Transcript Analyst / Investor Meeting Year Results 2001

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)
• Strategy and Growth Opportunities
• Strategy in Action
– Investments in Smart Tools and Integrated Solutions
– Tax and Accounting Destination Site
– Product Demonstration: Client Relate
• Conclusions
2
Overview of Legal, Tax and Business North America
LTB-NA Represents 32% of Sales and 41% of
Operating Income for Wolters Kluwer
2001 EBITA
2001 Sales
8%
2001 EBITA
2%
22%
7%
36%
32%
LTB-AP
LTB-NA
Education
1%
22%
29%
41%
LTB-EUR
IH&S
LTB-AP
LTB-NA
Education
LTB-EUR
IH&S
4
All Six Operating Companies Serve a Variety of
Professional Markets
LTBNA Sales by
LTB-NA 2000
Revenue
LTB-NA
2001
Revenue
4%
13%
27%
13%
17%
26%
CCH US Publishing
CCH Legal Information Services
Aspen Publishers
CCH Tax Compliance
CCH Canadian
Bankers Systems
Customer Type
LTB-NA Sales by
Customer Type
10%
21%
23%
17%
29%
Attorneys
Accountants
Banks/ Financial Institutions
Corporations
Other
5
LTB-NA Offers a Broad Set of Product Suites to
Meet Customer Needs
Lines of Business
CCH
Tax Compliance
CCH Legal
Information Services
Aspen Publishers
• 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
6
LTB-NA Offers a Broad Set of Product Suites to
Meet Customer Needs
Lines of Business
CCH Inc.
& CCH Canadian
BSI Inc.
• 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
• 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
7
LTB-NA Holds Leading Positions in Both Research
and Compliance Areas
Market Position
Tax Research
Tax Compliance
Securities Law
Corporate and
Legal
Compliance
Banking
Compliance
Human
Resources
#1
CCH US
Publishing
#2
RIA (Thomson)
#3
BNA
CCH Tax
Compliance
Lacerte
CCH US
Aspen
Publishing
Publishers
CCH Legal
Information
Services
CSC
Lexis Document
Services
CCH (BSI)
Harland Financial
Solutions
Fragmented
among local law
firms
CCH US
Aspen
Publishing
Publishers
BNA
CSI (Thomson)
West
8
Strategy and Growth Opportunities
Extend Our Leadership in Content to Software and
Services to Provide Smart Tools and Integrated
Solutions
Online Training
Tax Software
(e.g. CCH ProSystem fx
DPC Sales & Use Tax
Products )
(e.g. Shared Learning)
Content
Software
Tools
Software Tools & Compliance
Services
(e.g. CTAdvantage.com, Tax Notebook,
Client Relate, ePace!)
Services
Transaction Software
and Service
(e.g. CT iLien Online)
10
Providing Smart Tools and Integrated Solutions
offers Higher Retention and Margin Potential
Integrated
Solutions
Smart
Tools
Retention Rate
90
Dynamic
Content
80
Static
Content
•
•
•
Books
Reference Guides
Primary Source
Material
•
•
•
•
•
•
•
Compliance
Worklfow Tools
Integrated
Libraries (e.g.
content, forms
and practice
systems)
•
•
Integrated
Software
End to end
workflow system
Online
CD-ROM
Hyperlinked Content
Content that requires
updating
70
0
0
20
30
40
Margin Opportunities
50+
11
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
12
Smart Information Tools: All About Providing
Solutions
An Example: Life Cycle of a Business Entity
Create
Withdraw
Maintain
CTAdvantage.com
Merge
Research
Amend
13
Smart Information Tools: All About Providing
Solutions
“Create” Workflow: Using CTAdvantage.com
Qualifying to do business in multiple jurisdictions
TASK
• E.g. ABC Inc. needs to file qualification forms in 12 different
states
• Despite similar content, each form is unique and requires
customization.
CT Advantage.com’s intelligent filing tool minimizes
repetitive effort.
TOOL
• 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.
Value Added
• Significant productivity improvements
• Better accuracy
• End to end solution improves turnaround time for gaining
state approval.
14
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
15
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
16
Significant Progress Made in 2001
STRATEGIC ELEMENT
• Extend into Tools within
Existing Markets
KEY ACTIONS
• Launched Key Destination sites
including:
RESULTS
• Internet revenues grew
74% from 2000 to 2001
– Tax and Accounting
– Legal Compliance Service
– Lender Due Diligence (iLien)
• 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.
17
Significant Progress Made in 2001
KEY ACTION
STRATEGIC ELEMENT
• 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)
RESULTS
• Grew Loislaw revenues by
35%
• Created beach-head for
further expansion in
environmental market.
• Expanded product suite,
particularly software tools
and compliance products.
• Increased revenue base by
approximately 7%.
18
Strategy in Action
– Investments in Smart Tools and Integrated Solutions
– Tax and Accounting Destination Site
– Product Demonstration: Client Relate
19
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
20
Integrated Tools Provide Significant Cross-sell
Opportunities: An Example
Subscription
Customers*
CCH FAST
48K
7100
10,800
2700
PFX
22K
Total Customers*
(Subscription + Book)
CCH FAST
143K
10,500
PFX
22K
3240
4400
4400
17,800
ASPEN
76K
*Total Unique Subscription Customers =
126,467
ASPEN
76K
**Total Unique Customers = 212,059
21
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.
22
Tax and Accounting Destination Site
LTB-NA is the Leading Provider of Information &
Productivity Tools to the Tax & Accounting Market
Research
LTB-NA
Companies
Market &
Products
• CCH US Publishing
• CCH Tax Compliance
• CCH Canadian
• CCH Canadian
• Aspen Publishers
• CCH US Publishing - DPC
• Primary, secondary & tertiary
materials delivered in all media
• Tax prep, audit & practice
management software
targeting medium & large firms
• Over 90% penetration in
accounting firms
• Internet accounts for over
40% of sales
• Harcourt & Strafford
acquisitions bolster accounting
content
• Thomson (RIA & PPC)
Competitors
Compliance
• BNA
• Tax Analysts
• Over 60% of top accounting
firms use ProSystem fx Tax
• Sales and use tax rates tables
and calculation software
• Thomson (CLR & Creative
Solutions)
• Intuit (Lacerte & Turbo Tax
Pro)
24
Accounting Market Overview:
Redefinition of the Accounting Firm’s Practice
Top 100 Annual Revenue Contribution by Service
(1994-1999)
Change
Since 1994
100%
90%
Key Industry Trends
 Fragmented industry, despite significant
consolidation in recent years
- 9%
80%
70%
- 17%
60%
50%
40%
 Growth driven by extension into related
services, including financial & estate
planning, business valuations, and
systems consulting
30%
+26%
20%
 Approximately 52% of new CPA
engagements in 2000 came from crossselling to existing clients
10%
0%
1994
1995
1996
Managem ent Advisory Services
1997
1998
1999
Auditing and Accounting
Average Annual Revenue Growth for CPA
Service Groups (1993 – 1999)*
MAS
A&A
26%
9%
Tax Services
13%
Source: Accounting Today, AICPA
* As quoted by former SEC Chairman Arthur Levitt, 9/2000
Tax
 Shortage of qualified professionals;
fewer examinees & high staff turnover
 Increasing use of technology for tax
preparation
25
Accounting Market Overview
These Trends Present Growth Opportunities for LTB-NA
LTB-NA Opportunities
• 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
26
CCH’s Integrated Product Suite Assists CPAs in
Satisfying the Needs of Business Clients
CCH Integrated Tools
•
ePace! Paperless Engagement
•
ProSystem Fixed Assets
•
Miller Series including FASB,
GASB
•
CCH Integrated Tools
–Audits
CCH Tax Research Network
•
ProSystem fx
•
DPC TaxSolver
•
CCH Tax Research Network
–Financial Statements
–General Ledger
• Tax Compliance
–Income Tax
Business
Clients
•
–Sales & Use Tax
Planning
–Income Tax
–Sales & Use Tax
CCH Integrated Tools
•
CCH Tax Research Network
•
CCH Client Relate
•
CCH TaxTracker
=
Integration of
Client Data
and Content
27
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
• ProSystem fx
• CCH ClientRelate
• Tax Notebook
• ProSystem fx
• Complete Tax Pro
– Prior Year Tax Return
• Execusite CWS
– ProSystem fx Planning
•
Planning
–Year end Tax
Planning
•
Information Gathering
=
–Income Tax
Integration of
Client Data and
Content
Individual
Clients
•
Planning
–Financial
Planning
CCH Integrated Tools
• CCH Tax Research Network
• CCH Client Relate
• CCH DataXchange
• CCH Solutions
–Estate Planning
•
Compliance
–Income Tax
CCH Integrated Tools
• ProSystem fx
• CCH Tax Research Network
• CCH Client Relate
• CCH EnterAct and ViewPlan
28
These Products are Delivered Through One
Comprehensive Internet Site
29
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
30
CCH Client Relate Demonstration
Flash Demo
LTB-NA Opportunity: Integration Provides
Significant Cross-sell Opportunities
Subscription
Customers*
CCH FAST
48K
7100
10,800
2700
Total Customers**
(Subscription + Book)
CCH FAST
143K
10,500
PFX
22K
PFX
22K
3240
4400
4400
17,800
ASPEN
76K
CCH Client Relate has
created a potential crosssell opportunity of $12M
of which the first $2.5M
has been realized in 6
months time.
*Total Unique Subscription Customers =
126,467
ASPEN
76K
**Total Unique Customers = 212,059
32
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.
33
Future Developments
Workflow 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.
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.
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.
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.
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 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.
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
34
the implications.
Some of these Tools are In Use Today!
CCH Tax Prosystem
Products are used by
American Express to
execute their tax strategy!
35
LTB-NA Strategy
Benefits 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
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
Increased cross-selling
opportunities
36
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.
37
Appendix Material
38
ClientRelate Bulletins are sent via e-mail
with direct links to CCH TRN content.
39
Services have a longer “shelf-life” and
can be executed directly from CCH Tax
Research Network over the internet.
40
Each Service contains a Service Summary, Engagement
Planning Tools and a Sample Client Letter.
41
One click on the ClientRelate icon launches the search
against the tax professional’s secure tax return database.
42
Search criteria can be modified for CPA to narrow
or expand search criteria to better fit their client
base
43
Search Criteria and Results List are returned in minutes.
44
Step by step engagement
planning tools are included as
additional support material
45