Strategy in Action: Smart Information Tools

1

• 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

2
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

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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 2001 Revenue
LTB-NA Sales by Customer Type
6
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
7
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.
8
LTB-NA Holds Leading Positions in Both Research
and Compliance Areas
9
Strategy and Growth Opportunities
10
Extend Our Leadership in Content to Software and
Services to Provide Smart Tools and Integrated
Solutions
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)
11
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
40
30
50
Margin Opportunities
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
Smart Information Tools All About Providing
Solutions
An Example Life Cycle of a Business Entity
14
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.coms 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.

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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

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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

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Significant Progress Made in 2001
KEY ACTIONS
RESULTS
STRATEGIC ELEMENT

• 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 small
  business 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
  PC.
• Acquired CBF and TSoft to expand market position
  in banking and Uniform (01/02) in insurance.

• Leverage Current Positions in Growing Markets

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Significant Progress Made in 2001
KEY ACTION
RESULTS
STRATEGIC ELEMENT

• 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

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Strategy in Action

• Investments in Smart Tools and Integrated
  Solutions
• Tax and Accounting Destination Site
• Product Demonstration Client Relate

20
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

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

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Tax and Accounting Destination Site
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LTB-NA is the Leading Provider of Information
Productivity Tools to the Tax Accounting Market
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Accounting Market OverviewRedefinition of the
Accounting Firms 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
AA
Tax Services
26
9
13
Source Accounting Today, AICPA As quoted by
former SEC Chairman Arthur Levitt, 9/2000
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Accounting Market OverviewThese 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

27
CCHs 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

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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

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These Products are Delivered Through One
Comprehensive Internet Site
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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 ProSystem fx Tax
  Compliance System

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CCH Client Relate Demonstration

• Flash Demo

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LTB-NA Opportunity Integration Provides
Significant Cross-sell Opportunities
Total Customers (Subscription Book)
Subscription Customers
CCH FAST 48K
CCH FAST 143K
PFX 22K
10,500
PFX 22K
7100
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
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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.

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Future DevelopmentsWorkflow Enhancements
Prospective client visits the CPA firms CWS and
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 Prosystem fx and
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.
Firms financial planning expert receives a
notification through FMS to 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.
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
clients 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
clients PCS area along with the tax return and
other private documents.
35
Some of these Tools are In Use Today!
CCH Tax Prosystem Products are used by American
Express to execute their tax strategy!
36
LTB-NA StrategyBenefits for Customers LTB-NA
Customer Advantages
LTB-NA Advantages
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
Opportunity to update clients constantly
Remote access to applications
Revenue stream generated outside of traditional
research and compliance budgets
Applications that deliver increased level of
proactive customer service
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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.

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Appendix Material
39
ClientRelate Bulletins are sent via e-mail with
direct links to CCH TRN content.
40
Services have a longer shelf-life and can be
executed directly from CCH Tax Research Network
over the internet.
41
Each Service contains a Service Summary,
Engagement Planning Tools and a Sample Client
Letter.
42
One click on the ClientRelate icon launches the
search against the tax professionals secure tax
return database.
43
Search criteria can be modified for CPA to narrow
or expand search criteria to better fit their
client base
44
Search Criteria and Results List are returned in
minutes.
45
Step by step engagement planning tools are
included as additional support material