HR Block 2005 Annual Report Download - page 120

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NOTE 3: BUSINESS COMBINATIONS AND DISPOSALS
Significant acquisitions during fiscal years 2005, 2004 and 2003 are as follows. Results for each acquisition are included since the date of
acquisition.
(in 000s)
Business Asset Acquired Estimated Life Asset Value at Acquisition
Fiscal year 2005 ⬎⬎⬎
Non-accounting firm Business Services acquisitions Property and equipment $ 2,497
Goodwill 9,666
Customer relationships 10 years 7,730
Noncompete agreements 15 years 100
Weighted average life 10 years $ 19,993
Fiscal year 2004 ⬎⬎⬎
Former major franchise territories Property and equipment $ 2,697
Goodwill 205,313
Customer relationships 10 years 18,167
Noncompete agreements 3 years 17,069
Weighted average life 7 years $ 243,246
Accounting firms Goodwill $ 3,923
Customer relationships 10 years 1,794
Noncompete agreements 15 years 747
Weighted average life 11 years $ 6,464
Fiscal year 2003 ⬎⬎⬎
Accounting firms Goodwill $ 2,404
Customer relationships 10 years 2,242
Noncompete agreements 15 years 728
Weighted average life 11 years $ 5,374
During fiscal year 2005, our Business Services segment years. The purchase agreements also provide for possible future
acquired six businesses. Cash payments related to these contingent consideration of approximately $3.0 million. Goodwill
acquisitions totaled $19.5 million, with additional cash payments recognized in these transactions is deductible for tax purposes
of $0.1 million over the next five years. Goodwill recognized in and is included in the Business Services segment.
these transactions is included in the Business Services segment During fiscal year 2003, we acquired two accounting firms.
and all but $3.8 million is deductible for tax purposes. Cash payments related to these acquisitions totaled $2.6 million,
During fiscal year 2004, we made payments of $243.2 million with additional cash payments of $2.8 million over the next five
related to the acquisition of primarily assets and stock in the years. The purchase agreements also provide for possible future
franchise territories of ten former major franchisees. The contingent consideration of approximately $0.3 million. Goodwill
customer relationships will be amortized based on estimated recognized in these transactions was $2.4 million, which is
customer retention over ten years. The noncompete agreements deductible for tax purposes and is included in the Business
will be amortized on a straight-line basis over three years. Services segment.
Goodwill recognized in these transactions is included in the Tax During fiscal years 2005, 2004 and 2003, we made other
Services segment and all but $3.9 million is deductible for acquisitions which were accounted for as purchases with cash
tax purposes. payments totaling $14.4 million, $7.9 million and $3.0 million,
During fiscal year 2004, we acquired three accounting firms. respectively. Their operations, which are not material, are
Cash payments related to these acquisitions totaled $6.2 million, included in the consolidated income statements since the date
with additional cash payments of $1.0 million over the next five of acquisition.
H&R BLOCK 2005 Form 10K
58