HR Block 2005 Annual Report Download - page 9

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Letter t o Shareholders
took during 2005 and will continue to build upon
in 2006 have prepared us for the uncertainties
of this market. The competence and character
demonstrated by our organization represent a
unique advantage that we can translate into future
shareholder value.
RSM M cGladrey Demonstrates Its Potential in 2005
No business better exemplifies why we focus on
creating long-term success than RSM McGladrey.
For several years, we have been building unique
capabilities to serve the needs of midsized companies
in the United States. Starting with the development
of the nation’s leading accounting organization
serving the middle market, we then invested in
attractive lines of business that would complement
our core client relationships and meet the broader
needs of our business clients.
Our approach was slow but steady as we worked to
blend the right combination of services that would
meet the needs of midsized companies. In 2005, we
began to realize the potential of this long-term
investment as RSM McGladrey delivered its most
successful year ever. Revenues grew nearly 15
percent to $573.3 million, while earnings improved
50 percent to nearly $29 million.
Our core accounting business had a strong year, as
demand for our services grew. More importantly,
the focus that we place on midmarket clients is
allowing us to take advantage of a unique market
opportunity.
Equally significant, our leaders are acting on the
incredible opportunity that this market offers us.
Investments into business development and
marketing activities are creating the ability for
sustainable growth, even if the current strong
demand for our services slows. Investments into
emerging businesses such as financial process
outsourcing, payroll processing and wealth
management have begun to demonstrate the
financial promise that we recognized in them when
they were started.
In the coming years, we believe RSM McGladrey
and its related businesses will become as well
known to midsized companies as H&R Block is to
consumers. This growing brand recognition, combined
with the investments we have made, will enable our
shareholders to realize the financial rewards of this
emerging leader in the tax, accounting and business
services market.
A Proud History and a Bright Future
For some companies, 50 years represents success.
For H&R Block, it represents a beginning. Our
success, our heritage, the values of our organization,
and the strength of our brands and market positions
give us the foundation for a very bright future.
Of course, no company flourishes for 50 years
without the valuable contribution of many talented
individuals. Still, it is rare when one individual has
the impact that Director G. Kenneth Baum has had
on H&R Block. Kenny will be retiring from the
Board this year after serving for 44 years. He has
become both the historian of H&R Block’s past and
the voice for our future potential. He has personally
reflected the integrity of H&R Block as a staunch
advocate for good governance, while serving as a
highly effective counselor and supporter. I will miss
his insight, wit and optimism for what H&R Block
can become.
Let me close by thanking our thousands of associates
for their many contributions to serving clients with
distinction. As shareholders, we are fortunate to
have an organization ready to take us into the next
50 years.
M ARK A. ERNST
Chairman, President and Chief Executive Officer
CORPORATE VALUES
H&R Block has millions of one-to-
one relationships w ith our clients
w orldwide. Each relationship is built
on a foundation of trust. And those
relationships, as w ell as our day-
to-day business decisions, are
guided by our corporate values.
Our values are fundamental to the
promise of the H&R Block brand.
Client Focused > We are
passionate about helping clients.
Their success is a key measure of
our success.
Integrity > We are honest and
ethical in everything w e do.
Excellence > We take pride in
doing our best in everything w e
do. We embrace change to learn
and grow.
Respect > We treat each other
w ith respect and dignity, recog-
nizing that innovation springs
from unique perspectives.
Teamw ork > Everyone’s collabo-
ration and full participation make
us stronger and allow us to serve
clients better.