Ladies and gentlemen, thank you for standing by, and welcome to the Thomson Reuters First Quarter 2014 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I'll now turn the conference over to Frank Golden, Senior Vice President, Investor Relations. Please go ahead, sir.

Thanks very much, and good morning, and thank you, all, for joining us as we report our first quarter results. We'll begin today with our CEO, Jim Smith, followed by our CFO, Stephane Bello. Following their presentations, we'll open the call for questions. [Operator Instructions] 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. 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. Let me now turn it over to the CEO of Thomson Reuters, Jim Smith.

Thank you, Frank, and thanks to those of you on the call for joining us. Today, we'll begin with a review of the first quarter's results, and I'll update you on the progress we continue to make. I will then turn it over to Stephane, who will review the results in more detail. Now to the results for the quarter. In short, the year is off to a good start, with the first quarter's performance consistent with our full year expectations. As you've heard me say on several calls, the key is the trend line, not the performance in any given quarter, and the trend continues to improve. I'm pleased with the trajectory of the business. As I said last month at our Investor Day, our actions are taking hold, and enabling us to build a much better platform to support future growth as we execute more effectively, launch better products and simplify the business, and we can see that from these results. For the quarter, total revenues were up 1%, reflecting an exceptional period for Tax & Accounting, continuing good growth from IT and Science and a marked improvement for our Legal segment, all of which more than offset a decline in Financial's revenues. Our Financial business continues to make progress. That said, given the subscription nature of that business and its lag effect, our progress will not translate into top line improvement in 2014. Simply put, Financial's revenue performance this year reflects last year's negative net sales. However, the current trend in our net sales performance continues to improve, and we are making tangible progress on the cost side. At the consolidated level, EBITDA rose 8%, primarily from lower severance charges this quarter as compared to the first quarter of last year, and underlying operating profit rose 14%,…

Thank you, Jim, and good morning or good afternoon to you all. As Frank indicated earlier, I will speak to revenue growth before currency throughout today's presentation. This first slide provides a snapshot of our first quarter results, which do reflect the impact of charges during the quarter, consistent with what we announced last October. And as mentioned in our press release, these charges had a $10 million negative impact at the EBITDA level. As a reminder, we still expect to incur a total of $120 million of charges for the full year, and we would expect the balance of the charges to be spread relatively evenly over the remaining 3 quarters. Revenues were up 1% during the first quarter. Organic revenues were flat, which represents an improvement of about 100 basis points relative both to the same period last year and to our Q4 results. So this performance is very much in line with the gradual improvement in revenue growth we had been expecting as a result of our mix dynamics. Overall, our Professional businesses grew 5%, 3% organic, while F&R declined 1% and went down 3% organically. Adjusted EBITDA in the quarter was up 8% with an EBITDA margin of 26.2%, which represented an improvement of 180 basis points from the prior year period. This increase was primarily due to lower onetime charges compared to Q1 last year. In the first 3 months of 2014, charges totaled $10 million compared to $78 million in the first quarter of last year. Now excluding the charges from both periods, the margin in the first quarter of this year was 26.5% compared to 27% in 2013. The 50 basis points decline was primarily the result of the revenue decline of Financial business, which I will discuss later in the presentation. Foreign…

Thanks very much, Stephane, and that concludes the presentation. So I'd like now to open the call for questions, please.

[Operator Instructions] Our first question will come from Drew McReynolds with RBC Capital.

Maybe just 2 quick ones for me. Just on the Eikon situation. I'm just wondering if Frank or Jim, you can give us an update just on the kind of number installations and billing terminals that you have. And then just in terms of the U.S. legal print, obviously, down a little bit more modestly this quarter. Can you help us just understand why the fluctuations in those organic growth declines quarter-to-quarter?

Why don't I start with the second question first, and then come back -- and I think I'll kick the Eikon question to Stephane, if that's okay. The -- I think the simplest answer on the legal print question is seasonality. We publish on different cycles throughout the year. So it just depends upon what the publishing schedules are. As we've said, we still expect that to be more a mid-single-digit decline for the full year, and we expect that's influenced by seasonality. As a kicker into the Eikon number, we finished the number roughly in line with where we were at the beginning of the year, and that's a net of solid gross sales and some cancellations. And I would just remind you that this is going to be a little bit of a different journey this year than we had last year, where we were working very hard to do a new 1:1 swap out of Xtra 3000s for Eikon. Now as we begin to move the functionality from the old Thomson ONE products onto the Elektron infrastructure and accessible through the Eikon platform and viewer, this will be a slower and steadier journey, and one that will be managed to maximize revenue, as opposed to just move people as quickly as we possibly can.

And if I can just follow up there, Jim. Was that, kind of in line with what you're expecting as you kind of kick off the Thomson ONE migration?

Yes, it is absolutely in line with our expectations.

Our next question is from Sara Gubins with the Bank of America.

This is David Chu for Sara Gubins. In Legal, it appears that some costs were pushed back. Can you help us think about Legal margins for the rest of the year?

Sure, David. It's Stephane answering. I don't think there's any change to what we said earlier. I think, for the full year, we would still expect the Legal EBITDA margin to be flat to maybe down slightly. And that's really a combination of 2 factors. One is the revenue mix change, which is very favorable from a revenue perspective, as the growth businesses are representing a bigger proportion of the total, but this growth businesses have a lower margin than the very, very profitable U.S. print and U.S. online businesses. And that will be offset by continuing actions, efficiency actions that the Legal business will take. So overall, if we can get the Legal business to continue to gradually improve the top line growth, as you've seen very much in the first quarter, they were up 200 basis points. I'm not expecting this kind of improvement every quarter we see, but it was great to see them move back up from the negative R&D growth we have in the fourth quarter. That's really our priority in Legal. And if we can do that while maintaining margins, I think that will be our objectives for the Legal business.

Okay, great. And then just one follow-up, so can you speak to the timing of shutdowns for the data networks? Just wondering how much there is left to do and the timing of these events.

Sure. I mean, like that's very much the area of focus now. And I think it goes back to the earlier question of Drew, right, whereas, last year, we were very focused on transitioning from -- or essentially upgrading all the 3000 Xtra customers onto Eikon, which was a much better front-end platform than 3000 Xtras was. Now we're very focused -- the F&R team is very focused on the simplification of the back end of the system, so very focused on the full-tick network. You remember Tim Collier speaking about that at Investor Day. There, the migration of clients have been fully migrated. We're still running the platform in parallel for a few more weeks, but we're well ahead with that migration. The next big one is the band-optimized network, which we are in the process of migrating. That one is going to take a little longer. I would expect that we would be done with this one by the end of this year or very early next year. And if we do that, I think we'll have the largest proportion of our back-end systems on Elektron, which is -- which will be really a great achievement.

Our next question is from Vince Valentini with TD Securities.

Two-pronged question on the transformation program. Any further visibility on when you'll identify any restructuring costs and announce those? And secondly, I'm wondering, as you do all this massive real estate consolidation, are you taking a look to customer service? Is there a way to sort of optimize the efficiency and effectiveness of your customer service that, I think, is pretty fragmented across all your business groups? Are you creating sort of larger call centers as you do this transformation?

Yes. Look, that's a great question. To the first one, no. We're not at a point where we have any further visibility. We're working the plan and looking at everything. And we do not, at this point, anticipate or see any future charges that we haven't announced to this point. We'll do -- if that opportunity presents itself, we'll let you know as soon as we know, but we don't see that yet. As far as the location strategy, we think there's a number of positives from looking at our location strategy. The cost benefits are obvious, but our location strategy is really being led by the business teams, and it's all about where we want to interface with customers. It's where we want our talent located, and I think there is a real opportunity for us to improve our customer service by reflecting better our customer footprint in our -- where we locate our workforce. So I think there are a lot of positives to the real estate strategy that we're looking at right now.

We'll go next to William Bird with FBR. William G. Bird - FBR Capital Markets & Co., Research Division: I was just wondering if you can speak to F&R, the wider, organic revenue decline seem to somewhat counter to the improving net sales trend you've seen recently. So I was just was wondering why that is and what you expect going forward.

Sure. Let me try to take that one. I think that the -- you're right. I think that the numbers we publish don't do justice to the progress that's happening on the line, and we -- F&R has been at minus 3% organic now for like the last 4 quarters, I think, if I'm correct. If you look at the rounding of the number, you can see that, actually, in Q1 of last year, they were at like -- I think it was like minus 3.3% or something, and this year, they're more like minus 2.5%. So there is underlying improvement. It's modest, but we never expected it to be really accelerated and really flat. The other point I would make, following the first quarter, is that there's one piece of the revenue growth that we can't really predict, and that's the one that's related to transaction revenues. And in Q1 of last year, you'll remember that transaction revenues were actually up slightly. Organically, I think it was up 2% or 3%, and this year, they're down 4%. So that also has a dampening effect on the overall organic growth rate of F&R. William G. Bird - FBR Capital Markets & Co., Research Division: And could you speak to what you're seeing in Europe?

Look, as we said, right, I think looking at the leading indicator, which is net sales, Europe was the only region which was still negative in Q1. So there's a little bit of improvement, but it's still, by far, the region that's pulling us down the most on the F&R business. The other 2 regions were positive this quarter. For perspective in Q1 of last year, all 3 regions were negative. So we've seen progress everywhere, but the progress has led to essentially a move from negative to positive in Q1 for net sales for the Americas and for Asia, but that was not the case yet for Europe.

Our next question is from Andre Benjamin with Goldman Sachs.

There's a lot of attention to the desktops within the F&R business. I was first hoping you could provide us with the percentage of F&R business that's desktop versus the rest, and then maybe give us a little bit of color on what you're seeing in terms of trends for feed demand and what the growth rates have been there.

Sure, Andre. I think we've said in the past that the Financial desktop business represents a little less than 50% of F&R's total revenue base, so probably around 45% of the revenue base, and that's obviously the portion of the business that's declining right now. The rate of decline is -- from a revenue perspective is still in the mid-single-digit area at this point in time.

And with regard to the feeds in terms of what you're seeing in terms of demand for that business?

Feeds actually is more of a growth area. Both the market is growing, and our business is growing too. So demand remains actually quite strong in the feed business.

I guess, without pushing on specifics, then maybe shifting to the tax business, doesn't get really discussed very much, growth accelerated the last 3 quarters to double-digit on a constant-currency basis. Could you maybe talk a little bit about the pickup there and whether we should assume that, that normalizes back down to the kind of mid-single digits it's tended to be or if there's something special going on that we should assume that continues?

I would say that the 10% organic growth really was extremely pleasing for us, and it really demonstrates the tremendous work that the management team has done there that the -- through the investments that they have done, and more importantly, how well accepted the product is. And you can see that, that growth rate is very well balanced across the segments, both in the Professional and the Corporate side. And now the smaller government business is kind of coming back, following some of the issues we had last year. I would expect that for the full year -- I would probably not expect to see like the continuation of double-digit organic growth rate. I mean, that would be quite remarkable, but I do think there's -- this is a business that has the potential to grow mid-to-high single digit, and that's probably what we would expect for the full year for Tax & Accounting.

We'll go next to Ato Garrett with Deutsche Bank.

Two quick ones for me. One, can you give me a little bit more of an update on Practical Law as you've been deploying that into the U.S., just want to get a sense of how that's going relative to establishing its footprint here. And then two, just wanted to dive into the improving trends of the net sales a little bit to see if you guys could disaggregate that between trends as far as cancellations moderating or gross sales improving.

Why don't I take the first one, and then the second one to Stephane. Yes, I think we're very encouraged by Practical Law in the U.S. And as we begin -- it's been a very, very successful integration for us, particularly in the U.K. And as we've got our editorial teams together in the United States, I think we see more and more opportunity to ramp up that kind of practical know-how solution from a Practical Law perspective and incorporate that into our legal solutions at an even faster clip. So the short answer is that we have exceeded all of our kind of near-term goals for that acquisition, and acceptance is proving to be very strong. And demand for us to ramp up even faster is there. So that's a big success story for us.

And on the net sales coverage you were asking, we have been -- steady improvement in our, what we call our gross sales for -- over the last 2 quarters actually. And the first quarter gross sales were actually -- showed a marked improvement relative to what they were in Q1 last year. What's offsetting that is the cancellation we continue to see, and these cancellation come in, like the large accounts, as Jim mentioned, in his remarks primarily as large banks continue to reduce headcount.

Okay, great. And then I think that sounds like those cancellations are probably more concentrated within Europe, being that's where your sales are still -- the net sales are still negative there, but then in the U.S., would you see that trend stemmed a bit?

Yes, it probably stems a little bit in the U.S., absolutely. I would say, overall, the retention rate in the first quarter was about flat. And what we would expect, as we mentioned, is that as the year progresses we may see some improvement in the retention rate due to the fact that we get a much better and stickier product than what's typical .

And next we have Toni Kaplan with Morgan Stanley.

There have been a couple of media reports in the past few months on further expected sell side cuts at certain large banks, especially in Europe. So obviously, it isn't a new trend, something that's been going on for a while now. But do you feel the trajectory of net new sales in F&R being more at risk now than you thought last quarter? Or do you feel like the operating environment is still about the same like it's been, challenging?

I think -- look, it's a good question, and we see the same headlines that you do. And obviously, we're in constant communication with all those customers, and I -- we think that the environment remains challenging. Our biggest customers are the world's biggest banks, and they're hardly in a state of normalcy or back to the good old days. I think we can all agree to that. So we think it's a continuing challenging environment, but it has been for quite some time, and I don't -- it doesn't feel to us like it's worsening. In fact, it -- we are at a point -- and as I said last year, where it's not everything getting worse all the time anymore. There are real positive pockets out there. And even in a choppy and tough environment, we are finding opportunities to grow because whenever we can be in a position to help those big banks who are all struggling with their costs, where we can be in a position to help them reduce their cost, when we can be in a position to help provide industry utilities that can help take costs out by doing things that they can all no longer afford to do for themselves, that's a real opportunity for growth. So in some ways, the current environment has opened the door for us to have broad strategic conversations with our biggest customers that we wouldn't have had 5 years ago because folks are considering a whole range of services. And while -- we all love a more robust environment for the big sell-side banks, I have to say that there is opportunity within the current environment today. If you look at various pockets, if you look at our Risk business, for example, was up 11% or -- in the first quarter all in. And that's a positive story for us. Our compliance products and services, the reason we launched this Accelus Org ID product is that we think there's a great deal of opportunity for us to grow there. So yes, I expect it will remain a challenged environment for our largest customers, particularly in Europe right now, but there's opportunity in that as well.

Our next question is from Tim Casey with BMO.

Could you reconcile your comments on -- you mentioned you thought the you were making tangible progress on the cost side, yet you indicated margins were down in the first quarter in F&R if we x out the severance charges. Could you reconcile those comments for us?

Sure, Tim. Let me try to take this one. Actually, the first quarter results were very much in line with what we expected. And as I mentioned in my remarks, that the actions we took at the end of last year will have a greater impact on the expense base as the year progresses. The simple reason for that, I think, is that, as we've seen -- if you were to look at our headcount number at the end of last year and what it was at the end of the first quarter, you see a big decrease. However, because of the way the notification rules work in certain countries, particularly in Europe, many of the people actually left later in the quarter. So you didn't see the full impact of the expense benefit in Q1, but it should become more transparent in the second quarter.

We will move on to Doug Arthur with Evercore.

Stephane, 2 questions. The $68 million drop in severance in the quarter which -- I mean, as you guys are explaining it, explains most of the margin improvement, irrespective of the $120 million in charges that you're marking for '14, is that -- from a quarterly point of view, is that going to be the biggest delta that you see for the remaining of the year on the severance line?

Yes, with the exception of Q4. You see we took like a very large severance cost last year also. But if you exclude that one, which we clearly identified, there was not a lot in terms of severance, nothing really material meaningful in Q2 or Q3.

Okay. And then just a follow-up on Legal. The 2% decline in online legal, is that something you think flattens out as the year goes on? Or how do you see that playing out?

Well, that was impacted partially by transaction revenue within Westlaw, as I mentioned. So that's a little harder to predict. The same issue we have in Legal and Financial for the proportion of the revenue base that's transactional in Q1. This is what we call the ancillary revenue, which is really transaction revenues associated with Westlaw, show a bigger decline than maybe in prior quarters. So it really will depend on that aspect, I think, to see the overall evolution of the core online subscription rate.

That will come from Matthew Walker with Nomura.

Just a quick clarification, if you could, on one thing which is Legal and other thing which is the buyback. On the buyback side, I guess, you've noted through quite well, you've got only $400 million or so to do in the last 3 quarters. Does that suggest that you're going to increase the buyback figure? Or if you have room to do so? And the second one was on Legal. When you look at the 4% for the non-online and the non-print business, the 4% organic growth, what was the figure for Q4, if you have it for that definition of revenue, i.e., the growth revenues, what was the growth rate in Q4 for growth Legal?

Matthew, let me take the first question, the buyback while the team is frenetically researching the answer to your second question. Hopefully, we'll have it by the time I'm done on the buyback issue. But you're right, I mean, our intent was to move forward with space on the buyback. When we announced the program, we said quite clearly that our intent was to complete that $1 billion buyback and that it was not like a figure that we would not intend to completely achieve. I think what's important is you heard through our comments that we've stated very clearly that we view share buyback as another important lever of our overall value-creation toolbox going forward. So obviously, we need to review the next [indiscernible] once we complete the first $1 billion buyback program that you can read from our comments that I think the intent was not to do one and then finish it there. We will, obviously, review like the circumstances when we're closer to the end of this $1 billion buyback, and see what other costs for capital there might be at the time, but as I said, share buyback is an important lever for us to create shareholder value by returning capital to shareholders.

And Matthew, as it relates to the fourth quarter, growth rates for those growth businesses in Legal, we'll follow up with you after the call on that. So that will conclude our call today, and we'd like to thank you, all, very much for joining us.

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