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Strategy in Action: Smart Information Tools Legal, Tax and Business, North America Analysts & Investors, March 2002 Nancy McKinstry, CEO, LTB-NA and Executive Board Member Kevin Robert, CEO CCH Tax Compliance Table of Contents Overview Legal, Tax & Business North America (LTB-NA)

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slide1

Strategy in Action: Smart Information Tools

Legal, Tax and Business, North America

Analysts & Investors, March 2002

Nancy McKinstry, CEO, LTB-NA and Executive Board Member

Kevin Robert, CEO CCH Tax Compliance

table of contents
Table of Contents
  • Overview Legal, Tax & Business North America (LTB-NA)
  • Strategy and Growth Opportunities
  • Strategy in Action
    • Investments in Smart Tools and Integrated Solutions
    • Tax and Accounting Destination Site
    • Product Demonstration: Client Relate
  • Conclusions
ltb na represents 32 of sales and 41 of operating income for wolters kluwer
LTB-NA Represents 32% of Sales and 41% of Operating Income for Wolters Kluwer

2001 Sales

2001 EBITA

all six operating companies serve a variety of professional markets
All Six Operating Companies Serve a Variety of Professional Markets

LTB-NA 2001

Revenue

LTB-NA Sales by Customer Type

ltb na offers a broad set of product suites to meet customer needs
LTB-NA Offers a Broad Set of Product Suites to Meet Customer Needs

Lines of Business

  • Leading provider of software tools for tax and accounting practices targeted at medium to large size firms.
  • Key Products: Tax preparation software, audit and practice management software.
  • Number of products: 310

CCH

Tax Compliance

  • Premier provider of corporate and UCC software and services.
  • Key Products: Registered agent services, corporate entity and UCC filings, document retrieval and due diligence services.
  • Number of Products/Services: 35

CCH Legal Information Services

  • Leading provider of expert-authored secondary source material in a wide variety of legal and business specialties and of primary legal research material over the internet through Loislaw, an online database of more than 11 million legal documents.
  • Products: Treatises and periodicals for legal practitioners and professionals and educational materials for law students.
  • Number of Products: 1,500

Aspen Publishers

ltb na offers a broad set of product suites to meet customer needs7
LTB-NA Offers a Broad Set of Product Suites to Meet Customer Needs

Lines of Business

  • Leading provider of information and productivity tools to tax, legal, and regulatory markets.
  • Key Products: Tax, securities, human resources, financial information, healthcare, insurance and compliance software tools.
  • Products delivered in print, CD-ROM, and online (Internet).
  • Number of products: 1,500

CCH Inc. & CCH Canadian

  • Leading provider of transactional (e.g., lending, deposit transaction) compliance solutions to financial institutions.
  • Key Products: Loan documentation software, deposit transaction software, compliance resources and support, and privacy and other regulatory disclosures.
  • Number of products: 6,000

BSI Inc.

slide10
Extend Our Leadership in Content to Software and Services to Provide Smart Tools and Integrated Solutions

Content

Software

Tools

Services

Online Training

(e.g. Shared Learning)

Tax Software(e.g. CCH ProSystem fx DPC Sales & Use Tax Products)

Software Tools & Compliance Services(e.g. CTAdvantage.com, Tax Notebook, Client Relate, ePace!)

Transaction Software and Service(e.g. CT iLien Online)

providing smart tools and integrated solutions offers higher retention and margin potential
Providing Smart Tools and Integrated Solutions offers Higher Retention and Margin Potential

Integrated Solutions

SmartTools

90

  • Integrated Software
  • End to end workflow system
  • Compliance
  • Worklfow Tools
  • Integrated Libraries (e.g. content, forms and practice systems)

Dynamic Content

Retention Rate

80

StaticContent

  • Online
  • CD-ROM
  • Hyperlinked Content
  • Content that requires updating
  • Books
  • Reference Guides
  • Primary Source Material

70

0

0

20

30

40

50+

Margin Opportunities

integrated products work together to provide an overall solution to a task
Integrated Products Work Together to Provide an Overall Solution to a Task
  • Product offerings must meet the needs and work habits of specific customer segments (e.g. tax accountants)
  • Providing these tools and solutions requires:
    • Both content and subject matter expertise
    • Deep understanding of customer workflows
    • Expertise in integrating content, forms and software applications to build integrated solutions
  • Customers reap significant benefits from an integrated suite:
    • Improved productivity and turnaround time
    • Cost savings from automating workflows
    • Better compliance and increased overall accuracy
smart information tools all about providing solutions
Smart Information Tools: All About Providing Solutions

An Example: Life Cycle of a Business Entity

smart information tools all about providing solutions14
Smart Information Tools: All About Providing Solutions

“Create” Workflow: Using CTAdvantage.com

  • Qualifying to do business in multiple jurisdictions
  • E.g. ABC Inc. needs to file qualification forms in 12 different states
  • Despite similar content, each form is unique and requires customization.

TASK

  • CT Advantage.com’s intelligent filing tool minimizes repetitive effort.
  • The customer responds to single set of questions and the website fills out the appropriate forms.
  • If the project is paused and the task extended by 6 states, the customer does not have to start over.
  • The information is stored and one can resume completion without having to redo previous efforts.

TOOL

Value Added

  • Significant productivity improvements
  • Better accuracy
  • End to end solution improves turnaround time for gaining state approval.
how does our strategy differ from competitors
How Does Our Strategy Differ from Competitors?
  • Large media companies such as Thomson and Reed Elsevier focus primarily on aggregation of content:
    • Aggregation is the compiling of owned and third party information, often delivered through a common platform.
    • Products and functionality offered through delivery platforms such as Westlaw and Lexis-Nexis are designed to serve research needs across broad range of customers.
    • Functionality does not lend itself to the specific workflows or needs of specific customer segments.
  • Small, niche players provide single or “one off” solutions:
    • Lack full product suite for satisfying customer needs.
    • Integration between products is limited.

LTB-NA is Focused on Leveraging Integration of its Products and Content to Provide Solutions

providing integrated compliance solutions to professional markets cornerstone of strategy
Providing Integrated Compliance Solutions to Professional Markets Cornerstone of Strategy
  • Extend leading positions in proprietary content to software productivity tools and services within existing market segments (e.g. Tax and Accounting Destination Site)
  • Leverage current positions in growing markets to expand product line and market share (e.g. legal services, banking, securities)
  • Enter new markets that fit strategic requirements (e.g. "must have” information and software)
  • Pursue strategic acquisitions that support growth
significant progress made in 2001
Significant Progress Made in 2001

KEY ACTIONS

STRATEGIC ELEMENT

RESULTS

  • Extend into Tools within Existing Markets
  • Launched Key Destination sites including:
    • Tax and Accounting
    • Legal Compliance Service
    • Lender Due Diligence (iLien)
  • Internet revenues grew 74% from 2000 to 2001
  • Leverage Current Positions in Growing Markets
  • Launched key software tools to Banking, Securities and Insurance markets, including SEC Desktop; Option and Planned Participants Modules, Product Filing Guide for Life and Health and P&C.
  • Acquired CBF and TSoft to expand market position in banking and Uniform (01/02) in insurance.
  • Expanded software tool product suite in key growth markets. Today, LTB-NA has over $200 Million in sales to these markets.
  • Extended product suite in mortgage and small business lending.
  • Extended insurance product suite into forms and compliance systems.
significant progress made in 200118
Significant Progress Made in 2001

KEY ACTION

STRATEGIC ELEMENT

RESULTS

  • Grew Loislaw revenues by 35%
  • Created beach-head for further expansion in environmental market.
  • Enter New Markets
  • Expanded Loislaw content and coverage, tools and offerings.
  • Acquired content assets in the environmental market.
  • Pursue Strategic Acquisitions
  • Key Acquisitions in 2001 Include:
  • Loislaw
  • CBF Systems
  • Compliance International
  • EPace Software
  • Document Technologies
  • Capital Commerce Reporter
  • Tax byte
  • eSalesTax.com
  • Strafford Publications
  • Execusite
  • Cutter Environmental
  • BNA Medicare
  • Uniform Information Services (01/18/02)
  • Expanded product suite, particularly software tools and compliance products.
  • Increased revenue base by approximately 7%.
strategy in action
Strategy in Action
  • Investments in Smart Tools and Integrated Solutions
  • Tax and Accounting Destination Site
  • Product Demonstration: Client Relate
smart tools investment leverages our content strength and market position
Smart Tools Investment Leverages Our Content Strength and Market Position.
  • In 1997 LTB-NA launched the CCH Tax Research Network, now generating USD 55 million of annual sales.
  • Total Internet sales are USD 170 million in 2001. Recently launched Internet products including Tax Notebook, Complete Tax Pro and iLien are starting to contribute to this figure.
  • LTB-NA has in 2000 and 2001 spent a total EUR 56 million as part of the EUR 250 million additional Internet program, of which more than 60% on new product development
integrated tools provide significant cross sell opportunities an example
Integrated Tools Provide Significant Cross-sell Opportunities: An Example

Subscription Customers*

Total Customers*

(Subscription + Book)

CCH FAST

48K

CCH FAST

143K

7100

PFX

22K

10,500

PFX

22K

2700

10,800

3240

4400

4400

17,800

ASPEN

76K

ASPEN

76K

*Total Unique Subscription Customers = 126,467

**Total Unique Customers = 212,059

our product suites are delivered through customer specific destination sites
Our Product Suites Are Delivered Through Customer-Specific Destination Sites
  • Significant investment in customer specific destination sites has occurred since late 2000.
  • Destination sites provide customers with an integrated desktop, including content, tools and services delivered via the Internet.
  • Sites are focused on core customer segments, including Tax and Accounting, Legal Compliance Services, Legal Research (LOISLAW), Financial Services, Securities Compliance and HR.
  • Offering our product through these sites provide significant benefits:
    • Increase productivity and accuracy through efficient data reuse
    • Provide one point of access for customers
    • Create smart links and tools that mirror the way a professional works.
    • Enable anywhere/anytime access for customers to operate a significant portion of their practice through the Internet.
accounting market overview redefinition of the accounting firm s practice
Accounting Market Overview:Redefinition of the Accounting Firm’s Practice

Key Industry Trends

  • Fragmented industry, despite significant consolidation in recent years
  • Growth driven by extension into related services, including financial & estate planning, business valuations, and systems consulting
  • Approximately 52% of new CPA engagements in 2000 came from cross-selling to existing clients
  • Shortage of qualified professionals; fewer examinees & high staff turnover
  • Increasing use of technology for tax preparation

Change Since 1994

- 9%

- 17%

+26%

Average Annual Revenue Growth for CPA Service Groups (1993 – 1999)*

MAS

A&A

Tax Services

26%

9%

13%

Source: Accounting Today, AICPA

* As quoted by former SEC Chairman Arthur Levitt, 9/2000

accounting market overview these trends present growth opportunities for ltb na
Accounting Market OverviewThese Trends Present Growth Opportunities for LTB-NA
  • Increasing demand for productivity tools
  • Increasing demand for content and software tools in new topical areas e.g. Smart Information Tools
  • Opens new market segments that support growth areas for CPA firms

LTB-NA Opportunities

cch s integrated product suite assists cpas in satisfying the needs of business clients
CCH’s Integrated Product Suite Assists CPAs in Satisfying the Needs of Business Clients

CCH Integrated Tools

CCH Integrated Tools

  • ePace! Paperless Engagement
  • ProSystem Fixed Assets
  • Miller Series including FASB, GASB
  • CCH Tax Research Network
  • ProSystem fx
  • DPC TaxSolver
  • CCH Tax Research Network
  • Audits
  • Financial Statements
  • General Ledger
  • Tax Compliance
    • Income Tax
    • Sales & Use Tax

Business

Clients

  • Planning
    • Income Tax
    • Sales & Use Tax

CCH Integrated Tools

  • CCH Tax Research Network
  • CCH Client Relate
  • CCH TaxTracker

Integration of

Client Data

and Content

=

and cch provides a broad range of products and tools to satisfy the needs of individual clients
And CCH Provides a Broad Range of Products and Tools to Satisfy the Needs of Individual Clients

CCH Integrated Tools

CCH Integrated Tools

  • CCH Tax Research Network
  • CCH ClientRelate
  • ProSystem fx
    • Prior Year Tax Return
    • ProSystem fx Planning
  • ProSystem fx
  • Tax Notebook
  • Complete Tax Pro
  • Execusite CWS
  • Planning
    • Year end Tax Planning
  • Information Gathering
    • Income Tax

=

Integration of Client Data and Content

Individual

Clients

  • Planning
    • Financial Planning
    • Estate Planning
  • Compliance
    • Income Tax

CCH Integrated Tools

CCH Integrated Tools

  • ProSystem fx
  • CCH Tax Research Network
  • CCH Client Relate
  • CCH EnterAct and ViewPlan
  • CCH Tax Research Network
  • CCH Client Relate
  • CCH DataXchange
  • CCH Solutions
cch client relate
CCH Client Relate
  • Opens the door to higher levels of service
  • Provides new revenue streams for the tax professional
  • Keeps client tax return database – local and secure
  • Leverages the editorial power of CCH and the processing power of CCH’s ProSystem fx Tax Compliance System
ltb na opportunity integration provides significant cross sell opportunities
LTB-NA Opportunity: Integration Provides Significant Cross-sell Opportunities

Subscription Customers*

Total Customers**

(Subscription + Book)

CCH FAST

48K

CCH FAST

143K

7100

PFX

22K

10,500

PFX

22K

2700

10,800

3240

4400

4400

17,800

CCH Client Relate has created a potential cross-sell opportunity of $12M of which the first $2.5M has been realized in 6 months time.

ASPEN

76K

ASPEN

76K

*Total Unique Subscription Customers = 126,467

**Total Unique Customers = 212,059

future developments capabilities to enhance cpa client communication
Future Developments: Capabilities to Enhance CPA & Client Communication
  • Financial Professional’s Internet Office
    • Custom Web Sites (CWS) - ASP-based website solutions for accounting and tax professionals from our Execusite acquisition.
    • Private Client Services (PCS) – web-based communication and collaboration tools which allow CPA firms to interact with and provide a set of rich, customized solutions to individual clients.
    • Firm Member Services (FMS) – customized firm-wide Intranet that organizes work task components from applications into a high-level integrated view.
future developments workflow enhancements
Future DevelopmentsWorkflow Enhancements

Prospective client visits the CPA firm’s CWS and decides to become a client after reading content on the site discussing implications of a new tax law for her state.

After their initial meeting, client enters tax information through Tax Notebook built into CWS. Data gets stored in a secure PCS area for online viewing.

Client works with CPA firm to customize their PCS area. This includes the viewing/access to their documents as well as what other third party data (e.g., brokerage statements) will be included.

CPA enters FMS, accesses Prosystem fx and completes client’s tax return. Data is then automatically fed into Enteract. The resulting return and initial financial plan are once again placed in the PCS area. His notes on the client are placed in the firm’s FMS document management system.

Firm’s financial planning expert receives a notification through FMS to review the client’s financial plan. She accesses Enteract as well as the CPA’s notes through FMS and completes the plan for the client. Per the client’s instructions, permission to view these documents is granted (using PCS) to the client’s broker and insurance agent, who are given view and modify access.

Working collaboratively with the broker (through PCS), the financial planner modifies the plan. She schedules a meeting through FMS of all firm members working with the client on the site, each of whom receives an electronic notification of the meeting.

Weeks later, CPA mines his client base using CCH Client Relate to determine who is affected by a recent development He e-mails the client and they agree to meet in the PCS area at a predetermined time. Together, they view the client’s last tax return and financial plan online from the PCS area and discuss the implications.

Firm members, broker and the client all meet virtually to discuss financial plans, each viewing these documents, through PCS. They are modified collaboratively and then stored in the client’s PCS area along with the tax return and other private documents.

slide35

Some of these Tools are In Use Today!

CCH Tax Prosystem

Products are used by

American Express to

execute their tax strategy!

ltb na strategy benefits for customers ltb na
LTB-NA StrategyBenefits for Customers & LTB-NA

Customer Advantages

LTB-NA Advantages

Fully integrated products increase productivity and increases available hours to offer additional billable services

Increased switching costs resulting from being embedded in workflow

Increased cross-selling opportunities

Remote access to applications

Opportunity to update clients constantly

Applications that deliver increased level of proactive customer service

Revenue stream generated outside of traditional research and compliance budgets

ltb na strategy become a valued partner in the redefinition of the firm
LTB-NA Strategy: Become a Valued Partner in the Redefinition of the Firm
  • Combine assets of LTB-NA businesses & leverage their strengths.
  • Provide one point of access for customer.
  • Integrate LTB-NA products & services to support the professional’s workflow.
  • Enable firms to operate a significant portion of their practice through the Internet.
slide40

Services have a longer “shelf-life” and can be executed directly from CCH Tax Research Network over the internet.

slide42

One click on the ClientRelate icon launches the search against the tax professional’s secure tax return database.

slide43

Search criteria can be modified for CPA to narrow or expand search criteria to better fit their client base