contingencies (note 18)

The related notes form an integral part of these consolidated financial statements.

Page 40

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THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOW

(unaudited)

Three months ended September 30,

Nine months ended September 30,

(millions of U.S. dollars)

Notes

2018

2017

2018

2017

Cash provided by (used in):

OPERATING ACTIVITIES

(Loss) earnings from continuing operations

(58)

143

256

335

Adjustments for:

Depreciation

Amortization of computer software

294

265

Amortization of other identifiable intangible assets

103

Net gains on disposals of businesses and investments

(35)

Deferred tax

(94)

(106)

Other

118

274

Pension contribution

(500)

Changes in working capital and other items

191

(63)

(28)

Operating cash flows from continuing operations

267

400

828

393

Operating cash flows from discontinued operations

583

408

1,244

881

Net cash provided by operating activities

850

808

2,072

1,274

INVESTING ACTIVITIES

Acquisitions, net of cash acquired

(32)

(1)

(60)

(1)

Proceeds from disposals of businesses and investments

Capital expenditures

(110)

(160)

(420)

(392)

Proceeds from disposals of property and equipment

Other investing activities

Investing cash flows from continuing operations

(135)

(120)

(428)

(327)

Investing cash flows from discontinued operations

(110)

(98)

(356)

(486)

Net cash used in investing activities

(245)

(218)

(784)

(813)

FINANCING ACTIVITIES

Proceeds from debt

1,370

Repayments of debt

(500)

(550)

(1,370)

(1,100)

Net borrowings under short-term loan facilities

555

705

Repurchases of common shares

(129)

(230)

(488)

(808)

Dividends paid on preference shares

(1)

(1)

(2)

(2)

Dividends paid on common shares

(232)

(237)

(707)

(720)

Other financing activities

Financing cash flows from continuing operations

(836)

(449)

(1,109)

(1,895)

Financing cash flows from discontinued operations

(25)

(19)

(60)

(50)

Net cash used in financing activities

(861)

(468)

(1,169)

(1,945)

(Decrease) increase in cash and bank overdrafts

(256)

122

119

(1,484)

Translation adjustments

(9)

(21)

Cash and bank overdrafts at beginning of period

1,231

766

868

2,367

Cash and bank overdrafts at end of period

966

892

966

892

Cash and bank overdrafts at end of period comprised of:

Cash and cash equivalents

507

898

507

898

Cash and cash equivalents in assets held for sale

461

Bank overdrafts

(2)

(6)

(2)

(6)

966

892

966

892

Supplemental cash flow information is provided in note 17.

Interest paid

(31)

(53)

(173)

(218)

Income taxes paid

(55)

(43)

(150)

(99)

Interest paid is reflected as an operating cash flow and is net of debt-related hedges.

Income taxes paid are reflected as either operating or investing cash flows depending on the nature of the underlying transaction.

The related notes form an integral part of these consolidated financial statements.

Page 41

LOGO

THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(unaudited)

(millions of U.S. dollars)

Stated
share
capital

Contributed
surplus

Total
capital

Retained
earnings

Unrecognized
gain on cash
flow hedges

Foreign
currency
translation
adjustments

Total accumulated
other
comprehensive
loss (“AOCL”)

Shareholders’
equity

Non-

controlling
interests

Total
equity

Balance, December 31, 2017

9,306

243

9,549

7,201

(3,689)

(3,673)

13,077

498

13,575

Impact of IFRS 15 adoption
(see note 1)

172

Balance after IFRS 15 adoption

9,306

243

9,549

7,373

(3,689)

(3,673)

13,249

498

13,747

Net earnings

547

637

Other comprehensive income
(loss)

(239)

(233)

(136)

Total comprehensive
income (loss)

644

(239)

(233)

411

501

Change in ownership interest
of subsidiary

(1)

Distributions to
non-controlling
interests

(60)

Dividends declared
on preference shares

(2)

Dividends declared
on common shares

(732)

Shares issued
under Dividend
Reinvestment
Plan (“DRIP”)

Repurchases of common
shares

(159)

(329)

(488)

Pre-defined share repurchase
plan

(147)

(365)

(512)

Stock compensation plans

113

(70)

Balance, September 30, 2018

9,138

173

9,311

6,618

(3,928)

(3,906)

12,023

527

12,550

(millions of U.S. dollars)

Stated
share
capital

Contributed
surplus

Total
capital

Retained
earnings

Unrecognized
gain (loss) on
cash flow
hedges

Foreign
currency
translation
adjustments

AOCL

Shareholders’
equity

Non-

controlling
interests

Total
equity

Balance, December 31, 2016

9,393

196

9,589

7,477

(4,325)

(4,293)

12,773

483

13,256

Impact of IFRS 2 amendments

152

Balance after IFRS 2
amendments

9,393

348

9,741

7,477

(4,325)

(4,293)

12,925

483

13,408

Net earnings

819

868

Other comprehensive income
(loss)

(24)

605

581

643

Total comprehensive
income (loss)

881

(24)

605

581

1,462

1,511

Change in ownership interest
of subsidiary

Distributions to non-
controlling interests

(50)

Dividends declared on
preference shares

(2)

Dividends declared
on common shares

(746)

Shares issued under DRIP

Repurchases of common
shares

(241)

(575)

(816)

Pre-defined share repurchase
plan

(52)

(133)

(185)

Stock compensation plans

161

(99)

Balance, September 30, 2017

9,287

249

9,536

6,920

(3,720)

(3,712)

12,744

494

13,238

The related notes form an integral part of these consolidated financial statements.

Page 42

LOGO

Thomson Reuters Corporation

Notes to Consolidated Financial Statements (unaudited)

(unless otherwise stated, all amounts are in millions of U.S. dollars)

Note 1: Business Description and Basis of Preparation

General business description

Thomson Reuters Corporation (the “Company” or “Thomson Reuters”) is an Ontario, Canada corporation with common shares listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”) and Series II preference shares listed on the TSX. The Company is a major source of news and information for professional markets.

Basis of preparation

The unaudited consolidated interim financial statements (“interim financial statements”) were prepared using the same accounting policies and methods as those used in the Company’s consolidated financial statements for the year ended December 31, 2017, except as described below. The interim financial statements are in compliance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), have been omitted or condensed. The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements have been disclosed in note 3 of the interim financial statements and in note 2 of the consolidated financial statements for the year ended December 31, 2017. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2017, which are included in the Company’s 2017 annual report.

The accompanying interim financial statements include all adjustments, composed of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

References to “$” are to U.S. dollars and references to “C$” are to Canadian dollars.

Prior-year period amounts have been reclassified to reflect the current presentation.

Changes in accounting policy

Effective January 1, 2018, the Company adopted IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). The Company made the following changes as a consequence of adopting IFRS 15:

^●

Revenue for certain term licenses of intellectual property is recognized at the time control is transferred to the customer, rather than over the license term.

^●

Certain contingent payouts are recognized as a reduction of revenue, rather than as expense.

^●

Additional commission expense for sales employees is deferred and a substantial portion of these deferrals will be amortized over three years.

The Company adopted IFRS 15 using the modified retrospective method. Accordingly, the cumulative effect of adoption of $172 million was recognized as an adjustment to the opening balance of retained earnings at January 1, 2018 to reflect an increase in total assets of $150 million due to the deferral of additional commission expense for sales employees and a decrease in total liabilities of $22 million primarily related to adjustments to deferred revenue. Comparative information was not restated.

IFRS 15 did not have a material impact on the consolidated income statement and no impact on cash flows for the three and nine months ended September 30, 2018. In the consolidated statement of financial position, total assets increased $161 million and total liabilities decreased $22 million at September 30, 2018, compared to December 31, 2017. Of these amounts, $90 million of the increase in total assets and the entire decrease in total liabilities related to continuing operations. Refer to Note 3 for the Company’s accounting policies, critical judgments and disclosures under IFRS 15.

Page 43

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Effective January 1, 2018, the Company also adopted IFRS 9, Financial Instruments (“IFRS 9”). IFRS 9 introduces new requirements for classification and measurement, impairment and hedge accounting. The Company adopted IFRS 9 using the retrospective method and, as permitted by the standard, elected not to reclassify prior-year period amounts. IFRS 9 did not have a material impact on the consolidated income statement and cash flow for the three and nine months ended September 30, 2018 and financial position for the nine months ended September 30, 2018.

Note 2: Recent Accounting Pronouncements

Certain pronouncements were issued by the IASB or International Financial Reporting Interpretations Committee (“IFRIC”) that are effective for accounting periods beginning on or after January 1, 2018. Many of these updates are not applicable or consequential to the Company and have been excluded from the discussion below.

Pronouncements effective for annual periods beginning January 1, 2019:

IFRS 16

Leases

IFRS 16 introduces a single lease accounting model, eliminating the existing distinction between operating and finance leases for lessees. The standard requires a lessee to recognize right-of-use assets and lease liabilities on the statement of financial position for almost all leases having a term of more than 12 months. The Company is reviewing its lease portfolio to evaluate the impact of the standard and is considering changes to its processes and internal controls, including the implementation of a new lease accounting system in 2018. The Company will adopt the standard using the modified retrospective method. As such, the cumulative effect of adoption will be recognized as an adjustment to the opening balance of retained earnings. Prior-year period amounts will not be adjusted. While the assessment of the adoption impact is ongoing, the Company expects that IFRS 16 will increase its assets and liabilities by approximately $250 million for leases related to the continuing operations of its business. The Company also expects to reclassify approximately $60 million of lease expense from operating expenses to depreciation and interest expense, but does not expect a material impact to net earnings. There will be no impact on consolidated cash flows, however, cash flows from operating activities will increase as cash payments from the principal portion of lease obligations will be reclassified to cash flows from financing activities.

IFRIC 23

Uncertainty over Income Tax Treatments

IFRIC 23 adds to the requirements of IAS 12, Income Taxes, by specifying how to reflect the effects of uncertainty in the accounting for income taxes. An uncertainty arises when it is unclear how a tax law applies to a particular transaction, or whether a taxation authority will accept a company’s tax treatment. The Company does not expect IFRIC 23 to have a material impact on its consolidated financial statements.

Note 3: Revenues

Significant accounting policies

Effective January 1, 2018, revenue is recognized when control of the Company’s products or services is transferred to customers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled. Such consideration is net of estimated returns, discounts, value-added and other sales taxes.

The Company derives its revenue from selling information, software and services. Revenue is generally recognized as follows:

Recurring revenues

Recurring revenue is generally recognized on a ratable basis over the contract term.

Recurring revenues primarily consist of fees to access products or services delivered electronically over time, such as Westlaw and Checkpoint. These products are generally provided under subscription arrangements, which most customers renew at the end of each subscription term. The majority of subscription arrangements have multiple year terms that range from one to five years. Recurring revenues also include fees from software maintenance arrangements that are recognized over the maintenance period. Arrangements may be billed in advance or in arrears.

Page 44

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Transactions revenues

Transactions revenues are recognized primarily at a point in time and based on their type, as follows:

^●

Volume-based fees related to online searches are recognized based on usage;

^●

Fees from software licenses with no future obligations are recognized at the point of delivery; and

^●

Professional fees from service and consulting arrangements are recognized as services are performed, generally based on hours incurred, reflecting the continuous transfer of control to the customer.

Transactions revenues may be billed in advance or in arrears.

Print revenues

Print revenues are generally recognized at the point of shipment.

Print revenue consists of fees for content that is delivered in traditional paper format rather than online. Revenue is generally billed at shipment.

The Company also considers the following when recognizing revenue:

Multiple performance obligations

Certain customer contracts include multiple products and services, which are accounted for as separate performance obligations when they are distinct. A product or service is distinct if a customer can benefit from it either on its own or with other readily available resources, and the promise to transfer the good or service is separately identifiable in the contract. The transaction price is allocated to the separate performance obligations based on the relative standalone selling price.

A series of distinct goods or services is accounted for as a single performance obligation if the items in the series are substantially the same, have the same pattern of transfer and: (1) each distinct item in the series represents a performance obligation that would be satisfied over time, and (2) the measure to satisfy the performance obligation for each distinct item in the series is the same.

Certain arrangements include installation or implementation services. If these services are distinct, consideration is allocated to them and they are recognized as services are performed and included as transaction revenues. If the services are not distinct, they are recognized as part of the related subscription arrangement or as part of the related software license, as applicable.

Sales involving third parties

Revenue from sales of third party content or services delivered on the Company’s platforms is recorded net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is a principal to the transaction.

Deferred revenue

Deferred revenue is recorded when cash payments are received or due in advance of the transfer of the related products or services.

Contract costs

Incremental costs of obtaining a contract with a customer are recognized as an asset if the benefit of such costs is expected to be longer than one year, and amortized on a straight-line basis over the period that the product or service is transferred to the customer. Incremental costs include sales commissions to direct sales people as well as to account executives and sales management. Sales commissions on new customer contracts are generally paid at significantly higher rates than renewals. As such:

^●

Assets related to new customer contracts are amortized over three years, which may anticipate renewal periods, as management estimates that this corresponds to the period over which a customer benefits from existing technology in the underlying product or service; and

^●

Assets related to renewal customer contracts are amortized over the term of the contract if they are commensurate with previous renewals commissions.

The Company recognizes the following assets, “Deferred commissions” short-term, included within “Prepaid expenses and other current assets” and “Deferred commissions” long-term, included within “Other non-current assets” in the consolidated statement of financial position for costs to obtain a contract.

The Company applied the practical expedient in IFRS 15 to recognize the incremental cost of obtaining a contract as an expense when incurred, if the amortization period is one year or less.

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Critical judgments in applying accounting policies

Management exercises significant judgment to determine the following when applying the accounting policy:

^●

whether multiple products and services in customer contracts are distinct performance obligations that should be accounted for separately, or whether they must be accounted for together

^¡

In making the determination, management considers, for example, whether the Company regularly sells a good or service separately, or whether the goods or services are highly interrelated.

^●

the standalone selling price (SSP) for each distinct performance obligation

^¡

The Company typically has more than one SSP for individual products and services due to the stratification of its offerings by customer. As a result, management determines the SSP taking into consideration market conditions and other factors, including the value of its contracts, the product or service sold, the customer’s market, geographic location, and the number and types of users in each contract.

^●

the period over which to amortize assets arising from incremental costs of obtaining a contract

^¡

As management estimates that this period corresponds to the period over which a customer benefits from existing technology in the underlying product or service, this judgment is closely linked with the determination of software amortization periods.

Revenues by type and geography

The following tables disaggregate revenues by type and geography and reconcile them to reportable segments from continuing operations for the three and nine months ended September 30, 2018 and 2017 (see note 4).


Revenues by type	Legal				Tax & Accounting				Reuters News				Total
Three months ended September 30,	2018		2017		2018		2017		2018		2017		2018		2017
Recurring		649		618		272		267		59		62		980		947
Transactions		78		74		56		62		12		11		146		147
Print		156		168		13		12		-		-		169		180
Eliminations		-		-		-		-		-		-		(3)		(2)
Total		883		860		341		341		71		73		1,292		1,272


Revenues by type	Legal				Tax & Accounting				Reuters News				Total
Nine months ended September 30,	2018		2017		2018		2017		2018		2017		2018		2017
Recurring		1,926		1,835		859		824		185		187		2,970		2,846
Transactions		233		228		240		247		30		34		503		509
Print		478		496		38		37		-		-		516		533
Eliminations		-		-		-		-		-		-		(7)		(5)
Total		2,637		2,559		1,137		1,108		215		221		3,982		3,883


Revenues by geography (country of destination)	Legal				Tax & Accounting				Reuters News				Total
Three months ended September 30,	2018		2017		2018		2017		2018		2017		2018		2017
U.S.		690		658		274		268		20		17		984		943
Canada (country of domicile)		38		46		6		6		1		1		45		53
Other		12		15		33		41		3		3		48		59
Americas (North America, Latin America, South America)		740		719		313		315		24		21		1,077		1,055

U.K.		80		86		13		12		7		5		100		103
Other		25		19		5		4		26		29		56		52
EMEA (Europe, Middle East and Africa)		105		105		18		16		33		34		156		155

Asia Pacific		38		36		10		10		14		18		62		64
Eliminations		-		-		-		-		-		-		(3)		(2)
Total		883		860		341		341		71		73		1,292		1,272

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Revenues by geography (country of destination)	Legal				Tax & Accounting				Reuters News				Total
Nine months ended September 30,	2018		2017		2018		2017		2018		2017		2018		2017
U.S.		2,076		1,998		915		893		57		54		3,048		2,945
Canada (country of domicile)		99		115		28		26		2		2		129		143
Other		35		45		109		114		7		7		151		166
Americas (North America, Latin America, South America)		2,210		2,158		1,052		1,033		66		63		3,328		3,254

U.K.		246		242		42		33		21		19		309		294
Other		77		53		14		12		84		85		175		150
EMEA (Europe, Middle East and Africa)		323		295		56		45		105		104		484		444

Asia Pacific		104		106		29		30		44		54		177		190
Eliminations		-		-		-		-		-		-		(7)		(5)
Total		2,637		2,559		1,137		1,108		215		221		3,982		3,883

See note 10 for disaggregated revenues from discontinued operations.

Note 4: Segment Information

The Company’s continuing business is organized as three reportable segments reflecting how the businesses are managed: Legal, Tax & Accounting, and Reuters News. Beginning in the first quarter of 2018, Reuters News became a reportable segment. Reuters News was previously an operating segment included within a Corporate and Other category. The accounting policies applied by the segments are the same as those applied by the Company.

Effective January 1, 2018, the operating results of Financial & Risk are reported as a discontinued operation, except for the Regulatory Intelligence and Compliance Learning businesses that the Company will retain after the closing of the Financial & Risk transaction and is now reported as part of the Legal segment. The Company’s Chief Executive Officer continued to act as the chief operating decision maker (CODM) for the Financial & Risk business due to its significance to the Company. See note 10 for financial information regarding the Financial & Risk business.

The reportable segments offer products and services to target markets as described below.

Legal

The Legal segment is a provider of critical online and print information, decision tools, software and services that support legal, investigation, business and government professionals around the world.

Tax & Accounting

The Tax & Accounting segment is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government.

Reuters News

The Reuters News segment is a provider of real-time, multimedia news and information services to newspapers, television and cable networks, radio stations and websites around the globe.

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The Company also reports “Corporate”, which includes expenses for corporate functions and does not qualify for segment reporting.


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Revenues
Legal		883		860		2,637		2,559
Tax & Accounting		341		341		1,137		1,108
Reuters News		71		73		215		221
Eliminations		(3)		(2)		(7)		(5)
Consolidated revenues		1,292		1,272		3,982		3,883

Adjusted EBITDA
Legal		327		345		967		984
Tax & Accounting		93		95		331		339
Reuters News		6		7		22		29
Corporate		(124)		(59)		(240)		(169)
Adjusted EBITDA		302		388		1,080		1,183
Fair value adjustments (see note 6)		5		(4)		1		2
Depreciation		(24)		(23)		(83)		(85)
Amortization of computer software		(96)		(76)		(294)		(265)
Amortization of other identifiable intangible assets		(26)		(33)		(83)		(103)
Other operating gains, net		1		36		13		48
Consolidated operating profit		162		288		634		780
Net interest expense		(82)		(89)		(241)		(270)
Other finance (costs) income		(11)		(57)		10		(145)
Share of post-tax earnings (losses) in equity method investments		1		1		5		(4)
Tax expense		(128)		-		(152)		(26)
(Loss) earnings from continuing operations		(58)		143		256		335

In accordance with IFRS 8, Operating Segments, the Company discloses certain information about its reportable segments based upon measures used by management in assessing the performance of those reportable segments. These measures are defined below and may not be comparable to similar measures of other companies.

Adjusted EBITDA

^●

Segment adjusted EBITDA represents earnings from continuing operations before tax expense or benefit, net interest expense, other finance costs or income, depreciation, amortization of software and other identifiable intangible assets, the Company’s share of post-tax earnings or losses in equity method investments, other operating gains and losses, certain asset impairment charges, fair value adjustments, and corporate related items.

^●

The Company does not consider these excluded items to be controllable operating activities for purposes of assessing the current performance of the reportable segments.

^●

Consolidated adjusted EBITDA is comprised of adjusted EBITDA from reportable segments and Corporate.

Note 5: Seasonality

The Company’s revenues and operating profit on a consolidated basis do not tend to be significantly impacted by seasonality as it records a large portion of its revenues ratably over a contract term and its costs are generally incurred evenly throughout the year. However, the performance of the Tax & Accounting segment from quarter to consecutive quarter can be impacted by the release of certain tax products, which tend to be concentrated in the fourth quarter and, to a lesser extent, in the first quarter of the year. The seasonality of the Company’s operating profit may also be impacted by the timing of corporate costs incurred in connection with the repositioning of the business following the sale of a 55% majority stake in the Financial & Risk business.

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Note 6: Operating Expenses

The components of operating expenses include the following:

Three months ended September 30,

Nine months ended September 30,

2018

2017

2018

2017

Salaries, commissions and allowances

610

539

1,788

1,644

Share-based payments

Post-employment benefits

111

116

Total staff costs

661

591

1,934

1,802

Goods and services⁽¹⁾

218

199

681

613

Data

173

161

Telecommunications

Real estate

101

Fair value adjustments⁽²⁾

(5)

(1)

(2)

Total operating expenses

985

888

2,901

2,698

(1)	Goods and services include professional fees, consulting and outsourcing services, contractors, selling and marketing, and other general and administrative costs.

(2)	Fair value adjustments primarily represent gains or losses due to changes in foreign currency exchange rates on intercompany balances that arise in the ordinary course of business.

Note 7: Other Operating Gains, Net

Other operating gains, net, were $1 million and $36 million for the three months ended September 30, 2018 and 2017, respectively, and $13 million and $48 million for the nine months ended September 30, 2018 and 2017. The nine months ended September 30, 2018 included a gain on the sale of a Canadian wholly-owned subsidiary to a company affiliated with The Woodbridge Company Limited (“Woodbridge”), the Company’s principal shareholder (see note 19). The three and nine months ended September 30, 2017 included a gain from the sale of a portion of an investment.

Note 8: Finance Costs, Net

The components of finance costs, net, include interest expense (income) and other finance costs (income) as follows:

Three months ended September 30,

Nine months ended September 30,

2018

2017

2018

2017

Interest expense:

Debt

218

244

Derivative financial instruments - hedging activities

Other, net

Fair value (gains) losses on financial instruments:

Cash flow hedges, transfer from equity

(24)

(53)

(97)

Net foreign exchange losses (gains) on debt

(44)

Net interest expense—debt and other

228

252

Net interest expense—pension and other post-employment benefit plans

Interest income

(3)

(1)

(7)

(4)

Net interest expense

241

270

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Three months ended September 30,

Nine months ended September 30,

2018

2017

2018

2017

Net losses (gains) due to changes in foreign currency exchange rates

(7)

112

Net losses (gains) on derivative instruments

(3)

Other finance costs (income)

(10)

145

Net losses (gains) due to changes in foreign currency exchange rates

Net losses (gains) due to changes in foreign currency exchange rates were principally comprised of amounts related to certain intercompany funding arrangements.

Net losses (gains) on derivative instruments

Net losses (gains) on derivative instruments were principally comprised of amounts relating to foreign exchange contracts.

Note 9: Taxation

Tax expense was $128 million and nil for the three months ended September 30, 2018 and 2017, respectively, and $152 million and $26 million for the nine months ended September 30, 2018 and 2017, respectively. Tax expense in both periods of 2018 included $95 million of charges associated with the separation of Financial & Risk from the rest of the Company. The tax expense in each period reflected the mix of taxing jurisdictions in which pre-tax profits and losses were recognized. Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, tax expense or benefit in interim periods is not necessarily indicative of tax expense for the full year.

Note 10: Discontinued Operations

On October 1, 2018, the Company closed the sale of a 55% interest in its Financial & Risk business. See note 20. The results of Financial & Risk are reported as discontinued operations in the consolidated financial statements for all periods presented.

Earnings from discontinued operations are summarized as follows:

Three months ended September 30,

Nine months ended September 30,

2018

2017

2018

2017

Revenues

1,541

1,525

4,677

4,511

Expenses

(1,059)

(1,343)

(3,279)

(4,014)

Earnings from discontinued operations before income tax

482

182

1,398

497

Tax (expense) benefit⁽¹⁾

(133)

(1,017)

Earnings from discontinued operations, net of tax

349

205

381

533

Adjusted EBITDA (Financial & Risk)

482

461

1,480

1,380

Fair value adjustments

(49)

(173)

Depreciation

(3)

(50)

(17)

(137)

Amortization of computer software

(95)

(30)

(254)

Amortization of other identifiable intangible assets

(1)

(82)

(29)

(251)

Other operating losses, net

(1)

(6)

(61)

(35)

Net interest (expense) income

(1)

(7)

(2)

Other finance costs

(3)

(1)

(3)

(31)

Share of post-tax earnings in equity method investments

Intellectual Property & Science loss from discontinued operations

(7)

(2)

(16)

(1)

Earnings from discontinued operations before income tax

482

182

1,398

497

(1)

The three and nine months ended September 30, 2018 reflected a $38 million and an $850 million deferred tax charge, respectively, associated with the sale of a 55% interest in the Financial & Risk business. These deferred taxes were not required before 2018 as the business was not considered held for sale until January 2018. The charge in the three-month period resulted from an increase in state tax rates expected to apply to the transaction.

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The assets and liabilities classified as held for sale in the consolidated statement of financial position are as follows:

September 30,

2018

Cash and cash equivalents⁽¹⁾

461

Trade and other receivables

647

Other financial assets

Prepaid expenses and other current assets

178

Computer hardware and other property, net

488

Computer software, net

849

Other identifiable intangible assets, net

1,912

Goodwill

9,885

Other assets

151

Deferred tax

Total assets held for sale

14,605

Current indebtedness

Payables, accruals and provisions

856

Deferred revenue

207

Other financial liabilities

Provisions and other liabilities

396

Deferred tax

312

Total liabilities associated with assets held for sale

1,779

(1)	Includes cash and cash equivalents of $112 million, held in subsidiaries which have regulatory restrictions, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and were therefore not available for general use by the Company.

Relative to assets held for sale, foreign currency translation adjustments recorded within accumulated other comprehensive loss in the consolidated statement of financial position were losses of approximately $3.0 billion at September 30, 2018.

The following tables disaggregate revenues by type and geography for the Financial & Risk segment for the three and nine months ended September 30, 2018 and 2017:

Three months ended September 30,

Nine months ended September 30,

Revenues by type (Financial & Risk)

2018

2017

2018

2017

Recurring

1,302

1,295

3,947

3,842

Transactions

239

230

730

669

Total

1,541

1,525

4,677

4,511

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Revenues by geography (Financial & Risk)	Three months ended September 30,				Nine months ended September 30,
(country of destination)	2018		2017		2018		2017
U.S.		576		565		1,725		1,693
Canada (country of domicile)		33		33		100		97
Other		25		27		78		78
Americas (North America, Latin America, South America)		634		625		1,903		1,868

U.K.		224		219		696		642
Other		391		391		1,197		1,138
EMEA (Europe, Middle East and Africa)		615		610		1,893		1,780
Asia Pacific		292		290		881		863
Total		1,541		1,525		4,677		4,511

Note 11: Earnings Per Share

Basic earnings per share was calculated by dividing earnings attributable to common shareholders less dividends declared on preference shares by the sum of the weighted-average number of common shares outstanding and vested deferred share units (“DSUs”) outstanding during the period. DSUs represent common shares that certain employees have elected to receive in the future upon vesting of share-based compensation awards or in lieu of cash compensation.

Diluted earnings per share was calculated using the denominator of the basic calculation described above adjusted to include the potentially dilutive effect of outstanding stock options and time-based restricted share units (“TRSUs”).

Earnings used in determining consolidated earnings per share and (loss) earnings per share from continuing operations are as follows:


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Earnings attributable to common shareholders		261		330		547		819
Less: Dividends declared on preference shares		(1)		(1)		(2)		(2)
Earnings used in consolidated earnings per share		260		329		545		817
Less: Earnings from discontinued operations, net of tax		(349)		(205)		(381)		(533)
Remove: Non-controlling interests from discontinued operations		30		18		90		49
(Loss) earnings used in earnings per share from continuing operations		(59)		142		254		333

The weighted-average number of common shares outstanding, as well as a reconciliation of the weighted-average number of common shares outstanding used in the basic earnings per share computation to the weighted-average number of common shares outstanding used in the diluted earnings per share computation, is presented below:


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Weighted-average number of common shares outstanding		700,682,178		714,822,823		706,494,346		720,506,572
Weighted-average number of vested DSUs		530,241		709,946		687,447		698,469
Basic		701,212,419		715,532,769		707,181,793		721,205,041
Effect of stock options and TRSUs		-		1,367,356		893,186		1,322,556
Diluted		701,212,419		716,900,125		708,074,979		722,527,597

Because the Company reported a net loss from continuing operations for the three months ended September 30, 2018, the weighted-average number of common shares used for basic and diluted loss per share is the same, as the effect of stock options and other equity incentive awards would reduce the loss per share, and therefore be anti-dilutive.

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Note 12: Financial Instruments

Financial assets and liabilities

Financial assets and liabilities in the consolidated statement of financial position were as follows:


September 30, 2018⁽¹⁾	Assets/ (Liabilities) at Amortized Cost		Assets/ (Liabilities) at Fair Value through Earnings		Assets at Fair Value through Other Comprehensive Income		Derivatives Used for Hedging		Total
Cash and cash equivalents		377		130		-		-		507
Trade and other receivables		871		-		-		-		871
Other financial assets - current		39		3		-		-		42
Other financial assets - non-current		15		-		22		-		37
Current indebtedness		(2,127)		-		-		-		(2,127)
Trade payables (see note 14)		(140)		-		-		-		(140)
Accruals (see note 14)		(842)		-		-		-		(842)
Other financial liabilities - current⁽²⁾		(551)		(6)		-		(234)		(791)
Long-term indebtedness		(4,955)		-		-		-		(4,955)
Other financial liabilities - non current		-		(3)		-		(51)		(54)
Total		(7,313)		124		22		(285)		(7,452)

(1)	Current presentation reflects the adoption of IFRS 9, Financial Instruments, effective January 1, 2018.

(2)	Includes a commitment to repurchase up to $512 million of shares related to the Company’s pre-defined plan with its broker to repurchase the Company’s shares during its internal trading blackout period. See note 16.


December 31, 2017	Cash, Trade and Other Receivables		Assets/ (Liabilities) at Fair Value through Earnings		Derivatives Used for Hedging		Available for Sale		Other Financial Liabilities		Total
Cash and cash equivalents		874		-		-		-		-		874
Trade and other receivables		1,457		-		-		-		-		1,457
Other financial assets - current		78		20		-		-		-		98
Other financial assets - non-current		49		1		-		33		-		83
Current indebtedness		-		-		-		-		(1,644)		(1,644)
Trade payables (see note 14)		-		-		-		-		(307)		(307)
Accruals (see note 14)		-		-		-		-		(1,477)		(1,477)
Other financial liabilities - current		-		(49)		-		-		(80)		(129)
Long-term indebtedness		-		-		-		-		(5,382)		(5,382)
Other financial liabilities - non current		-		(31)		(246)		-		(2)		(279)
Total		2,458		(59)		(246)		33		(8,892)		(6,706)

Cash and cash equivalents

Of total cash and cash equivalents, $20 million and $126 million at September 30, 2018 and December 31, 2017, respectively, were held in subsidiaries which have regulatory restrictions, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and were therefore not available for general use by the Company.

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Long-term debt activity

The Company repaid the following notes in the nine months ended September 30, 2017:


Month/Year	Transaction	Principal Amount (in millions)
	Notes repaid
September 2017	1.65% Notes, due 2017	US$550
February 2017	1.30% Notes, due 2017	US$550

Commercial paper

Under its commercial paper programs, the Company may issue up to $2.0 billion of notes. At September 30, 2018, current indebtedness included $1,739 million of outstanding commercial paper within the consolidated statement of financial position. Refer to note 20 for commercial paper repayments made in October 2018.

Credit facilities

The Company has a $2.4 billion credit facility that matures in November 2021 and may be used to provide liquidity for general corporate purposes (including support for its commercial paper programs). In the nine-month period ended September 30, 2018, the Company borrowed and repaid $370 million under this credit facility. There were no borrowings under this credit facility at September 30, 2018. Based on the Company’s current credit ratings, the cost of borrowing under the agreement is priced at LIBOR/EURIBOR plus 100 basis points.

The Company had a $1.5 billion credit facility that was comprised of a $0.5 billion term loan facility and a $1.0 billion revolving credit facility that the Company cancelled on October 1, 2018. The Company had no borrowings under either facility on September 30, 2018. In the nine-month period ended September 30, 2018, the Company borrowed and repaid $1.0 billion under the revolving credit facility.

Fair Value

The fair values of cash, trade and other receivables, trade payables and accruals approximate their carrying amounts because of the short-term maturity of these instruments. The fair value of long-term debt and related derivative instruments is set forth below.

Debt and Related Derivative Instruments

Carrying Amounts

Amounts recorded in the consolidated statement of financial position are referred to as “carrying amounts”. The carrying amounts of primary debt are reflected in “Long-term indebtedness” and “Current indebtedness” and the carrying amounts of derivative instruments are included in “Other financial assets” and “Other financial liabilities”, both current and non-current in the consolidated statement of financial position, as appropriate.

Fair Value

The fair value of debt is estimated based on either quoted market prices for similar issues or current rates offered to the Company for debt of the same maturity. The fair value of interest rate swaps is estimated based upon discounted cash flows using applicable current market rates and taking into account non-performance risk.

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The following is a summary of debt and related derivative instruments that hedge the cash flows of debt:

Carrying Amount

Fair Value

September 30, 2018

Primary Debt
Instruments

Derivative
Instruments
Liability

Primary Debt
Instruments

Derivative
Instruments
Liability

Bank and other

(1)

Commercial paper

1,739

C$500, 3.369% Notes, due 2019

387

390

C$750, 4.35% Notes, due 2020

579

145

602

145

C$550, 3.309% Notes, due 2021

424

429

$500, 4.70% Notes, due 2019

500

509

$350, 3.95% Notes, due 2021

349

351

$600, 4.30% Notes, due 2023

596

607

$450, 3.85% Notes, due 2024

447

441

$500, 3.35% Notes, due 2026

495

460

$350, 4.50% Notes, due 2043

341

324

$350, 5.65% Notes, due 2043

341

374

$400, 5.50% Debentures, due 2035

395

415

$500, 5.85% Debentures, due 2040

490

545

Total

7,082

285

7,188

285

Current portion

2,127

234

Long-term portion

4,955

Refer to note 20 for debt repayments made in October 2018.


	Carrying Amount				Fair Value
December 31, 2017	Primary Debt Instruments		Derivative Instruments Liability		Primary Debt Instruments		Derivative Instruments Liability
Bank and other		4		-		7		-
Commercial paper		1,637		-		1,641		-
C$500, 3.369% Notes, due 2019		398		75		405		75
C$750, 4.35% Notes, due 2020		597		128		629		128
C$550, 3.309% Notes, due 2021		437		43		450		43
$500, 4.70% Notes, due 2019		499		-		519		-
$350, 3.95% Notes, due 2021		349		-		361		-
$600, 4.30% Notes, due 2023		597		-		634		-
$450, 3.85% Notes, due 2024		447		-		459		-
$500, 3.35% Notes, due 2026		495		-		497		-
$350, 4.50% Notes, due 2043		341		-		361		-
$350, 5.65% Notes, due 2043		341		-		420		-
$400, 5.50% Debentures, due 2035		394		-		459		-
$500, 5.85% Debentures, due 2040		490		-		607		-
Total		7,026		246		7,449		246
Current portion		1,644		-
Long-term portion		5,382		246

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Fair value estimation

The following fair value measurement hierarchy is used for financial instruments that are measured in the consolidated statement of financial position at fair value:

^●

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

^●

Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

^●

Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The levels used to determine fair value measurements for those instruments carried at fair value in the consolidated statement of financial position are as follows:



September 30, 2018⁽¹⁾				Total
Assets	Level 1	Level 2	Level 3		Balance
Money market accounts	-	130	-		130
Forward exchange contracts⁽²⁾	-	3	-		3
Financial assets at fair value through earnings	-	133	-		133
Financial assets at fair value through other comprehensive income⁽³⁾	3	19	-		22
Total assets	3	152	-		155

Liabilities
Embedded derivatives⁽⁴⁾	-	(2)	-		(2)
Forward exchange contracts⁽²⁾	-	(4)	-		(4)
Financial liabilities at fair value through earnings	-	(6)	-		(6)
Derivatives used for hedging⁽⁵⁾	-	(285)	-		(285)
Total liabilities	-	(291)	-		(291)



December 31, 2017				Total

Assets	Level 1	Level 2	Level 3		Balance

Embedded derivatives⁽⁴⁾	-	12	-		12

Forward exchange contracts⁽²⁾	-	9	-		9

Financial assets at fair value through earnings	-	21	-		21

Available for sale investments⁽³⁾	7	26	-		33

Total assets	7	47	-		54

Liabilities

Embedded derivatives⁽⁴⁾	-	(63)	-		(63)

Forward exchange contracts⁽²⁾	-	(16)	-		(16)

Contingent consideration⁽⁶⁾	-	-	(1)		(1)

Financial liabilities at fair value through earnings	-	(79)	(1)		(80)

Derivatives used for hedging⁽⁵⁾	-	(246)	-		(246)

Total liabilities	-	(325)	(1)		(326)

(1)	Current presentation reflects the adoption of IFRS 9, Financial Instruments, effective January 1, 2018.

(2)	Used to manage foreign exchange risk on cash flows excluding indebtedness.

(3)	Investments in entities over which the Company does not have control, joint control or significant influence.

(4)	Largely related to U.S. dollar pricing of customer agreements by subsidiaries outside of the U.S.

(5)	Comprised of fixed-to-fixed cross-currency swaps on indebtedness.

(6)	Obligations to pay additional consideration for prior acquisitions, based upon performance measures contractually agreed at the time of purchase.

The Company recognizes transfers into and out of the fair value measurement hierarchy levels at the end of the reporting period in which the event or change in circumstances that caused the transfer occurred. There were no transfers between hierarchy levels for the nine months ended September 30, 2018.

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Valuation Techniques

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

^●

quoted market prices or dealer quotes for similar instruments;

^●

the fair value of cross-currency interest rate swaps and forward foreign exchange contracts is calculated as the present value of the estimated future cash flows based on observable yield curves; and

^●

the fair value of contingent consideration is calculated based on estimates of future revenue performance.

Note 13: Other Non-Current Assets



	September 30,		December 31,

	2018		2017

Net defined benefit plan surpluses		13		30

Cash surrender value of life insurance policies		308		302

Equity method investments		156		167

Deferred commissions		71		8

Other non-current assets		24		98

Total other non-current assets		572		605

Note 14: Payables, Accruals and Provisions



	September 30,		December 31,

	2018		2017

Trade payables		140		307

Accruals		842		1,477

Provisions		99		166

Other current liabilities		210		136

Total payables, accruals and provisions		1,291		2,086

Note 15: Provisions and Other Non-Current Liabilities



	September 30,		December 31,

	2018		2017

Net defined benefit plan obligations		688		984

Deferred compensation and employee incentives		137		159

Provisions		55		124

Uncertain tax positions		147		337

Other non-current liabilities		33		136

Total provisions and other non-current liabilities		1,060		1,740

Note 16: Capital

Share repurchases

The Company may buy back shares (and subsequently cancel them) from time to time as part of its capital strategy. Share repurchases are effected under a normal course issuer bid (“NCIB”). In May 2018, the Company renewed its NCIB for an additional 12 months. Under the renewed NCIB, the Company may repurchase up to 35.5 million common shares between May 30, 2018 and May 29, 2019 in open market transactions on the TSX, the NYSE and/or other exchanges and alternative trading systems, if eligible, or by such other means as may be permitted by the TSX and/or NYSE or under applicable law, including private agreement purchases if the Company receives an issuer bid exemption order from applicable securities regulatory authorities in Canada for such purchases. The price that the Company will pay for shares in open market transactions under the NCIB will be the market price at the time of purchase or such other price as may be permitted by TSX. There were no private agreement purchases in 2018. In the nine months ended September 30, 2017, the Company privately repurchased 6.0 million common shares at a discount to the then-prevailing market price.

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Details of share repurchases were as follows:



	Three months ended September 30,				Nine months ended September 30,

	2018		2017		2018		2017

Share repurchases (millions of U.S. dollars)		129		230		488		808

Shares repurchased (number in millions)		3.1		5.0		12.2		18.5

Share repurchases — average price per share in U.S. dollars	$	41.13	$	46.03	$	39.95	$	43.60

Decisions regarding any future repurchases will depend on factors such as market conditions, share price, and other opportunities to invest capital for growth. The Company may elect to suspend or discontinue its share repurchases at any time, in accordance with applicable laws. From time to time when the Company does not possess material nonpublic information about itself or its securities, it may enter into a pre-defined plan with its broker to allow for the repurchase of shares at times when the Company ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Any such plans entered into with the Company’s broker will be adopted in accordance with applicable Canadian securities laws and the requirements of Rule 10b5-1 under the U.S. Securities Exchange Act of 1934, as amended. In August 2018, the Company entered into such a plan with its broker to allow for repurchases following the expiry of the substantial issuer bid/tender offer in October 2018. In connection with entering into this plan, the Company recorded a $512 million liability in “Other financial liabilities” within current liabilities at September 30, 2018 with a corresponding amount recorded in equity in the consolidated statement of financial position.

Dividends

Dividends on common shares are declared in U.S. dollars. In the consolidated statement of cash flow, dividends paid on common shares are shown net of amounts reinvested in the Company under its dividend reinvestment plan. Details of dividends declared per common share and dividends paid on common shares are as follows:



	Three months ended September 30,				Nine months ended September 30,

	2018		2017		2018		2017

Dividends declared per common share	$	0.345	$	0.345	$	1.035	$	1.035

Dividends declared		242		246		732		746

Dividends reinvested		(10)		(9)		(25)		(26)

Dividends paid		232		237		707		720

Note 17: Supplemental Cash Flow Information

Details of “Other” in the consolidated statement of cash flow are as follows:



	Three months ended September 30,				Nine months ended September 30,

	2018		2017		2018		2017

Non-cash employee benefit charges		39		35		115		123

Net losses (gains) on foreign exchange and derivative financial instruments		8		52		(9)		141

Other		13		(24)		12		10

		60		63		118		274

Details of “Changes in working capital and other items” are as follows:



	Three months ended September 30,				Nine months ended September 30,

	2018		2017		2018		2017

Trade and other receivables		3		58		64		61

Prepaid expenses and other current assets		(49)		11		(30)		18

Other financial assets		7		6		48		43

Payables, accruals and provisions		133		98		(63)		(141)

Deferred revenue		(57)		(60)		(12)		(16)

Other financial liabilities		(4)		(6)		(50)		(51)

Income taxes		29		99		27		107

Other⁽¹⁾		(25)		(15)		(47)		(49)

		37		191		(63)		(28)

(1)	Includes $(8) million (2017—$(6) million) and $(22) million (2017—$(21) million related to employee benefit plans for the three and nine months ended September 30, 2018 and 2017, respectively.

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Details of income taxes paid are as follows:



	Three months ended September 30,				Nine months ended September 30,

	2018		2017		2018		2017

Operating activities — continuing operations		(12)		(7)		(55)		(26)

Operating activities — discontinued operations		(43)		(36)		(95)		(90)

Investing activities — discontinued operations		-		-		-		17

Total income taxes paid		(55)		(43)		(150)		(99)

Note 18: Contingencies

Lawsuits and legal claims

The Company is engaged in various legal proceedings, claims, audits and investigations that have arisen in the ordinary course of business. These matters include, but are not limited to, employment matters, commercial matters, defamation claims and intellectual property infringement claims. The outcome of all of the matters against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on the Company’s financial condition taken as a whole.

Uncertain tax positions

The Company is subject to taxation in numerous jurisdictions and is routinely under audit by many different taxing authorities in the ordinary course of business. There are many transactions and calculations during the course of business for which the ultimate tax determination is uncertain, as taxing authorities may challenge some of the Company’s positions and propose adjustments or changes to its tax filings.

As a result, the Company maintains provisions for uncertain tax positions that it believes appropriately reflect its risk. These provisions are made using the Company’s best estimates of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of each reporting period and adjusts them based on changing facts and circumstances. Due to the uncertainty associated with tax audits, it is possible that at some future date, liabilities resulting from such audits or related litigation could vary significantly from the Company’s provisions. However, based on currently enacted legislation, information currently known by the Company and after consultation with outside tax advisors, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on the Company’s financial condition taken as a whole.

Note 19: Related Party Transactions

As of September 30, 2018, Woodbridge beneficially owned approximately 64% of the Company’s shares.

In April 2018, the Company sold a Canadian wholly-owned subsidiary to a company affiliated with Woodbridge for $16 million. The subsidiary’s assets consisted of accumulated losses that management did not expect to utilize against future taxable income prior to their expiry. As such, no tax benefit for the losses had been recognized in the consolidated financial statements. Under Canadian law, certain losses may only be transferred to related companies, such as those affiliated with Woodbridge. A gain of $16 million was recorded within “Other operating gains, net” within the consolidated income statement. In connection with this transaction, the board of directors’ Corporate Governance Committee obtained an independent fairness opinion. The Company utilized the independent fairness opinion to determine that the negotiated price between the Company and the purchaser was reasonable. After receiving the recommendation of the Corporate Governance Committee, the board of directors approved the transaction. Directors who were not considered independent because of their positions with Woodbridge refrained from deliberating and voting on the matter at both the committee and board meetings.

In October 2018, the Company returned approximately $6.5 billion to its shareholders pursuant to a substantial issuer bid/tender offer under which the Company repurchased approximately 138 million shares at a price of $47 per share. As part of this transaction, Woodbridge sold approximately 88.9 million shares through a proportionate tender which allowed it to maintain its equity ownership in Thomson Reuters of approximately 64%. See note 20.

Except for the above transactions, there were no new significant related party transactions during the nine months ended September 30, 2018. Refer to “Related party transactions” disclosed in note 29 of the Company’s consolidated financial statements for the year ended December 31, 2017, which are included in the Company’s 2017 annual report, for information regarding related party transactions.

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Note 20: Subsequent Events

Financial & Risk Strategic Partnership Transaction

On October 1, 2018, the Company closed the sale of a 55% interest in its Financial & Risk business to private equity funds managed by Blackstone. An affiliate of Canada Pension Plan Investment Board and an affiliate of GIC invested alongside Blackstone. The Company retained a 45% interest in the business, which is now known as Refinitiv. Beginning with its results for the fourth quarter of 2018, Thomson Reuters will include the Company’s 45% share of Refinitiv’s results reported in a single line item on the Company’s consolidated income statement titled “Share of post-tax earnings in equity method investments”. To facilitate the separation, Refinitiv and Thomson Reuters are providing certain transition services to each other for a specified period, including technology and administrative services.

The Company received approximately $17 billion in gross proceeds at closing, which remain subject to purchase price adjustments, and expects to record a post-tax gain of approximately $3.0 billion from the transaction.

Since the closing of the Financial & Risk transaction, the Company has repaid approximately $4 billion of debt from the proceeds of the Financial & Risk transaction, including through a recently completed debt redemption and debt tender offer. The repayments were as follows:



Full / Partial Redemption	Notes Repaid	Principal Amount (in millions)

Full Redemption	3.369% Notes, due 2019	C$500⁽¹⁾

Full Redemption	4.35% Notes, due 2020	C$750⁽²⁾⁽³⁾

Full Redemption	4.70% notes, due 2019	$500⁽³⁾

Partial Redemption	3.95% notes, due 2021	$211 million repaid of $350 million principal amount⁽³⁾

Partial Redemption	3.85% notes, due 2024	$208 million repaid of $450 million principal amount⁽³⁾

Partial Redemption	4.50% notes, due 2043	$231 million repaid of $350 million principal amount⁽³⁾

(1)	Converted to US$478 million principal amount at an interest rate of 2.852% after cross-currency swap agreements that were designated as cash flow hedges.

(2)	Converted to US$731 million principal amount at an interest rate of 3.911% after cross-currency swap agreements that were designated as cash flow hedges.

(3)	The notes were classified as “Long-term indebtedness” within the consolidated statement of financial position at September 30, 2018 based on their maturity date, as the early repayment in October 2018 was contingent on the Company closing the sale of a 55% interest in its Financial & Risk business.

The Company also repaid its outstanding commercial paper borrowings of $1,739 million.

In October 2018, the Company returned approximately $6.5 billion to shareholders pursuant to a substantial issuer bid/tender offer under which the Company repurchased approximately 138 million shares at a price of $47 per share. The Company’s principal shareholder, Woodbridge, made a proportionate tender, which resulted in it tendering the number of shares that allowed it to maintain its 64% proportionate equity ownership in Thomson Reuters following completion of the transaction.

The Company plans to return approximately $2.5 billion to shareholders through a return of capital transaction, which was announced on October 8, 2018 and is expected to be completed on or about November 27, 2018. The transaction, which is subject to shareholder and court approval, consists of a cash distribution of $4.45 per common share and a share consolidation, or “reverse stock split”, which will reduce the number of outstanding common shares on a basis that is proportional to the cash distribution.

In connection with the closing of the transaction, Reuters News and Refinitiv entered into a 30-year agreement for Reuters News to supply news and editorial content to the partnership for a minimum of $325 million per year. For the duration of the news agreement, the Company will grant the Refinitiv partnership a license to permit it to brand its products/services and company name with the “Reuters” mark, subject to applicable limitations and restrictions set forth in a trademark license agreement.

Share repurchases

In October 2018, the Company repurchased 11.1 million of its common shares under its NCIB for $512 million at an average price per share of $46.28.

Acquisition

In October 2018, the Company signed a definitive agreement to acquire Integration Point, a provider of global trade management operations. The completion of the acquisition is subject to customary regulatory approvals and closing conditions.

Dividends

In October 2018, the Company’s board of directors approved a $0.02 per share increase in the annualized dividend to $1.40 per common share, which will become effective with the Company’s quarterly dividend to be paid in the fourth quarter of 2018. A quarterly dividend of $0.35 will be paid on December 17, 2018 to shareholders of record as of November 15, 2018.

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Segment reporting changes

Effective October 1, 2018, The Company transitioned from a product-centric structure to a customer-centric structure, and remapped its business units into the following reportable segments:

^●

Legal Professionals

^●

Tax Professionals

^●

Corporates

^●

Global Print

^●

Reuters News

The Company will begin to report on the new segment basis beginning with the fourth-quarter 2018 results.

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EXHIBIT 99.3 - CEO 302 CERTIFICATION

Exhibit 99.3

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James C. Smith, certify that:

1.	I have reviewed this report on Form 6-K of Thomson Reuters Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018

/s/ James C. Smith

James C. Smith

President and Chief Executive Officer

EXHIBIT 99.4 - CFO 302 CERTIFICATION

Exhibit 99.4

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephane Bello, certify that:

1.	I have reviewed this report on Form 6-K of Thomson Reuters Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018

/s/ Stephane Bello

Stephane Bello

Executive Vice President and Chief Financial Officer

EXHIBIT 99.5 - CEO 906 CERTIFICATION

Exhibit 99.5

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of Thomson Reuters Corporation (the “Corporation”) on Form 6-K for the period ended September 30, 2018, as furnished to the Securities and Exchange Commission on the date hereof (the “Report”), I, James C. Smith, President and Chief Executive Officer of the Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: November 8, 2018

/s/ James C. Smith

James C. Smith

President and Chief Executive Officer

A signed original of this written statement has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 99.6 - CFO 906 CERTIFICATION

Exhibit 99.6

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of Thomson Reuters Corporation (the “Corporation”) on Form 6-K for the period ended September 30, 2018, as furnished to the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephane Bello, Executive Vice President and Chief Financial Officer of the Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: November 8, 2018

/s/ Stephane Bello

Stephane Bello

Executive Vice President and Chief Financial Officer

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