Frank J. Golden - Thomson Reuters Corp. James C. Smith - Thomson Reuters Corp. Stephane Bello - Thomson Reuters Corp..

Paul Steep - Scotia Capital, Inc. Ato Garrett - Deutsche Bank Securities, Inc. Vince Valentini - TD Newcrest Toni M. Kaplan - Morgan Stanley & Co. LLC Peter P. Appert - Piper Jaffray & Co. David J. Chu - Bank of America Merrill Lynch Giasone Salati - Macquarie Capital (Europe) Ltd.

Timothy Casey - BMO Capital Markets (Canada) Drew McReynolds - RBC Dominion Securities, Inc..

Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters Full Year and Fourth Quarter 2016 Earnings Conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. 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, Mr. Frank Golden. Please go ahead..

Good morning and thank you for joining us as we report our financial results for the full year and the fourth quarter of 2016. Our CEO, Jim Smith, will start today's discussion followed by our CFO, Stephane Bello.

Following their presentations, we'll open the call for questions and we would appreciate it if you would limit yourself to one question each, in order to enable us to get to as many questions as possible during the call. Now two items to point out before we get started.

First, a reminder that throughout today's presentation, when we compare performance period on period, we do look at revenue growth rates before currency, as we believe this provides the best basis to measure the underlying performance of the business.

And secondly, we closed the sale of our IP & Science business on October 3 and its results were classified as discontinued operations and therefore are not included in either the fourth quarter nor the full year reported results, except for free cash flow. 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. Now I will ask Jim Smith to take us through the results. Over to you, Jim..

Thank you, Frank, and thanks to those of you on the all for joining us today. 2016 was a year of continued progress executing against our operating and financial plans. I'm encouraged about the underlying improvement in our business and the momentum we've built heading into 2017.

Specifically, we've continued to demonstrate traction in pursuing the core objectives we set out three years ago, including fixing our Financial business and returning it to growth, operating at scale to improve profitability and investing for organic growth, making fewer acquisitions and returning more cash to shareholders.

Today's results reflect the clear progress we're making against each of these objectives and I'm confident this progress will continue in 2017. Total company organic revenue growth was positive for the second consecutive year. And importantly, the Financial business returned to growth in the second half of the year.

A foundation we expect to build upon in 2017. Our core legal and tax subscription businesses continued to perform strongly. However, lower transaction revenues and continued challenges in our Government business and tax had a dampening effect on revenue growth last year. We're forecasting improving revenue growth for all three businesses this year.

Improving productivity and profitability has been at the core of our strategy. I mentioned last quarter that our enterprise group has now clear visibility into a $3.3 billion cost base enabling us to operate at scale. This is reflected in our higher margins and profitability for employee, both of which have improved significantly.

I remain confident that the opportunities that this group continues to uncover will lead to further productivity gains and greater savings again in 2017. And as we make further progress in growing our top line, we expect to increasingly benefit from the improving operating leverage as reflected in our margins.

We've also been very focused on our third objective, providing an attractive return to investors through approved operating performance, annual dividend increases and share repurchases. It's a financial strategy that's clear, compelling and attainable and one that we will continue to employ.

Our business continues to deliver considerable free cash flow and we're committed to strategically utilizing this cash to both invest in the business and to deliver value to our shareholders.

Before I discuss results for the fourth quarter I think it's worth noting that 2016's performance marked the fifth consecutive year that we have met or exceeded each of our guidance metrics.

We've accomplished this by focusing on our customers by instilling greater rigor and discipline across the business, by redirecting investment to our faster growing initiatives and by significantly simplifying the business in advancing our platform strategy.

These achievements are leading to improving prospects for higher growth as well as continued improvement in profitability and earnings. Now the results. Let me begin by reviewing our reported results for the fourth quarter which include a $212 million charge related to the acceleration of our transformation program.

Reported revenue declined 1% in the quarter. The improved performance of our Financial business was offset by weaker than expected revenue growth in Legal and Tax and a 200 basis point negative impact from currency. The $212 million charge in the quarter led to a decline in EBITDA operating profit and earnings per share compared to the prior period.

Reported EPS for the fourth quarter was $0.31 compared to $0.55 in the prior period. Turning now to the quarter's results excluding the charge and the impact of currency, revenues grew 1% as our core subscription businesses performed well for both the quarter and the full year.

Transaction revenues were disappointing for both the quarter and the year and dampened revenue growth for both periods. Stephane will provide more color on this point in a moment.

From a profitability standpoint, revenue growth and savings from our transformation program led to an increase in both EBITDA and operating profit margins in the quarter, up 120 basis points respectively.

And finally, at actual rates excluding the charge, earnings per share were $0.60 for the quarter, a 9% increase from 2015 and for the full year, EPS was $2.07, a 16% increase. Now, let me turn to the results for the fourth quarter by business. Financial's revenue was up 1% resulting from higher recurring revenue and a 5% increase in transactions.

Excluding the impact of recoveries revenue and commercial pricing adjustments, revenues rose approximately 2%.

Importantly, all three geographies, EMEA, the Americas and Asia recorded revenue growth excluding recoveries and our business had another strong performance with revenue up – our Risk business had another strong growth performance with revenue up 12%. For the full year, revenue for our Financial business was unchanged from 2015.

Now, for the first time in 11 quarters Financial's net sales were negative as cancellations from European sell-side banks outweighed positive sales in the Americas and Asia.

As you will recall from prior discussions, the fourth quarter is usually the toughest quarter for us from a net sales perspective as it's the time when many of our customers make budget decisions for the coming year. Importantly, net sales were positive for the full year for the third consecutive year. Turning to Legal.

Fourth quarter revenue was unchanged versus the prior year due to a 9% decline in transaction revenues. Subscriptions grew a healthy 3% and represents about 75% of Legal's total revenue. For the full year, Legal grew 1%. Tax & Accounting's revenue growth was 2%, negatively impacted by continuing challenges in its Government business.

For the full year, revenue increased 4%. Excluding Government, revenue grew 4% for the quarter and a strong 6% for the year. And lastly, despite difficult macroeconomic conditions in several emerging markets, our Global Growth business achieved revenue growth of 2% and was up 6% excluding recoveries and pricing adjustments for the full year.

Now, let me turn to our expectations for 2017. After several years of riding the business, top line growth becomes a driver of our future success and it's priority number one in 2017. I believe that we can accelerate revenue growth this year by continuing to execute on the key initiatives we have in process.

This includes investing behind our high growth business in Risk, the Elektron data platform, Legal Software & Solutions, and Global Tax. And to that end, earlier this week, we announced the tactical acquisition of Clarient and Avox which will be integrated into our portfolio of risk management offerings.

This move enhances our goal to be the leading provider and trusted source of KYC and legal entity information. We continue to build our footprint globally and this adds particular strength to our position in the Americas. Starting this year, we will also begin to pivot our transformation machine that we've successfully deployed to drive efficiencies.

That pivot will now target two specific initiatives to help improve our growth, customer experience, and sales force effectiveness. I see significant opportunities for improvement in each of these areas. On the customer experience front, we've made good progress over the last few years.

However, we still have room to improve by applying more rigor and discipline in the way we seek to systematically address and eliminate customer pain points. I believe we can dramatically improve customer experience. We want to make it easier for our customers to do business with us.

With regards to sales effectiveness, we want to make our sales force more productive by equipping them with better tools and technologies, and by simplifying our commercial policies. Here again, we're implementing a number of specific initiatives in a more standardized way across the enterprise.

Last but not least, we plan to deliver on our financial commitments, including achieving earnings per share of $2.35 this year, which would represent an approximate 15% increase over 2016.

We will also continue to return cash to shareholders, and today, we announced another $1 billion share buyback program and a $0.02 dividend increase to $1.38 per share. This is our 24th consecutive annual increase.

One final point worth mentioning, our strategy to focus on organic growth rather than acquisitions and profitability improvement has led to a noticeable increase in ROIC, which puts us on track to drive ROIC above our cost of capital this year for the first time since 2007.

Now, before I turn to our 2017 guidance, let me provide some context concerning potential opportunities and pressures in the year ahead. First, the major geopolitical events that we saw last year certainly don't suggest the world will become less complex or more certain.

Our customers look to us to make sense of that complexity, to help them do their jobs better, and to help them reduce their total cost of ownership. In uncertain times, customers lean more heavily on trusted partners like Thomson Reuters to help navigate a changing environment, and we are ready to help them.

So what do we foresee for 2017? As for potential opportunities, the prospect of less regulation and higher interest rates should benefit banks and financial services companies. A more profitable financial services sector and changes to legislation across a broad spectrum of issues may increase demand for legal services. Furthermore, changes to U.S.

tax code may present a heightened demand for tax products, all positives for our business. And the potential for a more favorable regulatory environment in the U.S. may lead to an overall strengthening economy. That said, we're not counting on a tailwind.

Instead, to fuel our future growth, we're executing against our priorities and focusing on our customers.

Potential pressures this year include the impact of more protectionist trade policies, foreign currency fluctuations, ever present competitive dynamics and continued geopolitical uncertainty, particularly in Europe, each of which could impact our growth across markets and businesses.

If these pressures occur, they won't be specific to Thomson Reuters and if they do materialize we will be better positioned than most to deal with them. Let me conclude by highlighting our 2017 outlook. As I mentioned earlier, we're targeting an improvement in the growth performance of each of our businesses in 2017.

Therefore, we would expect revenue growth to improve year-on-year at the consolidated level as well. Overall, we expect revenue growth performance to improve gradually over the year and to be in the low-single digit range for the full year.

In the long-term, returning the company to mid-single digit revenue growth is the most certain path to sustainable growth in EPS and free cash flow per share. Based on our progress this year and what we see in our key markets, we feel increasingly confident that achieving mid-single digit revenue growth is an objective within our reach.

Our EBITDA margin is expected to range between 28.8% and 29.8%, as improving revenue growth and additional savings from our enterprise group are expected to deliver healthy margin improvement, reflecting the improved operating leverage in our model. If we achieve our margin guidance, it will represent a record high for the company.

Free cash flow is forecast to range between $900 million and $1.2 billion. Stephane will discuss the strong 2016 free cash flow performance and the reasons for the lower 2017 forecast in more detail in just a moment. And finally, we're committed to deliver on our earnings per share target of $2.35 for the year.

So to conclude, 2016 was a year of solid progress against the goals we set coming into the year. While headwinds in some of our transaction businesses impacted our growth rate, we nevertheless met all our guidance targets.

More importantly, 2017 will mark the year that all the benefits of working as a true enterprise really start to shine through our results, and I believe we are well positioned to deliver on our 2017 commitment. With that, I'll turn it over to Stephane to review the details for the quarter and the year..

Thank you, Jim. As always, I would like to first cover a few housekeeping items before discussing our financial results. As Frank mentioned, when discussing our performance against the prior year, I will be comparing year-on-year results excluding IP & Science, which was classified as a discontinued operation in 2016.

This will hold true for all metrics except free cash flow, which includes IP & Science, and is not restated in line with the way we have always treated divestitures in the past.

And given our focus on driving organic revenue growth, our recent acquisition activity has been far less significant than in prior years, meaning that growth rates discussed in this presentation are largely organic.

This first slide provides a snapshot of our fourth quarter and full-year results on a reported basis, which includes the impact of both currency and the charges incurred in the quarter. Both in the fourth quarter and for the full year, revenues were down 1%. Excluding currency, revenues were up 1%.

As Jim mentioned, we recorded a charge of $212 million in the fourth quarter, which negatively impacted both EBITDA and operating profit. This is consistent with what we announced last November, when we predicted that the amount of the charge would range somewhere between $200 million and $250 million.

As a reminder, we took this charge as we saw an opportunity to accelerate our transformation initiatives. The charge was spread among all business units with the largest amount impacting our financial business, which bore about 80% of the total charge.

Fourth quarter adjusted EBITDA margin declined to 22.2% due to the charge, and for the full year, the adjusted EBITDA margin was 26.5%. And similarly, underlying operating profit margin was 12.9% in the fourth quarter and 17.3% for the full year, both down from 2015 due to the Q4 charge.

Now for the remainder of the presentation, I will be speaking to our revenue excluding currency, and to profitability excluding the impact of the charge, which is comparable to the way we presented our full-year 2016 outlook just one year ago.

I will focus my discussion on this slide on the consolidated results highlighted in the orange print box, which excludes Q4 charges. Adjusted EBITDA for the fourth quarter was up 6% and the margin increased 180 basis points to 29.6%.

Currency had an 80 basis points positive impact with the remaining 100 basis points improvement driven by revenue growth and continued cost savings. Underlying operating profit for the quarter was up 4% and the margin was up 90 basis points to 20.3% with currency having a 70 basis points favorable impact.

Free cash flow for the quarter was $794 million, up 20% from last year and adjusted earnings per share were $0.60, a 9% increase from the $0.55 we recorded for last year. Now for the full year and, again, excluding the fourth quarter charge, adjusted EBITDA grew by 2% to $3.2 billion and the margin was up 100 basis points to 28.4%.

Currency had an 80 basis points favorable impact. Underlying operating profit increased 4% with the margin up 90 basis points to 19.2% with currency having a 70 basis points favorable impact. Free cash flow was very strong for the full year coming in at $2.1 billion, a 14% increase compared to 2015.

I'll come back on free cash flow in more detail later in the presentation. Adjusted earnings per share for the full year was $2.07, a 16% increase. That increase was predominantly driven by improved operating results, lower taxes and the impact of share buybacks.

Now, let me provide some additional color on the performance of our individual business segments starting with Legal. In line with what happened in the third quarter, demand for legal services in the U.S. market, as measured by Peer Monitor, was down modestly in the fourth quarter.

Demand at the Am Law 100 was flat with a decline being driven by midsized firms. Turning to our results, legal revenues were flat in the fourth quarter compared to the prior year. This softer than expected performance was entirely related to low transaction and print revenues which I will discuss in a moment.

Despite flat revenues, Legal continued to do a very good job managing expenses as demonstrated by the EBITDA margin which was 37.3% in Q4, up slightly versus the prior year and currency had a 10 basis points negative impact. The operating profit margin was 30.2%, up 20 basis points with currency having a 30 basis points negative impact.

Here's a more detailed look at the revenue performance of the three main subsegments in our Legal business during the fourth quarter. US online legal information, which represented 41% of total revenues, was up 2%, marking the eighth consecutive quarter of growth for this segment.

The continued positive growth performance in the traditional core of the franchise provides a solid foundation for Legal, particularly given its high margins and very strong free cash flow characteristics. US print comprised 15% of total revenues and was down 7% during the quarter.

And finally, the solutions businesses made up 44% of revenues and grew just 1%. The weaker than expected performance in this segment was primarily attributable to lower transaction revenues which I will discuss on this next slide. Now this slide details Legal's revenue performance by business type since 2013.

And starting from the left, you can see the noticeable progress we have made, turning around the performance of the core franchise, US online information which went from a 2% decline in 2013 to growth of 2% last year.

The importance of this 400 basis points turnaround should not be underestimated given the level of free cash flow that the business generates. This slide also shows four years of consistent mid-single digit growth for the subscription part of our solutions business.

This part of the business has grown from 31% of total Legal revenues to 35%, and we expect that this will continue to fuel the future growth of the division. Turning to transactions, you can clearly see that these revenue streams are obviously more volatile. Transaction revenues grew strongly in 2015, which made for a challenging comparison in 2016.

To some degree, we are dependent on the level of activity in the marketplace to drive revenues. For example, our Legal Managed Services business had an excellent year in 2015, when there were a number of large financial services litigation matters that drove significant revenue. But those opportunities did not present themselves again in 2016.

And finally, you can see also the ongoing decline of our US print revenues, which we do expect to continue. Now turning to our Tax & Accounting business. Fourth quarter revenues grew 2% which was somewhat disappointing.

Revenue growth for the full year was 4% better than the quarter, but still lower than our expectations due to the ongoing issues in our Government business, which I will discuss in a moment. Recurring revenues which are about 90% of the total, were up 4% in the quarter and 8% for the full year.

Transaction revenues decreased 14% in both timeframes, primarily impacting the Government and Corporate businesses. Profitability was similarly impacted with EBITDA down 7% versus the prior year and operating profit down 21%.

These declines were due to increased investments and costs related to the Government business, and also to higher depreciation and amortization. Turning to Tax & Accounting's result by subsegment. Our Professional business delivered another strong quarter, posting growth of 13% while Corporate grew 3%.

Corporate lower growth performance was driven by a different year-on-year comparison as revenues were up 14% in the fourth quarter of last year. For the full year, Professional grew 8% and Corporate grew 7%.

Knowledge Solutions was down 4% in the fourth quarter, and the weaker performance was driven primarily by timing factors between the third and the fourth quarters. Looking at the full year, Knowledge Solutions grew 2%.

Tax & Accounting's smallest division, the Government business revenues declined by 63% as we took further charges and rolled up certain assets. Now, we do expect the need for continuing investment in this business throughout 2017, and we have reflected such investments in our guidance for the full year.

But we are hopeful that the actions we took in Q4 will mitigate the need for additional large charges, similar to the ones we incurred in 2016. Now, turning to our Financial & Risk business, fourth quarter revenues were up 1%, and this represents the second consecutive quarter of revenue growth as we had expected.

Net sales were negative for the first time after 10 consecutive positive quarters. Positive net sales in the Americas and Asia were not enough to offset the decline in Europe, driven by desktop cancellations at large European banks.

As Jim indicated earlier, Q4 is traditionally the most challenging sales quarter of the year as many customers look to reset their spend for the next calendar year. That said, net sales were positive for the full year for the third consecutive year.

Now, returning to revenues, as was the case in the third quarter, the return to growth was due in part to the lessening impact of two temporary factors that we have highlighted in the past and that have hindered Financial's reported growth rate.

The first of these two factors is a decline in recoveries which had a less significant impact than in the first half of the year. As stated previously, we do not expect recoveries to be a major factor in 2017. The second factor was the ongoing commercial pricing adjustments on our remaining legacy foreign exchange products.

The year-on-year impact continues to diminish and these pricing adjustments should be largely completed in the first half of 2017. Excluding these temporary factors, F&R's revenues would have increased by about 2%, in line with similar performances in the previous five quarters.

Turning to the Q4 profitability metrics, EBITDA increased 1% resulting in a margin of 30.2%, up 70 basis points. Currency had a 110 basis points positive impact. The decline in EBITDA margin was driven by an outsourcing contract completing in the fourth quarter which is actually expected to drive further efficiencies in 2017.

Operating profit was down 4% vis-à-vis profit (28:23) margin decreasing 50 basis points or 170 basis points before currency. The margin decline was primarily due to the outsourcing contract I just referred to as well as the $25 million increase in depreciation and amortization expense that was primarily timing related.

On a full year basis, the operating profit margin was up a healthy 120 basis points. Looking at the Financial & Risk revenue breakdown in a bit more detail, you can see on this slide the desktop related revenues represented 38% of F&R's total and declined 4% during the fourth quarter.

And as was the case in Q3, the decrease was entirely driven by sell-side customers with buy-side revenues up slightly. For the full year, excluding pricing adjustments, desktop revenues were down 1%.

The balance of recurring revenues is comprised of Elektron data platform which primarily encompasses of feeds business and risk where revenues grew 8% in aggregate.

For the second consecutive quarter, this subsegment now makes up a greater percentage of F&R's revenues than desktops showing the positive evolving mix of the business into higher growth areas. Moving to recoveries. These pass-through revenues made up 8% of the total and were down 8% in the fourth quarter.

And as a reminder, the reduction in recoveries has almost no impact on EBITDA or operating profit. And finally, transaction revenues which make 15% of the total were up 5% in the fourth quarter. Foreign exchange spot volumes continued to be challenging, but this was more than offset by a strong performance in Tradeweb which was up 17%.

Now these slides provides a window into Financial & Risk's evolving business mix. On the left hand side, you can see that since 2012 our reliance on desktop revenues have declined significantly from 46% to 39% at the end of 2016. Over that time period, revenues from a faster growing Elektron data platform and risk segment have grown from 31% to 38%.

This should position us for better growth going forward and it gives us a trend that we expect to continue. I would also note on this chart that transaction revenues which generally have the highest margins in this business, have increased as a proportion of the total while recoveries which are very low margin, have declined.

Again, symbolic of the positive change in revenue mix. Moving to the center of the chart, you can also see that our reliance on revenues from the sell-side community have declined over time while buy-side revenues now make up 44% of the total, up from 37% in 2012.

With the migration of buy-side users to Eikon and the opportunities that this presents, as well as the buy-side's increased reliance on feeds and risks products, we continue to see opportunity to improve our footprint in the buy-side segment.

Lastly, turning to the regional mix of our revenues, you can see that we have a fairly balanced and global presence, although we are still more exposed to Europe, which continues to be more challenged than other regions.

Now before discussing our earnings per share and free cash flow performance, we wanted to provide a bit more insight into the evolution of our revenue base over the last couple of years. And this is at the consolidated level. As this slide shows, the large majority of our revenue base, almost 80% last year, is subscription-based.

This is the core of our franchise. And it provides stability and consistency in our revenue and free cash flow performance. And as you can see, this portion of our revenue base continues to perform strongly, with growth up 0.5% last year from 2.2% in 2015 to 2.8% last year.

The other three components of our revenue base all negatively impacted growth last year. Transaction revenues, which is about 14% of the total, were down 2% in 2016, whereas they were up 3% in 2015. This obviously is the portion of our revenue base which is the hardest one to predict and arguably, the most volatile.

Recoveries in our Financial business declined 13% which was very much expected and was a significant decline compared to what we incurred in 2015. And finally, print revenues in our US legal business were down 7%, in line with the 6% to 7% decline we expect for this business every year.

Importantly, you can see that US print revenues represent an increasingly small portion of our overall revenue base, just 4% in 2016. And, therefore, its impact on our overall revenue performance will continue to gradually diminish over time.

So, in summary, the headline decline in our reported revenue growth in 2016 really masks a solid performance from our core subscription revenue base and was due to the declines in the other three components. And that is the reason why we do expect our revenue growth to improve in 2017, as Jim mentioned earlier.

Now, let me update you on our earnings per share and free cash flow performance and I will start with earnings per share. For the fourth quarter, excluding the charges, adjusted earnings per share increased $0.05 to $0.60 per share, a 9% increase compared to the prior year.

That improvement was driven by improved operating results and lower share count. And for the full year, again excluding the charges, adjusted EPS was up $0.29 or 16% with currency contributing approximately $0.07.

Excluding the impact of currency, adjusted EPS increased 12% compared to 2016, largely driven by improved operating results, lower taxes and share count reductions. This next slide reflects our free cash flow performance for the year with and without the contribution of IP & Science.

As you can see, we delivered a strong performance in 2016 with our total free cash flow exceeding $2 billion for the first time, up 12% for the year. Now, that very strong performance was helped by a $200 million tax benefit, which we received in the fourth quarter in the connection with a $500 million contribution we just made to our pension plan.

There were a few other special items, which impacted free cash flow in Q4, but these other items largely offset one another. So, on a normalized basis our free cash flow was $1.8 billion.

The IP & Science contribution to free cash flow was $46 million for the year, about $200 million less than the prior year, driven by the loss of fourth quarter operating cash flow and by deal related costs. Excluding these items, IP & Science's performance would have been broadly in line with the prior year.

And finally, excluding IP & Science, the free cash flow generated from continuing operations was just shy of $2 billion, an improvement of 27% compared to 2015. As you would see in our 2017 outlook in a moment, we do forecast free cash flow this year to range somewhere between $900 million and $1.2 billion.

The expected decline from 2016 is due to a number of factors, including the $500 million pension contribution I just mentioned, the 2017 cash impact of the Q4 charges, which would be about $200 million and also the loss of the IP & Science free cash flow.

In addition, we are projecting a modest increase in both CapEx and cash taxes, so the aggregate negative impact of all these factors combined should range somewhere between $800 million and $900 million this year.

As stated earlier, the two largest of these factors, namely the pension contribution and the cash impact of the charge are clearly temporary, and therefore, we do expect to return to a stronger free cash flow performance in 2018. As you can see from this next slide, we remain very committed to returning capital to our shareholders.

In 2016, we returned $2.7 billion in the form of dividends and share buybacks and over the last four years, we returned $8.7 billion. In the fourth quarter, we repurchased 10.7 million shares for a total cash outlay of $441 million and this completed the $1.5 billion buyback program that we had announced at the start of 2016.

And as Jim mentioned, we are planning to execute a new $1 billion buyback program over the course of this year. Turning to our dividend policy, we also announced a $0.02 annualized dividend increase to $1.38 per share this year.

This marks the 24th consecutive year of dividend increases and this speaks both to the solidity and the free cash flow generative nature of our business.

Turning to our debt profile, we closed the year with total debt position of $7.8 billion, which was all term debt as we paid down our commercial paper using the proceeds from the sale of IP & Science.

As you can see on this slide, our debt portfolio continues to be fairly well balanced with an average maturity of about eight years and the average rate below 5%. Our net debt position was $5.4 billion at year-end with a net debt-to-EBITDA ratio of 1.8 times, which is well within our 2.5 times leverage target.

As we have stated previously, maintaining a strong and stable capital structure remains a key tenet of our overall capital strategy. Let me now turn to our guidance for 2017. Jim has already presented our key metrics for 2017 outlook, so I will speak to those he did not cover.

But before I do this, I just wanted to provide some context with regard to the margin performance we are projecting for 2017 based on our guidance. As you can see on this slide, the 28.8% to 29.8% EBITDA margin range we are projecting would represent an improvement of 300 basis points to 400 basis points from the margin levels we generated in 2013.

This represents a meaningful uplift over a four-year period, particularly in light with a fairly modest revenue growth performance we experienced over that time. Now to the balance of our guidance. First, we expect our depreciation and amortization expense to range between $950 million and $1.050 billion.

We also expect our capital expenditures to remain at approximately 8.5% of revenue. Both these figures are fairly similar to what we experienced in 2016. Interest expense is expected to range somewhere between $400 million and $425 million.

We do not forecast a significant decrease compared to 2016, despite the sale of IP & Science, since most of the debt reduction related to the sale was low cost commercial paper.

In addition, we do expect our net debt position to rise over the course of this year, given the lower free cash flow generation, due to the Q4 charges and the pension contribution I discussed earlier. We also forecast that our effective tax rate will range between 10% and 13% in 2017, which represent a modest increase when compared to 2016.

I'd like to remind you that we historically pay more in cash taxes than our effective tax rate may imply. For instance, excluding the $200 million tax benefit associated with the pension contribution, our cash taxes in 2016 were about $300 million, significantly more than the $135 million book tax expense we reported last year.

Lastly, we forecast core corporate costs this year to range between $300 million and $325 million, which is substantially below 2016 number of $380 million. There are two primary reasons for this decline.

First, with the sale of our IP & Science business, we took the opportunity to reduce corporate costs to better align it with the overall (41:46) side of the business.

And second, in connection with the divestiture and given the increased visibility we have from our enterprise group, we also took the opportunity to review our location (41:57) methodology and determined that about $40 million to $50 million should be pushed down to the business.

These changes will have no impact upon the total company margin, will have a very, very minor impact on Financial and Legal's margin, but it will be more impacted for Tax & Accounting which could see a negative effect on margins as a result of these allocation changes.

Now with that, let me turn it forward to Jim for a brief conclusion before opening the call for your questions..

Thank you. The slide Stephane just discussed regarding our margin improvement over the last four years really speaks to what we can achieve as an organization when we channel our focus and energy on simplifying our business. As I mentioned earlier, we're now pivoting our focus squarely on improving customer experience to accelerate our revenue growth.

I believe we have a large opportunity ahead of us and we're now using the very same framework and infrastructure which we successfully deployed to execute on our transformation program and we've focused it on improving customer experience and sales effectiveness.

We expect to deliver solid improvements in our revenue and margin performance in 2017 through revenue growth and further productivity improvements. We are also committed to deliver a record EPS performance in 2017 in line with the target we've communicated previously.

But more importantly, we're also taking the steps necessary to improve our revenue growth trajectory beyond 2017. As I stated before, our ultimate financial goal is to maximize earnings and free cash flow per share performance over time. The transformation program helped do this during the first years of our transformation journey.

Improving our revenue growth trajectory will enable us to carry this objective much further into the future. With that, let me turn it over to Frank for your questions..

Thanks very much Jim and Stephane and that concludes our formal remarks regarding the performance for the quarter and year. So now, operator, I'd like to open the call for questions, please..

Thank you. And one moment please for your first question. Your first question comes from the line Paul Steep from Scotia Capital. Please go ahead..

Great. Thanks. Jim, could you maybe talk a little bit – on slide 10 of the presentation, you talk about the core investment highlights that you aim to put money behind this year.

Can you talk, I guess, first, on the context of the contribution from these? It looks like you've sort of re-stack ranked them from, I guess, a year ago where Risk and Elektron have maybe floated to the top and then maybe the magnitude of investment in those?.

Sure.

And I think that we're always calibrating the relative priority and relative weighing and we do that collectively as a team and I think this would reflect the view of all of our senior team as to where the most attractive growth opportunities present themselves and I think they also represent where we think we can get the most meaningful acceleration in growth rate that will move the whole needle.

I think all of those initiatives that we've called out are in fact still attractive growth initiatives, but we re-ranked them based upon those that can, we think, be the biggest opportunities and could move the overall needle.

So I think you could expect a proportionate shifting of our resources in a very dynamic way, but all of which will be dealt with within the spending envelope that we have developed..

And I guess, the context of how large, are these consuming a significant or material amount of the CapEx investment this year or is it, these are just growth investments and should we really think of them in 2018 as sort of helping drive meaningful growth? Thanks..

Stephane, yes..

Yeah. So in terms of the revenue base of this business in aggregate represent a little bit over 50% of our total revenue base. They get a disproportionate amount of our product development capital. I would say – if I recall correctly, the percentage grew to (46:45) 70% of our CapEx for product development.

So we really are allocating a much higher percentage of product development dollars to these four initiatives than anywhere else..

And I think adding to that, that's probably been one of the biggest benefits that we've seen from having a central enterprise group with clear visibility into all of that spend, we're able to direct that in a more dynamic fashion toward those opportunities..

Great. Thank you..

Your next question comes from the line of Ato Garrett from Deutsche Bank. Please go ahead..

Hi. Good morning, gents. So just looking at the Legal segment a little bit there, you gave the context that you're seeing U.S. demand in the fourth quarter was down slightly with some steady gains at Am Law 100 and softness in the smaller markets.

When we look forward to 2018, can you give a little context about what you see turning around given your expectation for improving revenue growth in the segment?.

Sure.

Look, I think that if you kind of look at how the episodic nature of those engagements, particularly around our Legal Managed Services business work, that's going to be choppy and in 2016 we had a year in which we went against a year in which there were a number of class action suits and regulatory enforcements against financial services agencies and that generated a lot of work for us.

That didn't repeat in 2016, but if you look underlying that, what we've seen is a steady improvement in our core subscription businesses and that's – I just came from our legal sales conference earlier this week and I can tell you, we have a sales force that's got a very attractive pipeline and coming off a strong finish to the year.

So we think the core business is going to carry us forward. There will always be years in which we're going to have spikes and valleys in terms to some of those transactional businesses, but we'll take those revenues when they come and look at the stability of the underlying base of that business.

And if you think about it, more than 80% of that business comes from these stable subscription based products and those all look quite attractive going into the future, and as do some of our software products as well..

Okay. Great..

Let me point out, the only thing I would add which is a very secondary point to what Jim just said is that if you look at our transaction, the growth in our transaction revenues this year, it – the comparison should get easier and easier as you go through the year which – I mean, obviously as we said, these are more volatile revenue, but all things being equal, it should make the comparison more and more simple as we go through the – as we ramp up the year..

Okay. Great. And if I could sneak in one more. Just looking at the net sales within Europe, you said that was the area that drove the decline in net sales within the fourth quarter.

Can you talk about whether that was a change in – whether that was mainly driven by head count changes in the sell-side or that was more of a competitive dynamic shift with some of your clients kind of switching providers?.

It was not a competitive dynamic shift. It's driven exclusively by cutbacks in sell-side mix in Europe. And to a lesser extent, Russia and Brazil as well which was just a function of macroeconomic events. We do not sense a change in competitive position there.

In fact, if you look at our gross sales performance and I don't want to get in a habit of reporting gross debt all that on a regularly quarterly basis. Underlying our gross sales performance was actually quite good across the board..

Great. Thank you very much..

Your next question comes from the line of Vince Valentini from TD Securities. Please go ahead..

Yeah. Thanks very much.

I'll try to package two questions into one here, but following up on the European sales environment, we saw a pretty nice uptick in the last stats in terms of employment levels which were for the third quarter, so still a bit lag, but by our count, there were the 3.6% increase in employment levels in financial services in the main European countries.

So are you seeing that in your outlook for 2017 and would this – so Q4 net sales were negative, but that was really a lag effect from the head count reductions earlier in the year whereas a real forward looking demand environment maybe finally start to stabilize and get a bit better.

And if I can package with that, when you look forward to 2018, the recoveries are no longer an issue, the commercial pricing adjustments are no longer an issue, your net sales keep ticking forward, do you have some level of confidence that this more mid-single digit type growth for F&R maybe at least 3% or 4% is possible in 2018?.

The short answer to the latter is yes. We like the trajectories that we see. The earlier question is will be a bit more nuanced based upon my experience and my contacts with our customers this year. And I think you have a bit of a different picture in the U.S. versus Europe and rest of the world. So I'll start by clarifying that.

I think collectively what I see in financial services sector is a very cautious optimism that things could turn. And in the U.S.

it's driven largely by the expectation that some of the regulatory challenges that have been put in front of financial services institutions will be taken away and that they'll be freer to prosecute all lines of their historic business. So I see some, again, cautious optimism on that regard.

And then I see in Europe and also shared in the United States a cautious optimism looking forward to what could be a return to a normalized interest rate environment which, of course, is very important to the bank's profitability. So I would say there was a cautious optimism, but it's different U.S. versus rest of the world, particularly U.S.

versus Europe. But on both sides of the Atlantic there's a cautious optimism..

Thanks..

Your next question comes from the line of Toni Kaplan from Morgan Stanley. Please go ahead..

Hi. Good morning. I wanted to ask about the Tax & Accounting business. It looked like the government part of it continues to be under pressure and you had some increased investment and expenses related there in the quarter.

Can you explain really what you're doing in those contracts with the Government and how we should think about future growth in margins for that business overall?.

Sure, Toni. Let me try to take that one. First, let's make sure we keep thinking perspective, right? The Government business is a very, very small proportion of the overall Tax & Accounting business. It accounts for, I think, less than 3% of the total revenue base of the business.

We are in the process of implementing a few very large and very complex contracts with several municipalities and the implementation of these contracts is taking longer than we thought and that obviously has negatively impacted both revenues and EBITDA for us.

During the fourth quarter what we also did, we took a very close look at the assets we got on our books as they relate to the business and as a result of that review, we decided to write up some assets which obviously had a further impact on revenue, EBITDA and EPS.

Now looking forward to 2017, as I said on the call, we do expect that we're going to continue to need investments in that business and so that investments will essentially continue to exceed revenues in that business.

But given the balance sheet adjustments we've made throughout 2016 and in particular in the fourth quarter, I would say we are cautiously optimistic that the need to make such large one-time investment balance sheet adjustment should be much lesser than was the case in 2016. So, look, it's a small business.

It's proving to be much harder to implement these large contracts that we have anticipated, but we're working diligently on it and that's really what our focus is at this point in time..

Great. And I wanted to just ask a broader question on margins. So outside of the cost savings from the transformation plan you have, how should we think about that which segments should contribute the most to margin expansion both next year and beyond and just the key initiatives that should drive that margin expansion aside from scale. Thanks a lot..

Sure. I would say primarily our Financial business, Toni, and it's because of the point that you mentioned. The bulk of the charge we took in the fourth quarter, about 80% was very much in that business, so they should see the largest benefit coming from that business.

But also most importantly, we also speak about the operating leverage that we get in the business once we start getting back into growth territory, right? And where you're seeing the biggest shift going from negative to positive revenue growth is also in our Financial business.

So given the global nature of that business, given its scale and given the positive revenue dynamics I tried to describe in one of the slide, I would expect that's where you would see the biggest improvement..

Thanks very much..

Your next question comes from the line of Peter Appert from Piper Jaffray. Please go ahead..

Thanks. Stephane, just staying on the Tax & Accounting for a second, the growth has slowed meaningfully I think relative to the trajectory historically in that business.

Would you say competitive issues is a factor there?.

No. I don't think so and actually if you exclude the impact of the Government, the revenue growth of that business is still pretty solid. It's definitely still in mid-single digit in 2016 and that's pretty much what we would expect to see in 2017 also..

Okay. Fair enough..

Yeah. And I think, Peter, if I can add just a little color there and it's only because I was within the last five days been with their sales team at the year kickoff. I echo what Stephane says. I think the enthusiasm there is good. If you look at that business in 2016 versus 2015, there were a couple of really big corporate contracts.

So as we move into the corporate space, a lot of growth being driven in the corporate space and there were a couple of big contracts that we signed in 2015 that didn't repeat in 2016.

And if you look at over the course of the year what we saw, particularly in the corporate space, was a tough first half year comparison, but actually good solid performance over the latter half of the year, and they exited on a strong run rate.

So I think there's a lot of confidence in that business, and I really believe that's going to be a strong part of our growth story going forward and will continue to lead the growth rate for us..

Great. Thank you.

And then, Jim, on the acquisition front, with the Clarient and the Avox deal, are acquisitions maybe a little bit more backend focused at this point?.

There's been absolutely no change in our strategy there. We pivoted hard toward organic growth. We've always had our eye open for those tactical, fold-in acquisitions that would support our organic growth initiatives. And that's exactly what Clarient and Avox are.

As you'll see, we had another tactical acquisition that we announced of the REDI business, which provided execution management capability into our desktop products, which we needed. Nice tuck-in and really an important added functionality.

Clarient and Avox, those two businesses, again, it's a relatively small tuck-in individual business, but what it represents is a strengthening of our position in the KYC, client on-boarding space.

And even more than the acquisition of those businesses, we're delighted that they support the strategic initiative that we've been advancing for the last five years.

And particularly that – one of those businesses was really a consortium of some of the largest banks and the DTCC and have that blue chip client list trust us to be part of the industry-wide solution was a validation, I think, of the strategy we are on, and something we're very flattered by.

So we very much like our position in that space, and we think we're going to continue to build out there. But that's the kind of acquisitions that you could expect to see from us. That's just what we've done over the last five years. But we're not out looking for the big homerun acquisition. We've always got our eyes open.

And in almost every case it's a build, buy, capability discussion..

All right. Thanks, Jim..

Your next question comes from the line of David Chu from Bank of America. Please go ahead..

Good morning. Thank you. So it sounds like gross sales in F&R remained largely consistent.

So can you quantify how much retention was down in the quarter?.

Retention was, I think, just in the high 80%s, a little bit over 90% we were targeting. So I think it was around 89% or so..

So what was it in the third quarter roughly?.

It's probably – as I said, it's probably in that range, around – between 89% and 90%..

I think that I would add this as color, we did not see a dramatic change in retention in the fourth quarter over prior years or over prior quarters or over the kind of run rate that we've had for the past few years, as we've said in this relatively low-growth environment we're operating in right now, in any given quarter, one or two contracts can or – and one or two customers can determine whether or now we're above-the-line positive or below-the-line negative.

And I would – this last quarter fell into that bucket, and that's just where we were. There wasn't some dramatic shift, it was just cutbacks at a couple of the big European sell-side banks, kind of general softness across Europe and then Russia and Brazil..

Okay. That's helpful. Thanks. And also, Jim, as you suggested, there's some cautious optimism for the financial industry in the U.S. Can you discuss what you saw in the U.S.

during the renegotiation season?.

No, look, I like our position with our clients.

I think we worked really hard over the last five years to restore our credibility with our clients to be a trusted provider and to be someone that's at the table when we're having bigger, broader discussions about what we're able to do and how we're able to help our clients reduce their overall cost of operation.

And how we can provide alternatives to other competitors and indeed to internal spend within the banks in many instances. So I think we've had really solid and productive conversations, actually across the board. So I'm quite encouraged about where we ended the year.

And when you think about the optimism that comes over, perhaps some rollback of regulations that will allow a return to some more offensive activities in the U.S. banking sector, no one expects we're going to go to a wild west world of no regulations, nor that the regulatory environment is going to get any less difficult to navigate.

I think all of us realize we live in a world where regulatory scrutiny is going to be very, very high and frankly, we have an opportunity to help our clients navigate that..

Great. Thank you very much..

Your next question comes from the line of Giasone Salati from Macquarie. Please go ahead..

Hi. Good morning. Just one question on Financial & Risk.

What is your assumption in terms of MiFID II impact on head count in Europe in 2017 or 2018?.

(1:04:01) on head count for 2017 and 2018?.

Yes..

That's what. For Financial & Risk..

It's probably a loaded question given I seem to be the only analyst based in Europe..

You mean – I'm sorry.

Just you mean the head count of banks in general?.

Yes. If there is any relationship still between the cancellation of desktop in Q4 in EMEA and the head count in the financial industry in Europe. And MiFID II is one of the biggest driver of these trends in 2017 and 2018.

What is your assumption behind the impact of MiFID II in Europe, European financial head counts, behind the general guidance you're giving for the F&R division of an improvement in organic revenue growth?.

I would say generally speaking, we do expect continued pressures on desktop revenues for the reason that you mentioned. It's very, very much linked to head count. And so what we've tried to do, as you've seen one of the slides we presented, is really try to shift our revenue mix away – to have less reliance on desktop revenues.

And our desktop revenues represent now less than like 40% of our total revenues. It's still a pretty meaningful proportion, but it's much less than it used to be. So we would – we're not counting on desktop revenues to start rolling going forward. That's not the basis of our plan in Q1..

Okay. Maybe if I can follow-up, just quite a different way.

Can you split up what kind of volume and pricing growth you expect in F&R for the next – for 2017?.

Well, we would expect – again, net sales is primarily a measure of value. And I would say from where we sit today we would expect net sales to be positive in 2017. And pricing is generally in line with inflation. But we would expect certainly a modest uplift from pricing..

Thank you..

Your next question comes from the line of Tim Casey from BMO. Please go ahead..

Thanks. Good morning.

Can you talk about how your discussions are evolving on the topic of Brexit with your major customers? And what assumptions you've made in your guidance with respect to any Brexit implications?.

Sure. I think that it's still too soon to say what's going to happen with Brexit. I mean we're beginning to see some clarity in thinking. But people are largely reevaluating where they want to do certain activities. Thinking about how they think the regulations might evolve.

In our discussions what we've emphasized, and we feel quite confident actually that we'll be able to respond.

In any scenario we've discussed with our clients, we do have operations on the ground in more than 100 countries, and any place that our clients would consider moving any of their economic activity, we already have operations on the ground and we're really well positioned to serve our clients regardless of where they go.

I think that while you're seeing some early indications that people are given a hard look at what they want to do and where they want to do it, there's still very much a wait and see attitude because we're at the very early days of this and I think there's not a lot of clarity as to what the ultimate result is going to be of negotiations that haven't even really begun yet.

So I think there's a great deal of uncertainty about Brexit, as there's a great deal of uncertainty about a lot of stuff in the world today and we're just concentrating on making certain that we're going to be able to serve our clients regardless of the individual decisions that they make..

Thank you..

Operator, we'd like to take one final question, please..

Okay. That question comes from the line of Drew McReynolds from RBC Capital Markets. Please go ahead..

Thanks very much for squeezing me in. Just two quick follow-ups. Just first back to Tax & Accounting, maybe for you, Stephane.

Just on the EBITDA margin side, we're bumping around quite a bit and we've had that reallocation kind of go into the segment, can you just give us some margin parameters to look for for 2017 and maybe longer term? And then secondly, can you just give us a cash tax number for 2017 just so we can work that through our models? Thanks..

Sure. Let me try to get these two questions. On the EBITDA margin for Tax & Accounting, you're right. There are a lot of factors to take into consideration. Last year we had the negative impact of all the adjustments or charges we had to take in our Government business. Next year we are looking at these change in allocations.

I would say at a high-level, Drew, one largely offsets the other. So if you look at the margins for Tax & Accounting this year, excluding the impact of the Q4 charge, if you look at the underlying margin, it probably is reflective of what you should expect next year. I think it's just around 30% or so.

On your question regarding cash taxes, we would expect these to go up a little bit. I mean, to the extent that our profitability goes up, our cash taxes will go up. So order of magnitude it's not massive, but it's probably about maybe $250 million or something like that..

Okay. Thank you..

That'll be our final question. So we'd like to thank you all for joining us on our fourth quarter year-end call, and we look forward to speaking to you when we report Q1 in April..

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