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Strategy in Action: Smart Information Tools Strategy in Action: Smart Information Tools Legal, Tax and Business, North America Legal, Tax and Business, North America Lehman Brothers European Media Conference May, 2002 Nancy McKinstry, CEO, LTB-NA and Executive Board Member Kevin Robert, CEO CCH Tax Compliance

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  • 1. Strategy in Action: Smart Information ToolsLegal, Tax and Business, North America Lehman Brothers European Media Conference May, 2002 Nancy McKinstry, CEO, LTB-NA and Executive Board Member Kevin Robert, CEO CCH Tax Compliance

2. Table of Contents

  • Overview Legal, Tax & Business North America (LTB-NA)
  • Strategy and Opportunities
  • Strategy in Action
    • Investments in Smart Tools and Integrated Solutions
    • Tax and Accounting Destination Site
    • Product Demonstration: Client Relate
    • Legal Services Destination Site
  • Conclusions

3. Overview of Legal, Tax and Business North America 4. LTB-NA Represents 32% of Sales and 41% of Operating Income for Wolters Kluwer 2001 Sales 2001 EBITA 5. All Six Operating Companies Serve a Variety of Professional Markets LTB-NA 2001Revenue LTB-NA Sales by Customer Type 6. LTB-NA Offers a Broad Set of Product Suites to Meet Customer Needs

  • 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
  • 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
  • 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

CCHTax Compliance Aspen Publishers CCH LegalInformation Services Lines of Business 7. LTB-NA Offers a Broad Set of Product Suites to Meet Customer Needs

  • 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 Lines of Business

  • 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. 8. LTB-NA Holds Leading Positions in Both Research and Compliance Areas Aspen Publishers CCH US Publishing BNA Human Resources Fragmented among local law firms Harland Financial Solutions CCH (BSI) Banking Compliance Lexis Document Services CSC CCH Legal Information Services Corporate and Legal Compliance West Aspen Publishers CCH US PublishingSecurities Law CSI (Thomson) LacerteCCH Tax Compliance Tax Compliance BNA RIA (Thomson) CCH US Publishing Tax Research #3 #2 #1 Market Position 9. Strategy and Growth Opportunities 10. Extend Our Leadership in Content to Software and Services to Provide Smart Tools and Integrated Solutions Tax Software (e.g. CCH ProSystemfxDPC Sales & Use Tax Products ) Transaction Software and Service (e.g.CT iLien Online ) Online Training (e.g. Shared Learning) Software Tools & Compliance Services (e.g.CTAdvantage .com, Tax Notebook, Client Relate, ePace!) Services Software Tools Content 11. Providing Smart Tools and Integrated Solutions offers Higher Retention and Margin Potential Static Content Dynamic Content Retention Rate Smart Tools IntegratedSolutions Margin Opportunities

  • Books
  • Reference Guides
  • Primary Source Material
  • Integrated Software
  • End to end workflow system
  • Online
  • CD-ROM
  • Hyperlinked Content
  • Content that requires updating
  • Compliance
  • Worklfow Tools
  • Integrated Libraries (e.g. content, forms and practice systems)

0 0 90 80 70 20 40 30 50+ 12. 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

13. 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

14. 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

15. Significant Progress Made in 2001

  • Internet revenues grew 74% from 2000 to 2001
  • Launched Key Destination sites including:
    • Tax and Accounting
    • Legal Compliance Service
    • Lender Due Diligence (iLien)
  • Extend into Tools within Existing Markets


  • 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 smallbusiness lending.
  • Extended insurance product suite into forms and compliance systems.
  • 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.
  • Leverage Current Positions in Growing Markets

16. Significant Progress Made in 2001

  • Grew Loislaw revenues by 35%
  • Created beach-head for further expansion in environmental market.
  • Expanded Loislaw content and coverage, tools and offerings.
  • Acquired content assets in the environmental market.
  • Enter New Markets


  • Expanded product suite, particularly software tools and compliance products.
  • Increased revenue base by approximately 7%.
  • 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)
  • Pursue Strategic Acquisitions

17. Strategy in Action

  • Investments in Smart Tools and Solutions
  • Tax and Accounting Destination Site
  • Product Demonstration: Client Relate
  • Legal Service Destination Site

18. 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

19. Integrated Tools Provide Significant Cross-sell Opportunities: An Example CCH FAST 143K PFX 22K ASPEN 76K 17,800 3240 4400 10,500 Total Customers* (Subscription + Book) CCH FAST 48K PFX 22K ASPEN 76K 10,800 2700 4400 7100 Subscription Customers* *Total Unique Subscription Customers = 126,467 **Total Unique Customers = 212,059 20. 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.

21. Tax and Accounting Destination Site 22. LTB-NA is the Leading Provider of Information & Productivity Tools to the Tax & Accounting Market

  • CCH Tax Compliance
  • CCH Canadian
  • CCH US Publishing - DPC
  • CCH US Publishing
  • CCH Canadian
  • Aspen Publishers

LTB-NA Companies

  • Thomson (CLR & Creative Solutions)
  • Intuit (Lacerte & Turbo Tax Pro)
  • Thomson (RIA & PPC)
  • BNA
  • Tax Analysts


  • Tax prep, audit & practice management software targeting medium & large firms
  • Over 60% of top accounting firms use ProSystemfxTax
  • Sales and use tax rates tables and calculation software
  • Primary, secondary & tertiary materials delivered in all media
  • Over 90% penetration in accounting firms
  • Internet accounts for over 40% of sales
  • Harcourt & Strafford acquisitions bolster accounting content

Market & Products Compliance Research 23. Accounting Market Overview: Redefinition of the Accounting Firms Practice

  • 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

Source: Accounting Today, AICPA * As quoted by former SEC Chairman Arthur Levitt, 9/2000 Average Annual Revenue Growth for CPA Service Groups (1993 1999)*MAS A&A Tax Services 26% 9% 13% Key Industry Trends Change Since 1994 - 9% - 17% +26% 24. Accounting Market Overview These 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 25. CCHs Integrated Product Suite Assists CPAs in Satisfying the Needs of Business Clients

    • Audits
    • Financial Statements
    • General Ledger
  • Tax Compliance
    • Income Tax
    • Sales & Use Tax
  • Planning
    • Income Tax
    • Sales & Use Tax
  • ProSystemfx
  • DPC TaxSolver
  • CCH Tax Research Network

CCH Integrated Tools Business Clients

  • ePace! Paperless Engagement
  • ProSystem Fixed Assets
  • Miller Series including FASB, GASB
  • CCH Tax Research Network

CCH Integrated Tools Integration ofClient Dataand Content =

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

CCH Integrated Tools 26. And CCH Provides a Broad Range of Products and Tools to Satisfy the Needs of Individual Clients

  • Planning
    • Year end Tax Planning
  • Information Gathering
    • Income Tax
  • Planning
    • Financial Planning
    • Estate Planning

Individual Clients

  • Compliance
    • Income Tax
  • CCH Tax Research Network
  • CCH ClientRelate
  • ProSystemfx
    • Prior Year Tax Return
    • ProSystemfxPlanning
  • ProSystemfx
  • Tax Notebook
  • Complete Tax Pro
  • Execusite CWS
  • ProSystemfx
  • CCH Tax Research Network
  • CCH Client Relate
  • CCH EnterAct and ViewPlan
  • CCH Tax Research Network
  • CCH Client Relate
  • CCH DataXchange
  • CCH Solutions

CCH Integrated Tools CCH Integrated Tools CCH Integrated Tools CCH Integrated Tools Integration of Client Data and Content = 27. These Products are Delivered Through One Comprehensive Internet Site 28. 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 CCHs ProSystemfxTax Compliance System

29. CCH Client Relate Demonstration Flash Demo 30. LTB-NA Opportunity: Integration Provides Significant Cross-sell Opportunities CCH FAST 143K PFX 22K ASPEN 76K 17,800 3240 4400 10,500 Total Customers** (Subscription + Book) CCH FAST 48K PFX 22K ASPEN 76K 10,800 2700 4400 7100 Subscription Customers* *Total Unique Subscription Customers = 126,467 **Total Unique Customers = 212,059 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. 31. Future Developments: Capabilities to Enhance CPA & Client Communication

  • Financial Professionals 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.

32. Future Developments Workflow Enhancements Firms financial planning expert receives a notification through FMSto review the clients financial plan.She accesses Enteract as well as the CPAs notes through FMS and completes the plan for the client.Per the clients instructions,permission to view these documents is granted (using PCS) to the clients 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 . 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 clients PCS area along with the tax return and other private documents . Weeks later, CPA mines his client base using CCH Client Relate to determine who is affected by a recent developmentHe e-mails the client and they agree to meet in the PCS area at a predetermined time. Together, they view the clients last tax return and financial plan online from the PCS area and discuss the implications . Prospective client visits the CPA firms CWSand decides to become a client after reading content on the site discussing implications of a new tax law for her state. CPA enters FMS, accesses Prosystemfxand completes clients 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 firms FMS document management system. 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. 33. CCH Tax ProsystemProducts are used by American Express toexecute their tax strategy! Some of these Tools are In Use Today! 34. LTB-NA Strategy Benefits for Customers & LTB-NA Increased switching costs resulting from being embedded in workflow Increased cross-selling opportunities Fully integrated products increase productivity and increases available hours to offer additional billable services LTB-NA Advantages Revenue stream generated outside of traditional research and compliance budgets Opportunity to update clients constantly Applications that deliver increased level of proactive customer service Remote access to applications Customer Advantages 35. Legal Services Destination Site 36. LTB-NA is the largest provider of compliance transaction services

  • CT Corporation
  • UCC Direct Services
  • CT Corporation
  • UCC Direct Services

LTB-NA Companies

  • CSC (IncSpot)
  • Lexis Document Services
  • Diligenz
  • CSC
  • National Registered Agents


  • Filing and searching software, for corporations, law firms and financial institutions (UCC Direct)
  • Internet accounts for 30% of sales
  • Access to aggregated public information corporate records, liens to support transactions
  • Largest provider of compliance services to the NLJ 250
  • Statutory representation
  • Customer base includes over 70% of the Fortune 2000
  • UCC Direct provides lien portfolio management for financial institutions

Market & Products Compliance Transactions Records Management 37. The Legal Market Continues to Expand - Trends Create Further Opportunities for LIS

  • Legal sector continues to grow at a strong rate
  • However, law firms are under increasing pressure to maintain partner profitability, hence the need for greater productivity
  • Increasing use of technology to automate routine tasks
  • High turnover among paralegal staff requiring tools that are easy to use
  • Emerging trend toward online collaboration between law firms and their corporate law department clients

Source: American Lawyer, July 2001 * The Am Law 100 Key Industry Trends Total Revenues in millions of dollars Profits per partner in thousands of dollars Revenue growth remains healthy, but profits per partner are softening 38. LIS Is Well-Placed to Take Advantage of These Trends

  • Accelerated investments have established LIS as the clear industry leader in online compliance workflow tools
  • We maintain substantial information about the law firms clients to increase efficiency and customer loyalty
  • LIS has established the industrys largest customer service network ensuring comprehensive nationwide coverage
  • Dedicated LIS systems and service personnel compensate for loss of knowledge resulting from paralegal turnover in law firms and corporations
  • Current product development efforts will enhance the collaboration between law firms and their corporate customers ensuring an increasing role for LIS

39. LIS Integrates Three Related Workflows Records Management/ Corporate Compliance e.g. law department reorganized Transactional e.g. new business unit formed ABC Company Information Service of Process e.g. lawsuit received 40. LIS Has Built a Legal Services Destination Site to Create Efficiencies for Our Customers

  • CTAdvantage.com integrates three related workflow components
  • Previously separate software products have now been delivered as an integrated suite on a State of the Art Internet platform offering:
    • Statutory representation to ensure accurate delivery of lawsuits and serve as a basis for maintaining compliance in each state where the company does business
    • Intelligent tools to enable compliance transactions to form, amend and dissolve business entities
    • Corporate entity record management for tracking and reporting changes to the companys structure and management

41. LIS adds value by assisting in all phases of the Life Cycle of a Business Entity Maintain Merge Withdraw Create Research Amend 42. Workflow Example: Using ctadvantage.com to Establish a Business Entity and Create an Associated Corporate Record

  • Significant productivity improvements
  • Deep jurisdictional knowledge
  • Accuracy
  • End to end solution improves turnaround time for gaining state approval.

Value Added

  • CTAdvantage.coms intelligent filing tool minimizes repetitive effort
  • The customer responds to single set of questions and the website fills out all the appropriate forms
  • The information is stored and one can resume completion without having to redo previous efforts. Stored data can be reused for future transactions
  • New data may populate corporate records management system
  • Qualifying to do business in multiple jurisdictions
  • E.g. ABC Inc. needs to file qualifications forms in 12 different states
  • Despite similar content, each form is unique and requires customization.

Form a business Workflow: Using CTAdvantage.com TASK TOOL 43. Workflow Example: Using ctadvantage.com to Effect a Change to the Name of an Active Business Entity

  • Extensive re-use of accurate data
  • Integrated systems feed each other, increasing productivity and providing a pre-formulated workflow
  • Complete solution from single provider

Value Added

  • CTAdvantage.com supplies the research tools and multi-jurisdictional filing tools to change the name
  • Comprehensive online search of all 50 states for name availability
  • Intelligent filing tool requires answers to a single set of unique questions and completes the hundreds of forms necessary to accomplish the name change
  • New data may populate corporate records management system
  • Changing the name of a business in multiple states
  • The company is doing business in all 50 states, and has hundreds of subsidiaries, all effected by the name change
  • Name availability must be checked and reserved in each state

Amend Workflow: Using CTAdvantage.com TASK TOOL 44. Workflow Example: Using CTAdvantage.com to Maintain Compliance in Delaware File Annual ReportOn-line Determine most favorabletax result using e-calculator 45. Legal Services Destination Site Provides a Single Source for All Legal Compliance Work Intelligent tools to support legal transactions 46. 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 professionals workflow.
  • Enable firms to operate a significant portion of their practice through the Internet.

47. Appendix Material 48. ClientRelate Bulletins are sent via e-mail with direct links to CCH TRN content. 49. Services have a longer shelf-life and can be executed directly from CCH Tax Research Network over the internet. 50. Each Service contains a Service Summary, Engagement Planning Tools and a Sample Client Letter. 51. One click on the ClientRelate icon launches the search against the tax professionals secure tax return database. 52. Search criteria can be modified for CPA to narrow or expand search criteria to better fit their client base 53. Search Criteria and Results List are returned in minutes. 54. Step by step engagement planning tools are included as additional support material