Thomson Reuters Corporation
Q1 2012 Earnings Call Transcript

Published: 1 May 2012

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters First Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Frank Golden, Senior Vice President of Investor Relations. Please go ahead, sir.

[Frank J. Golden:]

Good morning, and thank you for joining us as we report first quarter 2012 results. We'll begin today with our CEO, Jim Smith; followed by Stephane Bello, our CFO. Following Jim and Stephane's presentations, we will open the call for questions. Please limit yourselves to one question each so we can get to as many as possible. Throughout today's presentation, keep in mind that 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 the business. In addition, today's results are presented on an ongoing basis and exclude disposals announced to date, including our Healthcare business. Before we begin, let me point out that on our website today, you will find a small change to the Financial & Risk restated financials we provided to you on April 1. Neither the total company annual revenues, nor total company quarterly figures have changed, nor have the Q1 growth rates for any of the business units changed. The changes relate solely to the allocation of revenues among the 4 Financial & Risk business units based on the new structure we announced on January 1 of this year. 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 is my pleasure to now introduce the CEO of Thomson Reuters, Jim Smith.

[James C. Smith:]

Thank you, Frank, and thanks to those of you on the call for joining us. Today, we will review the first quarter results and update you on the progress we're making toward the priorities I outlined during our year-end earnings call in February. I'll then turn it over to Stephane, who will provide you with further details on the results for the quarter. I would characterize the first quarter's results as on-track and consistent with our full year expectations. In short, so far so good. Total revenues were up 4% as the Legal, Tax & Accounting and IP & Science units all did a bit better than expected. Overall, Financial & Risk grew modestly in what continues to be a very choppy environment, particularly in Europe. EBITDA increased 15% with healthy margin improvement. Operating profit rose 2%. Adjusted earnings per share in the quarter were $0.44 compared to $0.37 in Q1 2011, a 19% increase. Last week, we announced an agreement to sell our Healthcare business for $1.25 billion in cash. We expect to realize net after-tax proceeds of about $1 billion. The sale is not subject to financing conditions and we expect the deal to close late Q2 or early Q3. We expect to use the proceeds for tactical acquisitions, organic investment and for share buybacks on an opportunistic basis. Lastly but importantly, we are reaffirming our full year 2012 outlook. Now let me return to our results by business segment. This slide reflects the new organization structure I outlined last quarter. Financial & Risk revenues rose 1% and now include the Governance, Risk & Compliance business. Good growth in marketplaces and GRC were offset by weakness in the trading and investor segments. Revenues by geography saw Europe, Middle East and Africa rise 2%; the Americas were up 1%; and Asia was flat due to softness in Japan. Overall, Financial & Risk net sales performance in Q1 was slightly better than Q4, but it was still negative. A modest improvement in the Americas was largely offset by a difficult environment in Europe. As we've previously stated, we do not expect net sales to turn positive until the end of the year, and, therefore, it's important to look at the momentum and run rate trend as we exit 2012. We are targeting a gradual improvement in net sales over the course of the year, driven by service improvements, new product rollouts, including Eikon. Tax & Accounting had a terrific quarter, with revenues up 31%, 9% organic. Growth was strong across the business. IP & Science revenues grew 4%. Legal had a good start to the year across the board, with revenues up 3%, 2% organic in what appears to be a slightly better legal market environment. We are particularly encouraged by the sales performance in our Legal and Tax & Accounting units, which were slightly ahead of our expectations. We also have a good story to tell about our fast-developing global growth businesses, which represent about $800 million in revenue and grew 18% in the first quarter, 7% organic. Those numbers are included within each of the 4 business segments. In summary, our businesses performed largely as expected during the first quarter. Tax & Accounting and IP & Science continued to perform well and we're particularly encouraged by the sequential improvement in organic revenue growth in our Legal segment, which was 2% in Q1 versus 1% in Q4 2011. Each of these businesses has a clear and compelling growth strategy against which we are executing, and our progress should continue to be reflected by good growth and profitability this year. Financial & Risk is now executing against a more focused strategy as we work to deliver better products and improve the customer experience. We've begun the task of simplifying our product offerings and we've launched several new products, including Datastream Pro, a new offering for investment managers which consolidates 12 Legacy desktop products and incorporates best-in-class macroeconomic content of Datastream; the Accelus Compliance Manager in GRC; a new Elektron hosting center in São Paulo, Brazil; and specific versions of Eikon that are tailored to the commodities and energy sector and to the wealth management market in Asia and EMEA. At the end of March, we had over 60,000 Eikon desktops, up 30% from December. In addition to those already mentioned, we continue to add Eikon desktops, particularly in segments which best fit for purpose such as commodities and energy, foreign exchange and fixed income, and we're making solid progress in building out tools and features that will make Eikon even better in the future. On the customer experience side in Financial & Risk, there's a lot of work being done to improve our service. We've undertaken a number of tactical initiatives to improve responsiveness, especially to the top 1,000 accounts. And in select areas like Investment Management, we're increasing our level of expert support. We are making steady progress and I will have more to share with you on this throughout the balance of the year. Now despite this progress, F&R is still dealing with a tepid global economic recovery and uncertainty in Europe. RDEs are growing but that growth has slowed while the U.S. has been showing modest improvement. Against that external environment, it's important for us to stay focused on the things in our control and that we continue to improve our ability to execute. Let me conclude by saying that since I last reported to you on February 9, there has been no change in the big picture. My key priorities remain unchanged and we're making good progress against them. Our new management team is gelling well, we have the right combination of ambition, urgency and pragmatism to get the job done. The vast majority of our businesses are performing well. Our work in Financial & Risk is far from done, but we are making headway. As I said a few minutes ago, we are on track. Now let me turn it over to Stephane.

[Stephane Bello:]

Thank you, Jim. Before reviewing the first quarter results, I want to discuss our new organization structure and highlight 2 particular changes. First, we reorganized the business around our customers rather than products. Now when we go to market in Financial & Risk, we're going out to serve traders and investors, not to sell desktops or feeds. Similarly, our US Law Firm segment includes both our core legal research platform, WestlawNext, as well as software and services offerings such as Elite in large law firms, or FindLaw for small and solo law firms. This new market approach is better aligned with what our customers expect from us

[Frank J. Golden:]

Thanks very much, Stephane and Jim. And now we would like to open it up for questions. So if we could have the first question, please.

[Operator:]

[Operator Instructions] Our first question comes from the line of Suzi Stein with Morgan Stanley.

[Suzanne E. Stein:]

Can you just talk about the tone of conversations on contract renewals in your market data business? And are you having to negotiate more on price during this time? And I guess can you just distinguish between the tone on the buy side and the sell side?

[James C. Smith:]

Yes, I would say that this is totally what you would expect in an industry that's going across – been going through the kind of change that it's going through. So I think everybody's concerned about cost reduction. Everybody's concerned about kind of total cost of ownership. Everybody's concerned about the depths of relationships that they have with various vendors. I don't find it so much to be the kind of brutal price competition that you might expect as I find it more, particularly on the largest customers, to be more about how you can talk about the breadth of the partnership, all right, and what we can do in a holistic fashion. So it's certainly -- every single contract is certainly a difficult negotiation these days, but particularly on the sell side. But in some ways, it kind of depends upon where you sit. The negotiations in Europe are a little bit different than the negotiations in the U.S., are a little bit different than the negotiations in Asia because the prospects look a lot different. The negotiations on the sell side are a bit different from the negotiations on the buy side where a lot of this disruption is creating opportunity. So you're correct in assuming that each of the negotiations is difficult, but if I have a comfort in it, it's been the amount of time we spent with customers over the first 4 months of this year and how pleasantly surprised I have been about the depth of the relationship that we have with those customers and how we've been able to engage in a broad discussion with them, not just a product versus product and product price, feature set for feature set, but rather how we could provide solutions across the range of their needs. Remember, we're in a particularly unique position where we're rather agnostic as to whether or not they place the value on desktops or feeds or other types of solutions because we have a broad array of solutions to sell. And that's been the type of engagements we've been engaging in, particularly with our largest customers.

[Operator:]

The next question is from Drew McReynolds from RBC Capital Markets.

[Drew McReynolds:]

Maybe, Jim, if you can just talk a little bit more about just the firming up of organic growth within Legal. Specifically, could you address pricing, whether that has improved or whether you expect it to improve going forward? And just a follow-up here, as you look at WestlawNext and the 65% penetration, is there any change in either kind of organic revenue growth or margin dynamic as you kind of migrate the remaining 35% of that base?

[James C. Smith:]

No, it's -- look, it's been -- obviously Legal is a pleasant surprise to see the strength. As we said, it's a bit ahead of our expectations. It was driven primarily on the back of our software solution sales, and those were surprisingly strong in the quarter. But also within the quarter, actually our Legal research services were surprisingly strong in the quarter. I wouldn't want to jump in and conclude any trends from one quarter's performance, right? And this was a relatively light quarter as is the next one for contract renewals or large contract renewals. I would say that we've had some success with efforts recently to add more transparency into our pricing and to explain exactly why we charge what we charge to our largest customers and to prove the volume of our premium price position. So I don't -- we haven't noticed any change in the dynamic. We just had a surprisingly productive first quarter.

[Frank J. Golden:]

I hope that whole -- we hope it's a trend.

[Operator:]

We have a question from the line of Vince Valentini with TD Securities.

[Vince Valentini:]

I'm wondering about your acquisition strategy in trying to find the growth factors in the Financial & Risk segment. Would you say that you're still at sort of the discovery stage of that? Or have you sort of formed a pretty good idea of where you want to go and you've got a bunch of targets identified so that by the time you get the Healthcare proceeds, you'll be ready to deploy that money right away? Or are these things perhaps going to take longer to gestate?

[James C. Smith:]

Well, it's really difficult, Vince, to predict the exact timing on acquisitions because we don't control that. It would be safe to say that in each area in our Financial & Risk business, we are pursuing the growth vector, right? And we are -- we've come up with a strategy and said, "Here's what we need to do to grow, how we're to grow, what do we need to build, what do we need to buy, how would we know we could win in that sector." And within that strategy, within each sector, we would have a list of potential acquisition targets identified and we would be working that list, right? The timing will be completely and utterly dependent upon when you have a seller who's willing to buy and on how the discussions progress and how promising, indeed, upon further investigation, the synergies will actually be between a target and what we would acquire. So we're still working that path. That said, we do have an attractive list, particularly in the areas that are our higher growth areas that we're working all the time. But that's just what we do. As far as timing goes, one can never predict. Sometimes these things come to fruition very quickly and sometimes they take much longer, but we're actively working the pipeline as we do and have done on -- certainly on the Professional side, for a long time. That's just kind of the playbook we've run before and we're running it again.

[Stephane Bello:]

I would just add to that, Vince, that the pipeline is not obviously just on the finance side, it's still pretty robust on the x Professional businesses, too.

[James C. Smith:]

That's a very good point, Stephane. And it's -- as we look across, and we see a number of opportunities within the growth vectors that we've already identified. And I think, just to add some color to that, what you can expect is that if we deploy proceeds from this sale to an acquisition, they will be in places that won't surprise you. They will be in identified growth vectors, right? Or they will be in the strongest areas of our Financial & Risk business.

[Operator:]

We have a question from the line of Tim Casey with BMO.

[Tim Casey:]

As you look through the year, can you talk to us a little bit about how you expect the quarters to fall out? I mean, you've had an encouraging start to the year, and I think you're set up for an easier comp for the fourth quarter. But what are your expectations as we go through the year and maybe a little more color on your comment about net sales improving through the year as well?

[James C. Smith:]

I'll leave that one to Stephane.

[Stephane Bello:]

Sure, Tim. Well obviously, we provide our guidance for the full year and such. We don't really go into too much detail with regard to the quarterly growth rates and margins. But let me just remind you of a few items, which will impact the quarterly saving of our performance. If you look at revenue growth first, we have said that we expect to grow low-single digit for the full year, and the first quarter was obviously higher than that at 4%, primarily due to the impact of the acquisitions that we did last year. Now obviously, the impact of last year's acquisition on the overall revenue growth rate will diminish over the course of the year, which you need to factor in as you look at our performance over the remaining quarters. From a margin perspective, if you look back at last year, you will know that the margins, both at the EBITDA and the OI level, were actually much higher in the second and third quarter than was the case in the first and fourth quarter. And this was due entirely to timing factors. For instance, we incurred some large severance costs in Q1 and even larger costs in Q4 while there were some positive timing impact in the 2 middle quarters, if you want, Q2 and Q3. And this year, I'd say we would expect a more steady improvement in margins when we look at things sequentially over the course of the year with, as Jim's pointed out, the largest improvement likely to take place in the fourth quarter. Now in terms of the net sales trajectory, and I assume that you refer primarily to the F&R business here, as Jim mentioned, we have seen a sequential improvement in net sales for F&R from Q4 to Q1. They were still negative, which is absolutely what we expected. And as we've mentioned, we do expect them to only turn positive towards the end of the year, which is going to be, really, the outcome of the upgrades we are making to Eikon over the course of the year and also to new product introductions as we go through the year. Obviously, the exact trend of the necessary improvement would also depend on the evolution of the environment in which we play, and we'll watch that very closely. As Jim said, during the first quarter, we did see an improvement in the Americas, but that was essentially masked by a very, very tough environment in Europe, so we'll continue to monitor that very closely, but that's essentially the trend we're expecting. Hopefully, that answers your question, Jim.

[Operator:]

We have a question from the line of William Bird with Lazard.

[William G. Bird:]

Has the cost transparency project identified any new cost save opportunities? And just as a follow-on, can you talk about just how we should think about the buybacks through the next couple of quarters?

[James C. Smith:]

Stephane, I think that's in your wheelhouse.

[Stephane Bello:]

Yes, let me speak a little bit about this cost transparency project we talked about in the fourth quarter. Let me first say that we're making solid progress. You remember in the prior earnings call, I mentioned that we only had 25% of F&R's expense base, which was directly under the control of the businesses, and 75% of the expense base, which was managed centrally. And as I mentioned at the time, our ultimate goal is to really reverse this ratio and to end up with about 80% of the expense base either directly under the control of the businesses or managed centrally, but with a very clear line of sight back to the businesses on how they can manage and reduce these expenses. Now at the end of the first quarter, we had about 40% of the expense base that was directly under the control of the businesses with another 20% in what we refer internally as the controllable expense bucket. And what we mean by that is essentially that the businesses do not manage these expenses directly, but that they have the leverage to influence them. And to give you one example of what would fall into that bucket, I would refer to real estate, which is obviously an activity that we manage centrally, but the cost is allocated back to the businesses based on the actual amount of space they use, and the business can control that by managing their headcount or managing the amount of space that they give to everyone on their lease [ph]. So at the end of the first quarter, we essentially moved from 25% of the expenses base being directly controlled by the businesses to close to 60% being either directly or indirectly controlled. And I would say we really got to the low-hanging fruits first, so the remaining 20% or so will take us another few months to sort out, but we're starting to drive for more accountability by having this greater transparency. You're going to see the result of that greater accountability really happen over the next few quarters because we just -- I mean, managers of the business are really just starting to get their hands around their cost basis and so they're really going through areas of opportunities to identify saving opportunities. Your other question, really, to the buyback program, and as I mentioned, we will continue to look at buying back shares opportunistically over the course of the year. We bought back a fair bit of shares under the existing NCIB program. We bought 12 million of the 15 million authorization that we have. And so as we do as a normal course of business, we will essentially ask authorization from our board to renew that program, most likely at the upcoming May meeting.

[Operator:]

We have a question from the line of Phillip Huang with UBS.

[Phillip Huang:]

I wanted to ask maybe the other side to Vince's question earlier. As you private playbook that you've used for the former Professional division to the F&R unit, do you see any challenges if at all in using the same strategy for the Financial & Risk unit? Like for example, do you see the unit as being perhaps a little bit more integrated and interdependent between each of the businesses, which should make it a little bit more difficult in exiting or selling certain businesses in order to turn the entire unit back to growth? And I guess to the extent that you can answer, what are some of the areas that you think may be less core to the company's overall strategy in the long term?

[James C. Smith:]

Yes. Well, it's way too soon to talk about what units wouldn't be core to the company's strategy. And I think you're right in identifying that those businesses are more tightly integrated than some of our other businesses have been. However, it's just way too soon to make a call as to what the differences would be. I don't think there's a material difference to coming up with a growth plan that starts by identifying a set of customers, looking at those customer needs, figuring out what tools and services that they need, how they need to connect with their customers and what they need to be successful, and then figuring out what we've got and what we need to add. I think that's, frankly, a tried and true strategy that we've deployed time and again across multiple business units. And I think that to the extent we find interdependencies that are really, really strong, we can build on those and they should make us stronger. To the extent that a business isn't benefiting from being part of us and that business unit is lagging, I think that we've always been able to find ways to redeploy capital in one form or another, whether that's a divestment or whether that's some form of partnership or whether that's some form of change in the profile of what we invest. We have lots of different kinds of businesses within our portfolio. We have those that we go aggressively for growth and invest behind pretty voraciously, and we have others that we manage for cash flow and profitability for a period of time. So we're just pretty judicious in the allocation process. And while it might be a bit different because there are more shared fundamental data and that sort of stuff between the various units, to the extent we can really tie them together on common platforms, they'll be core going forward. And to the extent we find that they do indeed sit along on their own and the growth opportunities are what they are in other growth vectors that we have, we still look to divest if we came to the conclusion that we couldn't win in a particular space. And the strategy, for us, has all been about identifying a customer set, identifying those markets, identifying what we need to win and then going hard at those places where we know we can win and getting out of places where we can't.

[Operator:]

The next question is from Adam Shine with National Bank.

[Adam Shine:]

Jim, a question on Eikon, I think you were very clear on the last call back in February that, look, there was going to be a reformulation maybe of the strategy with respect to Eikon. We saw, I guess, a modest 1,000 increase in the desktop sequentially. So I guess the question to you is, are you sort of pushing back from the sales effort on Eikon? Or I guess the flip side of that, has there continued to be a degree of resistance in the market such that we should be focusing really on greater traction on Eikon, maybe later in the year, let alone early next year, not necessarily focus on the next couple of quarters?

[James C. Smith:]

Yes, I think -- look, remember, we have an 8-quarter plan for Eikon for growing it out in various sectors. And, in fact, you shouldn't take that. The truth of the matter is, we're getting more and more positive reception to Eikon in the market with each passing week almost. And the features and functionalities have been improved significantly over the past several months. We're getting good reviews and feedback on the places where it's fit for purpose. And remember, what we've done is to say, "Let's take a sector-specific focus to Eikon. Let's roll it out first." So we haven't pulled back from Eikon. What we've done is focused the sales effort behind those places where we know we're likely to have the greatest chances of success. And those are going very, very well. And we're also focusing on the stuff that's underneath the covers on the platform aspects of Eikon. As opposed to Eikon being the be-all, end-all product for us in our Financial & Risk business, as we said, we've re-devoted capital resources and sales resources behind other new product launches to keep -- to get revenue going again and keep revenue flowing, while we're getting Eikon fit for purpose across the sectors where we think it is most attractive. That said, the platform effort for Eikon as a platform to support our desktop products is making very, very solid headway, and I think we're all encouraged about where we'll be on that later in the year. That said, it is an 8-quarter implementation plan on Eikon. There are some sectors of the business that we will not get to until next year on that plan. I'd love to say we can get to them sooner, but we're certainly not going to promise something that we can't deliver and we're sticking to our plan, we're working our plan. And the platform aspects of Eikon have never looked better.

[Operator:]

We have a question from the line of Paul Sullivan with Barclays.

[Paul D. Sullivan:]

Just a follow-up on the financial business. Do you think that the first quarter will mark the bottom in trading and investors from an organic perspective? Or does the phasing of net sales mean in those 2 areas we're likely to see it sort of get a little bit worse before it starts to get better? I mean, just following on from that, the 140 bps of margin contraction year-on-year in financial, do you think that's as bad as it gets?

[Stephane Bello:]

Paul, it's Stephane. On your question regarding the growth trend in investor and traders in the first quarter, I would remind you that, essentially, we had very negative net sales in the second half of last year. And essentially, the full impact of these negative net sales has not yet flowed through. You’re going to see it essentially for the ensuing 12 months. So I would be essentially expecting that you're still going to see weakness in the growth rate of these segments, and we're going to see improvement once we get to a better, let's say, picture, which we've started to see in Q1, as we just mentioned. And in terms of the margin, like progression for F&R, I think you're going to see probably fairly steady margins over the course of the year for F&R.

[Operator:]

Your next question is from Doug Arthur with Evercore.

[Douglas M. Arthur:]

Yes. I'm just wondering if you can drill a little deeper into the trading unit growth or lack of growth, the decrease of 2% in the quarter. I mean, Commodities & Energy, foreign exchange were strong. You had cancellations in ETFs and Fixed Incomes. And can you sort of flesh out how that might look in the next couple of quarters?

[James C. Smith:]

No, I don't think we want to go into that level of details, frankly. This is getting very, very granular.

[Douglas M. Arthur:]

Well, the desktop cancellations and the ETFs, is that a trend that's accelerating or do you think that's going to level out?

[Stephane Bello:]

I think what you're going to see is essentially probably an improvement in the areas where we are – where Eikon is fit for purpose, as Jim said, so areas like foreign exchange or Commodities & Energy are already showing improvement. Fixed Income is probably the next area that's fit for purpose. So I think that the progression of net sales in across all of the F&R business is really going to follow the progression of how we -- of how Eikon becomes ready and fit for purpose in each of these segments.

[James C. Smith:]

Yes. If I might make -- might just add that -- and I'm just going to add a qualitative comment to this, not a quantitative one because I agree completely with Stephane that just to make quarter-by-quarter predictions on the trending of that level of guidance is something that we just don't want to get into. I will say qualitatively that I look at the sales pipeline and I look at the sales closed and the sales reports every single day in a graphic chart form, and at the beginning of the year, there was a heck of a lot more red and a couple of little green, poking into the greens with the red being bad and the greens being good. And today we're, as Stephane pointed, starting to see more and more of the categories kind of tick over to the green, right? And at some point, that's also part of the playbook, which says focus behind the places where you can be strong and where you can win, drive those, and hopefully some of the big reds start to slow down and that's when we'll hit the tipping point. But we are seeing improvement, but it's moving category by category where we -- not surprisingly, where we have a winning hand in terms of content and features.

[Operator:]

Our next question is from Matthew Walker with Nomura.

[Matthew Walker:]

Just 2 questions, please. First is on -- have you seen any impact at all of the foray from Bloomberg into the legal market? And are they starting to play in the same space or you're just not seeing them at all? And the second question is, really, actually on the data feed market. Could you just maybe tell us what's going on in the data feed market and whether you think you are -- what kind of growth rates you're seeing in that market and whether you think you're gaining share or losing share against other providers?

[James C. Smith:]

Well, let me start -- do we see Bloomberg in the legal market? Sure, we see Bloomberg in the legal market. Their presence is certainly increasing. The marketing is increasing. They're out there more. I think they issued a press release in the first quarter, their first major contract. They signed a deal at DLA Piper, so they're in DLA Piper now. And interestingly, that did not displace any Westlaw use and they did not affect our contract in any way. So we are seeing a higher profile of Bloomberg. To date, it's not a major factor in changing the competitive dynamic. For us, you can look at -- I think there are enough third-party reports out there and surveys of law librarians and users as to where that might be attractive or who's most threatened by that. We're not seeing a material impact right now. That said, we take them very, very seriously. The acquisition of DLA certainly strengthened the regulatory content and we are taking the appropriate responsive steps to that to make sure that we remain far and away the premium provider of that kind of content. And so it's another wrinkle to the competitive dynamic, but not one that's having a major impact at this time. We're mindful of its potential to do so in the future and are reacting appropriately. I think it's healthy to be paranoid about all competitors. And on the second question, was that onto the data feed business, we're continuing to see strong growth in the data feed business and not seeing any material changes in the competitive dynamics there. I wouldn't want to get into detailed speculation about market share, but that's been a strong business for us in the past and it continued to be a strong business for us in the first quarter.

[Operator:]

That question comes from the line of Sami Kassab with Exane.

[Sami Kassab:]

It's Sami at Exane BNP Paribas. How do you -- I think you mentioned that the new sales in Legal were also a bit ahead of your expectations. So should we, therefore, assume that Legal organic revenue growth is more likely to accelerate rather than decelerate in the remaining quarters? And maybe in the same vein of thinking, do you see print revenues within the Legal division improving? Or do you expect the decline to accelerate from the minus 3% in Q1?

[James C. Smith:]

Stephane?

[Stephane Bello:]

Yes, I'll take that question. As you mentioned, we were encouraged by the new sales performance in the Legal business in the first quarter and also encouraged to see the organic revenue growth improve slightly sequentially. As you've said, however, a quarter doesn't make a trend, so we want to remain quite prudent in projecting what's going to happen going forward, and it takes time to start turning around the organic growth revenue rate of a business. We are cautiously optimistic that Q4 last year may have been the trough, but we really want to see another quarter or 2 before making that claim, very frankly. And in terms of print revenues in the Legal business, the print revenues -- U.S. print were down about 3% in the first quarter and we would expect this kind of decline in the print business going forward under normal market conditions. The attrition level tends to increase at the trough of the downturn in the legal market and then to return to a more normal level, which I would call low-single digit decreases otherwise and that's really what we're seeing right now.

[Frank J. Golden:]

That will conclude our call, and I'd like to thank you all for joining us this morning.

[Operator:]

Ladies and gentlemen, this conference will be available for replay after 10