Thomson Reuters Corp (TRI) 2009 Q4 法說會逐字稿

Ladies and gentlemen, thank you very much for standing by. Welcome to the Thomson Reuters full year and Fourth Quarter 2009 earnings conference call. At this time all participation lines are in a listen only mode. Later there will be an opportunity for questions with instructions given at that time. (Operator Instructions) As a reminder today's conference call is being recorded. We'll now turn the call over to your host, Senior Vice President of Investor Relations, Mr. Frank Golden.

Please go ahead.

Hello and thank you for joining us today as we review our Fourth Quarter and full year 2009 results and provide our outlook for 2010. We'll begin today with Thomson Reuters CEO, Tom Glocer. Tom will be followed by our CFO, Bob Daleo who will discuss the Fourth Quarter results. Now following their presentations we'll open the call for questions. I would ask that you please limit yourselves to one question each to enable us to get to as many questions as possible.

Today's presentation contains forward-looking statements. Actual results may differ materially due to a 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. It's now my pleasure to introduce the Chief Executive Officer of Thomson Reuters, Tom Glocer.

Thank you, Frank, and thank you all for joining us. I plan to cover four topics today. First, I'll discuss our full year results. Second, I'll provide you with selected 2009 highlights. Third, I'll discuss our market position as we enter 2010 including an update on the progress that we've made against my three key priorities, and lastly, I'll discuss our 2010 outlook and where I believe we can take this business over the next few years.

Now, despite global markets sliding deeper into recession in 2009, Thomson Reuters recorded a solid performance thanks to our proven business model. For the full year, we held revenues essentially flat, not a mean accomplishment given the challenging environment. As I stated last quarter and is even more clear today, we're past the bottom in terms of real economic activity. What our sales teams experience every day. Even though we're likely to report negative year on year results for the first half of 2010.

Now, as I begin my discussion of 2009's results, keep in mind that when we compare performance period on period, we look at revenue growth before currency as we believe this provides the best basis to measure the underlying performance of the business. I'm pleased with the Company's full performance that hopefully you can see on the slide now if you're watching on the screen. We were nimble, reallocating resources to higher growth opportunities and geographies, investing in new products, and continuing to make great progress with our integration program. These steps enabled us to hold revenues, grow margins, and adjusted EPS and drive free cash flow. From a net sales standpoint, we hit bottom in the Second Quarter with Q4 positive on a consolidated basis. For the full year, total revenue was essentially unchanged against tough prior year comps when revenues were up 8%. The Professional division was up 3% and the market division was down 2%. What we believe is good performance compared to our peers and the industry as a whole. In the Professional division, growth was driven by the Tax & Accounting and Healthcare & Science businesses, up a combined 8%. And the Tax & Accounting segment surpassed revenues of $1 billion for the first time, indicative of the expansion of its product suite and market share gains. The Markets division performance was resilient given the challenging market and tough prior year comps when revenues rose 6%. Moreover, the Markets recurring subscription revenues which comprise about 75% of its total revenues grew 1% in the year, really a remarkable achievement given the environment.

Good operating performance, integration related savings and the benefits of currency led to a 40 basis point increase in underlying operating profit margin, and we again delivered excellent free cash flow over $2 billion on an underlying basis. Importantly, we made significant progress with our integration program and have raised our savings target to $1.2 billion, nearly 2.5 times greater than our original target. Lastly, adjusted earnings per share this year was $1.85, up 2% from a year ago and that was after a $0.03 negative impact from higher integration related expenses.

It was a bit less than two years ago when we completed the acquisition of Reuters, and since that time we've been able to accelerate and expand the level of integration savings while also staying focused on revenues, margins and two critical product launches, WestlawNext and Utah. Outlined on this slide are some of the accomplishments worth highlighting in 2009, and I won't read them all to you, but let me just point out a few. Our Tax & Accounting business had another tremendous year in 2009 with revenues up nearly 10%. Already the market leader in the US, this business will look to take that success internationally in 2010 with the launch of its global tax workstation. Further to that point, you can see our increasing focus on global expansion as 16 of our 31 acquisitions in 2009 were made outside the US. We built new and innovative products by utilizing components from across the Company such as the incorporation of Reuters News into Professional products, and on the Financial side of the house, we're in very good shape. We've simplified our capital structure by unifying the DLC, ended the year with over $1 billion in cash on hand, and refinanced over $1 billion of debt at attractive rates extending our average maturities to over six years.

Let's now take a look at our market position as we enter 2010. First, given the improving sales figures off their Q2 lows, I'm confident that 2010 will be the bottom of the reporting cycle. Our Fourth Quarter total Company net sales were positive for the best of the year and given the subscription nature of our business model this will begin to flow through to revenues later in 2010. We're also well positioned as the global economy continues to strengthen. We've solidified our leadership positions having invested through the cycle and this is beginning to show in our results. Q4 '09 was Westlaw's best sales quarter in two years and that's before the exciting launch of WestlawNext earlier this month. December was Checkpoint's best sales month in its history and January was the first positive net sales month for Markets in a year and was the best month for FX volumes since October 2008.

Our business model is powerful and resilient and we're sticking to what we do best, operating in non-discretionary Markets and looking for opportunities that fit that description across Markets, customers, and geographies. The Great Recession of 2008/2009 was trying for most companies and a death experience for some. I feel good about how we've come through it and are sticking with and continuing to invest behind the strong business model. Selling electronic information and services to professionals primarily on a subscription basis that is highly capital efficient and cash flow generative is a model that we like.

Integration, globalization and scale economics, or making the whole greater than the sum of its parts, are the three key priorities I set out for you in April 2008 and we've performed very well against them. They remain priorities for 2010 but this year I folded them into two overarching themes--Growth and efficiency. From an integration standpoint, we've accomplished a lot, having rapidly integrated Thomson Financial into Reuters and Reuters into Thomson, and this has already shown what the combination is capable of. A tangible measure of this is the growth in our pro forma margin from 18.7% in 2007 to 21.3% in 2009; however we have some heavy lifting remaining to be done this year with the launch of WestlawNext and Utah, other product platform and infrastructure work, and the final year of heavy spend on the integration. It is our belief in our ability to return to growth and the promising sales data that have begun to bear this out that gives us the confidence to continue to invest in 2010.

We've also made good progress on our globalization and scale economics priorities, and have moved rapidly to expand the Professional divisions proven businesses on the back of the former Reuters global presence, sales channels, and brand. To achieve scale economics, we've launched joint product initiatives across the divisions, combined our significant purchasing power, co-located thousands of staff, and begun to work on shared infrastructure and capabilities. This year, we'll intensify our focus on growth and efficiency.

Growth opportunities come from both market and product while efficiency opportunities come from the further transformation of our cost base, in particular our technology infrastructure, and we're off to a very good start. WestlawNext launched earlier this month to very positive reviews. WestlawNext is truly a transformative product for the legal professional and it represents the largest product launched from Thomson Reuters Legal in more than a decade. It offers a clean, modern interface and powerful new search functionality that makes legal professionals significantly more efficient and gives them confidence that they've cast the widest possible research net but captured only the most relevant authorities. It was designed in close collaboration with our customers and geared to their unique needs. I know because I was a legal customer and I'm extremely pleased with the initial response from clients which has put us well ahead of our sales plan already.

Utah will be launched later this year and similar to WestlawNext will be a transformative product for the financial professional delivering the next generation user experience. Utah will offer enhanced collaboration, advanced analytics, intuitive search and navigation, and significantly enhanced multimedia capabilities. We're confident Utah will also be well received by our customers and will lead to share gains over time, and I've already swapped my 3000 extra that sits on my desk for the Utah Alpha Edition. I'm also focusing on how we can ramp up growth and allocate more resources to rapidly developing economies. I believe we're the best positioned Company in our industry to capture these opportunities. Lastly, we're intensifying our focus on achieving greater efficiencies across the Company, or put another way, transforming our cost and technology base to leverage scale. These initiatives include rationalizing and streamlining technology including consolidating data centers and deploying virtualization technologies, maximizing our pooled purchasing power and sharing cost of core technology across units. This isn't sexy stuff but it's an integral part of what we need to accomplish as we work to get our margins to the mid 20s range.

Let me now turn to 2010 and how I see the year ahead. First, revenues. We'll work tirelessly to try and achieve growth this year but the conservative manager in me must admit that despite a good Q4 2009 and a strong start to the year, it's more likely that revenues will be flat to slightly down, and this is a direct result of 2009's negative net sales, especially in the first half. Second, given that revenue assumption, we expect margins to be comparable to 2009 before the investments we plan to make in important new products and platforms that launch this year. These investments are expected to have an impact of about 100 basis points this year. Let me assure you that we continue to aggressively manage expenses across the organization and are holding expenses flat in corporate and markets for the full year. Professionals expenses will only be up in its fastest growing businesses and as a result of 2009 acquisitions. Third, we expect underlying free cash flow to be strong but down slightly which Bob will address in a moment, and fourth, our strong balance sheet, highly cash generative business, and confidence in our ability to return to good growth enables us to increase our dividend by $0.04 per share to $1.16 per share marking the 17th consecutive annual increase.

So, in conclusion, let me explain very clearly our strategy for 2010. We're confident that the bottom in our markets, Financial and Legal in particular, is behind us. We're confident that we're making the right investments to drive growth and capture efficiency and indeed, the last few months of Companywide positive sales as well as the first look at WestlawNext in action support this. Accordingly, we're not going to cut our strategic investments just to hold 2010 margins. We've thought long and hard about this and concluded that the best thing we could do for our shareholders is to continue these investments. At Reuters, I learned how to cut costs drastically to save the Company but it took us years and a big follow on investment program, Core Plus for you historians, to restart growth. At Thomson Reuters, I know we can do this in a better way thanks to the strength of our business model, strong balance sheet, and cash flow. Over the long term, I firmly believe that as the Company and the economy improve, we can grow the top line in mid to high single digits, achieve operating margins in the mid 20s, and generate cash flow in excess of $3 billion. And with that, let me turn it over to Bob Daleo.

Thank you, Tom, and good morning, everyone. Today I'm going to cover the following topics--Our fourth quarter and full year results, an update of our Integration Programs, and I'll discuss the dividend announcement and our cash flow, but before I get into the specific results for the Corporation, I'd like to show you an updated version of a slide we first introduced last year at this time.

Now this chart illustrates the diversity and resiliency of our businesses and depicts why we successfully held revenues last year. As Tom noted 2009 was very challenging; however, our diverse customer sets, product mix, and global footprint enabled our faster growing businesses to compensate for those businesses that were most impacted by the broader economic environment. As the chart reflects, over two-thirds of our revenue base recorded growth in 2009. Additionally, virtually every one of these segments saw improving sales environment as we exited last year which will likely translate into revenue growth in the second half of this year given the subscription nature of our business model.

Now, turning to the financials in particular, before I begin, let me point out that the full year reported revenues were negatively impacted by currency, primarily a strengthening US dollar; however in the Fourth Quarter we did experience a positive benefit from currency, but throughout today's presentation, I will speak to growth before currency as we believe this is a more relevant metric in measuring the performance of the business. Reported revenues are highlighted on each slide. Let me also note that currency had a muted impact on margins in the current quarter. Consolidated revenues in the Fourth Quarter were $3.3 billion. This is down 3% while acquisitions contributed 1%. Our underlying operating profit in the quarter was down 16% and the operating profit margin decreased to 19.7%. This is impacted by the flow through from lower revenues of product mix, ongoing investments and higher Corporate costs and I will talk about these shortly.

The quarters results are very much in line with our expectations when viewed in the context of the full year. They are against a tough comparative to the quarter of a year ago when organic revenue grew 5% and our margins expanded nearly 300 basis points. On a full year basis, revenues are flat, with organic revenues down 1% and acquisitions contributing and offsetting 1%. This compares with full year organic revenue growth of a year ago at 6%.

Underlying operating profit declined 1% and as expected, margins were comparable to last year. In fact, they rose by 40 basis points to 21.3%. The increase in margin was attributable to the integration savings, continued committment to strong cost management and the benefit of currency. The decline in underlying operating profit was partly attributable to higher Corporate costs, including an increase in non-cash pension expense of $30 million resulting from the Company's conversion to IFRS this last year, which I'd previously noted. Now, I'd like to discuss the operating performance of the businesses.

The Professional Division recorded Fourth Quarter revenues of $1.4 billion. This was up 1% against the prior year comp growth of 7%. Now this growth was driven by strong performance in Tax & Accounting and the Health & Science businesses as well as our subscription Legal products. Performance was offset by continued decline in print revenues. The Q4 segment operating profit declined 8% and the margin was 29.3%. While we did realize benefits from several efficiency initiatives and cost controls across the division, they were insufficient to offset lower revenue growth, the mix in that revenue, and the dilutive effect of acquisitions.

Now, just to illustrate the impact of business mix, West Print in this quarter comprised 19% of Legal's revenue versus 22% of Legal's revenues last quarter. Given the high incremental margins on print revenues this has a meaningful impact on the quarterly margin. Full year revenues of $5.4 billion were up 3%, 1% organic and 2% from acquisitions. As I discussed this time last year, we expected full year profit margins to decline slightly due to the shift to higher growth software and service products which have lower margins but higher returns on invested capital and due to the impact of investments in our global expansion initiatives, and as anticipated the full year margin finished down 80 basis points and operating profit declined 1%, also the effect of acquisition accounting.

For 2010, we expect Professionals margin to decline compared to 2009, particularly in the first and Second Quarters of the year. These traditionally smaller quarters are likely to see nominal revenue growth due to product mix and flow through from the weaker sales of 2009. While the division also experienced some front end investment spending, we expect both revenues and margins to ramp up in the second half of the year. We expect margins to further rebound in 2011 as top line growth improves and heavy investments begin to taper off.

Now, let me discuss the Fourth Quarter revenue mix which is shown on this slide and specific for the division. It segregates Legal's print about non-subscription revenues which represent 20% of the divisions total and these were down 13 and 14% respectively. Excluding these two components, the remaining 80% of Professional divisions revenue base grew over 5%. Legal subscriptions which include Westlaw, Westlaw Business and FindLaw as well as our Healthcare & Science segment both grew 4%, a solid performance, and our Tax & Accounting business continues to see very good growth of 10% in the quarter demonstrating it is somewhat insulated from the broader economic environment while it is also taking share. The fall off in non-subscription revenues included double digit declines in Westlaw ancillary revenues, Enterprise software and consulting services. Let me again point out that this change in revenue composition led to a decline in margin for the Professional division and resulting in the Company's decline as well.

Tax & Accounting and Healthcare & Science while fast growing segments have lower, although significant, but lower margins than Legal, and within Legal, our print and non-subscription products tend to have a higher flow through. The combination of these factors on our investments and recent acquisitions weighed on margins and as I've already noted this dynamic is likely to continue into 2010.

Looking at the revenue specifics by segment, Legal declined 3% in the Fourth Quarter, it was all organic. A 4% increase in subscription products lead by FindLaw's 9% growth; however, this growth was more than offset by a decline in print and non-subscription products which I mentioned. For the full year, Legal's revenues were $3.6 billion, unchanged from the prior year with acquisitions having contributed 1%. Now this compares favorably with a number of our competitors.

Tax & Accounting revenues grew 10% in the quarter, 5% organic and 5% from acquisitions. We continue to see strong demand across both customer segments with Corporate led -- led a strong performance from ONESOURCE and Professional segment driven by solid UltraTax growth in the important Fourth Quarter. Checkpoint grew 8% in the quarter and benefited for some real competitive wins. For the full year revenues exceeded $1 billion for the first time, up 9% from the prior year and this was split evenly between organic growth and acquisitions and as with Legal, we continue to see good share gain in this market as well.

Healthcare & Science revenues rose 4%, all organic, driven by continued demand for our healthcare analytics with the Payer segment which grew 10%. This performance was supplemented by good growth from our Science business. Healthcare & Science full year performance was absolutely terrific with revenues up 7% to $829 million, all of this was organic growth.

Let's turn to the operating profits for the Professional segments. As anticipated Legals operating profit in the quarter declined 10% and the margin decreased. Lower revenues particularly from high flow through businesses such as print and Westlaw ancillary services as well as the impact of foreign exchange more than offset the efficiency savings across the business. For the full year operating profit was down 3% and the margin declined 60 basis points, largely due to the revenue factors I've mentioned as well as the investments in growth initiatives. Tax & Accounting's operating profit grew 3% in the quarter. The margin of 32.5% was significantly lower than last year. Flow through on revenue was offset by the impact of acquisition, a shift towards those higher growth but lower margin businesses, and technology related product investments. The comparable year ago period included a $5 million timing benefit which was not repeated again this year.

Now the EBITDA margin which is probably more representative of 39.2% which excludes software amortization was less impacted, about 100 basis points. For the full year profit was down 1% and the margin declined 200 basis points. As I previously mentioned, these short-term margin trends are not indicative of the long term track of this business. Organic revenue increases plus acquisitions have driven solid top line growth; however acquisition accounting has resulted in significant software amortization costs negatively impacting margins. In 2009, these costs were $15 million. Over the next three years, the elimination of these non-cash charges will increase operating margins by what we project to be 150 basis points. The EBITDA margin for the full year was 29%, down slightly from the prior year.

Healthcare & Science operating profit in the quarter decreased dramatically, 16%. Corresponding margin declining to 23.2% from the 29.1% a year ago. Now this decline was attributable to technology costs and timing of expenses compared to last year. The significant change in quarterly margin is partly due simply to the law of small numbers here where a $10 million change in profit has a really big impact on margin and it should not be viewed as indicative of any trend. In fact the full year operating profit was up 9% and the corresponding margin was up 70 basis points driven by good revenue flow through and the benefit of currency and we expect to see full year margins expand again this year.

Now, turning to markets, revenues declined 5% in the Fourth Quarter, again against a very strong comparable of a year ago where we grew 4%. The revenue decline reflects the accumulated impact of net sales losses during the year as well as continued pressure on recoveries and tough comparables for outright sales and declining transaction revenues. By region, revenues in Asia were down a modest 1% with Americas and EMEA both declining 6% and I will discuss the components of this performance next. Operating profit declined 12% and the margin decreased 210 basis points. The benefits from integration savings were more than offset by the impact of lower revenues. The currency had a modest benefit on the margin in the quarter. Let me note that while the quarterly change in margin is directionally much different than recent quarters, it is in line with our previous expectation, and was taken into account when we referred to the second and Third Quarter margins as high watermarks before the eventual return to growth in markets.

Full year 2009 revenues fell 2% to $7.5 billion, recurring revenues rose 1% but were offset by an 8% decline in recoveries an 11% decline in transactions and a 17% decline in outright. By geography, Asia was up 2%, EMEA down 1% and the Americas were down 5%. Operating profit grew 3% and the corresponding margin grew 160 basis points. Now, let's look at some of the dynamics in play for Markets division in the quarter. Recurring subscription revenues which represent 75% of our total revenues declined 3% as growth in Enterprise was more than offset by desktop cancellations in Sales & Trading and Investment & Advisory. Recoveries continued to be significantly impacted by tight customer budgets and they declined 12%. Now, as a reminder, recoveries are low margin revenues that we collect and forward to third party providers such as exchanges. Most of these revenues are in Sales & Trading and some is also in Investment & Advisory.

Now, transactions continued to be a drag on revenues in the quarter; however, we did see sequential transaction revenue improvement in Q4 '09 from Q3 '09 and the year-over-year rate of decline slowed from 15% in the third quarter to 8% in the Fourth Quarter. Transactions benefited from improved trading conditions and easier comparables, and these trends have accelerated in the First Quarter. Finally, markets outright revenues decreased 20% in what is historically its largest quarter of the year. While we did achieve good sales we were not able to match last years record quarter, most of which was generated in the Enterprise business.

Now, let me turn to the markets four business units. Sales & Trading Fourth Quarter revenues declined 7%. The decline was driven by continued pressure on recoveries revenues and reductions in desktops and exchange traded instruments and fixed income businesses. The decline in desktop revenues was due to the flow through of cancellations received earlier in the year as well as decisions we have made as part of our integration programs to sunset certain low margin products. Commodities & Energies was flat in the quarter and Treasury declined slightly. FX transactions continue to show an improving trend with generating volumes reaching a 15 month high. Now for the full year S&T's revenues declined 4%. Investment & Advisory Fourth Quarter revenues declined 5%, while the Investment Banking segment returned to growth in the Fourth Quarter, the Investment Management segment was impacted by cancellations stemming from customer closures and fewer assets under management and while retail management was impacted by lower recoveries as customers reduce their purchasing of exchange fees. I&A's full year revenues declined 2% for the year.

Enterprise Fourth Quarter revenue growth was 1% against an extremely strong prior year comp when revenues grew 13% on very strong outright sales as I mentioned primarily in information management system. The Enterprise information segment grew 9% driven by demand for pricing information as customers looked to reduce costs, manage complexity and add transparency. This performance offset a 10% decline in outright revenues. Full year Enterprise revenue growth was 6% led by a 17% growth in Enterprise information. And finally, Media's Fourth Quarter revenues declined 8% as we experienced continued pressure on the Professional Publishing and Advertising driven consumer businesses. The agency business revenue declined 6% in the quarter due to consolidation of traditional media outlets and customer budget constraints and for the full year, media revenues fell 8%.

Now I'd like to take a moment to discuss the drivers of Corporate expenses in the quarter and the year. Fourth Quarter costs in Corporate were $281 million, including $163 million of integration related expense and $35 million in costs related to fair value adjustments of embedded derivatives which I'll remind you are non-cash mark-to-market adjustments of certain customer contracts. Removing these pieces, core Corporate costs were $83 million in the quarter, still up $49 million over the prior year comparable and this is primarily due to an increase in benefit expenses including the adoption of the IFRS pension accounting. For the full year, core Corporate costs were up by the same amount roughly $48 million and $30 million of which was related to this non-cash pension expense resulting from our conversion to IFRS last year.

Now, let me turn to adjusted earnings per share. Earnings attributable to common shares were $177 million in the quarter. To that we make the following adjustments to arrive at adjusted earnings per share. We removed the cost of fair value adjustments which I mentioned previously which had negatively impacted operating profit by $35 million. Again this has no cash impact. We remove $178 million of other finance expense which in this instance is resulting accounting treatment almost entirely associated with the foreign exchange impact of the settlement of interCompany loans. Again, this has no cash impacts. Next, we remove $175 million of discrete tax benefits that are primarily related to the interCompany movement of an asset, a portion of which I highlighted last quarter. Again, this has no cash impact. And finally, we remove $132 million of amortization of intangibles related to the acquisition, again, no cash impact. The result is $363 million of adjusted earnings per share or $0.44 per diluted share. I would note excluding integration cost, the run rate Q4 EPS was $0.61. Full year adjusted diluted earnings per share were $1.85 compared to $1.82 last year and again, excluding these integration costs, our full year run rate EPS was $2.36.

Now, turning to free cash flow, which as you know, we view as a very very important metric. 2009's reported free cash flow was $1.6 billion. It is $2.1 billion on an underlying basis. This solid performance is a testament to our continued focus across the Company on free cash flow and the strength of our business model. Now, underlying free cash flow excludes integration costs that we -- and then we normalize or adjust for $450 million of timing benefits in 2008 to make it more comparable and those really are the benefit of interest income from Thomson Learning proceeds and we have interest this year from Reuters and second is the absence of cash flows associated with Reuters Business in Q1.

Now, another comparable here is if you were to take our free cash flow, adjust it and divide it by our shares, our free cash flow per share is $2.47 for the full year, and I'll remind you what I said earlier that our run rate earnings per share excluding intangibles $2.36. I think this points to the quality of the run rate of our business and the strength of our earnings capabilities.

Now I'd like to move on to the integration legacy programs where we continue to make excellent progress. Through year-end, we've achieved a run rate savings of $1.1 billion and these savings were derived from reductions in product platforms and consolidation of content sense, merging two Corporate centers into one which is now complete, rationalization of sales and customer service functions, real estate consolidation, and HR -- harmonizing of HR and benefit systems. This success has enabled us to identify additional opportunities and today we raise our 2011 aggregate savings target by $200 million to $1.6 billion. This compares to our original target of $1 billion when we announced the Reuters acquisition and the $1.2 billion target we put forth when we closed the acquisition in April of 2008. The additional savings will come from taking further advantage of our global infrastructure footprint across the Company and realizing greater savings from data center efficiencies. To achieve the additional $200 million in savings we expect to spend an additional $275 million for a total of $600 million in these one-time costs between now and the program completion at the end of next year. The spend to savings ratio based on the revised number is 1.3 times and this compares to our original expectation of 1.5 times.

Now, our strong free cash flow performance and our opportunistic approach to capital management has further strengthened our financial position. We ended 2009 with over $1 billion of cash on hand. We have $1.4 billion of debt maturing in the next two years with our next set of maturities not due until November of this year. We have an untapped fully committed $2.5 billion Credit Facility that could be used to cover debt maturities if necessary. Our 2009 debt to EBITDA figure was two times, on our stated long term target, and last but not least our strong financial position enables us not only to continue to make substantial investments in the business to drive growth and further solidify our position but also enables us to increase our dividend by $0.04 again this year, and as Tom has noted this is the 17th consecutive year of dividend increases and I might note this is through two recessions.

In summary, we achieved what we set out to accomplish in 2009, despite a very difficult environment. We understand our business model extremely well which helps us to anticipate performance. We continue to focus on our integration programs, which will strengthen our business infrastructure, and on the backs of these past investments we were able to sustain and enhance our leadership positions in most of our markets. From a sales perspective we have begun to see some tangible evidence that 2009 will likely see the bottom of our sales cycle. However, as Tom has noted, 2010 will present some challenges from a reporting perspective as we work our way through the net sales losses realized in the first three quarters of last year. The first half of this year in particular will likely see reported revenues down quarter on quarter and result in a softening and temporary decline in operating margins; however given the current sales projections and our market position, we expect a reversal in this trend as the year evolves and we anticipate we will return to growth in 2011. I'm reminded by the way that historically, the First Quarter is our smallest quarter of the year. Quarterly we generate only about 20% of our full year operating profit.

Now, nevertheless, in 2010, we will maintain our investments in new products and platforms such as WestlawNext and Utah and we'll continue to drive our integration in synergy programs. Remember, it is this very philosophy that sustained us through the current downturn and has put a little blue water between us and many of our competitors. We're confident the benefits of these investments, a strengthening economic environment and improving net sales will drive growth momentum later this year into 2011 and beyond. And with that let me turn it back over to Frank who will open it up for questions.

Thanks very much, Bob. Just a couple of housekeeping items before we open it for Q&A. First let me direct you to two supplemental appendix slides that we've included on our website. The first slide are some additional financial metrics for 2010 including estimates for depreciation and amortization, interest expense, and again an estimated tax rate. The second slide you'll find is a pie chart that reflects revenue and expenses by major currency for 2009. And the last item I'd like to direct you to on our Investor Relations website is we've posted a link for WestlawNext which includes a product demonstration, the WestlawNext launch video and several customer testimonials. I believe you'll find the presentation helpful and it will provide you with a better understanding as to why we're all so excited about this new product offering.

So with that I would now, Operator, like to open the call for questions, please.

Thank you. (Operator Instructions) Our first question comes from the line of Drew McReynolds from RBC Capital Markets. Please go ahead.

Thanks very much. Good morning. My one question I guess for you, Tom, and it's a big picture question, it appears as if the visibility on your business has certainly improved quite dramatically sequentially in the quarter. It does sound just by the tone of your comments that net sales are certainly building nicely. The big picture question is when you look at coming out now of the bottom, has the environment permanently changed as a result of the last couple of years in terms of your end markets? And then a follow-up would be when you look at your targeted kind of medium term or sustainable top line organic revenue growth rate, do you remain confident that that is mid single digit going forward? Thank you.

It's a great question Drew, and it's one we spend a lot of time as a management group and as a Board. I think the most honest answer I can give you is we don't fully know yet, and I think the big variable for everyone is the impact and the nature of global regulatory change is not yet known, right? And it waivers between let's start with financial services. Some days or weeks when it looks like things are headed back to the way they were and people acting certainly like that in the markets and then in other weeks where governments are saying, haven't you learned anything, we're going to have to come in with a big stick. So if I try and look across all our businesses, it's a probably net positive in Legal, a net positive in Tax & Accounting. In Financial Services at the moment I would call it neutral. Developments that we're seeing like the instability in Greece while threatening to the euro has actually been fantastic for our FX dealing services, so I think the bottom line is we're well balanced, we're adjusting along with the markets, and in terms of the composite overall picture, I still think this is a business that can and should be capable of mid to high single digit growth rates and that's what we're planning for but I would agree with you, there's a little bit of regulatory uncertainty that hangs through this year.

Thank you. We have a question from the line of Phillip Huang, UBS Securities.

Thanks, good morning. Just on WestlawNext, I know you've only launched it at the beginning of the month and was just wondering if you might be able to give us a little bit more color on the initial feedback. I understand it's positioned as a premium service and provides significant time savings benefits to customers. How soon can we start to notice the benefit of this product in the numbers? Do you think we need to see law firms being done with cost cutting and return to growing headcount or do you expect to see the benefits show up earlier as a result of market share gains, et cetera? Thanks.

Good question. Well, I guess the first thing to observe is and we've now seen the numbers come out of let's say our competitors, our established competitors in the Legal space, it's pretty clear by a wide margin that the existing Westlaw which by the way, is a very good product has already opened up very significant blue water. WestlawNext is sort of oil on that fire, if I can mix metaphors. Maybe the best thing I could recommend you do is go do a search into the blogosphere beyond the realm of sort of official superlatives coming out of us, take a look at the law library in blogs, a Google or Technorati search of the blogs will pull up some pretty interesting stuff. I'm not sure if we have the links to it in what we put up on our website. If not, Frank can get it to you but the initial reaction from the sort of skeptical law library and legal community is very strong. I've been playing with it for months. I use the old product. It is just a significant world of difference. It is a pleasure to use the product. And then in terms of how do we expect to see the benefit, I think it exists on several bases. One, is don't underestimate especially in a market like this the benefit to a salesforce of having something new to show. It was a tough year last year across-the-board. The reaction in our own inside the Company at our salesforce presentation is huge and the success stories are running right across the firm. I think we're up to something like 400 new sales of WestlawNext in less than a month. Externally, I think you will see it in terms of a further shift in market share and some up lift in essentially the achieved pricing across the firm and the initial sales bear that out but it's still early days so we don't want to blow our horn too much but other people seem to be blowing it for us.

Thank you. Next we'll go to the line of William Bird from Banc of America. Please go ahead.

Thanks, Tom, I was just wondering if you could just discuss the scale of the net sales improvement and just your point of view on markets improvement in January and the sustainability of that improvement? Thank you.

It's a good question. So I think we've given you a sort of a directional indication in that the progression last year quarter to quarter was by the time you got to the fourth quarter, markets were still negative but on a far less negative than say the second quarter, down some 75% and that's after a 50% improvement in the third quarter. The only thing that we've completed so far this year is January. It is very unusual for us and don't expect we're going to go to a month to month basis. Bob and I really look at average net monthly sales across a quarter because there is a certain lumpiness. We chose to flag it only because there's a -- I think there's a natural focus on when do you cross that zero line. We did it as a firm in the fourth quarter which is why we flagged consolidated net sales turning positive. The fact that markets is coming up is also I think really important and that goes to the issue, I guess Drew had pointed out in our clarity on forward-looking data which is we're not trying to predict whether the whole economy is V or U or L-shaped. What we're able to say is look, we know what the trend line is. If the trend line continues, our net positive sales will turn into net positive period on period reported revenues in the second half. We would have to go off of that trend which of course is entirely possible, double dip or some other factors, for it not to be true and that's how we sort of give you the composite view of what we think the rest of the year shapes like. A U-shape for us with improvement right through the year.

And I guess what's your point of view on the sustainability of growth in markets without job growth?

Well, that's the real focus that the work Devin has been doing in markets and together we did at old Reuters which was we were very badly hurt. I think a cumulative 20% fall in revenues from a much milder recession and we were very exposed to headcount and we have progressively reshaped that business to have -- it's still obviously heads are important. We have some 440,000, 450,000 terminals in front of people but we have another 50% plus of revenue which is non-headcount dependent either because it's Enterprise data feeds and valuation systems or because it's transactions and the recent activity with the volatility in the euro is a good example. People haven't laid on a huge number of heads in January but volumes are almost double a year ago and that's because obviously of the stresses in the FX market. We participate in that and benefit from that even in a headless recovery. So I guess what I'd say coming back to pull it together is if you were to tell me that banks were now going to go on another 20% headcount purge, that's clearly negative for our business. If it's essentially flat and only minor growth in Latin America, Asia, et cetera, but continued strengthen non-headcount markets, we can grow in that environment.

Thank you. We have a question from the line of Vince Valentini from TD Newcrest. Please go ahead.

Yes, thanks very much. John, the integration seems to be going quite well. I'm wondering if from your perspective the organization and specifically the market segment is ready for the integration of another reasonably large acquisition, and maybe as a follow-up to that, if there is no large acquisition that occurs this year, is there any chance of using some of that $1.1 billion in cash for further share buybacks?

Well, I'm going to let Bob, since we're talking balance sheet in part here, I'll just start with the -- Markets has a lot on their plate very positively starting with the launch of Utah which is the desktop platform but they're also really hard at work on the transaction systems, on their low latency data feed efforts. There are a ton of really good things going on in Markets. Could they technically do something more? Well, they're doing interesting bolt ons all the time. We just announced a small acquisition called Aegisoft, which adds direct market access capabilities in markets. They can do that but put it this way, if they have nothing else to do, if we add nothing else to their plate, they're fully occupied for the year. I'll let Bob comment on the sort of use of cash.

Well, Vince, you're right to point out and we're very pleased to have a nice cash cushion going into the year. Last year at this time, we had about $850 million roughly so we are up a bit and certainly, we're always looking to strengthen our businesses, and this past year I think we reported about $400 million of acquisitions, many of those small -- the largest one being about $100 million I think, and so those are the kind of acquisitions that are really low risk and propel growth and certainly we'll continue to do that and I think we're in a good position to do an equal or more of that this year, and that's what we'll think about and remember that we do have a dividend committment and management has always thought it's important. A, it's a real value creation for our shareholders so we do dividends rather than stock buybacks at this point and secondly, we do have some debt coming up for renewal at the end of the year. I think the way to view it is that we're in a strong position and we can do virtually what we need to do to continue to drive this business and everything we're doing we're thinking more about '11, '12, and '13 and how we can position ourselves to take advantage of the return to growth, so we are in a position to do things but I would suspect they would tend to be -- they could tend to be smaller and certainly the kind that propel growth for us just as well.

Next we'll go to the line of Thomas Singlehurst from Citigroup. Please go ahead.

Yes, good morning, it's Thomas Singlehurst from Citigroup. I have two questions, just about the cost in 2010 you talk about the additional 100 basis points of investment. Is that a permanent increase in investment levels or does it fall away in short order and then linked to that, I know you've got the flat underlying margin for reinvestments but just on the specifics of the Corporate cost, is that going to jump up again in 2010, and then the final question was actually back on the larger acquisition side and maybe turning it around, specifically we have IDC and risk metrics both with strategic reviews under way. Is there any threat to your business if they are acquired by any of your major competitors? Let's put it that way.

Okay, Tom, I'll jump in on the last bit and go back to Bob on the margin and Corporate cost point. We obviously look at everything that's out there. We're very familiar with those assets. I feel very good about the cards we have in our hand. Our businesses are very competitive thanks to the way we've built them. Neither of those assets in and of themselves dramatically change the playing field no matter whose hands they go to or whether they stay where they are. They're both well run businesses as they are so we don't see a dramatic shift there.

And Tom, in terms of your questions on investments, I would view the investments that are affecting the margin as part temporary and part run rate because some of them are as we launch these new products, we actually start incurring amortization of investment and other costs that are in the run rate and the reason why it's a negative impact is because we don't see all of the full benefit of the revenue and I think WestlawNext is a great example of that and certainly Utah later in the year. So I think the majority of it would probably be run rate which will be overtaken quickly by revenues and then the other part on Corporate costs, we have really managed Corporate costs, the core Corporate costs very tightly and kept them flat now for I think certainly 2008 and 2009 and -- we reduced them in 2008 and kept them flat in 2009 and I think in 2010, we will see those costs continue to be flat, the core. Where we've had increase has been in pension and benefits and right now, we may see some increase in that again in 2010. It may be along the line of what we talked about, but maybe not quite as much of this year but it still won't be essentially flat.

I see.

I'm sorry, Mr. Singlehurst, did you have a follow up?

No, I was just saying thank you.

Okay, thank you. Next we'll go to the line of [Brian Trinidad] from Goldman Sachs. Please go ahead.

Good morning, on Project Utah so last year on this call it was kind of flagged it might be a back half '09 release. Now it looks like it will be some time later this year, Tom you have an alpha release on your desktop which is good although it's not a beta. Just as you look at this project, first how are you managing customer reaction to some of the delays? And then second as you run it through more paces on the veritable Bonneville flats out there, what kind of feedback are you incorporating and what are some of the things that you're adding to it with this extra time you're spending?

Well, the single biggest thing where we're doing now is making sure that the quality is as good as we can possibly make it before we officially declare it released. I'm running an alpha but it's a very stable load. It's an alpha because several times a week there are significant changes going through it. One of the best things that this platform, because it's really a platform more than a product allows us to do is to transition to a much quicker response to market, the ability to incorporate not only new data but new analytics as the market evolves so quickly, it is a significant step up. It doesn't require a site visit. It doesn't require golden discs or customers to open up their systems and do rollouts, so we'll be going to a very broad beta this Spring which probably under the way we used to handle releases we would have already released by now but the key issue for us in the marketplace is we don't feel a gun to our heads. The 3000 extra that I've switched off in favor of Utah is a very competitive product so the issue really is when do we get to take our game up rather than a burning, Oh, my God we've got to get this thing out because we've got a problem today.

All right, thank you.

And we have a question now from the line of Paul Steep from Scotia Capital. Please go ahead.

Great, thanks. Tom, maybe we could talk about things that are within your control excluding employment, so if we look at those 2011 integration synergies and what you need to do to hit those numbers that are sort of cost related or working with customers, what are the top three things in the critical path that would at this point maybe derail or see you get to those numbers sooner?

You're right, we look at it the same way that we focus on the things that we can control the most. I'm trying to think about what would most derail us. So where there's a certain amount of product migration and frankly, shutting off product next year, so the issue there would really be a, if Utah didn't ship until 2011, that would probably delay us a bit. That's probably the single largest factor this year. Otherwise, the plans are very well advanced.

Great. That helps for perspective. Thanks.

We have a question now from the line of Paul Sullivan from Barclays Capital. Please go ahead.

Hi, good morning guys. Just a question on the Legal business. Can you, Tom, maybe just talk about the broader customer spending patterns you're seeing in Legal and how that's evolving in terms of buying patterns, et cetera? And then specifically on the print in Legal, how should we view the sort of acceleration and the decline as we went through the second half? Are you seeing, is that part of a new structural shift there and I don't know if you can size for us but what proportion of the print business within Legal would you regard as sort of nice to have as opposed to must have which will give us a better sense as to the levels at which we should start to see stabilization there?

That's a good question. I don't have a good answer for you on must versus sort of nice to have in print but I think I can add a little bit of color. Each time there's a recession, you see a real focus on cost more than just the day in, day out and a sort of ratchet down in print and some of that is generational. I'm 50 years old, I like, if I'm going to read 100 page case I'm going to read it in print rather than the screen. I use the screen for the things it does best which is search and sites aid or et cetera.

I think what Thomson has done remarkably well and not just in Legal is manage the transition from print to electronic without having these huge chasms where the profit drops out, the revenue growth drops out. If you do the read across to say LexisNexis these days in Legal, they're overwhelmingly electronic. They have far less of a print component last time I looked in the US, but yet their revenue growth rates are significantly down suggesting that not only are we taking share on the macro level but if you were actually going to compare the electronic to electronic, it would be off the charts. I think a certain amount of that print, a good amount of that print does stay. Go to the US Supreme Court, they aren't going to throw out the Supreme Court reports nor will the United States code annotated disappear from law libraries, but solo small firms I think over time just don't have a library at all, or if they have one it's more to show the clients than it is for the actual work they do.

I'm pretty comfortable with the shift. The obvious issue is that print is very profitable, it's the mix effect that Bob has pointed to and what we're doing as the electronic gets scale, then it begins to move up towards those sort of margins but in the interim you see a bit of mix effect and all in all, I think we're managing the transition better than any other industry I see.

I'd just like to add from a historical perspective that the decline of print does not necessarily herald the decline of margins in the Legal group because if you think about the longer term, when Thomson acquired West in 1996, roughly 60% of the revenues were print and only 40% were electronic. In that transition from print to electronic, the margins of the Legal group expanded, expanded dramatically I think by almost 10 points, and then during that period, so the challenge that you had is in a short-term period like now where you have dramatic shifts that in fact we don't have the return to growth and the kind of robust growth in online that we're used to enjoying that you would see this affect on the bottom line. I think over the longer term, we continue to manage it and we don't see the longer term issues of margin as dramatic as they are in this short-term period.

Great, thanks, and in terms of the changes in customer buying patterns, Tom, any changes or anything to report there?

Well, I think the most significant change is really something that WestlawNext is really focused on which is there is pressure on law firms, certainly on both sides of the Atlantic, to do all in fixed price deals, let's say you're doing a bond offering or if there is such a thing as a plain vanilla litigation, pressure from general counsels to do flat fees. This is where -- and people have questioned whether the shift from hourly rates is negative for this business. The really dramatic thing that WestlawNext does is increase the efficiency and so suddenly if you're a law firm and you've agreed to a fixed price to do a deal, you care and your interests are aligned with your clients, you care deeply about the efficiency so I think we've gotten that trick right.

In terms of buying patterns, people are under a lot of stress. Law firms are very cash oriented, the lease tends to be the biggest financial purchase or decision they make. I think our guys have been very successful in working with clients. Some of that pressure is easing a little bit but I think 2010 will continue to be a challenging year in the legal market overall and that's why it's so good that we have an exciting product to go out with.

That's great. Very helpful, thank you.

Next we'll go to the line of Mark Braley from Deutsche Bank. Please go ahead.

Yes, good afternoon. I guess just one question, sort of on the margin guidance. You've got quite a big year on year increment coming from the cost savings particularly after increasing the target there, and yet you're steering us towards margins down 100 basis points inclusive of the extra investment. So I have sort of two questions. Are you really telling us that kind of normalized cost inflation is starting to come back into the business, you're having to give salary increases again? And second, is there any element here of taking extra cost to sort of fixed problems in the completion of Utah in particular? Are we sort of -- are we far enough behind plan that you're having to do things that you didn't want to do to get that product ready for market?

Well, in answer to that question first the answer is absolutely not. That's not the reason why. The cost trajectory for Utah is -- veered somewhat to what it was when we first started out and we don't expect to see any changes. What you need to think about is, first of all when you say, are we starting to see normal cost inflation, I think we've always had cost inflation and we've been able to cover that. What you have to remember is that this is a very very leveraged business and when you have revenue slowdown and we haven't had robust revenue growth, we talked about over the past two years since we've come together, we've taken the margin from 18.7 to 21.3. That's 260 basis points of margin improvement. That hasn't been done in a robust revenue environment so we have been taking significant costs out both within the integration and outside of it just in normal response to the environment but in any business of our size and scale, you have many cost components that drive the business and so it's a bit of a challenge to just steady state and say well, where are these particular costs.

I think the one thing that is true, we said this all along, that this $1.6 billion and $1.2 billion of costs are permanent efficiencies that we will have in the business and that will allow us when we return to a normal growth -- to a growth environment to see the flow through and have a restoration and indeed continued improvement in the margins. We have said in the past that our target longer term is 25%, mid 20s operating margin. We see no reason why we can't still attain that, and we see these and we've couched these margin impacts as temporary and so I think that's an important point.

The other point not to be lost is that we tend to think about margin flow through for all businesses is equal and I think that we've talked about and we've had in the short-term some really crimping of print revenues which have a very high flow through and the growth that we have seen has come from areas that by and large don't quite have the same margin flow through. I mean even within the Markets division transactions for us are usually profitable and they have suffered more dramatically than recurring, so it's not a simple answer, but there is a simple response to the impact of our integration program and that is they are real savings with real benefits and we are positioning ourselves for when growth returns to achieve the targets that we've set out in terms of operating profits and more importantly cash generation.

I'd just ask on the salary point because Walter's clearly this morning on their call, did specifically say that there was some more sort of normal inflationary cost pressure coming back into the business, as employees got a bit more confident about standing up for their rights, would it be fair to assume that you're seeing that too?

Well, I think through this year, through 2010, I think we'll see that strengthen, right? Asia, for example, we've seen this right through so while London and New York haven't made a lot of noise about labor cost growth given the fact that prices if anything were going backwards . India wage inflation has been running 10%, 15% right through this and we have a significant number of our staff in Asia. I'd say coming back to Bob's themes, I think of this in sort of two very simple ways. One is we need about 2% to 3% revenue growth to see the large costs we're taking out of the business actually fall to the bottom line. Below that, we are eating up some of that margin improvement in temporary, right, reduction in revenue and we have every reason to believe -- we're obviously targeting well North of that but we have every reason to believe we can get back up to that rate.

With respect to 2010 in particular, there's a bunching of spend so it's not just Utah. Utah is pretty much on where its cost projections have been all along and now the costs are really in Q&A. It's -- WestlawNext was a large dollop of cost, we have the global tax workstation in tax, a new version of MicroMedics, we're doing a lot of things precisely because we think we can open up competitive strength and you were around at the time Mark, you'll remember, I think Reuters got hurt very badly and got taken out of the market because I had no choice but to cut costs horribly deeply and then had to come back a couple of years later with the big Core Plus program to restart growth from zero and that eventually worked but it took a lot longer and was very painful and I remember many of the folks on this call said well, you're ex-growth you'll never restart growth. We can do it a better way. That does involve a certain bunching of spend because you got to spend to get the growth but we feel it's managed in a way that makes '11, '12, and '13 look very good in our model. That's great. Thank you. I look forward to getting a new product on my desk. You'll get it. You'll

Thank you. Next we have a question from the line of Tim Casey from BMO Capital Markets.

Thanks, just on Utah, how should we think about it flowing through the P&L? Should we assume a -- are you expecting an acceleration in top line or an acceleration in margin as you're able to over the course of three years shut down some of the legacy systems and thereby see an improved cost structure?

I'll start and then I'm sure Tom will jump in but I think Tim, the way we think about it, Utah is really a significant platform and infrastructure opportunity for markets that gives them new product capabilities, so it's both ends. It is the revenue side of it and the cost side of it. The revenue side has a bit of a tale to it because part of it is getting customers to convert off of current platforms to Utah. Some of that we think will be easy because it will be so compelling and then the other side of it is that what Utah does from a platform perspective in terms of uniting various and sundry functions and capabilities is that we will see cost savings and so really, it is -- the way to look at it is over the longer term we look at it as a growth play in terms of top line and as a margin play in terms of cost and that's the way we play it out. I think as far as specifics to that it's very very hard for us to even discuss that at this point.

Is it fair to think, Bob, that the costs fall away late stage because you can't shut down legacy networks until everybody is off them?

Well, it's not just -- that part is true, right? You can't, all the way in the back end you can't do that but there are significant amount of costs going on middle and front end, so for example, you -- we're not doing a huge amount of development right now on legacy services that we know we're sunsetting so we're going to see run rate cost advantages even before we shut off the last server. We've begun migrating and closing down entire systems including heading towards Reuters Plus, shut down in the US, and we've done it in the UK with Equity Topic as well so there are some savings along the way.

That's helpful, thank you.

I'd just like add one point for clarity is that while we expect to see improvements in the operating performance of markets and part of that is reflected in some of our outward thinking that by and large the costs for Utah are not in integration. There's some in there. The vast majority of them are development costs which are on the balance sheet and will be amortized when we launch the product. So we're not using integration as a way to fund -- primarily fund Utah.

Thank you. We have a question now from the line of Colin Tennant from Nomura. Please go ahead.

Hi, everybody, thank you. Just a quick one on the regional performance if I can. I wonder if you could give us a bit more detail in how particularly some of those faster growing markets like Asia, last home might be doing, have done in 2009 and how you see the geographical diversity of revenue growth going into 2010?

Hi, Colin.

Hi.

It's Tom. So what we seen through the year is it's really thanks to that geographic balance that we have been able to hold revenues as well. Let's go to markets in particular which along with Scientific are the most international of the businesses. So Asia has been the most resilient area and has held up quite well. Brazil, although it's a small base, numbers I looked at recently was growing double digit for us. The Gulf is still good, so as we've come through the year and as the early negative net sales have worn through, all of the regions have come down but the pattern is still pretty much the same with Asia in the last quarter sort of just turning negative and in terms of reported results and the Americas and EMEA more negative.

Sure, and just as a follow-up, you talked a little bit about how you were relocating people, integrating offices et cetera around the world and I remember one of the attractions of the merger was that you'll be able to leverage the Reuters global footprint for helping to sell and establish the Professional businesses. Is there any concrete progress on that to date?

Well, in the property integrations, yes, very much so, so in New York, early on we got it done really the quickest. We've moved to a principally two location sort of A, B site, 3 Times Square and 195 Broadway. In London, we've been moving to a similar strategy of Canary Wharf, plus the city. We've moved in Tokyo and a bunch of other places and every time we do it we try and co-locate both for cost sharing and savings but also very much for the ability to cross-fertilize products. One area where probably more than any other we've seen it already turn into very tangible product and revenue is the Gulf where we've had a, really a group from Professional parachuted into the Dubai old Reuters office and together have launched not only the Islamic Finance Center out of Westlaw business but in 3000 Extra the Islamic Finance Center is beginning to benefit from some of those things coming out of the Professional division and that trend will continue.

Operator, we would like to take one final question, please?

Yes, sir. Thank you. Our last question will come from the line of Randal Rudniski from Credit Suisse. Please go ahead.

Thanks. I just wanted to ask again on margins. Did the development of WestNext have any impact on Q4 Legal margins, and in terms of the 100 basis point impact to 2010 margins from investment, I think you answered this but I just want it to be clear, that impact occurs because of -- is it because it occurs because of higher amortization or is there also an OpEx element? Thanks.

Randy, the -- Q4 was not impacted by WestNext, because we officially launched the product in the first quarter this year and have begun the sales process so we will see amortization this year. In terms of the margins, part of it is certainly amortization of product but there are other operating expenses as well in it as you rollout a new product. Some of them are marketing costs which will continue and some -- obviously marketing sales and there are now some production costs as well related to supporting the product.

Okay, thank you.

Okay, that will conclude our call. We would like to thank you very much for joining us today.

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