Thomson Reuters Corp (TRI) 2008 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Thomson Reuters first-quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given to you at that time. (OPERATOR INSTRUCTIONS). As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Vice President of Investor Relations, Mr. Frank Golden. Please go ahead.

Good morning and welcome to the Thomson Reuters first-quarter 2008 earnings call -- our inaugural call. Thank you for joining us today. Those of you listening should have a copy of today's earnings release and the latest slides, which are posted on our website at www.thomsonreuters.com.

We will begin this morning with Thomson Reuters CEO, Tom Glocer. Tom will begin with a discussion of Reuters strategy, share his priorities for 2008 and beyond and will review the pro forma first-quarter results for the new company. And Bob Daleo, our CFO, will start by discussing the cost-savings initiatives. Bob will then provide details on the pro forma Thomson Reuters first-quarter results on a consolidated basis and he will then conclude with our outlook for 2008.

Let me point out that The Thomson Corporation's first-quarter results are appended to today's presentation. Following Tom and Bob's presentations, we will open the call for questions. Now I would ask that you please limit yourselves to one question each to enable us to get to as many participants as possible.

Before we begin, let me point out that on our website today is the following information. We have provided you with quarterly 2007 pro forma results for Thomson Reuters for the Markets and Professional groups and we take that down to the business unit level. And Reuters first-quarter results are also posted in both IFRS and Canadian GAAP.

I will remind you that today's presentation contains forward-looking statements. Actual results may differ materially due to the number of risks and uncertainties discussed in reports and filings that we provide to regulatory agencies. You can access these documents on our website or by contacting our Investor Relations Department. We have also provided a GAAP/non-GAAP reconciliation in today's earnings release, as well as in the Investor Relations section of our website. It is my pleasure to now introduce the Chief Executive Officer of Thomson Reuters, Tom Glocer.

Thanks, Frank and good morning. We've certainly waited a long time for this day and I am pleased to be able to discuss with you why I am so excited about the business that we are creating.

There are three things that I plan to cover today -- Thomson Reuters unique starting position, my key priorities for the Company and our first-quarter results and how we will drive the business going forward.

So let me begin with how Thomson Reuters is positioned. The global economy requires information and no one is better placed than Thomson Reuters to provide it. Now the specific information that we provide we are calling intelligent information and why is that?

Well, intelligent information is certainly insightful, well-written text, just the right legal authority on point from West or a thoughtful analysis of the credit bubble from Reuters news, but it is not just flat, passive data. Intelligent information is about supplying dynamic data, which is action-oriented and which can be consumed and further processed by machines.

Okay, so we provide intelligent information, but why will there be a growing demand for what we offer? And I think there are three reasons. Number one, the world is professionalizing at an unprecedented rate. Number two, physical industries are transforming into information businesses and three, the world is going global and real-time 24/7.

Let me just share two examples that I believe bode well for our Professional Division businesses. In little more than seven years, more than 100 countries, including the 27 European Union member states, now permit or require the use of IFRS accounting standards. As the US and Canada join the list, this convergence will benefit our tax and accounting business and enhance our scale.

In the pharmaceutical industry, which our scientific, legal and financial businesses serve, the emerging markets are providing an increasing share of the growth. So for example, the Brazilian retail market is growing 24%, the Russian market at 27% and this global growth, coupled with the transformation of the pharma industry from one characterized by chemical compound discovery and manufacturer to the more information-intensive decoding and manipulation of the human genome, will help expand opportunities for Thomson Reuters.

So let's delve a little more deeply into who we are and what we aspire to be. By combining industry expertise with innovative technology, we have achieved significant scale in each of the markets in which we operate, delivering critical information to leading decision-makers. Concentrating on business and professional customers delivers high-quality revenue, consistently growing revenue, which is predominantly recurring subscription in nature and derived globally. Our revenues are not advertising or consumer-dependent. We are also highly profitable, generating $3 billion in EBITDA last year on a pro forma combined basis and our market cap is some $30 billion.

Next, we are also balanced from a geographical and business segment perspective and we are well-positioned in today's biggest markets and in the fastest-growing markets of tomorrow. Our Markets Division is second to none in terms of the range of products it can now offer to both buy and sell-side customers. As you see reflected in the first-quarter results, our breadth of products, coupled with our geographic diversification, is enabling us to continue to grow across the globe despite softness in some markets. I think you will agree that 9% organic growth is very good this late into the cycle.

Our Professional Division includes some of the best-known and most highly respected brands in their markets. Our products are at the commercial heart of what lawyers, tax and accounting professionals, scientists and doctors do each day and demand for these products continues to be strongly reflected in Legal's 7% organic growth, and Tax and Accounting's 13% organic growth in the first quarter. Thomson Reuters geographic and business segment diversification provides a natural hedge that I'm confident will help drive growth while also positioning us to weather any market fluctuations.

You will find us to be highly focused and disciplined in two regards. First, we are highly focused on our customers. Understanding our customers' needs and how we can help improve their productivity is at the core of what we do. Consequently, our investments will be targeted at enhancing the portfolio of products we can offer our customers.

Second, we are focused in the way we approach investments. Thomson has done a particularly good job of developing and honing its investment strategy and criteria, which will benefit us as we explore opportunities for growth. Our strong cash-generating capability will enable us to make targeted internal and external investments to take advantage of opportunities without stretching our balance sheet. We will build on the strengths of the individual businesses by bringing the scale and competitive strength of a $12 billion global company. And I am confident that we have both the resources and the discipline to achieve high-quality growth and strong profitability.

So to recap, Thomson Reuters will benefit from the value created by more diversified revenue streams, a larger capital base and our disciplined investment approach.

I now want to turn forward and share my priorities for the businesses that will enable us to deliver on those assets and they are integration, globalization and scale economics. First, integration. Simply put, my goal is to be One Company in One Year and this is a message I have been taking to staff across the 11-month regulatory process and intensively in the last two weeks since closing.

My second priority is globalization. And I will be seeking to strengthen our position as the provider of choice across each of our markets worldwide. Thomson Reuters is now a truly global company and we can tap higher growth rates around the world for our predominantly North American businesses.

Third, scale economics. Our business units are leaders in their respective markets and possess strong brands. Each business would be attractive as an investment in its own right. So how do we achieve a whole that is worth more than the sum of its parts? For me, it comes down to a handful of key horizontal initiatives or planks across these vertical segments. This is really the industrial logic or the glue of the group and this is what can drive scale economics right across the Company.

So let me give you a few specifics for each priority. Let me start with integration. One benefit to the long regulatory approval process was that it enabled us to plan fully for the integration. It also enabled us to fully quantify the costs and savings targets related to the integration plan and Bob will provide you a bit more detail on that in a minute.

Long term, our success is dependent on our ability to achieve a full and complete integration, including all customer-facing and internal systems, but importantly also focusing on cultural integration, the right organizational structure, the right people in the right roles and the values, behaviors and reward systems to drive performance. Getting the integration done right and at the same time getting it done quickly is my priority number one.

We expect to achieve aggregate run rate savings of $1 billion by the end of 2010 and $1.2 billion in run rate savings by the end of 2011 and this is made up of our existing THOMSONplus and Reuters Core Plus programs, plus $750 million in savings from the Reuters integration. And this is ahead of our original target of $500 million and ahead even of the original timetable in that we will have already achieved the three-year, $500 million run rate target by the end of 2010 rather than the third anniversary of closing.

We have already begun to leverage our infrastructure and consolidate back-office functions and to establish the common product roadmap. So for example, by the end of this summer already, we will have migrated the Markets Division off of Oracle and onto SAP and I can tell you that is no small undertaking. I am confident we will fully deliver on the cost savings and most importantly, for the longer term, build an agile platform and culture for growth.

Next, I want to turn to globalization. The world is going global in real-time and this is a significant opportunity for us. Information knows no borders, respects no time zones and has no friction costs. At the same time, the globalization of business is expanding the ranks of professionals across the planet and Thomson Reuters is ideally positioned for this with our unique global footprint. 25% of our employees are in Asia, the fastest growing region in the world, where we generate more than $1 billion of revenue.

Consider this, between 1995 and 2002, US GDP growth was about 80% of the world's total. Between 2003 and 2007, it fell to 20%. The time is right for us to expand our leadership position in the information economy and increase our exposure to the faster growing regions of the world. We have proven that professionals will pay for just the right information delivered at just the right time and place in their workflow.

We can achieve this in the Markets Division by leveraging the Reuters salesforce, brand and presence around the globe. In particular, we are excited by the opportunity to sell Thomson Financial buy-side content into Asia, the Gulf and emerging markets and add Reuters news to ThomsonONE and TradeWeb products. And if you look just at our first-quarter results, in the Markets Division, we did some 15% revenue growth, 14% of it organic in Asia and that is just with half of the arsenal we will be able to bring to bear.

Over in the Professional Division, we see longer-term opportunities to internationalize many of our market-leading North American franchises by leveraging our global footprint and strengthen technology.

Finally, let me address scale economics. I don't believe in magic, but I do believe we have the tools to make Thomson Reuters an information powerhouse. I believe that overlaying a few carefully chosen horizontal capabilities, such as the world's best professional search, news and content management platforms, we can drive one to two points of additional growth or one to two points of additional margin versus what each of these businesses could do on a purely standalone basis. We have had a great start to the year and you can see from our 2008 outlook, we expect to achieve strong full-year results.

Beyond the current year, 2009 and 2010 will be the years we will benefit from great operating improvement across the Company through the self-help of our integration programs, which I am confident will deliver the $1.2 billion of run rate savings, as well as healthy growing franchises.

The bottom line is we are building a company with global reach and platforms that will propel us to stronger growth in the years ahead, a company that will achieve strong top-line growth, higher margins and will generate strong cash flow for our shareholders.

Before I turn it over to Bob who will take you through the results in some detail, let me touch on a few pro forma highlights for the quarter. As you have seen, total revenue grew 12% with organic revenue up 8%. Based on the strong start to the year, we are estimating that total revenue growth this year will be in the range of 6% to 8%, nearly all of which organic.

The Markets Division had an excellent first quarter with 9% organic revenue growth, 10% from the former Reuters businesses and the Professional Division also had an excellent quarter, recording organic revenue growth of 7%. Underlying operating income grew 37% with a margin of 17.8% due to the strong top-line growth and efficiency initiatives in advance of the transaction closing.

Lastly, on April 17, we announced a $500 million share buyback program. Thus far, we have repurchased 3.3 million shares of Thomson Reuters PLC stock for a total cost of about $100 million. The buyback program underscores our financial strength and focus on shareholder value. We will manage our capital structure and set our cash distribution policy so as to maintain a strong, yet efficient, balance sheet. As I turn it over to Bob Daleo, let me just say how excited I am about the prospects of Thomson Reuters. Bob?

Thank you, Tom. Good morning, everyone. First, I want to echo Tom's comments regarding how excited we are for the prospects of this company going forward. And I am pleased to be speaking with you on this, the first Thomson Reuters quarterly earnings call.

I begin by discussing our savings program and related costs. Next, I intend to review the first-quarter pro forma results for the Company and I will close by providing an update on our business visibility for 2008.

Before I get into the financials, let me quickly summarize the results for the quarter and their implication. We are focused on growth and we are off to a strong start for the year. Organic growth in both the Professional and Markets Division was very healthy, signaling the strength of our businesses in their respective markets. And of course, while we are focused on organic growth, we are keenly aware of the significant opportunity we have in front of us to streamline our operations and reduce our current cost base and are confident we will achieve this goal and we believe we are on track to record a strong performance for this year.

Now last May when we announced this deal, we expected $500 million in net synergy run rate savings 36 months after close. The actual close puts this target at mid of April of 2011. It is not very practical. So we are providing targets for both 2010 and 2011. Also, the original goal was net of potential dyssynergies or possible revenue losses. We recognize this. But from a business perspective, it does not make sense for us to quantify dyssynergies. Our objective is to minimize any revenue loss and as we have had time to study the business, we believe that pure losses associated with duplicate services to be minimal. Any other losses will be driven by our efforts to move customers to more robust and effective products and platforms and these actions by their very nature will enhance our long-term growth prospects and more than offset any short-term losses. Now we also said these savings were on top of THOMSONplus, Core Plus programs. So the growth savings at the time were $950 million run rate when complete.

Now this schedule shows our current thinking on these programs. As the combined Thomson Reuters, we will bring our three cost-savings initiatives under one umbrella and you can see from the chart, we expect to achieve aggregate run rate savings of $1 billion by the end of 2010 and $1.2 billion by the end of 2011. The majority of these incremental savings will come from technology-related efforts and I will have more on that in a moment. The $1.2 billion in cost savings represents 12% of the overall cost base of both companies relative to 2006 and is comprised of $750 million of savings from the Reuters integration, $300 million from Core Plus and $160 million from THOMSONplus. Through March 31, the combined THOMSONplus and Core Plus programs achieved run rate savings of approximately $300 million at a cost of roughly $570 million.

In addition to these savings, we plan to achieve an additional $900 million by the end of 2011, which will require estimated cash costs of about $1.2 billion. We currently estimate that about 80% of these future cash costs will flow through the income statement. A portion of them will also be allocated to the acquisition purchase price. We will report our progress to you on a quarterly basis against these targets. We will not provide granularity on THOMSONplus and Core Plus on a standalone basis. Furthermore, let me point out that these numbers are reflective of our best estimates at this point in time. However, you should recognize there is a combination of literally hundreds of projects, which inherently could shift the timing on these projections.

Now in addition to the cost to achieve these savings shown on this slide, we anticipate approximately $200 million of integration-related costs, $68 million of which was recorded in the first quarter. These costs will primarily be realized in 2008 and 2009 and are associated with bringing our two businesses together, but are not directly related to any savings and they include things such as retention programs, our launch advertising and branding efforts and consulting and professional services expenses, which led up to the transaction.

We expect to achieve these savings from a variety of categories, which we have listed on this slide in order of priority. We anticipate the areas of product development, sales and technology and the corporate functions will contribute roughly 80% of the overall savings. Real estate and content are expected to contribute approximately the remaining 20%. Specifically, we will reduce, for example, the number of offices in Bangalore from five to three and we will see additional savings in our London operations as well and our New York operations as well and we will also consolidate back-office systems and infrastructure, rationalize content databases and consolidate data centers.

In addition, the plotting of these bars gives you some indication as to the anticipated timing of these savings. While these are generalizations, which we recognize, they do provide a broad overview of timing and magnitude of saving by category. I can assure that significant work has been done to identify and characterize and operationalize these targets and that management is heavily focused on these opportunities.

Before walking through the results themselves, let me quickly explain the mechanics of the pro forma statement. The pro forma numbers we will present will assume the acquisition of Reuters as of January 1, 2007. Our basis of comparison is the pro forma financial information presented in the 20-F, which we published on April 17. We will be making one modification to this reported pro forma. For the purposes of a comparison, we will be removing the impact of an accounting adjustment, which requires us to reduce 2007 revenues by $86 million. As you can see, we have added this back so as not to distort the true operating performance of the Company for this year.

On a GAAP basis, this adjustment, along with other accounting and acquisition-related accounting adjustments, will occur actually in our second quarter of 2008, the quarter in which the transaction closed. We show this slide because we believe that the most effective way to manage and evaluate performance for Thomson Reuters in this first year of transition is to focus really on the pro forma results. While the GAAP results are, of course, important, pro forma will provide clarity of the businesses' achievements.

For Thomson Reuters, pro forma revenue increased 12% in the quarter, 8% organic, driven by the strong performances across our businesses. Underlying operating profit is a better reflection of our first-quarter performance than reported operating profit given the adjustments required under acquisition accounting. So we removed the following -- THOMSONplus costs, the fair value adjustments for currency exposure and customer contracts and the amortization of intangibles. And while the Q1 impact of this item is relatively minor, beginning next quarter, intangible amortization will be significant that we will be referring to this underlying operating profit metric throughout. So removing the impact of these items results in underlying operating profit growth of 37% and a margin improvement to 17.8%. This is a good reflection of the strong profitability demonstrated by both Thomson and Reuters in the first quarter.

Now I would like to discuss the operating performance starting with the Professional Division. The Professional Division reported overall revenue growth of 11% to $1.3 billion, with 7% organic growth. Online services and software represented nearly 80% of total revenues and grew 13%. Print represented 20% of total revenues and grew 5%. Operating profit grew 6% and corresponding -- and their margin actually declined by 120 basis points. Now the margin decline has to do with the impact of growth investments and certain dilutive acquisitions and the fact it's a small quarter. It is not a reflection of any weakness in the business and we do expect to see good margin improvement for the Division for the year.

Let me give you a little color to these investments and acquisitions, which are sprinkled throughout the results. In Thomson Tax and Accounting, we have made several acquisitions to build out our corporate workstation and these are software-related and there is also a service acquisition that we made, which has a lower margin.

On the software-related acquisitions that we make, they are dilutive. Actually relative to their size, reasonably dilutive on an earnings basis, but immediately accretive from a cash basis and the reason they are dilutive is because we cannot earn the revenues that are in deferred when we acquire the business and in fact, we take a portion -- a reasonably substantial portion of the purchase price, allocate that to software, which we then amortize. Neither of these have any cash consequences.

In Scientific, last year, we acquired Prous, a very important and significant scientific database and that business has lower margins and is a bit dilutive to that segment. And also we are making an investment in Asia to build out both content and capabilities in science because of the growth in that segment and that segment of the world that Tom has already talked about.

In Healthcare, we are investing in a consumer initiative and as healthcare costs are increasing and passed on to individuals, they are becoming more involved in their healthcare plan decision-making. This initiative involves building tools and supplying data to these individuals through their employers and healthcare providers to empower them to make optimal healthcare plan decisions. So it is a very important initiative for us.

And in the Legal segment, we have a software business that we are developing, a small acquisition, that will enhance our customers' ability to better manage their customer relationships.

Our Legal segment had another strong revenue quarter, achieving 9% growth -- 7% organic and 2% from exchange. Online solutions continues to be the driver of the business, growing 8% organically. And this was led by continued good growth in Westlaw and 20% growth from our international online businesses.

Software and services revenue was also a big contributor, growing 12% organically, led by Findlaw, which continues to grow nearly 30% thanks to both new sales and new products offerings. Print revenue represented approximately 30% of total revenue for the quarter and was up 7%, which is all organic. Now I would caution you this benefited from some timing of shipments relative to last year. Operating profit increased 9% and the margin was 27.8%, equal to the prior year. Historically, about 22% of Legal revenues and 20% of its operating profit is generated in the first quarter of the year. And we anticipate solid margin improvement for this business for the full year.

Tax and Accounting's revenue growth continued at a very healthy pace of 28% for the quarter -- 13% organic and 15% from acquisitions. Organic revenue growth continues to be driven by core products like Checkpoint and InSource. All three of the segments in this business -- Research and Guidance, Professional Software and Services and Corporate Software and Services -- all three of them grew at least 9% organically. The 15% revenue growth from acquisitions came from the acquisition of TaxStream, which closed early in the first quarter and Property Tax Services last year, both important additions to [TGA's] core offerings in our corporate tax workstation.

Overall operating profit increased 3% and the margin was actually down to 19%. This decline was due to the revenue mix, the impact of revenue recognition and amortization of purchased software intangibles resulting from these recent acquisitions. Now we estimate that the recent acquisitions impacted this margin by roughly 400 basis points in the quarter. And while Tax and Accounting's margin will continue to be impacted by these factors throughout the year, we do anticipate that its margin will be up compared to the full year of 2007.

An important -- let me remind you, that perhaps more so than any other business, the Tax and Accounting segment is a seasonal business with over one-third of its revenue and 50% of its profit generated in the fourth quarter.

Scientific revenues were up 9% for the quarter -- 4% organic, 4% acquisition and 1% exchange. The information solution businesses, which comprise about 62% of the overall business, were up 19%, of which 11% was organic and these include Web of Science, Thomson Pharma and Corporate Solutions. Thomson Pharma had a very strong quarter, growing 37% from the strength of new sales. The Web of Knowledge also had another good quarter as sessions and queries were dramatically up versus the prior year, indicating the new release launch at the fourth quarter of last year has been very well-received.

These gains were somewhat offset by declines in legacy online and print products, which were down 11% for the quarter and comprised about 27% of total revenues, down from about 35% of total revenues a year ago. Acquisition-related revenue reflected contributions from Prous Science that was acquired in September of last year.

During the quarter, Scientific made several investments associated with efforts to localize content in the Asian markets. This, along with other one-time expenses, led to an operating profit decrease of 6%. After growing margins from 17% to 27% over the last six years, we do expect a slight decline in 2008 due to these investments for these initiatives in Asia. Now historically, about 20% of Scientific's operating profit is recorded in the first quarter and about 30% in the fourth quarter.

Turning to healthcare, let me point out that this first quarter is historically the smallest for the year, generating about 20% of their revenues and only 5% of the profits and the nature of these small figures certainly distort the year-over-year comparisons. However, revenue increased 3% in the first quarter, of which 2% was organic. The Payer segment, comprised primarily of the Medstat, business, continues to perform well with 9% organic growth. The Provider segment, comprised of Solucient and Micromedex, grew 4% organically.

The Physicians' Desk Reference, or PDR, continues to impact the overall growth rates at Healthcare, declining in the quarter due to fewer customized products. Now excluding PDR, the Healthcare segment actually grew 6% organically. Operating income was actually down $1 million versus the prior year, largely attributable to the PDR decline. Historically, approximately 35% to 40% of Healthcare's revenue and 70% of its operating profit have been generated in the fourth quarter.

Now let's turn to the Markets Division. The Markets Division had a very strong quarter, growing 11% on a pro forma basis, 9% organic. Revenue growth was attributable to 10% organic growth from the former Reuters business, which saw strong performance across all of its segments and 6% organic growth at Thomson Financial. While we are beginning to see some softness in some sales channels like investment banking, we continue to see very favorable signs in most areas like foreign exchange, data feeds in emerging markets, corporate services and our transaction businesses such as Omgeo.

Let me make several points. First, the softness in financial markets has primarily been driven by weakness in mortgage and credit markets -- two areas where we do not have a significant presence. Second, no single bank represents more than 2% of Markets revenue, no more that 1% of Thomson Reuters consolidated revenue. Third, as Tom already mentioned, Asia represents a large and growing part of our global business. It represents 15% of overall Markets revenue and is derived from Asia in this quarter and they grew 14% in the quarter organically.

There is no denying that we and companies across the world will be affected by overall weakening in the macroeconomic conditions. However, we are confident the impact on our business will be much more in line with that of the corporate world at large.

Now let's turn to the Reuters Group PLC results for the quarter. We are showing the results in both Canadian GAAP and IFRS this quarter to try and make it easier for you for comparison purposes. Reuters continued its momentum coming off the fourth quarter as it reported revenue growth of 13%, of which 10% was organic. This performance was spread throughout the business with each of the four groups growing at least 7% organically. Operating profit of $335 million reflects a significant pension adjustment resulting from converting to Canadian GAAP from IFRS and therefore, underlying operating profit, which was up 88%, is a fair indicator of performance. The strong growth resulted from revenue flow-through and efficiency projects in advance of the closing. Core Plus run rate savings at the end of the quarter were $160 million.

Sales and Trading grew 9%, 7% organic, to $876 million, led by the Xtra family of products, which saw a 10% organic growth. Usage transactions were also up in the quarter by 22%, driven by strong FX volume. The Trader family of products declined 11%. That's a big improvement relative to the 20% full-year decline of a year ago. Investment and Advisory achieved 27% growth, 20% organic, to $214 million, backed by their strong performance in investment management from data feeds and Reuters Knowledge. Retail Wealth Management had a solid quarter, growing 11% from online feeds and web-based solutions.

Enterprise grew 18%, 14% organic, to $239 million. Growth was led by data feeds up 18% and Information Management Systems up 10% and for several years of declining revenue due to the introduction of new products. Growth was also aided by the new commercial model for licensing machine-readable data and the demand for independent pricing and valuations. Media grew 12%, 9% organically, to $91 million from strong growth in TV, text and subscriptions.

Thomson Financial also continued the momentum they exhibited in the fourth quarter, growing 7%, of which 6% was organic. The core solutions businesses of Investment Management, Investment Banking and Corporate Services achieved combined organic growth of 5%. Omgeo, our straight-through processing business, continues to perform well, growing 16% in the quarter. Both Retail Wealth Management and TradeWeb markets had their best quarters in recent history, with Retail Wealth growing 6% and TradeWeb markets up 5%, driven by volumes in mortgage-backed securities, foreign exchange and interest rate swaps.

International operations continued to perform well with Europe up 7% organically and Asia up 17%, reflecting continued success of localized solutions and expanded operational capabilities in both markets. Operating profits grew 16%. The margin rose 150 basis points, the result of revenue growth, as well as the efficiency and integration planning initiatives.

Now finally, let's discuss our business outlook for 2008. Before we get into the details, let me highlight that we are basing our guidance on 2008 pro forma figures, as if Reuters was acquired by Thomson on January 1, 2007. We are using the comparable set of figures from slide 20 as our baseline.

Let me also say that we are providing a level of granularity in the outlook, which acknowledges the complexity of putting these businesses together and our desire to provide sufficient transparency for the market and future outlooks may not be as detailed.

We estimate revenue growth to be in the range of 6% to 8%, nearly all organic. Now this compares to our Q1 growth rate of 10% and does anticipate that the current rate of growth will slacken a bit as the year progresses and this slackening will reflect several factors. First, it acknowledges that we are entering a weaker business environment and it will have an impact on our overall business to a degree. Secondly, in our Professional business, our print and legacy or the low growth businesses are weighted to the latter half of the year and third, in the Markets Division, both Reuters and Thomson Financial had strong second halves, so the comparisons are a bit tougher.

Underlying operating profit margin, which includes integration savings and excludes synergy and integration costs, as well as acquisition-related amortization of intangibles, is expected to be between 19% and 21%. Free cash flow, excluding again acquisition-related cash spend as a percentage of revenue, is estimated to be between 11% and 12%. Capital expenditures as a percentage of revenue is expected to be between 8% and 9%. This is a bit higher than our long-term target of 7% to 8%, but is reflective of some technology investments related to new product developments, which were contemplated actually prior to the merger and which we are driving hard to execute.

Depreciation is expected to be between $800 million and $850 million. Amortization of intangibles is expected to be between $625 million and $650 million, largely due to the incremental amount attributable to the Reuters acquisition. Our interest expense we are forecasting at roughly $450 million and we estimate our effective tax rate on adjusted earnings will be between 22% to 25% and post-amortization between 19 -- I am sorry -- that is post-amortization -- and 19% to 21% pre-amortization. And as I have already said, we appreciate the financials are quite complicated this year, which is why we are providing you with a more detailed forecast than we have historically provided. Now with that, let me turn it back to Frank.

Thanks very much, Bob. Okay, needless to say, that was an awful lot to get through. I am sure you have your questions, so we would like to open the call for questions now.

(OPERATOR INSTRUCTIONS). Peter Appert, Goldman Sachs.

Thank you. Bob, can you give us any guidance on how you see the phasing of the integration spending and the phasing of the savings over the next couple of years and how front-loaded are both of those items?

Peter, are you referring to the schedule? It had those. I think there is a schedule we provided that shows that.

Oh, is that in one -- I'm sorry. I don't have them --.

Yes, there is Peter. There is a slide, number -- slide number 21 has all of that. It doesn't have the phasing for the integration -- it has it for the costs and savings I thought you -- there are separate integration costs, which I mentioned, were $200 million. The bulk of those will be in this year with some flow-over to next year, but the actual programs of savings and the costs associated with them are detailed in --.

Okay, thank you. I will get back to that. That doesn't count as my question therefore, so I get to squeeze in another one and that is specifically relative -- this is for Tom or Bob -- relative to your comments in terms of sort of a tougher environment as the year progresses, what are you hearing back in terms of the Markets business specifically -- cutbacks, cancellations, etc. -- from both buy and sell-side clients and should we expect to see that as early as the second quarter?

Well, I will add a little color, but then I would like to turn it over to Tom who has been spending time with customers more than I have, but we continue to see good performance across the vast majority of our businesses in the Markets Division. I think what we all have to keep in mind is that the Markets Division is a very different business than either Thomson Financial or Reuters was separately. The footprint that we have across all the segments of the markets, the global nature of the businesses are just so different. I will tell you I was in Asia last week and that market is absolutely booming and not only are our customers pumped, but our employees are pumped as well. So when you've got 15% of your business in that segment, and it is growing at those rates, I think that we are still pretty encouraged by all we see.

I think it is more -- the caution I have in this is that the second half of last year for both these businesses was very, very strong and so as you get those comparatives, you would see a slight decline and as I said, I think the reasons I have given in terms of why we see the decline speak for themselves. But I will ask Tom if he wants to add any color to that.

Yes, Bob is absolutely right. I think the two things I would add, especially for folks who haven't been watching the Reuters story closely, is that, number one, everyone tends to focus on the terminals business and that is important and frankly, putting Thomson Financial and Reuters together, we are going to have a terrific terminal offering going forward, but a larger part of the Reuters business was non-headcount-related, non-terminal-related. It is the data feed business, it is the risk management systems and so if you look at Reuters results over the last three years or so in terminal numbers, our terminals actually have gone down by about 10% if you count them, but the revenues are now growing at, what, 10% organic.

So that is an important theme and then the particular markets that Reuters serves have -- I wish I could claim this was genius. Some of it is obviously good fortune and just being well-positioned. So the FX markets have been on fire. We did a 22% increase in transaction systems. We have the number one franchise in commodities, in energy and in emerging markets and although you are absolutely right that the big money center banks have been seeing losses and are laying off people in particular in the fixed income departments, they are not hurting their good franchises because they frankly need the results there to cover and so we have had the good results to date and still quite decent sales as well in the first quarter.

Vince Valentini, TD Newcrest.

Thanks very much. Just to follow up on that theme a little bit, so from the tone of what you are saying -- I know you don't want to give 2009 guidance -- but at this point, you wouldn't be seeing this 6% to 8% revenue growth for this year dropping to be a -6% to -8% for next year. Do you see some sort of massive cliff with Bear Stearns and ABN and everything else happening in the market that this is just a ticking time bomb or are you saying even with what has happened in the market, your signals from customers are that things may slow a bit, but the huge cliff is probably not there this cycle?

It's Tom. Let me address that, Vince. I think the issue is that Thomson Reuters is certainly not immune to the business cycle. Our Professional businesses are very strong, people obviously still have to file and pay their taxes in the downturn. They get sick. They need healthcare, but I think the fear around the financial services business has been overstated in part because we are well-positioned and in part because of the work that both companies have done over the last five years to strengthen their franchises.

So neither Bob nor I will want to be drawn into specifics about 2009 and as he said, there are some areas of softness on the investment banking floor. Of course, Bear Stearns was a valued client of both companies, but don't forget some good operations. JPMorgan didn't buy them just to shut them down, so we will see -- we hope to retain a good amount of the revenues there. So altogether, I am pretty pleased with how we are positioned at this stage in a downturn that has been running a good nine, ten months already.

Colin Tennant, Lehman Brothers.

Hi, thank you very much. Just a couple of things. First of all, sticking with Markets I'm afraid, but you mentioned the product roadmap, you have made some progress on that. I wondered if you could just expand a little bit on the timing that we might hear about some of those initiatives and how that might affect sales going forward. And secondly, just around net sales, it is a number which I know we used to talk about at Reuters. I don't know if you want to say anything about -- you said that in the first quarter, it was looking strong back at the Reuters full-year results in March. I wonder if you could comment on the shape of that line on the chart now.

Okay. Well, we are not going to want to get into quite the granular detail that Reuters seemed to be for a long time, but why don't I just characterize it as net sales were positive every month and they were good and that reflects really the breadth of the business both in terms of the productline and geographically and that is obviously a helpful indicator into the second quarter and beyond.

In terms of the product roadmap, I don't want to steal Devin Wenig's thunder. He has put together a fantastic team, drawing on people from both the Thomson Financial and Reuters business. They are hard at work on what folks on the Reuters side remember as the common platform and they are planning to release essentially the successor product to 3000 Xtra, the top-of-the-line trading terminal in particular, next year and that will draw on now content from both sides of the house, everything we have learned about how our users want to search for and use the data.

And what I am really excited about for the Markets Division is that not only will we have a great terminal head-to-head in that part of the business, because contrary to popular reports, I can promise you there will still be human beings employed in the financial services market, but it complements the franchise we have on the enterprise side. All the data feeds, the trading systems, the risk management systems, areas where Reuters standalone was always strong. So it is a nice balanced offering.

Randal Rudniski, Credit Suisse.

Thanks. I just wanted to clarify one of the cost element comments, Bob, that you had made earlier. I just wanted to make sure that I heard you right. So in addition to the costs to deliver the synergies that are outlined in that schedule, is there an additional $200 million that we are going to see in 2008?

Yes, there is. Not all of it in 2008. We just incurred $68 million of it in the first quarter. If you look at the pro forma results, you will see that it is in there. So we have got -- what is that? Do the math. $140 to go and a significant portion of that will fall into 2008. Some of that might fall into 2009.

Okay, and the spending, can you elaborate on what it is related to?

Of course. I did at the time. I will repeat myself. It relates to things like retention bonuses. It's very important for us to make sure that, for example, at Thomson Financial, the organization stayed together, was motivated and so those costs were all costs that were bore by Thomson consulting services and tax advice to put together the businesses. And let me see if I can remember what else was in there. Those are kind of -- of course, the branding and marketing programs to rebrand the Company. All right?

Okay, that's helpful. Thank you.

Paul Sullivan, Merrill Lynch.

Good morning, guys. Just on the margin target, the 19% to 21% doesn't seem to look particularly demanding, especially at the low end of the range. Why haven't you set a more tighter target or a more demanding target, especially in light of the current revenue growth?

And then just in terms of the overall savings targets, how much flex do you have in the model to increase those targets further, especially in the event of a revenue shortfall within financial? And also have you baked in any incremental investment into those numbers?

The targets that we are providing are targets that we believe are reasonable based upon where we are in the business and where we are. You we will not see significant -- there aren't a lot of savings that will come from integration in 2008. The bulk of them occur in the out-years. So these targets represent a combination of the businesses pretty much at their current run rates, and we are comfortable that we can attain them and we will work very hard to exceed them.

In terms of do we have scope if the revenues soften, we will run our business prudently as both Reuters and Thomson have in the past. And if, in fact, the market situations toughen, we will take actions accordingly. We do have in both these businesses a level of investment in the Professional and Markets, a level of investment that we need to think is important to continue to drive the business forward. For example, that is why we have the -- I said our CapEx expenditures are going to be between 8% and 9%.

I mentioned when I talk about Professional investments that we are doing in growth and the acquisitions, which are dilutive to us. All of those things contribute to this margin, and we think it is the right balance for us of positioning ourselves for the longer-term while making sure we drive efficiency for the short-term.

Also could you just give us a sense of your expectation of year-end net debt and sort of a target net debt to EBITDA figure we should be aiming for over the medium term?

I don't have that in front of me. I will get an answer to that, and I will post it to the website rather than me struggle with this right now. I have it, but not right in front of me. Thank you.

Tim Casey, BMO.

Thanks. A couple of things. I am wondering if you could comment on the Professional Division as you did on Markets regarding what you're seeing out there in terms of your core customers, if you're starting to see any tightening based on the slowdown. I know deal flow in some of the law firms is down. Are you seeing anything there?

And secondly, could you comment to the degree you are comfortable on what you're seeing from your competition on the market side? I think everybody expected Bloomberg to step up on product releases and whatnot. How are you finding the competitive marketplace? Thanks.

Sure, it's Tom. I will take those. You know, on the Legal business we are seeing, certainly on the corporate side, a slowing down in the transactions activity. But as I am sure you know, a very large proportion of the big Westlaw business is really focused on litigation and the needs of litigators in preparing and prosecuting their cases.

And I don't know if I could say this is good news for the country, but it's certainly good news for Thomson Reuters that when, you know, we've tended to see recessions before. Although the growth does dampen a little bit, you typically see an uptick in both litigation and the bankruptcy restructuring practices. We haven't yet seen it on the bankruptcy side.

The litigation is beginning to pick up again, and I think you will see certainly as an outgrowth of the subprime and the credit crisis a ton of litigation, and also a lot of internal investigations that use services. So the Legal business is quite resilient. Again, Tax and Accounting given the multiple jurisdictions, even if the amount is smaller you still have to file your return and the returns change every year.

Scientific and Healthcare tend to be a bit more related to government spend, and those tend to work over longer cycles. So we haven't seen -- we are seeing positive trends there at the moment. Over under the Markets side, I don't think there is much really to say on a competitive basis. You know, Bloomberg has got their box. That is their business, and it is a good business. They are quite focused into the fixed income space, so I am sure there are some challenges there.

From our perspective, we think the best thing is that customers really have choice and that is what they want, and we just expect over the coming years to have an increasing share of wallet. So I am pretty pleased where we are positioned competitively.

Mark Braley, Deutsche Bank.

Hi, good afternoon. Sort of 1.5 questions. First of all, Tom, do you want to give us a feel for kind of how far you feel you are down the path of reviewing the whole portfolio, and kind of give us a feel for what your timing might be in terms of talking to us about where you see the business going, you know, on a kind of five-year view; i.e., is this something we should expect to the half year or the third quarter, going into next year?

And then my sort of half a question for Bob is just on the buyback. Are you sort of leaving it totally flexible as to which line of stock you buy? So basically, are you just going to buy whichever line of stock is cheaper on a day-to-day basis, or is there any intention of trying to keep the balance between the two lines?

I will take the second question first. The buyback that we have announced right now is focused on the PLC shares. Because of discount, we will continue to do that. Over the long term, we will look at our buyback program and determine which markets it makes sense to do it in. And also we have to keep an eye towards our overall liquidity. So for Thomson Reuters, just as it was for Thomson and unlike Reuters, we don't have quite the same latitude that Reuters enjoyed in the past, which is to be able to go into the market and buy significantly because it affects liquidity.

So we have to keep that in mind as we think about buyback programs. But right now, we are very active as we have said in the marketplace. It makes sense. It is delivering value, I think, longer-term to our shareholders, and we will continue to do that. And whether we buy -- what we buy in either market will be opportunistic and based on our view of whether we actually have the capacity to go in there and do that without restricting liquidity.

Mark, on the first question, I guess where I characterize that I am at the moment is towards the bottom of a very steep and very exciting learning curve, both in terms of the businesses themselves and what they are capable of; but the customers of those businesses, the products, the relevant technology trends, the people we have in our business.

So I am going to be -- I have the luxury because this is a really good business, unlike the one I found at Reuters where we sort of had to go into the operating room on Day 1 with assets like Instinet. I am going to take my time to really understand these businesses bottom-up. I am playing with all the products, and that is fun for me as well.

Then I owe my Board an answer and once we have had a chance to do that in strategy sessions, we, Bob and I, will certainly communicate it. But don't expect a key point where you get a grand unveiling because I think this is going to be more one of just continuing to set our own targets for the business and then hopefully exceed them. It is really a great business at first view.

Michael Meltz, Bear Stearns.

I actually have two questions. One clarification on Peter's earlier question, Bob, about financial or market trends. You responded slight decline in H2. Are you talking about a deceleration of growth from the 9% or you actually expect organic revenue to go negative in the second half?

No, no, no. A slight decline. Only because -- in part because of the comparatives.

So you are saying a deceleration in growth or a year-over-year decline?

A deceleration in growth.

Got it. Thank you. Secondly, given the increased costs or synergy targets, can you give us a sense as to when you get to 2011, where do you expect your margins to be from this current 19% level? What is a good target we should be thinking about?

I would like to defer that question for now. I think that we have a lot of moving parts here. That is a thoughtful process. As you know, Thomson -- when we started THOMSONplus, we talked about a target margin. We will think about that. Tom and I will go away. We will discuss that with the Board and we are happy to communicate that. And I think that, Michael, you are onto a very good point, which is, that over the longer term, what really matters here is not whether we get the $1.2 billion out, but whether we can drive this business to an operating margin that makes sense for our business, for our scale and capabilities and we will talk about that in the future when we are prepared to. But right now, I think we would just like to stick with the target that we have laid out.

Patrick Wellington, Morgan Stanley.

Yes, good afternoon, everybody. I just wanted to go back again to the Markets business. Tom, you outlined that, in 2007, much of the redundancies have been in fixed income, but don't you think there has been a change in tone since the start of this year? I count 22,000 redundancies from investment banks since the beginning of the year. Obviously we are about to see a round of redundancies -- apologies to anybody on the call -- from ABN and UBS. Citigroup I think was Reuters largest customer and has made significant redundancy announcements since the beginning of the year in their heartland investment bank and we are -- even in some of your trading areas, there have been a few announcements from people like Bank of America and Citigroup withdrawing from lines of risk-taking in commodities and other areas. So do you agree with me that there has been a change in the nature of how investment banks have responded and if that were to affect Reuters business, what is the lag effect? When would one see it if it were to have an impact?

There are movements in various directions, so I would agree with you that the cutting I am seeing -- although it certainly started directly in let's say the mortgage and asset-backed area -- has spread derivatives desks as well, sponsor groups in the investment bank. Obviously the level of activities there is down. But I also have seen some silver linings. So the leverage loan market is beginning to open up a bit. Deutsche has gotten off a sale, Citi has gotten off a sale. There is a bit of a sense among the senior bankers that I have talked to that, although there is still some rough water to cross, we may have turned in finance.

So we do expect to see softening on the investment banking floor, but when you look at the Markets business now, Asia, we are not seeing signs of the Asian financial services being pulled down. The Gulf has been absolutely on fire for us. Volumes in the FX business are up and up. TradeWeb had a very good quarter. Omgeo, in post-trade equities, had a very good quarter. So I point to that and I guess back to the issue about enterprise. So let's take a mutual fund on the buy side.

Maybe you can cut your analysts in half and cut your portfolio managers, but at four o'clock every day, you better calculate your net asset value if you have a single holder left. If that is a Thomson Reuters data feed in there, you can't shut it until you turn off the lights. So again, we are not immune to the cycle. I think as Bob said, we may very well see a softening later in the year, but the only other thing I can provide is that on the net sale side, as I think I mentioned in response to the first question, our net sales have remained strong and that is the best forward indicator, other than market chatter, I have.

And Tom, can I ask this one? In the closing days of Reuters, I think -- you have had rationalization in the Reuters business for seven or eight consecutive years now and we have now got a plan that rolls out till 2001. Do you think this is the last plan? Is this everything that you can think of or are we going to see, by the time it gets to 2011, further rationalization plans announced?

I think we started it with that seminal note you issued on Reuters: Terminal or terminal? Businesses are living creatures. You need to invest in them and at times, you need to transform the portfolio. I cannot see sitting here today a need to do anything close to the radical surgery we needed with Reuters. Now there is continuing work that is going on there, as you know. Common platform high on the list, but when I look at the integration plan we have, you have got a series of very, very clear, once-off costs to achieve that. That is one of the reasons why we also were clear -- Bob separated the extraordinary costs in 2008 associated with things like branding and retention bonuses, which were not related to taking costs out. So this business will continue to evolve, but we can certainly, in our planning, see the way to nice, clean, operating results and I think you are beginning to see the strength of that come through already in the first quarter, even before we have done some of the heavy lifting.

Drew McReynolds, RBC Capital Markets.

Thanks very much. I noticed the list of analysts has grown longer now. Just three quick housekeeping questions for Bob. Just number one, on the corporate costs line, I think you were doing a run rate core of $50 million to $55 million. Does that still apply pro forma Reuters going forward? Second question, just your 8% to 9% CapEx as a percentage of revenue, do you expect still to get back to the 7% target and can you give us potential timeline for that broadly? And just lastly, the pro forma underlying operating profit of $579 million, can you just confirm that that excludes the $68 million in Reuters related costs in Q1? Thanks.

The first answer is yes. The second, relative to corporate costs, the run rate is about $250 million, we should assume. The third had to do with capital expenditures. I think that the target for this company longer term is 7% to 8% based upon what we see in the businesses. It may take us a year or two to get there. But I clearly think the way we have to think about this business is we have to go through a number of things to streamline the operations to take us to 2011. This is a large, complex business and with great opportunity in front of it. So we really should say that probably by 2011, we will be at that target rate or around that time.

But up until then, we will continue to be investing and by the way, investing not simply in things in the Markets Division. We have got a couple of significant opportunities, which are in the run rates of the Professional Division as well like our next generation of interface for Westlaw, which we are very excited about. So I do think that 7% to 8% is reasonable, but not for the next say two years.

Jonathan Helliwell, Cazenove.

Yes, hi, thanks. First of all, actually just a point of clarification. Tom, when you were talking about net sales, was that for January, February and March or have you had a look at April yet?

Here I said I wasn't going to go into detail, so I won't. Let's just say it includes the entire period up until April 17 when we closed and they were positive and good.

Okay, that's great. My actual question was a more broad one about priorities really on free cash flow as you go forward, particularly as the general economic climate slows. You have got a strong balance sheet, you've got a number of choices. One would be to get more aggressive on the buyback, particularly to try and help address the big initial discount you are seeing between the two lines of the DLC and also sort of holding a strong balance sheet into a downturn, and those acquisitions you are talking about for building out the business internationally in the market. I wonder if you could talk about how you prioritize those.

Okay, you were breaking up a little bit, but I think I understood the question to be -- there are a variety of good uses of cash, including efficient balance sheet, buying back stock, as well as internal and external investment. How do we look at that? I think one of the very pleasant surprises I had as I have been learning more and more about how Thomson worked is there is an excellent capital allocation process tied directly into the strategy process and the whole issue of optimizing the portfolio. I think Thomson has done historically an excellent job of it. The swap trade of Learning for Finance is only the largest example. A lot more goes on at a very granular level. And so I am very much going to fall in and use that process. When stock is cheap, when we are permitted to because of the liquidity, both companies have not hesitated to buy back stock and we are doing it right now for exactly that reason.

But the good news is, across this portfolio of businesses, the teams running the businesses continue to be able to find good, intelligent, accretive acquisitions, fold-ins that make their product lines stronger, capture another element in the value chain deep, deep in the specifics of these professional businesses. So one of the most interesting things that Bob and I will do is run the process to decide who gets that capital and how they prove to us that they are going to use it wisely for a return.

Okay, but you initial balance sheet that you start off with in this climate, do you feel that is underleveraged? You've got a lot of spare capacity there or does it feel broadly appropriate?

I will take that one if you don't mind. I think it is appropriately leveraged. It is not underleveraged. We will be adding $3.5 billion worth of debt to it. And what we want to make sure of throughout this is that we preserve our strong rating. It reflects the quality of our debt and we are firm believers that quality debt and quality equity go hand-in-hand. So to leverage up significantly beyond that would jeopardize that in the short term. In the long term, we will be drawing off a significant amount of cash, which we will be able to invest in a variety of ways.

We would like to take one final question, please.

Jeff Fan, UBS.

Thanks for taking the question. The bigger picture question, when we look back to last cycle, I tend to see both in the Markets and I guess the Professional segments as well a lag effect in terms of where the macro picture troughed versus where your revenue growth rate troughed. As you look into this cycle, what factors make you believe that either the lag effect isn't there or there may be some compression of that lag or lengthening of that lag as you go through this cycle? I am trying to understand how you guys are looking at that. Thanks.

Bob and I will both chime in here. There is an inherent lag effect built into the mathematics of the subscription business, right? So if you cancel a service midway through this year, we will have had six months of the revenue this year. Next year, we will have none and so that is just built into every recurring subscription business. Ours is no different.

There does tend to be a further lag, which is the difference between when our customers begin feeling the pinch and when they start looking to address it. Now one of the things we did in the Markets Division over the last several years is put some of our largest clients on longer-term enterprise agreements, Citi most notably since they seem to be the ones people point to in terms of the need to cut a large amount of costs. But similarly in the Professional Division let's say in Legal, they have also lengthened the contracts to services like West. So there is a lag. It is maybe a year in Markets, two years more generally, but, again, I think you are not going to see it go right across the business. It depends very much market-by-market FX, strong, corporate finance weaker.

And Jeff, let me just add a little bit more color perhaps in the detail. I think what is really important is, first of all, we are not saying that our business would not be impacted by an economic cycle. I think Tom was very clear about that. I just think that also our business will be impacted like most general corporate businesses would be as opposed to a pure financial services company.

I think that there are things that we have done, both in Thomson and Reuters, over these intervening years that have positioned these companies much better. Start with the Markets Division, what I said before, our footprint is across the broad financial services industry in its entirety and the global footprint is very broad. And so the idea that while there may be some cycles -- some of this cycle will impact segments of the financial services industry harder than others and because we are positioned more broadly, we stand a far better opportunity of continuing to grow even in a slower -- even in a bit of a challenging environment.

The other thing is, as you know, Jeff, we have the Professional side and the Professional side is very different. When Thomson was a standalone in 2002 and 2003, we actually saw revenue decline out of our financial business, which was -- at that point, we were implementing ThomsonONE, which was more vaporware than it was a product as it is today and also on the Professional side, we actually -- our revenue growth declined to about 1%. We had a lot more print products back then. We had, for example -- I will give you one in North American Legal today. 40% of the revenue base in the Legal segment is in three-year contracts or more with law firms. So that gives you a lot of resiliency in that regard. Today, less than 30% of the business is print. Back then, it was over half and we had a lot of issues relative to print cycles and also relative to the libraries.

So the businesses are different and we feel much more confident that Thomson Reuters as a company will weather an economic downturn and continue to grow, perhaps not at the same rates, but continue to grow in a slow cycle and I think a lot of the thinking in the market today harkens back to those years of when Thomson and Reuters were separate. So that is why we tend to be more positive. But we will acknowledge that we can't expect to grow robustly in a market when our customers are not doing well.

And just to clarify quickly Tom's comment, you said one year on the Markets side and did you see two years on the Professional or --?

It can be two years. It depends upon the segments.

Yes, less severe, so I guess in the Markets, you tend to see a more pronounced effect around the year. On the Professional side, it is much more tempered, as Bob said, but can take a little bit longer. But the blended business -- both sides of the house really are significantly better positioned in this cycle and it is not at all clear to me sitting here today that it is as dire as some of the questions suggest.

Okay, thanks very much.

Okay, well, that will conclude our call. Let me say that we understand that that's an awful lot of information to get through. We know that you will be level-setting your models as you move forward. Let me point out that we are here to work with you. Mike Goddard and I are the team here in New York. We also point out that Chris Collett is the IR person in London. The contact information for all three of us is on our website, so I would refer you to our website for that and I would like to just thank everyone for joining us today.

Thank you. Ladies and gentlemen, today's conference call will be available for replay after 12 p.m. today until midnight May 8. You may access the AT&T teleconference replay system by dialing 800-475-6701 and entering the access code of 919870. International participants dial 320-365-3844. Those numbers once again, 800-475-6701 or 320-365-3844 and enter the access code of 919870. That does conclude your conference call for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.