HR Block 2005 Annual Report Download - page 136

have a material adverse effect on our consolidated financial the liability can be reasonably estimated. Many of the various
statements. Regardless of outcome, claims and litigation can legal proceedings are covered in whole, or in part, by insurance.
adversely affect us due to defense costs, diversion of Any receivable for insurance recoveries is recorded separate
management and publicity related to such matters. from the corresponding litigation reserve, and only if recovery is
It is our policy to accrue for amounts related to legal matters if determined to be probable. Receivables for insurance recoveries
it is probable that a liability has been incurred and the amount of at April 30, 2005 were immaterial.
NOTE 19: SUBSEQUENT EVENT
On June 8, 2005, our Board of Directors declared a two-for-one Additionally, we have corrected certain amounts set forth in
stock split of the Company’s Common Stock in the form of a 100% the 2004 and 2003 condensed consolidating financial information
stock distribution, effective August 22, 2005, to shareholders of in note 22 which were inadvertently not updated in our original
record as of the close of business on August 1, 2005. All share and Form 10-K filing.
per share amounts have been adjusted to reflect the retroactive
effect of the stock split for all periods presented.
NOTE 20: SEGMENT INFORMATION
The principal business activity of our operating subsidiaries is the same flexible product line available through brokers, are
providing tax and financial services and products to the general offered through H&R Block Mortgage Corporation retail offices
public. Management has determined the reportable segments and some other retail offices.
identified below according to types of services offered and the BUSINESS SERVICES ⬎⬎⬎ This segment offers middle-market
manner in which operational decisions are made. We operate in companies accounting, tax and consulting services, wealth
the following reportable segments: management, retirement resources, payroll services, corporate
TAX SERVICES ⬎⬎⬎ This segment is primarily engaged in finance, and financial process outsourcing. This segment offers
providing tax return preparation and related services and services through offices located throughout the U.S. Revenues of
products in the U.S., Canada, Australia and the United Kingdom. this segment are seasonal in nature.
Segment revenues include fees earned for tax-related services INVESTMENT SERVICES ⬎⬎⬎ This segment is primarily
performed at company-owned tax offices, royalties from engaged in offering investment services and securities products
franchise offices, sales of tax preparation and other software, through H&R Block Financial Advisors, Inc., a full-service
fees from online tax preparation, and payments related to RALs. securities broker-dealer, to the general public. Investment advice
This segment includes the Company’s tax preparation software – and services are primarily offered through H&R Block Financial
TaxCut˛ from H&R Block, and other personal productivity Advisors branch offices.
software offered to the general public, and offers online do-it- CORPORATE ⬎⬎⬎ This segment consists primarily of
yourself-tax preparation, online tax advice to the general public corporate support departments that provide services to our
through the www.hrblock.com website. Revenues of this segment operating segments. These support departments consist of
are seasonal in nature. marketing, information technology, facilities, human resources,
Our international operations contributed $110.0 million, executive, legal, finance, government relations and corporate
$97.6 million and $85.1 million in revenues for fiscal years 2005, communications. These support department costs are largely
2004 and 2003, respectively, and $11.3 million, $11.1 million and allocated to our operating segments. Our captive insurance and
$10.5 million of pretax income, respectively. The previously franchise financing subsidiaries are also included within this
reported International Tax Operations segment has been segment, as was our small business initiatives subsidiary in fiscal
aggregated with U.S. Tax Operations in the Tax Services segment, years 2004 and 2003. The pretax loss from our Corporate segment
and prior year results have been reclassified to reflect this change. for fiscal year 2005 includes a non-operating gain of $17.3 million,
MORTGAGE SERVICES ⬎⬎⬎ This segment is primarily or $0.03 per diluted share, resulting from legal recoveries.
engaged in the origination of non-prime mortgage loans, sales and IDENTIFIABLE ASSETS ⬎⬎⬎ Identifiable assets are those
securitizations of mortgage assets and servicing of non-prime assets, including goodwill and intangible assets, associated with
loans in the U.S. This segment mainly offers, through a network each reportable segment. The remaining assets are classified as
of independent mortgage brokers, a flexible product line to corporate assets and consist primarily of cash, marketable
borrowers who are creditworthy but do not meet traditional securities and equipment.
underwriting criteria. Prime mortgage loan products, as well as
H&R BLOCK 2005 Form 10K
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