beat fourth-quarter earnings targets, boosted its quarterly dividend by 10% and said it would put some noncore educational businesses on the block.
The Stamford, Conn., company made $249 million, or 38 cents a share, for the quarter ended Dec. 31, down from the year-ago $437 million, or 67 cents a share. But on a so-called underlying basis, normalizing taxes and excluding discontinued operations and one-time items, earnings rose to 62 cents a share from 49 cents a year ago, beating the Wall Street estimate by 7 cents.
Revenue rose 5% from a year ago to $2.43 billion, reflecting stronger organic growth and contributions from acquisitions. Excluding currency effects, revenue rose 6%.
Operating profit was $555 million, up 14% from the fourth quarter of 2004. Operating margin was 22.9%, up from 21.1% in the prior-year period due to higher revenue and greater efficiencies.
"Our strong results reflect the increasing momentum in our business and the success of our strategic shift to providing integrated workflow solutions to professional customers," said CEO Richard Harrington. "Thomson drove revenue and profit growth across all our market groups, a 17% increase in adjusted earnings per share and strong free cash flow growth. We are particularly pleased with the acceleration in the growth of our electronic products, software and services business, which achieved a 12% increase in revenue for the full year and now makes up nearly 70% of our total revenue. We also broadened the range of products and services we offer to our customers through organic development and investment of approximately $289 million in tactical acquisitions in 2005.
"In line with our commitment to drive shareholder value, Thomson returned more than $750 million to shareholders in 2005 through dividends and share repurchases. Given the significant cash flow generation capabilities of our business, our strong balance sheet, and our focus on returning capital to our shareholders, our board of directors has accelerated the timing of its annual dividend review to the first quarter of the year and has authorized a 10% increase in the annual dividend rate.
"As part of our commitment to drive growth and returns by optimizing our portfolio of businesses, we are also announcing the sale of four businesses that are not core to Thomson's workflow solutions strategy. The sales will improve the strategic focus and financial profile of Thomson. All of these businesses have solid operations and well-respected brands. We expect these sales to be completed in 2006.
Thomson approved the sale of three businesses in the Thomson Learning group, including Peterson's, a college preparatory guide; the U.S. operations of Thomson Education Direct, a consumer-based distance-learning career school; and K.G. Saur, a German publisher of biographical and bibliographical reference titles serving the library and academic community. The financial results of these businesses are included in Thomson Learning for 2005 and will be reclassified as discontinued operations beginning in the first quarter of 2006. The combined annual revenues of these three businesses are approximately $145 million.
The company boosted the dividend to 22 cents on a quarterly basis from the previous 20 cents.
For the full year 2006, Thomson expects revenue growth of 7% to 9%, excluding currency effects, in line with the company's long-term revenue growth target. Full-year 2006 revenue growth will continue to be driven primarily by existing businesses, supplemented by tactical acquisitions.