Thomson Reuters Corp (TRI) 2016 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters first-quarter earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Senior Vice President, Investor Relations Frank Golden. Please go ahead, sir.

Good morning and thank you for joining us as we report our financial results for the first quarter of the year. Our CEO Jim Smith will start today's discussion followed by Stephane Bello, our CFO.

Following their presentations we will open the call for questions. We'd appreciate it if you would limit yourselves to one question each in order to enable us to get to as many questions as possible.

I have several items to point out before we get started. First, a reminder that throughout today's presentation when we compare performance period on period we look at revenue growth rates before currency as we believe this provides the best basis to measure the underlying performance of our business.

Second, we are pursuing the sale of IP & Science, as you know, so its results are now classified as discontinued operations and are no longer in our reported results except for free cash flow. As a reminder IP & Science is not included in our 2016 guidance again except for free cash flow.

And third, on our website today we have posted quarterly 2015 restated results as well as full-year 2013 and 2014 excluding again IP & Science.

Now 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.

And with that I'd like to turn it over to Jim Smith.

Thank you, Frank, and thanks to those of you on the call for joining us. As I stated on our fourth-quarter earnings call in February 2015 was a milestone year for Thomson Reuters. Today's results reflect the progress we continue to make building from that foundation.

Yes, market conditions were turbulent to start the year and many companies were understandably cautious in the face of so much uncertainty. This was reflected in longer lead times to close deals. We will have to see whether this period of uncertainty persists in the coming months or whether confidence returns along with the improving market conditions we've seen over the past few months.

As I've said before, we are ideally positioned to take advantage of global trends impacting the industries we serve at the intersection of commerce and regulation. Therefore, we continue to ramp up our efforts and our investment to help our customers be more efficient, reduce their overall costs and deal with the increasing burden of regulatory compliance.

That means we will continue executing and focusing on everything in our control. If we do that well the results will follow.

Now to the results for the quarter. I will highlight both our reported results and our results before currency so you can see the underlying progress we're making. You will note that currency had a far less impact on our reported results than in the prior-year period.

First, the reported results. Reported revenues were down 1% as currency had a 200 basis point negative impact.

Reported EBITDA increased 2% with the margin up 80 basis points. And underlying operative profit was up 8% with the margin up 150 basis points.

Adjusted EPS increased 23% to $0.48. That's $0.09 better than Q1 2015. Currency benefited EPS by only $0.01.

Moving to the underlying results or results before currency, underlying revenues were up 1% and EBITDA increased 1% with the margin up 10 basis points, driven primarily by continued progress in our financial statement. Underlying operating profit was up 6% with the margin up a healthy 80 basis points. Stephane will take you through the details in a moment. Given our start to the year, we are reaffirming our full-year 2016 outlook.

Now to some of the highlights for each of our businesses. Revenues for the Financial business decreased 1% for the quarter as expected due to a 13% decline in recoveries revenues and ongoing commercial pricing adjustments, both of which are expected to be completed later this year. Excluding these two items, the underlying revenue growth was approximately 2%.

Net sales for the first quarter were again positive, marking the eighth consecutive quarter of positive net sales. On a separate note, I'm pleased to announce that end-of-life notices were sent to customers on March 31 informing them that the legacy Thomson ONE asset management products will be sunset in March 2017 as the functionality of 14 individual products is now fully available in our Eikon for research and advisory offering. This represents our last major migration from legacy platforms to the open platform, continued progress and a significant accomplishment.

Turning to Legal, revenues grew 2%, a bit better than expected. Importantly, US Online revenues grew 2%, about a 200 basis point improvement from Q1 last year. It's very encouraging to have Legal's most profitable segment back to growth as we look to the balance of 2016 and 2017.

Legal's improving performance is partly reflective of a slightly healthier overall legal market as compared to softness in the past few years. Demand for legal services was up a little more than 1% in first quarter. That's the best quarter since Q1 2012; too early to call it a trend, but nevertheless a hopeful sign.

Tax & Accounting continues to execute very well and had another strong quarter with revenues up 8% against a tough first-quarter 2015 compare when revenues grew 10%. Despite difficult macroeconomic conditions in several emerging markets our GGO revenue grew 2% and would've been up 7% excluding recoveries and pricing adjustments.

And finally, the confidential information memorandum related to the sale of IP & Science went out earlier this month. To parties who have expressed interest we're working toward a sale and closing in the second half of the year. We were pleased with the good performance of IP & Science in Q1 with revenue growth of 4% compared to the same period last year.

So let me conclude with the three priorities we're executing against this year and a slide that you have seen before at our Q4 earnings presentation. Accelerating organic revenue growth involves prioritizing our efforts toward the big levers that we can pull to accelerate our journey for long-term sustainable revenue and profit growth. We're confident these investments and market segments shown on the slide will drive stronger revenue growth and margin expansion in 2017 as we work to return the Company to mid-single-digit growth.

In addition, applying world-class go-to-market capabilities to fuel growth by improving both retention and sales is also essential. Improving customer satisfaction and employee engagement scores are critical components of this approach and we are investing in both of them.

We've proven over the past several years that we can improve profitability and the next critical step along that path is achieving our 2017 EPS targets. We are working to get there by continuing to ramp up our efforts to transform the business under an enterprise model, to drive growth, efficiency and profitability. It's early days but the pivot towards enterprise is uncovering new opportunities for growth and savings in many ways: one, it is allowing us to become more nimble in reallocating resources to growth opportunities; two, we're building our technology infrastructure once and for the whole enterprise; and thirdly, we continue to find opportunities to consolidate things like real estate locations.

Since I became CEO we have reduced the number of office locations from more than 500 to about 300 today and we expect to be below 250 by the end of this year. This is requiring new ways of thinking and working and we are confident we are on the right path. And we continue to execute a consistent capital strategy by balancing opportunities to invest in the business against the value created by returning capital to our shareholders, all the while remaining within our leverage target.

We bought back approximately $430 million of stock in the first quarter. And we expect to use the proceeds from the IP & Science sale for general corporate purposes including investing in the core business, repaying debt and buying back more shares.

With that let me turn it over to Stephane.

Thank you, Jim, and good morning or good afternoon to you all. Before I begin discussing our first-quarter results, I would like to cover two housekeeping items.

First, as Frank mentioned when discussing our performance against the prior year, I will be comparing year-on-year results excluding IP & Science which is now classified as a discontinued operation. This will hold true for all metrics except free cash flow which includes IP & Science and is not restated as has as has always been our practice.

Second, as Jim mentioned, currency had a smaller impact on our results than last year. However, as always, I will talk to revenue growth before currency.

So on to our results. On a constant currency basis, our first-quarter revenues were up 1%. Our Financial business was down 1% while our Legal and Tax & Accounting businesses grew 4% in aggregate during the quarter.

Adjusted EBITDA was up 2% with a margin of 80 basis points to 26.8%. Currency had a 70 basis points favorable impact on the margin. Operating profit was up 8% in the first quarter with the margin at 17.8%, up 150 basis points, and currency had also a 70 basis points favorable impact on the margin. So the pre-currency improvements of 10 basis points at the EBITDA level and 80 basis points at the operating margin level reflect the genuine improvement in the underlying performance of the business as there were no material severance charges taken either in the first quarter of last year or this year.

Now let me provide you with some additional color on the performance of our individual businesses, starting with Legal. Demand for legal services in the US market as measured by Peer Monitor showed a modest improvement in the first three months of the year. As Jim said it's too early to call this a trend but it is a positive start of the year nonetheless.

During the first quarter, Legal grew 2%, an encouraging performance given the difficulty year-on-year comparison this segment faced as Legal grew 3% in the prior-year period. Transaction revenues for the quarter, which represent 12% of the total, were down 1% whereas they were up 13% last year. And subscription revenues, which accounted for about 74% of the total, were up 3%. The continued strong performance of our subscription revenue base during the quarter is a good indicator of the underlying strength of the business.

Turning to profitability metrics, the EBITDA margin was up 160 basis points to 36.3% while the operating profit margin increased 240 basis points to 29%. Currency had a 120 basis points favorable impact on gross margins.

This improvement in margin during the quarter was in part explained by a stronger performance in our US print business which was due to timing. And I will come back to this in a moment.

Now here's a more detailed look at the performance from a revenue perspective of the three main subsegments in our Legal business. US Online Information, which was 42% of the total, was up 2%, consistent with the performance reported in the previous two quarters. In fact, this marks the fifth consecutive quarter of positive growth for this segment. Higher net sales and retention rates were the key contributing factors.

US print revenues were down 3% during the quarter. Now, this better-than-usual performance was timing related and we still expect the full-year performance for US print to be comparable to the 6% reduction we experienced in 2015.

And finally, our Solutions businesses made up 44% of revenues in the first quarter. And revenue growth for the quarter came in at 3% against a very challenging prior-year comparison of 10% growth which was the high water mark for 2015.

The weaker growth performance in Q1 was attributable to the reduction in transaction revenue growth I mentioned earlier. So we continue to expect mid-single-digit growth for the Solutions businesses for the full year.

Now turning to our Tax & Accounting business, revenues in the first quarter grew 8%. Recurring revenues, which were about 82% of the total, grew 11%. From a profit standpoint, EBITDA was 10% lower than the prior-year period with the margin down 450 basis points.

And excluding currency, the margin was down 580 basis points. Operating profit was down 15% with the margin down 500 basis points and 620 basis points before currency.

Now the key drivers of the contraction in margins are twofold. First, the first quarter of 2015 included the benefit of several small one-time items which made it the highest margin quarter of the year, apart from the Q4, obviously, which is where we report higher revenues due to seasonality. And we did not see these one-time benefits repeat themselves in 2016.

Second, we incurred some severance costs and also made some growth investments during the quarter. As discussed earlier, these severance costs were not material enough to call them out at the consolidated level but they did temporarily impact the margins of our Tax & Accounting business.

As we've said in the past, small items can have a disproportionate impact on the quarterly margin performance of this business and therefore it is more appropriate to look at the margin performance of Tax & Accounting over the full year. And on a full-year basis we still expect Tax & Accounting to deliver a solid margin performance while at the same time making the strategic investments required to maintain its revenue growth momentum beyond 2016.

As you can see on this slide, our Professional and Corporate segments, which represent almost three-quarters of the business, continued their strong performance, delivering growth of 5% and 17% respectively in the first quarter. Knowledge Solutions revenue grew 1% while Tax & Accounting's smallest segment, the Government business, saw revenue decline by 7%. As we have stated before, revenues for the Government business are less predictable in nature and are more prone to fluctuate quarter by quarter.

Now turning to our Financial & Risk business, first-quarter revenues were down 3% on a reported basis versus down 6% in the first quarter last year with currency once again having an impact. Before currency revenues were down 1% compared to the prior-year period.

As we have pointed out on prior calls, there are currently two temporary factors that have a dampening impact on F&R's reported growth rate. The first is a decrease in recoveries revenues which negatively impacted F&R's revenue growth by 140 basis points in the first quarter. This was expected as some of our partners moved to a direct billing arrangement with our customers. And also impacting revenues in Q1 was the ongoing commercial pricing adjustments on our remaining legacy foreign exchange products.

Now, excluding recoveries and these pricing adjustments F&R's revenues would have increased by about 2%, building upon similar performance in the previous two quarters. The foreign exchange commercial pricing adjustments are expected to be completed in the second half of 2016.

Turning to the first-quarter profitability metrics, EBITDA was up 9% and the reported EBITDA margin for the quarter was up 320 basis points. Excluding currency the margin was up 260 basis points, reflecting the benefits associated with last year's platform closures.

As we mentioned during our fourth-quarter earnings call, we expect our Financial business to show continuing year-on-year improvement in its underlying EBITDA margin this year. And this was clearly the case in the first quarter. Operating profit was up 22% with the reported margin increasing 400 basis points and increasing a solid 380 basis points before currency.

Looking at the Financial & Risk revenue in a bit more detail, you can see that recurring revenues, which were 77% of the total in the first quarter, were up 1% which can be attributed to the annual price increase and to the positive impact of net sales throughout 2015. This is encouraging as this is the portion of F&R's revenue base that is impacted by the pricing adjustments taking place in our legacy foreign exchange desktops. As a reminder, the majority of these pricing adjustments have now been made, meaning that the impact on growth is smaller than what we observed in 2015.

Turning to recoveries, these pass-through revenues made up about 9% of the total and they were down 13% in Q1. As we explained on our fourth-quarter call, we expect these reductions to have a noticeable impact on revenue growth throughout 2016 but it will have no impact on EBITDA or operating profit.

Transaction revenues, which is 14% of the total, were down 1% in the first quarter. While volumes in the quarter rebounded somewhat from what we saw in the fourth quarter they were not strong enough to put us in positive growth territory versus the prior-year period.

Now let me update you on our free cash flow and earnings per share performance. I will start with our free cash flow performance for the first quarter which we are presenting with and without the contribution of IP & Science.

Starting from the bottom of the slide, free cash flow for Q1 was $223 million compared to negative $65 million in the prior year. The key drivers of this strong performance were working capital improvements, the timing of CapEx and higher EBITDA. Overall Q1 free cash flow came in quite strong as we typically are in a negative free cash flow position in the first quarter.

Now the IP & Science contribution to free cash flow was $111 million for the quarter, a $4 million improvement over prior year. As you can see IP & Science generates a great deal of its free cash flow in the first quarter, so we will expect this divestiture to have a modest impact on free cash flow this year with the real impact of the sale on our free cash flow performance happening primarily in 2017. So excluding IP & Science the free cash flow generated by our continuing operations was $112 million, an improvement of almost $300 million over the prior-year period.

Turning to our earnings per share performance, first-quarter adjusted EPS increased $0.09 to $0.48 per share which represents a 23% increase compared to the prior year. $0.03 of this improvement was driven by a stronger underlying profit performance, another $0.02 was due to having a lower share count compared to the prior-year period and by the way during the first quarter we did buy back 11.7 million shares at a cost of $432 million. And as you can see the remainder of the improvement was contributed by other factors that are highlighted on this slide. Currency only had a $0.01 favorable impact during the quarter which was a welcome change from what we experienced throughout 2015.

So to wrap up, I would say that we are off to a solid start this year and based on the first-quarter results we are reaffirming our outlook for the full year. With that, let me turn it back over to Frank to take some questions.

Thanks very much Stephane. And now we would like to open the call for questions. So, operator, if we could have the first question, please.

Vincent Valentini, TD Securities.

Hi there. Two things, mostly related to Tax & Accounting.

One, you haven't provided any exclusion of acquisitions in your revenue numbers this quarter, so nothing organic. Does that imply that there was no material contribution from acquisitions and does that apply in the Tax & Accounting segment as well? Because it has still been somewhat material there in recent quarters.

And just slightly related to that, the growth rate in Tax & Accounting seems very strong still, but yet you're taking severance charges. So I wonder if you could just explain that a little bit, why a business that's growing so much would be doing that kind of cost cutting? Thanks.

Sure. Good morning and let me take your questions.

On your first question there has been virtually no impact from acquisitions on our reported growth rates. That's why we didn't distinguish between organic growth and total revenue growth rate. If there were a meaningful difference, we would continue to report it, but that was not the case and in the case of our Tax & Accounting business I think there was no impact whatsoever from acquisition actually. So the number that you see is really the true organic growth performance from the business.

And on your second question, you know, in every single business we continue to look at opportunities to always streamline the business. And there's always some parts of the business where we find opportunities to do that and that was the case in our Tax & Accounting business.

It happened mostly in the Knowledge Solutions segment of the business. And we did it at the beginning of the year as part of the run rate of the business essentially.

I think if I might add, Jim here, Vince. That's a good question. I think it's a good example when we talk about refocusing our resources and our efforts on those areas that have the greatest opportunity for us to grow and we continue to manage the businesses with a keen eye on the cost line in areas where we think we have opportunities to take costs out.

At the same time, we're investing then disproportionately in the areas that can grow. So we would have actually added -- at the same time, we have taken some severance to kind of rightsize the business in certain parts of Tax & Accounting. We have actually increased headcount in other areas that we think can grow that are as we say right at that intersection of regulation and commerce, particularly outside the United States.

And you've seen the rapid growth of our Tax & Accounting business outside the United States over the last few years and we're continuing to support that. But that's a big part of the pivot that's ongoing as we look at our transformation efforts to take costs out of the business so that we can, yes, improve profitability but more importantly redirect them to growth efforts that are more important.

Thanks.

Toni Kaplan, Morgan Stanley.

Hi, good morning. Just wondering, just a big picture question on the industry.

I'm just wondering are you expecting that the financial terminals industry becomes more fragmented in the next five to 10 years? And if so, how would you adapt your strategy to sort of gain market share in that type of environment? Thanks.

Sure, Toni. Our belief has been for the past several years and the strategy we've been executing against is the belief that open wins. So we've actively embraced an open world.

We've tried to create an open platform where a number of our customers and our colleagues and third-party partners can innovate on our platform. And we've been open to connecting with other platforms. And I think we will continue to see a great deal of shifting in the financial services market and in those of us who serve that market.

So we have been very open in our embrace and support for an open world. And we think that's ultimately going to be the solution. It's one that we think we can thrive in.

Thank you.

Paul Steep, Scotia Capital.

Great, thanks. Jim, maybe you could talk to in terms of your 2017 plans for driving organic growth whether you see that as a broad-based initiative? Is that across multiple lines of business or is it narrow?

Does this rely on a single set of product introductions or is it improved execution? And then one clarification as well, on the network infrastructure shutdown I don't know if you had mentioned that in terms of the dates and the timing there? Thank you.

Let me take the first part of that and then I will turn it over to Stephane for the latter part. I think what we are seeing in the business is what we're relying on the trend to be in the future. And that's a steady improvement across the face of the business.

And I think as we've talked in the past, there are certain parts of our business that can continue to grow at disproportionately high rates. We identified those four sectors or four areas that now constitute about a quarter or so of the business that are growing double digits. That's really attractive.

But also equally important is getting all of our businesses on improving growth trajectory. When you see things like our Online Legal research business getting back to 2% that's a big chunk of revenues going in the right direction and it's also incredibly profitable.

So I think we see underlying growth opportunities although of different scale in virtually all of our businesses. There will be a couple of places, US legal print is one, where there will be an inevitable decline. But if you look at the vast majority of our businesses we are looking for growth from each of them, albeit at the rate the market will allow.

And just to answer the other part of your question and build a little bit upon what Jim just said, the continuing improvement in organic growth rate next year is predicated as much as our ability to drive our highest growth business like our Solutions businesses in the Legal segment or Tax & Accounting businesses or Risk business as it is, frankly, to the gradual elimination of some of these headwinds we have been talking about. Like recoveries we said will have a big impact in 2016.

We don't expect the same impact in 2017. The pricing adjustment we said will be largely through them by the end of the first half of this year.

So it's very much a combination of these two factors. And I think that our confidence in the latter is also driven by the fact that we are now seeing the end of this migration of legacy products we've been talking about for a number of years now. And that's the answer to your second question.

I don't know if your question was related to the shutdown of the IDN Bond network. That was done in the fourth quarter of last year. With regard to our legacy desktop products, we send end-of-life notices and these end-of-life notices go for one year.

So we send them at the end of March which means that in March 2017 we will no longer support the legacy desktop products on the buy side. Everything will be replaced or will be replaced by then by our Eikon solution.

Perfect. Thank you.

Sara Gubins, Bank of America.

Thanks, good morning. Some margin questions.

The F&R margin came in well above our expectations. And I'm wondering if you can help us with how you're thinking about F&R margins for the year?

And then a bit more holistically, I recognize that there are some timing issues in legal print that helped margins this quarter. But overall I'm wondering; as you look at the low end of the operating margin guidance it strikes me as being somewhat less likely given the trend that we saw in the first quarter. And so I'm wondering if there's something that we should keep in mind aside from legal print that might explain how you might end up at the lower end versus the higher end when we look at the full year?

Hi, Sara, it's Stephane. Thanks for your question. We still feel pretty good about the guidance we've given for the full year.

We always caution everyone not to look at one quarter's performance and extrapolate for the full year. There always puts and takes in every given quarter. It depends sometimes with the timing of the investments that we are making in any given segment.

You're right, the improvement in margin for F&R was quite strong in the first quarter. I would not expect the same kind of basis points improvement pre-currency for the full-year. You will see as we always said a nice improvement in F&R's margins for the full year but probably not as high as what we've seen in the first quarter.

So I wouldn't change anything in terms of our guidance for the full year. The one thing as you pointed out, there were two things that were different each going in one direction in Q1.

I think that Tax & Accounting's margins were artificially depressed in Q1 so they were abnormally low and I would expect certainly a rebound in the balance of the year and a little bit the reverse for our Legal business because of the lower print decline we experienced in Q1 versus what we expect for the balance of the year. But overall no change in our guidance for the full year.

Thank you.

Aravinda Galappatthige, Canaccord Genuity.

Good morning, thanks for taking my questions. Maybe a question for Jim. With respect to the dividend, obviously you've followed a fairly lower growth policy of late but as we look ahead beyond the sale of IP & Science you're going to have an even better balance sheet.

Your payout ratio is now below 60% and with the buybacks that you're doing your share count is falling and your ability to pay even more dividends shows up even more. In that backdrop, is there a case to be made to revisit that dividend policy starting next year?

I think as we've always said the dividend is an important part of our total shareholder return and has been for a couple of decades now. And as we also said, we are comfortable with that kind of dividend payout ratio being in the kind of 40%, 50% free cash flow range and we're not quite there yet.

As we get back to that range we will have a conversation with our Board of Directors and we will discuss what our options are as we do every year when we assess our capital strategy. And we will obviously reassess as we do every year in light of the facts of where we stand that is a fair assumption that that will be one of the things that will be on the table as we get back into that range.

Great, thank you.

Ato Garrett, Deutsche Bank

Good morning. I just have a question about your thoughts for the balance of the year. You mentioned that the headwinds from the recovery of revenue as those were going to be over in the first half of the year as well as the impact of the commercial pricing adjustments.

I just wanted to get your thoughts on whether we can expect organic revenue growth to accelerate from here? And also just how should we think about CapEx? You said that you had a boost of free cash flow in the first quarter due to timing of CapEx. Thanks.

Sure. Just to be clear, we do expect -- it's two different types of headwinds at this point in time. One is recoveries, the other one is commercial adjustments.

We've said that we would expect the impact of the commercial adjustments to be far diminished in the second half of the year. For recoveries you're still going to see a fairly significant impact in the second half of the year. Maybe not as high as the first but still a very significant impact in the second half of the year. So if you combine these two things we should see, all other things being equal, we would expect to see growth to nudge up slightly in the second half of the compared to the first half of the year.

In terms of your question on CapEx, CapEx can vary from one quarter to the other. We are not changing our guidance for the full year, so I would expect a level of CapEx which is in line with what we've seen in the prior years in terms of percentage of revenue, CapEx as a percentage of revenue. No change year on year in that regard.

Great, thanks.

Andrew Steinerman, JPMorgan

Hi, it's Andrew. Could you give an Eikon desktop count and give us a sense of the recent additions in Eikon desktops, where they are coming from, are they upgrades from legacy desktop products for Thomson Reuters? Are they new desktop users, meaning didn't have a competitive product before, and are some of them win-aways from competitor products?

The Eikon desktop count is at about 130,000 at this time. You know, it's a mix of all the factors that you mentioned. So it's still the conversion of the legacy product on the buy side that's helping us.

We are actually seeing an increase on the buy side count of Eikon desktops. We do have some initiatives with various large banks about trying to see if they can use Eikon in areas where most sophisticated or pricier desktops may not be always necessary. So it's really a combination of all these factors.

Okay, thank you.

Drew McReynolds, RBC.

Thanks very much. Two questions if I can squeeze that in. First, on the Corporate & Other costs, in the quarter you talked about transformation cost in there. Just wondering if Q1 is a run rate for the rest of the year, Stephane?

And then secondly, on the FX side we saw a nice boost to margin from FX. If you look at the rest of the year given where exchange rates are today, do you expect a similar tailwind from FX on margin just given where all the hedges are at the moment? Thank you.

Sure, Drew. Let me start with the currency question that you have. The reason that currency had a positive impact on margin in the first quarter was really driven primarily by our over short position in pound sterling.

As you know we have a portion of our employee footprint that is based in the UK. And so a weakening of the pound sterling is essentially beneficial from a margin perspective for us because it reduces our cost structure when expressed in US dollars. So it really will depend on what your view is about the pound sterling and given the level of uncertainty in the UK on the political front right now it could really go either way.

So I would certainly not venture to make a forecast of where that will go. But that's really what has been driving the main beneficial impact of currency on margin. And in terms of your question for Corporate & Other costs, we would continue for the full year to expect Corporate & Other costs to be in the $375 million to $400 million area.

Okay, thanks very much.

Operator, we have time for one more question.

Andre Benjamin, Goldman Sachs.

You actually answered my question there at the end. I was hoping to get some color on what the right run rate should be for Corporate & Other, so (inaudible).

Okay, so that will be our final question and that will conclude our call. So thanks very much for joining us this morning and we will speak to you again at Q2 in July. Have a good day.

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