Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters Fourth Quarter Earnings Conference Call. At this time all participants are in a listen-only mode and later we'll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Senior Vice President of Investor Relations, Frank Golden. Please go ahead. Frank Golden Thanks very much. Good morning and thank you for joining us as we report our financial results for the full year and the fourth quarter of 2015. Our CEO Jim Smith will start today's discussion, followed by Stephane Bello, our CFO. Following their presentations, we'll open the call for questions. We would appreciate if you would limit yourself to one question each in order to enable us to get to as many questions as possible. Now let me point out three things before we begin. First, throughout today's presentation, 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. Second, our discussions of the 2015 results include our IP & Science business. And third, in 2016 the IP & Science business will be included in discontinued operations for reporting purposes, and therefore is not included in our 2016 guidance. You will see that Appendix A in today's release 2015 pro forma results removing IP & Science business. This will enable you to compare our 2016 guidance against the pro forma '15 results excluding this business. Also on our website we've posted quarterly 2015 pro forma results excluding IP & Science, and later this quarter we'll provide the same for the full year 2013 and 2014. Lastly, also on our website there are several schedules that update our currency exposures. 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. Let me now turn the call over to Jim Smith.

Thank you, Frank, and thanks to those of you on the call for joining us. Let me start by saying that 2015 was a milestone year for Thomson Reuters. Today's results reflect the significant progress we've made putting the company back on a solid footing. Last year we returned the company to organic revenue growth for the first time since 2011. We delivered the highest level of adjusted earnings per share in our history and free cash flow exceeded our expectations, translating into free cash flow per share of $2.30, the highest in the history of the company. Our financial business also hit a number of milestones which demonstrate that we truly turn the corner including achieving flat revenue growth for the year despite having to absorb lower recoveries revenues and pricing adjustments. On an underlying basis, revenue growth was north of 2%, hitting its EBITDA margin target of 30% in Q4, a remarkable achievement given our starting point. And last but not least, financial net sales were positive in Q4. And 2015 marks the first year we achieved positive net sales in all four quarters since we acquired Reuters in 2008. Today we announced our 23rd annual dividend increase, a testament to the stability of our business and the consistency of our free cash flow model. So 2015 was the year that our strategy clearly began to yield results which gives us growing confidence as we look to 2016 and 2017. Now to the results; 2016 marked the fourth consecutive year that we've met or exceeded our guidance metrics. We've accomplished this because we've been sharpening our focus and prioritizing investments behind the opportunities we see at the intersection of global, commerce and regulation. We are simplifying the organization and focusing the business on driving revenue growth organically rather…

Thank you, Jim, and good morning or good afternoon to you all. Let me start with our usual slide which provides a snapshot of our fourth quarter results and full year results. We've been cautioning each quarter that currency movements would have a higher than usual impact on the results throughout the year, and that was again the case during the fourth quarter. Therefore, as always, I will talk to revenue growth before currency. So on a constant currency basis our fourth quarter revenues were up 2%. Our financial business was flat to the prior year while our three other businesses grew 4% in aggregate during the quarter, all organic. Adjusted EBITDA was up 13% in Q4 with an EBITDA margin up 370 basis points. Currency had a 20 basis points favorable impact on the margin during the quarter. Operating profit was up 28% in the fourth quarter and the margin was up 470 basis points, and currency had a 10 basis points negative impact on the operating margin. Now as you may recall, we booked charges in the fourth quarter of 2014 that had a negative impact on both, EBITDA and operating profit margins last year. But even excluding these charges, the margin improvements are meaningful, a 110 basis points at the EBITDA level and 240 basis points at the operating margin level. Now let me provide you with you some additional color on the performance of our individual businesses, starting with our legal segment. Demand for legal services in the U.S. market as measured by Peer Monitor, was essentially flat in both the fourth quarter and for the whole of 2015. Demand at large law firms is slightly better, up 2% with smaller firms a bit weaker, a pattern replicated on the full year basis. During the fourth…

Thank you, Stephane. I'd like to conclude by saying that we're pleased with the progress we achieved on multiple fronts in 2015. And we're especially pleased with the strong finish we had last year, particularly, positive net sales performance in Financial & Risk, the steady improvement in legal’s growth rate, the continued strong performance of our tax business and last but not least, our stronger than expected free cash flow performance. As you can see on this slide, the company has achieved steady and tangible improvements, both in terms of organic growth and margins. We enter 2016 with good momentum, while we will continue to be impacted by macroeconomic developments; the markets in which we operate continue to present us with opportunities. As we look at 2016, we are squarely focused on three key financial objectives; first, lay the ground work required to achieve our 2017 EPS goal. Second; continue to drive improvements in our free cash flow per share as we did in 2015. And third but not least, build upon the recent improvement in our organic growth performance by making judicious investments for our highest growth markets. As we have done in the past, we fully intend to self-fund these investments through the savings generated by our transformation program. And as you've seen us do in the past, we expect to fund these organic investments, while at the same time, further improving margins. As you can tell from our guidance, the projected improvement in margins will be somewhat mitigated by the organic investments we'll make in the business. Given our success in improving our organic growth, we are now more confident than ever in our ability to gradually bring our business to mid-single digit growth, provided we make the necessary but self-funded investments in our most attractive markets. In the long term, we believe further improvements in our organic revenue growth is the best way to maximize the growth and free cash flow per share. As you have seen us do for the past four years, we will continue to pursue this objective in a fiscally disciplined and responsible manner, while at the same time, returning attractive levels of capital to our shareholders. Our strategy is clear and it has not changed since we announced it in fall of 2013. Our 2015 results clearly show that strategy is starting to bear fruit. With that, let me turn it back over to Frank.

Thanks very much, Jim and Stephane and that conclude our formal remarks. And now we would like to open the call for questions. So operator, if we could have the first question please.

[Operator Instructions]. And our first question comes from Tim Casey with BMO. Please go ahead.

Thanks. Question for Stephane, could you talk a little bit about the progression of growth you're expecting through the quarters this year, particularly in light of some of the macro trends you talked about. But also in terms of price increases which had been offset by some adjustments you had to make last year, just curious of how those will float through to 2016?

Yes, Tim, good morning and thanks for the question. Just to remind where we start from, we achieved organic growth of about 1.5% this year and our guidance for next year is for growth of 2% to 3% excluding recovery, so that would be a 50 basis point to 150 basis point step-up on the growth performance we achieved this year. Now as you look at the progression of growth over the course of the year, there is a couple factors to keep in mind, one is exactly what you mentioned Tim which is these commercial adjustments as we continue to make as we are migrating our legacy Foreign Exchange Desktops to our new platform. The bulk of that impact is behind us, I'm glad to report, but it still got to have an impact through the first half of this year. So we expect to be largely complete with these commercial adjustments by the middle of this year and so that's one reason why you should expect to see growth to increase, probably bit more dramatically in the second half than in the first half. The second factor is the recoveries that I mentioned earlier, and I mentioned this was about $100 million for the full year and again, this has no economic impact, no impact on EBITDA or free cash flow, but it will have an impact on our reported revenue growth. And that $100 million impact based on what we think is going to be weighted more heavily in the first half, only two-third of that will happen in the first half, one-third happening in the second half. And the final point I would note is what I mentioned for our legal business, I think we are facing a really tough year-on-year comparison in the first quarter, so Q1 would probably be the trough a drop in terms of their growth performance this year and we should see an improvement from there. So all these factors combine to essentially explain why we would expect the growth acceleration to be more noticeable in the second part of the year not in the first part of the year.

Our next question comes from the line of Vince Valentini with TD Securities. Your line is open.

Yes, thanks very much. Hopefully a quick clarification and then a question, the $20 million of severance Stephane, is that mostly in the corporate line or has someone allocated to one of the segments?

Yes, that is the corporate line; they are related to the simplification program. I mean to be very specific; this is related to the consolidation of our technology organization under one umbrella. And we did consolidate a technology operation we took the opportunity to streamline little bit the ranks of the technology organization and we took about 20 or somewhere between 20 million and 25 million and that was all taken at the corporate line level.

Okay, thanks. And question is done, similar to Tim's question, little bit different. Price increases at F&R, can you give us some context on what you've been able to put through in January of this year exclusive of those commercial adjustments. I mean we're starting to lap a couple of years here over the first icon installations mostly on the sell side, are you starting to see a better price contraction.

Yes, thank you, Vincent sorry, for not answering the question fully in my prior answer. Yes, you now the model of our Financial & Risk business essentially its heaviest subscription based and we have price increases that are pushed through at the beginning of every year, and I would say this year, we've seen the same price increases that we see in prior year. So it's usually in line with inflation and it's something that happens automatically that we don't really have to negotiate on a case by case basis with every of our customers.

Thank you.

And we have a question from the line of Toni Kaplan with Morgan Stanley.

Good morning. This is actually Patrick Hoffmann [ph] in for Toni. I appreciate the color on F&R trends during your prepared remarks, but wanted to dive in a little bit deeper there. I've heard a lot about banks tailor-managing expenses, some are exiting full business lines. So kind of first thing, net sales are obviously negative and EMEA this quarter. And I was wondering first, if they turned more negative in the fourth quarter than they were in the third? And then second, if you're beginning to see signs of weakness in the United States as well? Thanks.

No, it's a great question; I'm glad you asked it and let me clarify. When we look at our fourth quarter, we were positive in the Americas and we were positive in Asia and we were just barely negative in Europe and it was actually an improved performance. So year-on-year improved performance from the prior year, so it wasn't the kind of impact and as you know, for the last several quarters, as we floated right around that positive line, one or two contracts can move you above or below the line, particularly in Europe. But we did see actually an improved performance in Europe, not a declining performance in Europe in the fourth quarter.

And then, just as a follow on there, are you beginning to see any signs of weakness in the United States? You just mentioned that markets are really choppy and things in Europe seem pretty weak, are you starting to see any signs that's kind of moving across the Atlantic?

No, I think the markets are unsettled everywhere, and I think there's a great deal of talk but the month of January is a very light month for us and frankly it's not a month in which we would see something reflected in our numbers or trends, so it's too early to see anything like that. I just would take the point of saying that when you think about -- and I know this may be a bit counterintuitive, but when you see the volatility in these markets, and when you think about our position, certainly uncertainty causes hesitancy to take action, and CEOs, and people who run major divisions may hesitate to act. But if you think about where we've made our investments over the last several years, they've been in areas that help our banks be more efficient, where they help them to take out costs and where they help them to deal with regulatory complexity. And all of this activity actually makes that value proposition even stronger. So we haven't seen that, we've seen in fact increased discussions with our customers about more things we might be able to do for them.

And Patrick, what I would add to that is refer --you to the slide we discussed during the formal remarks showing that the dependence of our financial business on desktop revenues has decreased quite dramatically over the last 6-7 years, from about 55% to 40% of the revenue base, it's still significant but it's certainly not the majority anymore.

Great. Thanks, guys.

Our next question comes from Paul Steep with Scotia Capital.

Thanks. First one is a clarification for Stephane, can you talk on U.S. legal, print, the decline rates been about 100 basis points, is there any reason to think about an acceleration or change in those trends? And my bigger question would be for Jim, could you just recap for F&R, the major remaining platform initiatives that have to go along with the milestones or the timing over in the next two years? Thanks.

So Paul, let me quickly address your first question. So U.S. Print revenues are declined by 6% to 7% a year so as you point they are becoming increasingly less important, an impactful part of the business and we expect that trend to continue in 2016. So, probably again 6% to 7% decline.

Sure. And Paul if you look at the remaining large platform migrations that are likely to impact the numbers, they are two big ones really, and the first is the completion of the modern foreign exchange platform. We will, as Stephane mentioned, we will likely be through the majority of that economic impact in the first half of this year, the rollout of the new tools will continue for some time as customers are ready and as we were -- and as we work on the implementation schedules there but the economic impact on the numbers will likely be completed in the first half of this year. And then we'll probably go through the first quarter of 2017 with the other one which is the conversion of all of our by side functionality from the old Thomson One products onto the new integrated platform. That will continue throughout this year and move into the first part of 2017.

Thank you.

Our next question comes from Sara Gubins of Bank of America Merrill Lynch.

Hi, thanks. Question about margins next year, but first with net context, it looks like there were some segment cost that shifted to corporate and I know that you're consolidating quite a bit of the corporate level. Could you help us think about what might have shifted out of the segments into corporate? And then after that could you help us think about Legal and F&R margin expectations in 2016?

Sure. I don't think there was any major shift from the businesses to corporate. What we did as we mentioned earlier, we took the severance cost associated with the consolidation of our technology operations at corporate. For the rest there was really no other movement in terms of -- from the segment to corporate or vice versa.

Okay.

And in terms -- I mean there were other factors that impacted the corporate line in Q4, that maybe what you are referring to. We have some higher healthcare cost and other miscellaneous bunch of items but these are typically taken at the corporate level, so there was no shift there. In terms of the evolution of margin for next year, I would refer you to the answer to the question from Tim earlier that I gave with regard to revenue progression and obviously, the margin trend will, to a certain extent, fuddle [ph] the revenue trend. So probably a more pronounced improvement in the second half than in the first half. The other point to note is that, as Jim noted during his remarks, we will make some very surgical investments in the few key areas which we see as good growth opportunity for us and we'll probably do these investments earlier in the year in order to try to read the benefit on the topline as quickly as possible. So these two factors combined would probably lead you to saying that the margin improvement would be more pronounced in the second part of the year than in the first part of the year.

Okay. And do you think we should expect legal margins to increase when we look at it on an annual basis in '16 versus '15?

No, I mean legally still facing that change in revenue mix right which is pretty dramatic when your most profitable business is declining 67%, it certainly has an impact. So that's really what's still the -- what I say the headwind that they are facing, and so I think that our goal for the legal business is to see a gradual improvement in top line with relatively flat margin and this is what's going to drive improvement in free cash flow or EBITDA.

Right, thanks very much.

And we have a question from the line of Drew McReynolds with RBC Capital Markets.

Just on -- for you Stephane, on the cash tax rate for 2016, can you give us just a little guidance there? And then just a follow up within desktop and F&R, maybe for you Jim, can you comment on the market share battle in desktop, we're obviously hearing a lot of noise out there among the major vendors and who is looking at replacing who. So just -- can you comment on whether that competitive dynamic has changed tangibly over the last one or two quarters? Thanks.

Good morning, Drew, and thanks for the question. So our guidance for effective tax rate, booked tax rate is 10% to 13%. For cash taxes, we would that actually cash taxes will go up a little bit next year, and cash taxes are higher our booked provision as you know for the reasons we explained multiple times on prior calls.

And Drew, from a competitive position, I would say our competitive position continues to improve. And if I look as per the last records, I think consistently over the last three years we've been stronger quarter after quarter. And as I look at, kind of our head to head competitive battles, I think we are in a position where we are winning our fair share of those contest and I think there is opportunity for us to continue to improve in terms of share. So do I see a dramatic change in the competitive dynamic in the last few quarters, no, but I do see a steady strengthening of our position over the last few years.

Okay, thank you.

And our next question comes from Manav Patnaik with Barclays.

Hi, this is actually Greg calling on for Manav. If I look at the low single digit growth that you're talking about with the $100 million in recoveries it sounds like that's about 1% drag. Just wondering on the transaction side of the business, what you're expecting to get to that target?

Greg, thanks for the question. Transaction has been a difficult area for us, especially in the financial business and we've pointed out on numerous calls. I think that last year in particular, the growth in transaction revenues was pretty anemic, it was minus one in Q4 and plus one for the full year. What we're hoping to see is -- what we're hoping frankly is that sets the stage for what should be hopefully an easier comparison year-on-year. So hopefully slightly better growth rate or transitions but we don't know, we'll have to find that out, we're certainly not banking on double-digit growth rate in transactions at this point in time but hopefully it would be better than last year.

Okay. And I guess for Jim, you highlighted the organic investments, that's a reason for slightly lower margin expansion. Just given the amount of M&A we've seen in the Centex [ph] base, maybe you can just touch on that that build versus buy decision that you're making.

We do -- look, we do that all the time. We look at build versus buy all the time and as you know our historic reflex had been to buy. And I think we ask the same questions when we see an opportunity today that we always ask, what can we build? With whom should we partner to deliver the solution or who do we need to buy? I think historically, the old Thomson culture would have asked the same three questions but in the reverse order. So today we're looking to build more and we're looking to partner more and we see opportunities there. Frankly, we see opportunities to partner with, and build opportunities with same Centex startup. We're involved with Centex startups literally from Europe to Africa and increasingly with formalized networks, whether they be in the Toronto-Waterloo quarter, whether they be with MIT or Imperial College of London. We're increasingly active in that space, but frankly, this focus on organic growth is beginning to bear fruit for us. So we're looking first to see what we can build, we're looking to see with whom we can partner. And then there will always be an acquisition or two that will strengthen us. But that's not our main focus at this point in time.

Great, thanks.

Next question comes from Ato Garrett with Deutsche Bank.

Hi, good morning. One question, online legal information, you mentioned some positive trends there and you said that demand overall within -- according to Peer Monitor [ph] was pretty flat within the U.S. So what you think is driving -- can you explain what's driving that improvement for online legal? And just a quick follow-up on your end market exposures, you mentioned your premium commodities energy were very -- pretty weak, can you just update us on what you're exposures might be and maybe if there is any concentration by any of your business lines there. Thanks.

Sure, Ato. Let me take the first part of that question and then give the remaining part to Stephane, if he has those numbers on-hand because I certainly don't. Now looking on my legal business, I think it's quite interesting, it's a reflection of the underlying quality, particularly of our core Westlaw product and what we've seen in increasing and improving retention from that product. And we've gone through a period of pretty intense price competition in that space and we've held the line on our premium pricing and frankly quality has won out, and in fact some customers we've lost have come back. So quality is winning with our core Westlaw platform but we've also seen it improve by adding features and functionalities from our practical law acquisition onto the platform and combining products and strengthening our offerings. And I think you see that we have really high hopes for this coming year and as Stephane mentioned in addition to this, we have this practice point product that's coming out this year which is a real blending of both Westlaw and practical law and is getting early solid response from both our customers and just with the salesforces last week, I'm very excited about the ability to go out and sell this product. So I think there is -- it's a combination of both our innovation in the space and quality winning out, and frankly, improve sales execution in customer service.

And Ato, I unfortunately don't have the number you're looking for at the pick of my hand but we will definitely come back to you separately for that on your question. I'll ask Frank and Ben to get back to you with a specific answer to your question.

Thank you.

And we have a question from the line of Aravinda Galappatthige with Canaccord Genuity.

Good morning, thanks for taking my question. Stephane with respect to the FX, the negative FX impact on legal and T&A, it's bit more than expected, I mean, it seems like it was 3% on revenue for legal and about 4% for T&A, almost as high as what we've seen in F&R. Given that those two segments have less international exposure, not predominant in North America and predominantly U.S. I was just wondering if you can reconcile why the FX impact was almost as high as what we saw in F&R?

I don't see the impact was as high as that on these segments, bear with me for one second if you don't mind. I'm sorry, you're right, it was like minus 3% for legal and minus 4% for tax and accounting. I think that's really a reflection of the target these business have become more global and in particular, I think what may have had a bigger impact in Q4 was the devaluation we saw in Latin America and that was quite pronounced, it was double digit numbers in percentages and that's why I think it was a bit higher in Q4. Let us double check that and get back to you but I got them in driver for the higher than expected percentages as you see in legal and tax and accounting.

Great, thanks for that Stephane. And just a quick one to follow-up with respect to FX impact, historically you've given the ex-FX EBITDA growth for the company but in this case obviously it's high because of the restructuring impact. Are you able to give us excess ex-restructuring EBITDA growth in Q4?

Yes, we certainly can give you that. What I gave you I think during the call was what the underlying EBITDA margin improvement was ex-currency and ex-charges, reason try to give you an underlying perspective of what the -- that the improvement was in margin. But the exact EBITDA growth, let me see if I can give it to you right now. So the foreign exchange impact in the fourth quarter, it was pretty minimal, on both margins. I think it was a positive impact of 20 bips on EBITDA in the fourth quarter and a negative impact of 10 basis points on operating margin, so it was pretty benign in Q4 in terms of margin impact.

Okay, great. And lastly, I was just -- I was wondering if you can just update on these, sort of the hedges you have in place, obviously below the EBITDA line you have some protection against FX. I was just wondering if you can just talk to that. Thanks.

Yes, we continue to have like a hedging program which is looking at our exposure 12 months ahead. The benefit of these hedges essentially flew through free cash flow in 2015 and not through our P&L. As these hedge were lost and we put new hedges on, obviously they are being put at the new exchange rates so their spread is not going to be as bigger than benefiting like other free cash flow in 2016 as what you saw in 2015. But the hedge probe I mean is still very much in place.

Thank you. I'll go offline.

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

Our last question comes from the line of Claudio Aspesi with Bernstein. Please go ahead.

Yes, good morning. A quick question on your legal solution business, can you help us how much of the growth is volume and how much is pricing? And more broadly, if you step back, how much more growth can this business accomplish on the volume basis? I assume you're also able to raise the prices over the years but can we expect growth rates like this going forward or at some point you start to run against the duration and competitive issues?

Yes, Claudio, it's Stephane. Thank you for your question and good morning. I will say the majority of the growth comes from volume more than price at this point in time. And this is really not one business, it's a series of businesses; it includes businesses like Fine Law, that serve all small law firms or Elite, that serves our larger law firm or [indiscernible] that will serve primarily corporate counsels. And I would say at any point in time, there is always going to be one of these businesses that doesn't perform at the same level as what we would call. So two years ago, our business in Latin America probably were a little bit underperforming but the solution businesses in hold deliver like 5% organic growth last year. I would say probably a fine law business didn't deliver as much as we would hope but yet in aggregate the businesses did over 6% organic growth rate. So going forward, I would expect a bit more of the same. There is always going to be one part of the business that may not run perfectly but the strength of the business and the market potential that we still see, we believe it should enable us to, in aggregate, continue to deliver the kind of growth rate we've delivered over the last couple of years. And as Jim mentioned in his remarks, right, these are exactly the businesses behind which we're putting investments.

Alright, thank you.

Okay. That will be our final question and that concludes our call. And we would like to thank you very much for joining us for the fourth quarter call. And we'll speak to you again in April on the Q1 results.