Transcript Lehman Brothers European Media Conference (New York)

Strategy in Action: Smart Information Tools
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
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
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
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
13
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
14
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.
15
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%.
16
Strategy in Action
– Investments in Smart Tools and Solutions
– Tax and Accounting Destination Site
– Product Demonstration: Client Relate
– Legal Service Destination Site
17
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
18
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
19
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.
20
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)
22
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
23
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
24
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
25
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
26
These Products are Delivered Through One
Comprehensive Internet Site
27
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
28
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
30
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.
31
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
32
the implications.
Some of these Tools are In Use Today!
CCH Tax Prosystem
Products are used by
American Express to
execute their tax strategy!
33
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
34
Legal Services Destination Site
LTB-NA is the largest provider of compliance
transaction services
Records Management
LTB-NA
Companies
• CT Corporation
• CT Corporation
• UCC Direct Services
• UCC Direct Services
• Statutory representation
• Filing and searching software,
for corporations, law firms and
financial institutions (UCC Direct)
• Customer base includes over
70% of the Fortune 2000
Market &
Products
Compliance Transactions
• UCC Direct provides lien
portfolio management for
financial institutions
• 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
Competitors
• CSC
• CSC (IncSpot)
• National Registered Agents
• Lexis Document Services
• Diligenz
36
The Legal Market Continues to Expand Trends Create Further Opportunities for LIS
Key Industry Trends
Total Revenues in
millions of dollars
Profits per partner in
thousands of dollars
$35
$1,000
Am Law 100 - Total Revenue
Am Law 100 - Profit per Partner
$30
$875
$25
$750
$20
$625
$15
$500
1996
1997
1998
1999
2000
Revenue growth remains healthy, but
profits per partner are softening
Source: American Lawyer, July 2001
* The Am Law 100
 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
37
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 firm’s clients to
increase efficiency and customer loyalty
•
LIS has established the industry’s 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
38
LIS Integrates Three Related Workflows
Transactional
e.g. new business
Service of
Process
unit formed
e.g. lawsuit received
ABC Company
Information
Records Management/
Corporate Compliance
e.g. law department reorganized
39
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 company’s structure and
management
40
LIS adds value by assisting in all phases of the Life
Cycle of a Business Entity
Create
Withdraw
Merge
Maintain
Research
Amend
41
Workflow Example: Using ctadvantage.com to Establish a
Business Entity and Create an Associated Corporate Record
“Form a business” Workflow: Using CTAdvantage.com
Qualifying to do business in multiple jurisdictions
• E.g. ABC Inc. needs to file qualifications forms in 12 different
states
TASK
• Despite similar content, each form is unique and requires
customization.
CTAdvantage.com’s intelligent filing tool minimizes
repetitive effort
•The customer responds to single set of questions and the website fills
out all the appropriate forms
TOOL
•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
Value Added
•
•
•
•
Significant productivity improvements
Deep jurisdictional knowledge
Accuracy
End to end solution improves turnaround time for gaining
state approval.
42
Workflow Example: Using ctadvantage.com to Effect a
Change to the Name of an Active Business Entity
“Amend” Workflow: Using CTAdvantage.com
Changing the name of a business in multiple states
TASK
•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
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
TOOL
•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
Value Added
• Extensive re-use of accurate data
• Integrated systems feed each other, increasing productivity
and providing a pre-formulated workflow
• Complete solution from single provider
43
Workflow Example: Using CTAdvantage.com to
Maintain Compliance in Delaware
File Annual Report
On-line
Determine most favorable
tax result using e-calculator
44
Legal Services Destination Site Provides a Single
Source for All Legal Compliance Work
Intelligent tools
to support
legal
transactions
45
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.
46
Appendix Material
47
ClientRelate Bulletins are sent via e-mail
with direct links to CCH TRN content.
48
Services have a longer “shelf-life” and
can be executed directly from CCH Tax
Research Network over the internet.
49
Each Service contains a Service Summary, Engagement
Planning Tools and a Sample Client Letter.
50
One click on the ClientRelate icon launches the search
against the tax professional’s secure tax return database.
51
Search criteria can be modified for CPA to narrow
or expand search criteria to better fit their client
base
52
Search Criteria and Results List are returned in minutes.
53
Step by step engagement
planning tools are included as
additional support material
54