EXHIBIT 99.1

THOMSON REUTERS CORPORATION

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 our financial condition and results of operations. We recommend that you read this in conjunction with our consolidated interim financial statements for the three and six months ended June 30, 2014, our 2013 annual consolidated financial statements and our 2013 annual management’s discussion and analysis. This management’s discussion and analysis is dated as of July 30, 2014. 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 2014 outlook 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 “Cautionary Note Concerning Factors That May Affect Future Results” section of this management’s discussion and analysis.

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

		Page
·	Overview – a brief discussion of our business	1
·	Results of Operations – a comparison of our current and prior-year period results	3
·	Liquidity and Capital Resources – a discussion of our cash flow and debt	15
·	Outlook – our current financial outlook for 2014	20
·	Related Party Transactions– a discussion of transactions with our principal and controlling shareholder, The Woodbridge Company Limited (Woodbridge), and others	21
·	Subsequent Events – a discussion of material events occurring after June 30, 2014 and through the date of this management’s discussion and analysis	22
·	Changes in Accounting Policies – a discussion of changes in our accounting policies and recent accounting pronouncements	22
·	Critical Accounting Estimates and Judgments – a discussion of critical estimates and judgments made by our management in applying accounting policies	22
·	Additional Information – other required disclosures	22
·	Appendices – supplemental information and discussion	24

We prepare our consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). This management’s discussion and analysis also includes certain non-IFRS financial measures which we use as supplemental indicators of our operating performance and financial position and for internal planning purposes.

References in this discussion to “$” and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars. In addition, “bp” means “basis points” and “na” and “n/m” refer to “not applicable” and “not meaningful”, respectively. 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.

OVERVIEW

Our company -We are the leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision-makers. We deliver this must-have insight to the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world’s most trusted news organization.

We derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Over the years, this has proven to be capital efficient and cash flow generative, and it has enabled us to maintain leading and scalable positions in our chosen markets. Within each of the market segments that we serve, we bring in-depth understanding of our customers’ needs, flexible technology platforms, proprietary content and scale. We believe our ability to embed our solutions into customers’ workflows is a significant competitive advantage as it leads to strong customer retention.

Our company is organized as a group of strategic business units: Financial & Risk, Legal, Tax & Accounting and Intellectual Property & Science, supported by a corporate center. We believe this structure allows us to best meet the complex demands of our customers, capture growth opportunities and achieve efficiencies. We also operate a Global Growth & Operations (GGO) organization which works across our business units to identify opportunities in faster growing geographic areas. We do not report GGO as a separate business unit, but rather include its results within our strategic business units. Our Reuters News business is managed and reported within our corporate center.

1

KEY HIGHLIGHTS Second quarter performance:  Our second quarter results built upon the good start we achieved in the first quarter of the year. Our performance in the second quarter and the first six months of 2014 was consistent with our full-year expectations. In the second quarter, revenues from ongoing businesses increased 1% before currency(1), reflecting 5% combined growth from our Legal, Tax & Accounting and Intellectual Property & Science businesses, which was partially offset by a 2% decline in our Financial & Risk business. The overall increase in revenues from ongoing businesses before currency was due to contributions from acquisitions as revenues from existing businesses were essentially unchanged.
	●	Despite a 2% revenue decrease, we believe that Financial & Risk is continuing to make progress. Financial & Risk’s revenue decline reflected the lag effect of negative net sales over the past 12 months on its revenue, and lower market-driven transaction revenues. A 1% contribution from acquisitions was more than offset by a 3% decline in existing businesses. Led by Eikon and Elektron, Financial & Risk’s net sales continued to improve and were positive in the second quarter. This net sales performance was better than both the prior-year period and the first quarter of 2014. We expect Financial & Risk’s net sales performance to continue to improve in the second half of the year compared to the prior-year period. The business continued to drive cost savings and expanded margins by executing on its operational priorities and simplification program initiatives.
	●	Legal’s revenues rose 1% due to contributions from acquisitions. Revenues from existing businesses were essentially unchanged.  A 6% increase in Legal’s Solutions businesses was offset by a 9% decline in U.S. print and a 1% decline in U.S. online legal information.
	●	Tax & Accounting had a strong second quarter, with revenues increasing 14%, of which 10% was from existing businesses. This growth was driven by the continued strength of our offerings and healthy conditions prevailing in the global tax and accounting markets.
	●	Intellectual Property & Science also reported good growth, with revenues increasing 7% driven by 5% growth from existing businesses. Revenue growth reflected strong growth in recurring revenues.
	●	Our Global Growth & Operations (GGO) unit, which works across our businesses to combine our global capabilities, increased revenues 9%, of which 5% was from existing businesses. On an annualized basis, GGO comprises about $1.2 billion of our company’s total revenues. GGO’s results are included in each of our four segments.
Adjusted EBITDA(1) increased 2% and the related margin increased 20bp to 27.8% despite higher charges associated with our simplification program initiatives in the current-year period. Excluding charges from both periods, our consolidated adjusted EBITDA margin was 28.7% in the second quarter of 2014 compared to 27.9% in the prior-year period, an increase of 80bp. The increase in adjusted EBITDA margin reflected the cost savings from our earlier simplification program initiatives, which more than offset the margin impact of a 3% decline in revenues from existing businesses within our Financial & Risk segment in the quarter.Underlying operating profit(1) increased 2%, and the related margin increased 10bp largely reflecting the same factors that impacted adjusted EBITDA.Excluding charges from both periods, our consolidated underlying operating profit margin was 19.3% in the second quarter of 2014 compared to 18.6% in the prior-year period, an increase of 70bp. Adjusted EPS(1) was $0.51 per share, which represented a $0.03 increase compared to the prior-year period. In the first six months of 2014, we returned over $600 million to shareholders through our buyback program. During 2014, we remain focused on:
	●	Transforming from a portfolio company to an enterprise model to realize more benefits from simplification and greater scale;
	●	Shifting our growth focus towards organic initiatives (rather than acquisitions), with greater emphasis on innovation and investing organically in high growth opportunities; and
	●	Delivering strong and consistent cash flow growth to reinvest in our growth businesses while returning capital to our shareholders both through dividends and increased share repurchases.
2014 Outlook:  We recently reaffirmed our 2014 full-year business outlook that we originally communicated in February. For 2014, we continue to expect revenues to be comparable to 2013(1), adjusted EBITDA margin(1) between 26.0% and 27.0%, underlying operating profit margin(1) between 17.0% and 18.0%, and free cash flow(1) between $1.3 billion and $1.5 billion. Our 2014 outlook includes the impact of an estimated $120 million of previously announced charges expected to be incurred this year. The free cash flow outlook for 2014 reflects the estimated cash impact of the charges incurred in 2013 and expected to be incurred in 2014, as well as the impact of the loss of free cash flow from Other Businesses (approximately $375 million in the aggregate). Additional information is provided in the “Outlook” section of this management’s discussion and analysis.
(1)	Refer to Appendix A for additional information on non-IFRS financial measures.

2

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, our non-recurring revenues can cause changes in our performance from quarter to consecutive quarter. Additionally, the release of certain print-based offerings can be seasonal as can certain product releases for the regulatory markets, which tend to be concentrated at the end of the year. As a consequence, the results of certain of our segments can be impacted by seasonality to a greater extent than our consolidated revenues and operating profit.

USE OF NON-IFRS FINANCIAL MEASURES

In addition to our results reported in accordance with IFRS, we use certain non-IFRS financial measures as supplemental indicators of our operating performance and financial position and for internal planning purposes. These non-IFRS financial measures include:

· Revenues from ongoing businesses;

· Revenues at constant currency (before currency or revenues excluding the effects of foreign currency);

· Underlying operating profit and the related margin;

· Adjusted EBITDA and the related margin;

· Adjusted EBITDA less capital expenditures and the related margin;

· Adjusted earnings and adjusted earnings per share;

· Net debt;

· Free cash flow; and

· Free cash flow from ongoing businesses.

We report non-IFRS financial measures as we believe their use provides more insight into and understanding of our performance. 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 the sections of this management’s discussion and analysis entitled “Results of Operations”, “Liquidity and Capital Resources” and Appendix B for reconciliations of these non-IFRS financial measures to the most directly comparable IFRS financial measures.

RESULTS OF OPERATIONS

BASIS OF PRESENTATION

In this management’s discussion and analysis, we discuss our results of operations on both an IFRS and non-IFRS basis. Both bases exclude discontinued operations and include the performance of acquired businesses from the date of purchase.

Consolidated results

We discuss our consolidated results from continuing operations on an IFRS basis, as reported in our consolidated income statement. Additionally, we discuss our consolidated results on a non-IFRS basis using the measures described in the “Use of Non-IFRS Financial Measures” section. Among other adjustments, our non-IFRS revenue and profitability measures as well as free cash flow from ongoing businesses exclude Other Businesses, which is an aggregation of businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification.

Segment results

We discuss the results of our four reportable segments as presented in our consolidated interim financial statements for the three and six months ended June 30, 2014: Financial & Risk, Legal, Tax & Accounting and Intellectual Property & Science.

We also provide information on “Corporate & Other” and “Other Businesses”. These categories neither qualify as a component of another reportable segment nor as a separate reportable segment.

· Corporate & Other includes expenses for corporate functions, certain share-based compensation costs and the Reuters News business, which is comprised of the Reuters News Agency and consumer publishing.

· Other Businesses is an aggregation of businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. The results of Other Businesses are not comparable from period to period as the composition of businesses changes due to the timing of completed divestitures.

3

See note 3 of our consolidated interim financial statements for the three and six months ended June 30, 2014 which includes a reconciliation of results from our reportable segments to consolidated results as reported in our consolidated income statement.

In analyzing our revenues from ongoing businesses, at both the consolidated and segment levels, we separately measure the effect of foreign currency changes. We separately measure both the revenue growth of existing businesses and the impact of acquired businesses on our revenue growth, on a constant currency basis.

CONSOLIDATED RESULTS

	Three months ended June 30,									Six months ended June 30,
(millions of U.S. dollars, except per share amounts)	2014			2013			Change			2014			2013			Change
IFRS Financial Measures
Revenues		3,159			3,163			-			6,289			6,338			(1	%)
Operating profit		381			597			(36	%)		740			987			(25	%)
Diluted earnings per share	$	0.31		$	0.30			3	%	$	0.65		$	0.26			150	%
Non-IFRS Financial Measures
Revenues from ongoing businesses		3,158			3,108			2	%		6,287			6,205			1	%
Adjusted EBITDA		877			858			2	%		1,697			1,615			5	%
Adjusted EBITDA margin		27.8	%		27.6	%		20	bp		27.0	%		26.0	%		100	bp
Adjusted EBITDA less capital expenditures		652			670			(3	%)		1,224			1,077			14	%
Adjusted EBITDA less capital expenditures margin		20.6	%		21.6	%		(100	)bp		19.5	%		17.4	%		210	bp
Underlying operating profit		581			569			2	%		1,109			1,031			8	%
Underlying operating profit margin		18.4	%		18.3	%		10	bp		17.6	%		16.6	%		100	bp
Adjusted earnings per share	$	0.51		$	0.48			6	%	$	0.97		$	0.86			13	%

Foreign currency effects. With respect to the average foreign exchange rates that we use to report our results, the U.S. dollar strengthened against the Japanese yen, but weakened against the Euro and the British pound sterling in the second quarter of 2014 compared to the same period in 2013. Given our currency mix of revenues and expenses around the world, these fluctuations had a positive impact on our revenue growth, and on our adjusted EBITDA and underlying operating profit margins in the second quarter. 

Revenues.

	Three months ended June 30,				Percentage change:
(millions of U.S. dollars)	2014		2013		Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues from ongoing businesses		3,158		3,108		-		1%		1%		1%		2%
Other Businesses		1		55		n/m		n/m		n/m		n/m		n/m
Revenues		3,159		3,163		n/m		n/m		n/m		n/m		-

	Six months ended June 30,				Percentage change:
(millions of U.S. dollars)	2014		2013		Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues from ongoing businesses		6,287		6,205		-		1%		1%		-		1%
Other Businesses		2		133		n/m		n/m		n/m		n/m		n/m
Revenues		6,289		6,338		n/m		n/m		n/m		n/m		(1%)

Revenues from ongoing businesses increased on a constant currency basis in both the second quarter  and the six-month period as our Legal, Tax & Accounting and Intellectual Property & Science segments, which increased 5% on a combined basis, were partially offset by a 2% decline in our Financial & Risk segment. Acquisitions contributed to revenue growth across all segments in both periods. Revenues from existing businesses were essentially unchanged as growth in our Tax & Accounting and Intellectual Property & Science segments offset a 3% decline in Financial & Risk. The decline in Financial & Risk was primarily due to the lag effect of negative net sales over the prior 12 months on our current period revenue, reflecting our largely subscription-based model.

4

Our GGO organization is focused on supporting our businesses in the following geographic areas: 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. Revenues from these geographic areas represented 10% and 9% of our revenues in the second quarter and six-month period, respectively.  On a constant currency basis, revenues from our GGO regions grew 9% and 8% (5% and 4% from existing businesses) in the second quarter and six-month period, respectively.

Operating profit, underlying operating profit, adjusted EBITDA and adjusted EBITDA less capital expenditures.

	Three months ended June 30,									Six months ended June 30,
(millions of U.S. dollars)	2014			2013			Change			2014			2013			Change
Operating profit		381			597			(36	%)		740			987			(25	%)
Adjustments to remove:
Amortization of other identifiable intangible assets		165			157						328			317
Fair value adjustments		33			(29	)					35			(91	)
Other operating losses (gains), net		2			(136	)					5			(130	)
Operating profit from Other Businesses		-			(20	)					1			(52	)
Underlying operating profit		581			569			2	%		1,109			1,031			8	%
Remove: depreciation and amortization of computer software (excluding Other Businesses)		296			289						588			584
Adjusted EBITDA(1)		877			858			2	%		1,697			1,615			5	%
Remove: capital expenditures, less proceeds from disposals (excluding Other Businesses)		225			188						473			538
Adjusted EBITDA less capital expenditures(1)		652			670			(3	%)		1,224			1,077			14	%
Underlying operating profit margin		18.4	%		18.3	%		10	bp		17.6	%		16.6	%		100	bp
Adjusted EBITDA margin		27.8	%		27.6	%		20	bp		27.0	%		26.0	%		100	bp
Adjusted EBITDA less capital expenditures margin		20.6	%		21.6	%		(100	)bp		19.5	%		17.4	%		210	bp

(1) See Appendix B for a reconciliation of earnings from continuing operations to adjusted EBITDA and adjusted EBITDA less capital expenditures.

Operating profit decreased in both periods primarily due to a gain in 2013 on the sale of our Investor Relations, Public Relations and Multimedia Solutions businesses (Corporate Services) and unfavorable fair value adjustments. Operating profit was further impacted by charges, primarily severance, associated with our simplification program initiatives. In the second quarter of 2014, we incurred $30 million of charges compared to $9 million in the prior-year period. In the six-month period of 2014, we incurred $40 million of charges compared to $87 million in the prior-year period. As previously announced, we expect to incur approximately $120 million of charges in 2014.

In both periods, the increase in adjusted EBITDA and the related margins reflected lower expenses, which resulted from the reduction of our cost structure and favorable foreign exchange. The increase in adjusted EBITDA and the related margin for the six-month period also reflected lower charges compared to the prior-year period. Underlying operating profit and the related margins increased in both periods primarily due to the same factors that impacted adjusted EBITDA. Foreign currency increased adjusted EBITDA and underlying operating profit margins by 30bp and 20bp, respectively, in the second quarter, and adjusted EBITDA and underlying operating profit margins by 50bp and 30bp, respectively, in the six-month period. Depreciation and amortization increased slightly in both periods.

Adjusted EBITDA less capital expenditures decreased in the second quarter as higher adjusted EBITDA was offset by higher capital expenditures.  Adjusted EBITDA less capital expenditures increased in the six-month period due to higher adjusted EBITDA and lower capital expenditures. The fluctuations in capital expenditures in both periods reflected timing of spending.

As discussed above, in the second quarter of 2014, we continued to incur charges for simplification program initiatives and we continued to reduce our costs as a result of earlier simplification program initiatives. We believe that our adjusted EBITDA and underlying operating profit margins excluding these charges from each period provide a better measurement of our performance. Excluding charges from both periods, our consolidated adjusted EBITDA margin increased 80bp to 28.7% in the second quarter, as benefits of our earlier simplification program initiatives more than offset the impact of the 3% decline in revenues from existing businesses in our Financial & Risk segment. On the same basis, our consolidated adjusted EBITDA margin increased 20bp to 27.6% in the six-month period of 2014 (which is less than the increase including the charges), because benefits from simplification program initiatives in the first quarter were not enough to mitigate the decline in first quarter revenues from existing businesses in our Financial & Risk segment. Excluding charges from both periods, our consolidated underlying operating profit margin increased 70bp to 19.3% in the second quarter, and increased 30bp to 18.3% in the six-month period due to the same factors that impacted adjusted EBITDA margin. Our simplification program initiatives are expected to generate additional benefits in 2014, and by 2015, we expect to generate approximately $300 million of annual cost savings from these initiatives due to lower ongoing staff costs.

5

Operating expenses.

	Three months ended June 30,									Six months ended June 30,
(millions of U.S. dollars)	2014			2013			Change			2014			2013			Change
Operating expenses		2,315			2,256			3	%		4,628			4,580			1	%
Adjustments to remove:
Fair value adjustments(1)		(33	)		29						(35	)		91
Other Businesses		(1	)		(35	)					(3	)		(81	)
Operating expenses, excluding fair value adjustments and Other Businesses		2,281			2,250			1	%		4,590			4,590			-

(1) Fair value adjustments primarily represent non-cash accounting adjustments from the revaluation of embedded foreign exchange derivatives within certain customer contracts due to fluctuations in foreign exchange rates and mark-to-market adjustments from certain share-based awards.

Operating expenses, excluding fair value adjustments and Other Businesses, increased slightly in the second quarter, and were unchanged in the first six months compared to the prior-year periods, respectively. All periods included charges associated with our simplification program initiatives, which were $30 million in the second quarter ($9 million – 2013) and $40 million in the six-month period ($87 million – 2013). Both periods benefited from lower expenses due to the reduction of our cost structure which resulted from these initiatives. Additionally, both periods included higher expenses associated with newly acquired businesses.

Depreciation and amortization.

	Three months ended June 30,							Six months ended June 30,
(millions of U.S. dollars)	2014		2013		Change			2014		2013		Change
Depreciation		99		101		(2	%)		197		208		(5	%)
Amortization of computer software		197		188		5	%		391		376		4	%
Subtotal		296		289		2	%		588		584		1	%
Amortization of other identifiable intangible assets		165		157		5	%		328		317		3	%

· Depreciation and amortization of computer software on a combined basis increased in both periods due to higher amortization reflecting our investments in products, such as Thomson Reuters Eikon, and the amortization of assets from recently acquired businesses, partly offset by the completion of depreciation of fixed assets acquired in previous years.

· Amortization of other identifiable intangible assets increased in both periods due to amortization from newly-acquired assets which more than offset decreases from the completion of amortization for certain identifiable assets acquired in previous years. 

Other operating (losses) gains, net.

	Three months ended June 30,					Six months ended June 30,
(millions of U.S. dollars)	2014			2013		2014			2013
Other operating (losses) gains, net		(2	)		136		(5	)		130

In the second quarter and six months ended June 30, 2013, other operating gains, net, were primarily comprised of a gain from the sale of our Corporate Services business, which was partially offset by acquisition-related costs.    

Net interest expense.

	Three months ended June 30,							Six months ended June 30,
(millions of U.S. dollars)	2014		2013		Change			2014		2013		Change
Net interest expense		111		124		(10	%)		219		239		(8	%)

The decrease in net interest expense in both periods was primarily due to lower interest costs on our net pension and debt obligations. In the second half of 2013, we contributed $500 million to our pension plans which reduced our net obligations, as well as our ongoing interest cost associated with the net obligations. The decrease in interest from debt obligations reflected timing of 2013 debt issuances and repayments (see the “Liquidity and Capital Resources - Cash Flow” section of this management’s discussion and analysis for additional information). As of June 30, 2014, over 95% of our long-term debt obligations paid interest at fixed rates (after swaps), so the balance of net interest expense was relatively unchanged.

6

Other finance income (costs).

	Three months ended June 30,					Six months ended June 30,
(millions of U.S. dollars)	2014		2013			2014		2013
Other finance income (costs)		29		(17	)		57		(72	)

Other finance income (costs) primarily included gains or losses realized from changes in foreign currency exchange rates on certain intercompany funding arrangements and gains or losses related to freestanding derivative instruments.

Share of post-tax earnings in equity method investments.

	Three months ended June 30,				Six months ended June 30,
(millions of U.S. dollars)	2014		2013		2014		2013
Share of post-tax earnings in equity method investments		1		9		1		19

The second quarter and six months ended June 30, 2013 included our share of post-tax earnings from our former joint venture in Omgeo, a provider of trade management services, which was sold in the fourth quarter of 2013.

Tax expense.

	Three months ended June 30,				Six months ended June 30,
(millions of U.S. dollars)	2014		2013		2014		2013
Tax expense		40		209		27		456

The comparability of our tax expense was impacted by various transactions and accounting adjustments during each period. Additionally, 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 distorts the reported effective tax rate, tax expense or benefit in interim periods is not necessarily indicative of tax expense for the full year.

In the three and six months ended June 30, 2013, we recorded tax charges of $161 million and $396 million, respectively, in connection with intercompany sales of certain technology and content assets between our wholly owned subsidiaries. These transactions were part of the consolidation of the ownership and management of our technology and content assets and are part of our simplification program. The intercompany gains that arose from these transactions were eliminated in consolidation. 

7

The following table sets forth significant components within income tax expense that impact comparability from period to period, including tax expense associated with items that are removed from adjusted earnings:

(Expense) benefit	Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars)	2014			2013			2014			2013
Discrete tax items:
Deferred tax adjustment(1)		(21	)		-			(21	)		-
Consolidation of technology and content assets(2)		-			(161	)		-			(396	)
Uncertain tax positions(3)		-			-			3			2
Corporate tax rates(4)		-			-			2			1
Other(5)		7			10			16			21
Subtotal		(14	)		(151	)		-			(372	)
Tax related to:
Sale of businesses(6)		-			(15	)		-			(23	)
Operating profit of Other Businesses		-			(5	)		-			(13	)
Fair value adjustments		8			(14	)		7			(23	)
Other items		(4	)		(2	)		(3	)		1
Subtotal		4			(36	)		4			(58	)
Total		(10	)		(187	)		4			(430	)

(1) Relates to the write-off of deferred tax assets established in prior years.

(2) Relates to the consolidation of the ownership and management of our technology and content assets.

(3) Relates to the reversal of tax reserves in connection with favorable developments regarding tax disputes.

(4) Relates to the net reduction of deferred tax liabilities due to changes in corporate tax rates that were substantively enacted in certain jurisdictions.

(5) Primarily relates to the recognition of deferred tax benefits in connection with acquisitions.

(6) Primarily relates to the sale of the Corporate Services business.

Because the items described above impact the comparability of our tax expense for each period, we remove them from our calculation of adjusted earnings, along with the pre-tax items to which they relate. Accordingly, in our calculation of adjusted earnings for the three and six months ended June 30, 2013, we removed the impact of the tax charges associated with the consolidation of technology and content assets. Within our tax provision on adjusted earnings, we amortize a portion of the taxes associated with the intercompany sales on a straight-line basis over seven years (see note 2 below). 

The computation of our adjusted tax expense is set forth below:

(Expense) benefit	Three months ended June 30,						Six months ended June 30,
(millions of U.S. dollars)	2014			2013			2014			2013
Tax expense		(40	)		(209	)		(27	)		(456	)
Remove: Items from above impacting comparability		10			187			(4	)		430
Other adjustments:
Interim period effective tax rate normalization(1)		7			19			(5	)		12
Tax charge amortization(2)		(21	)		(24	)		(43	)		(32	)
Total tax expense on adjusted earnings		(44	)		(27	)		(79	)		(46	)

(1) Adjustment to reflect income taxes based on estimated full-year effective tax rate. Reported earnings or loss for interim periods reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which we operate. The adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.

(2) For the year ended December 31, 2013, we recorded $604 million of deferred tax charges associated with the consolidation of the ownership and management of our technology and content assets. Within our tax expense on adjusted earnings, we amortize these charges on a straight-line basis over seven years. We believe this treatment more appropriately reflects our tax position because these charges are expected to be paid over seven years, in varying annual amounts, in conjunction with the repayments of interest-bearing notes that were issued as consideration in the original transactions.

8

Net earnings and earnings per share.

(millions of U.S. dollars, except per share amounts)	Three months ended June 30,							Six months ended June 30,
	2014		2013		Change			2014		2013		Change
Net earnings		260		262		(1	%)		552		245		125	%
Diluted earnings per share	$	0.31	$	0.30		3	%	$	0.65	$	0.26		150	%

Net earnings decreased slightly in the second quarter as lower operating profit was offset by lower income tax expense. The related per share amount increased due to the impact of lower diluted weighted-average common shares outstanding as a result of share repurchases (see the “Liquidity and Capital Resources - Share repurchases” section of this management’s discussion and analysis for additional information). Net earnings and the related per share amounts increased in the six-month period primarily from lower tax expense. Both periods in 2013 included tax charges associated with the consolidation of the ownership and management of our technology and content assets.

Adjusted earnings and adjusted earnings per share.

(millions of U.S. dollars, except per share amounts and share data)	Three months ended June 30,									Six months ended June 30,
	2014			2013			Change			2014			2013			Change
Earnings attributable to common shareholders		249			248			-			531			217			145	%
Adjustments to remove:
Operating (profit) loss from Other Businesses		-			(20	)					1			(52	)
Fair value adjustments		33			(29	)					35			(91	)
Other operating losses (gains), net		2			(136	)					5			(130	)
Other finance (income) costs		(29	)		17						(57	)		72
Share of post-tax earnings in equity method investments		(1	)		(9	)					(1	)		(19	)
Tax on above items(1)		(4	)		36						(4	)		58
Discrete tax items(1)		14			151						-			372
Amortization of other identifiable intangible assets		165			157						328			317
Discontinued operations		-			(6	)					-			(6	)
Interim period effective tax rate normalization(1)		7			19						(5	)		12
Tax charge amortization(1)		(21	)		(24	)					(43	)		(32	)
Dividends declared on preference shares		-			(1	)					(1	)		(2	)
Adjusted earnings		415			403			3	%		789			716			10	%
Adjusted earnings per share (adjusted EPS)	$	0.51		$	0.48			6	%	$	0.97		$	0.86			13	%
Diluted weighted-average common shares (millions)		813.4			832.5						817.3			831.5

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

In the second quarter and the six-month period, adjusted earnings and the related per share amounts increased as higher underlying operating profit and lower interest expense were partly offset by higher income taxes. Additionally, the increase in adjusted earnings per share was partially attributable to lower diluted weighted-average common shares primarily due to share repurchases (see Liquidity and Capital Resources - Share repurchases). Foreign currency positively impacted adjusted earnings per share in the second quarter and the six-month period by $0.01 and $0.03, respectively, compared to the prior-year periods.

SEGMENT RESULTS

A discussion of the operating results of our Financial & Risk, Legal, Tax & Accounting and Intellectual Property & Science segments follows.

· Results from the Reuters News business are included in “Corporate & Other”. These results as well as Other Businesses are both excluded from our reportable segments as neither of them qualify as a component of our four reportable segments, nor as a separate reportable segment.

· We use segment operating profit to measure the operating performance of our reportable segments.

o The costs of centralized support services such as technology, news, real estate, accounting, procurement, legal and human resources are allocated to each segment based on usage or other applicable measures.

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o We define segment operating profit as operating profit before (i) amortization of other identifiable intangible assets; (ii) other operating gains and losses; (iii) certain asset impairment charges; (iv) corporate-related items; and (v) fair value adjustments. We use this measure because we do not consider these excluded items to be controllable operating activities for purposes of assessing the current performance of our reportable segments.

o We also use segment operating profit margin, which we define as segment operating profit as a percentage of revenues.

o Our definition of segment operating profit may not be comparable to that of other companies.

· As a supplemental measure of segment operating performance, we add back depreciation and amortization of computer software to segment operating profit to arrive at each segment’s EBITDA and the related margin as a percentage of revenues. See Appendix B of this management’s discussion and analysis for additional information.

Financial & Risk

(millions of U.S. dollars)	Three months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		1,655			1,660			(3%)		1%		(2%)		2%		-
EBITDA		426			420											1%
EBITDA margin		25.7	%		25.3	%										40bp
Segment operating profit		266			260											2%
Segment operating profit margin		16.1	%		15.7	%										40bp

(millions of U.S. dollars)	Six months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		3,313			3,335			(3%)		1%		(2%)		1%		(1%)
EBITDA		825			780											6%
EBITDA margin		24.9	%		23.4	%										150bp
Segment operating profit		506			460											10%
Segment operating profit margin		15.3	%		13.8	%										150bp

Revenues decreased on a constant currency basis as growth from acquired businesses was more than offset by a decline in revenues from existing businesses in the second quarter and six-month period. In both periods, the 3% decline in revenues from existing businesses was due to the lag effect of negative net sales over the past 12 monthson our current period revenues, reflecting our largely subscription-based model, as well as from a decline in market-driven transaction revenues. The decline in transaction revenues reflected significantly lower market volatility, which resulted in lower trading volumes across global markets including equity, credit and foreign exchange. Net sales were positive in the second quarter, an improvement from the negative net sales performances reported in the prior-year period and the first quarter of 2014. By region, net sales were positive in the Americas and Asia Pacific, and slightly negative, but much improved over the prior-year period, in Europe. We expect Financial & Risk’s net sales performance to continue to improve in the second half of the year compared to the prior-year period as a result of the migration of our customers to new products and packages. While in some instances pricing will be reduced as a result of this migration, the improving trend in net sales in 2014 is expected to lead to improving recurring revenue performance in 2015.

By geographic area, second quarter revenues in the Americas decreased 1% (4% from existing businesses), Europe, Middle East and Africa (EMEA) second quarter revenues decreased 4%, all from existing businesses, and Asia Pacific second quarter revenues increased 1% (essentially unchanged from existing businesses). For the six-month period, revenues decreased in the Americas and EMEA, but increased in Asia Pacific largely due to growth from acquired businesses.

Since the beginning of 2014, Financial & Risk continued to make progress on its operational execution which included the launch of Eikon 4.0 as well as a new “Know Your Customer” proposition in our Risk business. We also discontinued our legacy Reuters 3000Xtra product with over 120,000 customers upgraded to Eikon. In the second quarter and six months ended June 30, 2014, our simplification program led to higher operating profit and margin expansion in the business as we reduced our cost structure.  

In 2014, we are no longer reporting revenue information for four lines of businesses in our Financial & Risk segment, as the business is no longer managed under that structure. Financial & Risk is building a unified technology platform, which is enabling us to leverage the scale of a single Financial & Risk business, and also provides a vehicle for innovation and the creation of industry solutions. The unified technology platform strategy has enabled us to simplify our structure, remove costs and focus investment spending on areas that we believe provide the greatest growth and scale opportunities.

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Results by revenue type were:		Second Quarter 2014 Revenues
·	Subscription revenues decreased 2% (3% from existing businesses) in both the second quarter and six-month period reflecting the impact of negative, but improved, net sales over the past 12 months;
·	Transactions revenues decreased 4% (11% from existing businesses) in the second quarter and decreased 1% (7% from existing businesses) in the six-month period, driven by significantly lower market volatility which depressed trading volumes; and
·	Recoveries revenues (low-margin revenues that we collect and largely pass-through to a third party provider, such as stock exchange fees) were essentially unchanged in the second quarter and six-month period.

EBITDA and segment operating profit increased in the second quarter as cost savings resulting from earlier simplification initiatives were partially offset by higher charges for our continuing simplification program. We believe that Financial & Risk’s EBITDA margins excluding these charges from each period provide a better measurement of Financial & Risk’s performance. Excluding charges from both periods, Financial & Risk’s EBITDA margin increased 210bp to 27.6% in the second quarter, as benefits of our earlier simplification initiatives more than offset the impact of the 3% decline in revenues from existing businesses. On the same basis, Financial & Risk’s EBITDA margin increased 80bp to 26.2% in the six-month period of 2014 (which is less than the increase including the charges), because benefits from simplification initiatives in the first quarter were not enough to mitigate the decline in first quarter revenues from existing businesses. Foreign currency increased EBITDA margins by approximately 60bp in the second quarter and six-month period compared to the respective prior-year periods. Excluding charges from both periods, Financial & Risk’s segment operating profit margin increased 210bp to 17.9% in the second quarter, and increased 70bp to 16.5% in the six-month period due to the same factors that impacted adjusted EBITDA margin.

Legal

(millions of U.S. dollars)	Three months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		850			846			-		1%		1%		-		1%
EBITDA		331			326											2%
EBITDA margin		38.9	%		38.5	%										40bp
Segment operating profit		261			255											2%
Segment operating profit margin		30.7	%		30.1	%										60bp

(millions of U.S. dollars)	Six months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		1,653			1,640			-		1%		1%		-		1%
EBITDA		615			602											2%
EBITDA margin		37.2	%		36.7	%										50bp
Segment operating profit		476			456											4%
Segment operating profit margin		28.8	%		27.8	%										100bp

Revenues increased on a constant currency basis in the second quarter and six-month period due to contributions from acquired businesses. In the second quarter, revenues from existing businesses were unchanged as 4% growth in subscription revenues, which comprised approximately 75% of our Legal business, were offset by declines in transaction revenues and U.S. print revenues of 10% and 9%, respectively. In the six-month period, revenues from existing businesses reflected subscription revenue growth of 3% offset by a 7% decline in transaction revenues and a 6% decline in print revenues. Excluding U.S. print, Legal’s revenues increased 3% (2% from existing businesses) in the second quarter and six-month period.

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The following chart illustrates the growth dynamics and business mix in the Legal segment:

Results by line of business were:		Second  Quarter 2014 Revenues 1% constant currency revenue growth
·	Solutions Businesses revenues include non-U.S. legal information and global software and services businesses. Our Solutions businesses revenues increased 6% (5% from existing businesses) and 7% (5% from existing businesses) in the second quarter and six-month period, respectively,  driven by our U.K. Practical Law, Elite and FindLaw businesses;
·	U.S. Online Legal Information revenues are primarily comprised of Westlaw and decreased 1% in both periods. Revenues from existing businesses declined 1% and 2% in the second quarter and six-month period, respectively; and
·	U.S. Print revenues decreased 9% and 6%, all from existing businesses in the second quarter and six-month period, respectively. We expect U.S. print revenues to decline in the upper-single digit range in the third quarter of 2014 and to decline by mid-to-high single digits for the full year 2014 compared to prior-year periods.

In the second quarter and six-month period, EBITDA and the related margin increased as lower costs offset the impact of a challenging business mix. In the six-month period, segment operating profit growth and margin improvement also benefited from lower depreciation and amortization.

Tax & Accounting

(millions of U.S. dollars)	Three months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		324			288			10%		4%		14%		(1%)		13%
EBITDA		98			87											13%
EBITDA margin		30.2	%		30.2	%										-
Segment operating profit		65			57											14%
Segment operating profit margin		20.1	%		19.8	%										30bp

(millions of U.S. dollars)	Six months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		672			605			10%		3%		13%		(2%)		11%
EBITDA		213			185											15%
EBITDA margin		31.7	%		30.6	%										110bp
Segment operating profit		149			126											18%
Segment operating profit margin		22.2	%		20.8	%										140bp

In both periods, revenues increased on a constant currency basis reflecting contributions from existing and acquired businesses. Recurring revenues, which comprised approximately 80% of our Tax & Accounting business in each period, increased 12% (7% from existing businesses) in the second quarter and 11% (8% from existing businesses) in the six-month period. Transaction revenues increased 25% (24% from existing businesses) in the second quarter and 21% (19% from existing businesses) in the six-month period.

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Results by line of business were:		Second Quarter 2014 Revenues
·	Professional revenues from small, medium and large accounting firms increased 5% and 8%, all from existing businesses, in the second quarter and six-month period, respectively, primarily from our CS Professional Suite and Enterprise Suite accounting software solutions;
·	Knowledge Solutionsrevenues increased 2% (essentially unchanged from existing businesses) in the second quarter and 2% (1% from existing businesses) for the six-month period. Revenues from existing businesses in the second quarter reflected growth in our U.S. Checkpoint business offset by a decline in non-U.S. content sales;
·	Corporaterevenues increased 21% (11% from existing businesses) in the second quarter and 21% (13% from existing businesses) for the six-month period, primarily from ONESOURCE software and services and strong growth in solutions revenues in Latin America; and
·	Government revenues in the second quarter, which only represents about 5% of Tax & Accounting revenues, increased significantly over a relatively small revenue base in the prior-year period.

In both periods, EBITDA and segment operating profit increased due to the impact of higher revenues. In the second quarter, EBITDA margin was unchanged and segment operating profit margin was slightly higher, as reinvestments in the businesses offset the impact of higher revenues. In the six-month period, EBITDA and segment operating profit margins both increased reflecting the impact of higher revenues.

Tax & Accounting is a seasonal business with a significant percentage of its operating profit historically generated in the fourth quarter. Small movements in the timing of revenues and expenses can impact quarterly margins. Full-year margins are more reflective of the segment’s performance.

Intellectual Property & Science

(millions of U.S. dollars)	Three months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		251			234			5%		2%		7%		-		7%
EBITDA		85			79											8%
EBITDA margin		33.9	%		33.8	%										10bp
Segment operating profit		62			59											5%
Segment operating profit margin		24.7	%		25.2	%										(50)bp

(millions of U.S. dollars)	Six months ended June 30,						Percentage change:
	2014			2013			Existing businesses		Acquired businesses		Constant currency		Foreign currency		Total
Revenues		494			467			4%		2%		6%		-		6%
EBITDA		157			149											5%
EBITDA margin		31.8	%		31.9	%										(10)bp
Segment operating profit		113			110											3%
Segment operating profit margin		22.9	%		23.6	%										(70)bp

In both periods, revenues increased on a constant currency basis reflecting contributions from existing and acquired businesses. Recurring revenues, which represented approximately 75% of Intellectual Property & Science’s business in each period, increased 10% (8% from existing businesses) in the second quarter and 7% (6% from existing businesses) in the six-month period. Revenue growth from recurring revenues was partly offset by transaction revenues, which declined 1% (3% from existing businesses) in the second quarter, and were essentially unchanged (1% decline from existing businesses) in the six-month period.

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Results by line of business were:		Second Quarter 2014 Revenues
·	IP Solutions revenues increased 6%, all from existing businesses, in the second quarter and 4% (3% from existing businesses) in the six-month period, respectively, primarily due to recurring revenue growth from MarkMonitor;
·	Scientific & Scholarly Research revenues increased 12% (10% from existing businesses) in the second quarter and 11% (9% from existing businesses) in the six-month period, led by higher subscriptions and discrete sales for Web of Science products; and
·	Life Sciences revenues increased 6% (essentially unchanged   from existing businesses) in the second quarter and the six-month period.

In both periods, EBITDA and segment operating profit increased primarily due to the impact of higher revenues. The declines in segment operating profit margins reflected the dilutive impact of businesses acquired in 2013.

Quarterly revenue growth for Intellectual Property & Science can be uneven due to the impact of large sales in the Scientific & Scholarly Research business. Small movements in the timing of revenues and expenses can impact quarterly margins. Full-year revenues and margins are more reflective of the segment’s performance.

Corporate & Other

(millions of U.S. dollars)	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenues - Reuters News		82			82			161			163
Reuters News		4			1			4			(3	)
Core corporate expenses		(77	)		(63	)		(139	)		(118	)
Total		(73	)		(62	)		(135	)		(121	)

Revenues from our Reuters News business were essentially unchanged in the second quarter and down slightly in the six-month period. Before currency, revenues from our Reuters News business decreased 1% in both periods.

Higher core corporate expenses in both periods reflected 2014 consulting costs associated with transforming our business. Full-year core corporate expenses are expected to be unchanged to slightly lower than the prior-year period.

Other Businesses

“Other Businesses” is an aggregation of businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. The results of Other Businesses are not comparable from period to period, as the composition of businesses changes as businesses are identified for sale or closure. Further fluctuations are caused by the timing of the sales or closures. In 2013, the most significant business in Other Businesses was Corporate Services, a provider of tools and solutions that help companies communicate with investors and media formerly in the Financial & Risk segment. Corporate Services was sold in the second quarter of 2013.

The results of Other Businesses were as follows:

(millions of U.S. dollars)	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014			2013
Revenues		1		55		2			133
Operating profit (loss)		-		20		(1	)		52

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LIQUIDITY AND CAPITAL RESOURCES

Our disciplined capital management strategy remains focused on:

· Growing free cash flow and balancing the cash generated between reinvestment in the business and returns to shareholders; and

· Maintaining a strong balance sheet, solid credit ratings and ample financial flexibility to support the execution of our business strategy.

Our principal sources of liquidity are cash on hand, cash provided by our operations, our $2.0 billion commercial paper programs and our $2.5 billion credit facility. 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, acquisitions and share repurchases. We believe that our existing sources of liquidity will be sufficient to fund our expected 2014 cash requirements in the normal course of business.

CASH FLOW

Summary of Consolidated Statement of Cash Flow

(millions of U.S. dollars)	Three months ended June 30,									Six months ended June 30,
	2014			2013			Change			2014			2013			Change
Net cash provided by operating activities		876			904			(28	)		989			1,020			(31	)
Net cash (used in) provided by investing activities		(349	)		33			(382	)		(596	)		(1,013	)		417
Net cash (used in) provided by financing activities		(486	)		264			(750	)		(1,009	)		340			(1,349	)
Increase (decrease) in cash and bank overdrafts		41			1,201			(1,160	)		(616	)		347			(963	)
Translation adjustments		3			(6	)		9			3			(17	)		20
Cash and bank overdrafts at beginning of period		655			411			244			1,312			1,276			36
Cash and bank overdrafts at end of period		699			1,606			(907	)		699			1,606			(907	)
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents		704			1,613			(909	)		704			1,613			(909	)
Bank overdrafts		(5	)		(7	)		2			(5	)		(7	)		2

Operating activities. The decrease in net cash provided by operating activities in both periods was primarily due to the loss of operating cash flow from Other Businesses and higher severance payments associated with our simplification program initiatives, partly offset by higher adjusted EBITDA. While the second quarter included favorable timing of interest and tax payments, these inflows were largely offset by outflows of working capital due to timing.

Investing activities. The increase in net cash used in investing activities in the second quarter was principally attributable to higher capital expenditures and the 2013 proceeds from the sale of our Corporate Services business. The decrease in net cash used in investing activities for the six-month period reflected lower acquisition spending and lower capital expenditures in 2014, as well as the 2013 proceeds from the sale of our Corporate Services business. In 2014, we acquired Dominio Sistemas, a Brazilian provider of accounting and software solutions primarily to large and small accounting firms within our Tax & Accounting segment. In 2013, we acquired Practical Law, a provider of practical legal know-how, current awareness and workflow solutions within the Legal segment and T.Global, a Brazilian provider of global trade management software and solutions also within our Tax & Accounting segment. The fluctuations in capital expenditures in both periods reflected timing of spending.

Financing activities. The increase in net cash used in financing activities for the second quarter and six-month period was primarily attributable to 2014 share repurchases and proceeds from 2013 debt issuances. These increases were partly offset by a contribution from the non-controlling interests of Tradeweb of $115 million in exchange for additional shares. This contribution is reflected within “Other financing activities” in the consolidated statement of cash flow. Additionally, in the second quarter of 2013, we repaid $0.3 billion of commercial paper. In the second quarter and six-month period of 2014, we returned approximately $0.6 billion (2013 - $0.3 billion) and $1.1 billion (2013 - $0.5 billion) to our shareholders through dividends and share repurchases, respectively. 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 to balance the timing of completed acquisitions, dividend payments and debt repayments. We had no short-term notes outstanding at June 30, 2014. Issuances of commercial paper reached a peak of $0.2 billion during the six-month period of 2014.

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· Credit facility. We have a $2.5 billion syndicated credit facility agreement which matures in May 2018. The facility may be utilized to provide liquidity for general corporate purposes (including support for our commercial paper programs). There were no borrowings during the first six months of 2014. In the six-month period of 2013, we borrowed and repaid $440 million under the credit facility.

We may request an extension of the maturity date under certain circumstances for up to two additional one-year periods, which the applicable lenders may accept or decline in their sole discretion. We may also request an increase, subject to approval by applicable lenders, in the lenders’ commitments up to a maximum amount of $3.0 billion.

Based on our current credit ratings, the cost of borrowing under the agreement is priced at LIBOR/EURIBOR plus 100 basis points. If our long-term debt rating were downgraded by Moody’s or Standard & Poor’s, our facility fee and borrowing costs may increase, although availability would be unaffected. Conversely, an upgrade in our ratings may reduce our facility fees and borrowing costs. We monitor the lenders that are party to our facility and believe they continue to be able to lend to us. 

We guarantee borrowings by our subsidiaries under the credit facility. 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 agreement (earnings before interest, income taxes, depreciation and amortization and other modifications described in the credit agreement) for the last four quarters ended of not more than 4.5:1. We were in compliance with this covenant at June 30, 2014. 

· Debt shelf prospectus. We have a debt shelf prospectus under which we may issue up to $3.0 billion principal amount of debt securities from time to time through April 2016. No debt securities have been issued under this prospectus as of the date of this management’s discussion and analysis.

· Long-term debt. We did not issue or repay long–term debt in the first six months of 2014. In the second quarter of 2013, we issued the following notes:  

Month/Year	Notes issued	Principal Amount (in millions)
May 2013	0.875% notes due 2016	US$500
May 2013	4.50% notes due 2043	US$350

We used the net proceeds of the May 2013 debt issuance for general corporate purposes, including pension contributions and debt repayments.

· 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.

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 (1)	R-2 (high)	F2
Trend/Outlook	Stable	Stable	Stable	Stable

(1) The A-2 rating represents the global short-term/commercial paper rating from Standard & Poor’s. This A-2 global short-term/ commercial paper rating, taken together with our global long-term debt rating of BBB+, corresponds to a Canadian market commercial paper rating of A-1 (low) per Standard & Poor’s ratings criteria.

We are not aware of any changes to our credit ratings being contemplated by rating agencies.

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. Credit ratings may not reflect the potential impact of all risks on the value of securities. We cannot assure you that our credit ratings will not be lowered in the future or that rating agencies will not issue adverse commentaries regarding our securities.

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· Dividends.In February 2014, we announced a $0.02 per share increase in the annualized dividend rate to $1.32 per common share. Dividends paid on our common shares were as follows for the periods presented:

(millions of U.S. dollars)	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Dividends declared		266			270			536			539
Dividends reinvested		(8	)		(10	)		(16	)		(20	)
Dividends paid		258			260			520			519

· Share repurchases. We may buy back shares (and subsequently cancel them) from time to time as part of our capital strategy. In October 2013, we announced plans to repurchase up to $1 billion of our common shares by the end of 2014. We substantially completed these repurchases as of the date of this management’s discussion and analysis. We currently repurchase shares under a normal course issuer bid (NCIB), which we renewed in May 2014 for an additional 12 months. Under the current NCIB, we may repurchase up to 30 million common shares between May 28, 2014 and May 27, 2015 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.

During the second quarter and six months ended June 30, 2014, we repurchased 9.8 million and 17.8 million of our common shares for a cost of $345 million and $624 million, respectively, of which $7 million was payable to the broker at June 30, 2014. The average price per share that we repurchased in the second quarter and six months ended June 30, 2014 was $35.25 and $35.17, respectively. We did not repurchase any shares during the six months ended June 30, 2013.

Decisions regarding any future repurchases will be based on market conditions, share price and other factors including opportunities to invest capital for growth. In July 2014, we announced that we plan to repurchase up to an additional $1.0 billion of our common shares by the end of 2015. 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. We entered into such plans with our broker on June 30, 2014 and on December 31, 2013. As a result, we recorded a liability of $40 million in “Other financial liabilities” within current liabilities at June 30, 2014 ($100 million at December 31, 2013) with a corresponding amount recorded in equity in the consolidated statement of financial position in both periods. The liability recorded on December 31, 2013 was settled in the first quarter of 2014.

Free cash flow and free cash flow from ongoing businesses.

(millions of U.S. dollars)	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Net cash provided by operating activities		876			904			989			1,020
Capital expenditures, less proceeds from disposals		(225	)		(188	)		(473	)		(538	)
Other investing activities		1			17			2			21
Dividends paid on preference shares		-			(1	)		(1	)		(2	)
Free cash flow		652			732			517			501
Remove: Other Businesses		1			(59	)		1			(52	)
Free cash flow from ongoing businesses		653			673			518			449

Free cash flow and free cash flow from ongoing businesses decreased in the second quarter and increased in the six-month period primarily due to capital expenditures, which reflected timing of spending. Both periods included the impacts of higher adjusted EBITDA, as well as severance payments associated with our simplification program initiatives. Other Businesses were primarily comprised of our Corporate Services business, which was sold in the second quarter of 2013.

17

FINANCIAL POSITION

Our total assets were $31.6 billion at June 30, 2014, reflecting a decrease of $0.9 billion compared to December 31, 2013. The decrease was due to payments of dividends, repurchases of shares, depreciation and amortization, partly offset by assets of newly-acquired businesses, capital expenditures and changes in foreign currency. See the “Cash Flow” section of this management’s discussion and analysis for additional information.

As of June 30, 2014, the carrying amounts of our total current liabilities exceeded the carrying amounts of our total current assets principally because current liabilities include deferred revenue from the sale of information and services delivered electronically on a subscription basis, for which many customers pay 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 balance sheet. 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 that our negative working capital position as at June 30, 2014, was not indicative of a liquidity issue, but rather an outcome of the required accounting for our business model.

Net Debt⁽¹⁾ 

	As at
(millions of U.S. dollars)	June 30, 2014			December 31, 2013
Current indebtedness		591			596
Long-term indebtedness		7,467			7,470
Total debt		8,058			8,066
Swaps		(97	)		(86	)
Total debt after swaps		7,961			7,980
Remove fair value adjustments for hedges		(8	)		(27	)
Total debt after hedging arrangements		7,953			7,953
Remove transaction costs and discounts included in the carrying value of debt		75			78
Less: cash and cash equivalents(2)		(704	)		(1,316	)
Net debt		7,324			6,715

(1) Net debt is a non-IFRS financial measure, which we define in Appendix A.

(2) Includes cash and cash equivalents of $93 million and $105 million at June 30, 2014 and December 31, 2013, respectively, which was 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.

The increase in our net debt was primarily due to a decrease in cash and cash equivalents of $612 million, which reflected capital expenditures, and payments for dividends and repurchases of shares exceeding net cash provided by operating activities. See the “Cash Flow” section of this management’s discussion and analysis for additional information.

The maturity dates for our long-term debt are well balanced with no significant concentration in any one year. Our next scheduled long-term debt maturity occurs in the fourth quarter of 2014 and is recorded as “Current indebtedness” in our consolidated statement of financial position. At June 30, 2014, the average maturity of our long-term debt was nine years at an average interest rate (after swaps) of 5%.

Additional information.

· We monitor the financial strength of financial institutions with which we have banking and other commercial relationships, including those that hold our cash and cash equivalents as well as those which are counterparties to derivative financial instruments and other arrangements; and

· We expect to continue to have access to funds held by our subsidiaries outside the U.S. in a tax efficient manner to meet our liquidity requirements.

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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 2013 annual management’s discussion and analysis. There were no material changes to these arrangements, commitments and contractual obligations during the six months ended June 30, 2014.

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, intellectual property infringement claims, employment matters and commercial matters. 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 probable 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. There are many transactions and calculations during the course of business for which the ultimate tax determination is uncertain. We maintain provisions for uncertain tax positions that we believe appropriately reflect our risk. These provisions are made using the 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 the reporting period. It is possible that at some future date, liabilities in excess of our provisions could result from audits by, or litigation with, relevant taxing authorities. Management believes that such additional liabilities would not have a material adverse impact on our financial condition taken as a whole.

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OUTLOOK

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

We recently reaffirmed our business outlook for 2014 that was first communicated in February.

Our 2014 outlook for adjusted EBITDA margin and underlying operating profit margin includes an estimated $120 million of previously announced charges associated with our simplification program initiatives. Our free cash flow outlook includes the estimated cash impact of charges incurred in 2013 and expected to be incurred in 2014, as well as the impact of the loss of free cash flow from Other Businesses (approximately $375 million in the aggregate). 

The following table sets forth our current 2014 financial outlook, the material assumptions related to our financial outlook and the material risks that may cause actual performance to differ materially from our current expectations.

Our 2014 outlook for revenues, adjusted EBITDA margin and underlying operating profit margin excludes the impact of foreign currency.

Revenues to be comparable to 2013
Material assumptions	Material risks
●     Gradual improvement in Financial & Risk’s net sales performance during the year ●     Gross domestic product (GDP) growth in the countries where we operate ●     Continued increase in the number of professionals around the world and their demand for high quality information and services ●     Continued operational improvement in the Financial & Risk business and the successful execution of new sales initiatives, ongoing product release programs, our globalization strategy and other growth and efficiency initiatives ●     A mid-to-high single digit decline in our U.S. print revenues within the Legal segment	●     Uneven economic growth or recession across the markets we serve may result in reduced spending levels by our customers ●     Demand for our products and services could be reduced by changes in customer buying patterns, competitive pressures or our inability to execute on key product or customer support initiatives ●     Implementation of regulatory reform, including further Dodd-Frank legislation and similar financial services laws around the world, may limit business opportunities for our customers, lowering their demand for our products and services ●     Pressure on our customers, in developed markets in particular, to constrain the number of professionals employed due to regulatory and economic uncertainty ●     Competitive pricing actions could impact our revenues
Adjusted EBITDA margin expected to be between 26.0% and 27.0%
Material assumptions	Material risks
●     Revenues expected to be comparable to 2013 ●     Business mix continues to shift to higher-growth, lower margin offerings ●     Realization of expected benefits from simplification program initiatives, primarily in our Financial & Risk segment, relative to reductions in workforce, platform consolidation and operational simplification	●     Refer to the risks above related to the revenue outlook ●     Revenues from higher margin businesses may be lower than expected ●     The costs of required investments exceed expectations or actual returns are below expectations ●     Acquisition and disposal activity may dilute margins ●     Simplification program initiatives may cost more than expected, be delayed or may not produce the expected level of savings

20

Underlying operating profit margin expected to be between 17.0% and 18.0%
Material assumptions	Material risks
●     Adjusted EBITDA margin expected to be between 26.0% and 27.0% ●     Depreciation and software amortization expense expected to be approximately 9.5% of revenues ●     Capital expenditures expected to be approximately 8% of revenues	●     Refer to the risks above related to adjusted EBITDA margin outlook ●     Capital expenditures may be higher than currently expected, resulting in higher in-period depreciation and amortization
Free cash flow is expected to be between $1.3 billion and $1.5 billion
Material assumptions	Material risks
●     Revenues expected to be comparable to 2013 ●     Adjusted EBITDA margin expected to be between 26.0% and 27.0% ●     Capital expenditures expected to be approximately 8% of revenues	●     Refer to the risks above related to the revenue outlook and adjusted EBITDA margin outlook ●     A weaker macroeconomic environment and unanticipated disruptions from new order-to-cash applications could negatively impact working capital performance ●     Capital expenditures may be higher than currently expected resulting in higher cash outflows ●     The timing and amount of tax payments to governments may differ from our expectations

Additionally, in 2014, we expect interest expense to be between $450 million and $475 million, assuming no significant change in our level of indebtedness. We expect our 2014 effective tax rate (as a percentage of post-amortization adjusted earnings) to be between 13% and 15%, assuming no material changes in current tax laws or treaties to which we are subject.

RELATED PARTY TRANSACTIONS

As of July 29, 2014, Woodbridge beneficially owned approximately 57% of our shares.

TRANSACTIONS WITH WOODBRIDGE

From time to time, in the normal course of business, we enter into transactions with Woodbridge and certain of its affiliates. These transactions involve providing and receiving product and service offerings, are negotiated at arm’s length on standard terms, including price, and are not significant to our results of operations or financial condition either individually or in the aggregate.

In May 2012, as part of our efforts to expand our mutual fund data and strategic research capabilities, we acquired a Canadian mutual fund database, fund fact sheet business and mutual fund and equity data feed business for approximately C$9 million from The Globe and Mail (The Globe), which is majority owned by Woodbridge. We paid approximately C$8 million in cash and issued a C$1 million promissory note to The Globe that will be due in May 2016. In connection with the acquisition, we licensed the acquired database to The Globe over a four year term, valued at approximately C$250,000 per year. The Globe issued four promissory notes to us, each for the value of the annual license. Amounts due each year under the notes issued by The Globe are offset against the note issued by us. Our board of directors’ Corporate Governance Committee approved the transaction.

In the normal course of business, certain of our subsidiaries charge a Woodbridge owned company fees for various administrative services. In 2013, the total amount charged to Woodbridge for these services was approximately $105,000.

We purchase property and casualty insurance from third party insurers and retain the first $500,000 of each and every claim under the programs via our captive insurance subsidiaries. Woodbridge is included in these programs and pays us a premium commensurate with its exposures. Premiums relating to 2013 were $44,000, which would approximate the premium charged by a third party insurer for such coverage.

We maintained an agreement with Woodbridge until April 17, 2008 (the closing date of the Reuters acquisition) under which Woodbridge agreed to indemnify up to $100 million of liabilities incurred either by our current and former directors and officers or by our company in providing indemnification to these individuals on substantially the same terms and conditions as would apply under an arm’s length, commercial arrangement. We were required to pay Woodbridge an annual fee of $750,000, which was less than the premium that would have been paid for commercial insurance. In 2008, we replaced this agreement with a conventional insurance agreement. We were entitled to seek indemnification from Woodbridge for any claims arising from events prior to April 17, 2008, so long as the claims were made before April 17, 2014. As there were no claims against the indemnity by current or former directors and officers, we did not seek indemnification from Woodbridge under this arrangement.

21

TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES

From time to time, we enter into transactions with our investments in associates and joint ventures. These transactions typically involve providing or receiving services and are entered into in the normal course of business and on an arm’s length basis.

We and Shin Nippon Hoki Shuppan K.K. each own 50% of Westlaw Japan K.K., a provider of legal information and solutions to the Japanese legal market. We provide the joint venture with technology and other services, which were valued at approximately $300,000 for the six months ended June 30, 2014.

In connection with the 2008 acquisition of Reuters, we assumed a lease agreement with 3XSQ Associates, an entity owned by Thomson Reuters and Rudin Times Square Associates LLC that was formed to build and operate the 3 Times Square property and building in New York, New York that serves as our corporate headquarters. We follow the equity method of accounting for our investment in 3XSQ Associates. The lease provides us with over 690,000 square feet of office space until 2021 and includes provisions to terminate portions early and various renewal options. Our costs under this lease arrangement for rent, taxes and other expenses were approximately $19 million for the six months ended June 30, 2014.

SUBSEQUENT EVENTS

Share repurchases

In July 2014, we announced that we plan to repurchase up to an additional $1.0 billion of our common shares by the end of 2015.

CHANGES IN ACCOUNTING POLICIES

Please refer to the “Changes in Accounting Policies” section of our 2013 annual management’s discussion and analysis, which is contained in our 2013 annual report, as well as note 2 of our consolidated interim financial statements for the six months ended June 30, 2014, 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 2013 annual management’s discussion and analysis, which is contained in our 2013 annual report, for additional information. Since the date of our 2013 annual management’s discussion and analysis, there have not been any significant changes to our critical accounting estimates and 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. A multi-year phased implementation of order-to-cash (OTC) applications and related workflow processes is in progress. 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 processes across our organization through this initiative. We are also in the process of automating manual processes and updating workflows associated with intercompany revenue and cost allocation. In 2014, we outsourced the support for selected financial applications and general accounting processes as part of our simplification program. Therefore, the internal control activities associated with the outsourced functions will now be performed by the third-party providers. However, our management remains responsible for the end-to-end control environment. We continue to modify the design and documentation of the related internal control processes and procedures as the implementations of these initiatives progress.

Except as described above, there was no change in our internal control over financial reporting during the last fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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SHARE CAPITAL

As of July 29, 2014, we had outstanding 803,688,587 common shares, 6,000,000 Series II preference shares, 10,690,287 stock options and a total of 7,691,223 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.

PUBLIC SECURITIES FILINGS AND REGULATORY ANNOUNCEMENTS

You may access other information about our company, including our 2013 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.

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 2014 expectations in the “Overview” and ”Outlook” sections, our expectations about additional charges associated with our simplification program initiatives and expected cost savings, net sales, revenue growth and EBITDA margin in the Financial & Risk segment, U.S. print revenues in our Legal segment, and future share repurchases. The words “expect”, “target” and “will” and similar expressions identify forward-looking statements. 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 2013 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 any forward-looking statement will materialize. Our outlook is provided for the purpose of providing information about current expectations for 2014. 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 meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies. 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
	Revenues from ongoing businesses
Revenues from reportable segments and Corporate & Other (which includes the Reuters News business), less eliminations.	Provides a measure of our ability to grow our ongoing businesses over the long term.	Revenues

Revenues at constant currency (before currency or revenues excluding the effects of foreign currency)
Revenues applying 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 revenues using the same foreign currency exchange rate.	Provides a measure of underlying business trends, without distortion from the effect of foreign currency movements during the 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 manage our operating segments on a constant currency basis, and we manage currency exchange risk at the corporate level.	Revenues

 

Underlying operating profit and underlying operating profit margin
Operating profit from reportable segments and Corporate & Other. The related margin is expressed as a percentage of revenues from ongoing businesses.	Provides a basis to evaluate operating profitability and performance trends, excluding the impact of items which distort the performance of our operations.	Operating profit

Adjusted EBITDA and adjusted EBITDA margin
Underlying operating profit excluding the related depreciation and amortization of computer software. The related margin is expressed as a percentage of revenues from ongoing businesses.	Provides a measure commonly reported and widely used by investors as an indicator of a company’s operating performance and ability to incur and service debt, and as a valuation metric.	Earnings (loss) from continuing operations

Adjusted EBITDA less capital expenditures and adjusted EBITDA less capital expenditures margin
Adjusted EBITDA less capital expenditures, less proceeds from disposals (excluding Other Businesses). The related margin is expressed as a percentage of revenues from ongoing businesses.	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 (loss) from continuing operations

24

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 earnings per share
Earnings (loss) attributable to common shareholders and per share excluding:	Provides a more comparable basis to analyze earnings and is also a measure commonly used by shareholders to measure our performance. We believe this treatment more accurately reflects our tax position because the tax liability is associated with ongoing tax implications from the consolidation of these assets.	Earnings (loss) attributable to common shareholders and earnings (loss) per share attributable to common shareholders
●      the pre-tax impacts of amortization of other identifiable intangible assets; ●      the post-tax impacts of fair value adjustments, other operating gains and losses, certain impairment charges, the results of Other Businesses, 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 also deduct dividends declared on preference shares; and         amortization of the tax charges associated with the consolidation of ownership and management of technology and content assets. For the non-IFRS measure, the majority of the charges are amortized over seven years, the period over which the tax is expected to be paid.
This measure is calculated using diluted weighted-average shares.
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 adjusted pre-tax 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 distorts the reported effective tax rate within an interim period, 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.

25

How We Define It	Why We Use It and Why It Is Useful to Investors	Most Directly Comparable IFRS Measure/Reconciliation
Net debt
Total indebtedness, including the associated fair value of hedging instruments on our debt, but excluding unamortized transaction costs and premiums or discounts associated with our debt, 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 certain 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
Net cash provided by operating activities, and other investing activities, less capital expenditures and dividends paid on our preference shares.	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 operating activities
Free cash flow from ongoing businesses
Free cash flow excluding businesses that have been or are expected to be exited through sale or closure, which we refer to as “Other Businesses”.	Provides a supplemental measure of our ability, over the long term, to create value for our shareholders because it represents free cash flow generated by our operations excluding businesses that have been or are expected to be exited through sale or closure.	Net cash provided by operating activities

26

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 six months ended June 30, 2014 and 2013.

RECONCILIATION OF EARNINGS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA AND ADJUSTED EBITDA LESS CAPITAL EXPENDITURES 

(millions of U.S. dollars)	Three months ended June 30,									Six months ended June 30,
	2014			2013			Change			2014			2013			Change
Earnings from continuing operations		260			256			2	%		552			239			131	%
Adjustments to remove:
Tax expense		40			209						27			456
Other finance (income) costs		(29	)		17						(57	)		72
Net interest expense		111			124						219			239
Amortization of other identifiable intangible assets		165			157						328			317
Amortization of computer software		197			188						391			376
Depreciation		99			101						197			208
EBITDA		843			1,052						1,657			1,907
Adjustments to remove:
Share of post-tax earnings in equity method investments		(1	)		(9	)					(1	)		(19	)
Other operating losses (gains), net		2			(136	)					5			(130	)
Fair value adjustments		33			(29	)					35			(91	)
EBITDA from Other Businesses(1)		-			(20	)					1			(52	)
Adjusted EBITDA		877			858			2	%		1,697			1,615			5	%
Remove: Capital expenditures, less proceeds from disposals (excluding Other Businesses(1))		225			188						473			538
Adjusted EBITDA less capital expenditures		652			670			(3	%)		1,224			1,077			14	%
Adjusted EBITDA margin		27.8	%		27.6	%		20	bp		27.0	%		26.0	%		100	bp
Adjusted EBITDA less capital expenditures margin		20.6	%		21.6	%		(100	)bp		19.5	%		17.4	%		210	bp

RECONCILIATION OF UNDERLYING OPERATING PROFIT TO ADJUSTED EBITDA BY SEGMENT

(millions of U.S. dollars)	Three months ended June 30, 2014								Three months ended June 30, 2013
	Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA			Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA
Financial & Risk		266			160		426			260			160		420
Legal		261			70		331			255			71		326
Tax & Accounting		65			33		98			57			30		87
Intellectual Property & Science		62			23		85			59			20		79
Corporate & Other (includes Reuters News)		(73	)		10		(63	)		(62	)		8		(54	)
Total		581			296		877			569			289		858

** Excludes Other Businesses⁽¹⁾

27

RECONCILIATION OF UNDERLYING OPERATING PROFIT TO ADJUSTED EBITDA BY SEGMENT (CONTINUED)

(millions of U.S. dollars)	Six months ended June 30, 2014								Six months ended June 30, 2013
	Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA			Underlying Operating profit			Add: Depreciation and amortization of computer software **		Adjusted EBITDA
Financial & Risk		506			319		825			460			320		780
Legal		476			139		615			456			146		602
Tax & Accounting		149			64		213			126			59		185
Intellectual Property & Science		113			44		157			110			39		149
Corporate & Other (includes Reuters News)		(135	)		22		(113	)		(121	)		20		(101	)
Total		1,109			588		1,697			1,031			584		1,615

** Excludes Other Businesses⁽¹⁾

(1) Other Businesses are businesses that have been or are expected to be exited through sale or closure that did not qualify for discontinued operations classification. The results of Other Businesses were as follows:

(millions of U.S. dollars)	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014			2013
Revenues		1		55		2			133
Operating profit (loss)		-		20		(1	)		52
Depreciation and amortization of computer software		-		-		-			-
EBITDA		-		20		(1	)		52
Capital expenditures, less proceeds from disposals		-		-		-			-

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APPENDIX C

QUARTERLY INFORMATION

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

	Quarter ended    March 31,						Quarter ended    June 30,					Quarter ended    September 30,				Quarter ended    December 31,
(millions of U.S. dollars, except per share amounts)	2014			2013			2014		2013			2013		2012		2013			2012
Revenues		3,130			3,175			3,159		3,163			3,086		3,181		3,278			3,364
Operating profit		359			390			381		597			316		372		213			537
Earnings (loss) from continuing operations		292			(17	)		260		256			283		451		(347	)		365
Earnings from discontinued operations, net of tax		-			-			-		6			-		2		4			3
Net earnings (loss)		292			(17	)		260		262			283		453		(343	)		368
Earnings (loss) attributable to common shareholders		282			(31	)		249		248			271		441		(351	)		352
Dividends declared on preference shares		(1	)		(1	)		-		(1	)		-		-		(1	)		(1	)
Basic earnings (loss) per share
From continuing operations	$	0.34		$	(0.04	)	$	0.31	$	0.29		$	0.33	$	0.53	$	(0.43	)	$	0.41
From discontinued operations		-			-			-		0.01			-		-		-			0.01
	$	0.34		$	(0.04	)	$	0.31	$	0.30		$	0.33	$	0.53	$	(0.43	)	$	0.42
Diluted earnings (loss) per share
From continuing operations	$	0.34		$	(0.04	)	$	0.31	$	0.29		$	0.33	$	0.53	$	(0.43	)	$	0.41
From discontinued operations		-			-			-		0.01			-		-		-			0.01
	$	0.34		$	(0.04	)	$	0.31	$	0.30		$	0.33	$	0.53	$	(0.43	)	$	0.42

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, our non-recurring revenues can cause changes in our performance from quarter to consecutive quarter. Additionally, the release of certain print-based offerings can be seasonal as can certain product releases for the regulatory markets, which tend to be concentrated at the end of the year. As a consequence, the results of certain of our segments can be impacted by seasonality to a greater extent than our consolidated revenues and operating profit.

Revenues - Revenues declined in each of the trailing four quarters compared to the respective prior-year periods, primarily reflecting the impact of divestitures. Revenue performance over these periods also reflected challenges in our Financial & Risk segment, including an overall difficult economic environment. This dynamic was partially offset by growth in our Legal, Tax & Accounting and Intellectual Property & Science segments. Acquisitions contributed to revenue changes. Foreign currency had a positive impact on revenues in the second quarter of 2014, no impact on revenues in the first quarter of 2014 and fourth quarter of 2013, and a negative impact on revenues in the third quarter of 2013.

Operating profit - Operating profit decreased in first and second quarters of 2014 from each respective prior-year period because 2013 included operating profit from Other Businesses which were sold later in the year and also as a result of unfavorable fair value adjustments. The second quarter of 2013 also included a gain on sale of our Corporate Services business, and the first quarter of 2013 included $78 million of charges associated with our simplification program initiatives. In the fourth quarter of 2013, operating profit included $275 million of charges associated with our simplification program initiatives.

Net earnings (loss) - Net earnings in the second quarter of 2014 were comparable to the second quarter of 2013 as lower operating profit was offset by lower income tax expense. The second quarter of 2013 included an income tax charge of $161 million associated with the consolidation of the ownership and management of our technology and content assets, which are part of our simplification program.The net losses in the first quarter and fourth quarter of 2013 were primarily due to $235 million and $425 million, respectively, of tax charges associated with the consolidation of the ownership and management of our technology and content assets.The decrease in net earnings in the third quarter of 2013 reflected lower income tax benefits, as the 2012 period included higher tax benefits from the reversal of uncertain tax provisions and changes in estimates identified during the preparation of prior-year income tax returns.

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