HR Block 2007 Annual Report Download - page 51

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RESULTS OF OPERATIONS –
TAXSERVICES
TaxServices :: Financial Results (in 000s)
This segment primarily consists of our income tax preparation
businesses –retail, online and software. This segment includes our tax
Year Ended April 30, 2007 2006 2005
operations in the United States, Canada and Australia. The following
Service revenues:
discussion excludes the results of our tax business in the United
Taxpreparation fees $1,896,269 $1,791,624 $1,718,208
Kingdom, which is reported in discontinued operations for all periods
Other services 301,411 204,892 192,311
presented.
2,197,680 1,996,516 1,910,519
Other revenues:
TaxServices :: Operating Statistics(in 000s, except average fee) Royalties 220,136 207,728 197,551
Year Ended April 30, 2007 2006(1) 2005(1)
Loan participation fees and
CLIENTS SERVED –related revenue 210,040 177,852 182,784
United States: Other 58,002 67,655 65,854
Company-owned operations 10,336 10,359 10,608 Total revenues 2,685,858 2,449,751 2,356,708
Franchise operations 5,458 5,373 5,428 Cost of services:
IMAL only (2) 77 ––
Compensation and benefits 826,064 753,793 722,067
15,871 15,732 16,036 Occupancy 346,937 316,686 281,298
Digital tax solutions (3) 4,444 3,721 3,017 Supplies 58,013 52,857 47,600
20,315 19,453 19,053 Depreciation and
International (4) 2,569 2,459 2,333 amortization 42,043 44,825 54,505
22,884 21,912 21,386 Bad debt 25,228 31,820 33,020
Allocated shared services and
NETAVERAGE FEE PER CLIENT SERVED (5) –23 m
other 189,595 118,342 121,958
Company-owned operations $172.45 $162.91 $ 153.53
1,487,880 1,318,323 1,260,448
Franchise operations 151.06 140.37 133.49
Provision for RAL litigation –70,200 –
$165.06 $155.20 $ 146.75
Cost of other revenues, selling,
RALs (6) –general and administrative 492,807 471,139 430,969
Company-owned operations 2,402 2,542 2,667 Total expenses 1,980,687 1,859,662 1,691,417
Franchise operations 1,450 1,487 1,499
Pretax income $705,171 $590,089 $665,291
3,852 4,029 4,166
FISCAL 2007 COMPARED TO FISCAL 2006 –Tax Services’ revenues
(1) Company-owned and franchise data for fiscal years 2006 and 2005 have not been
increased $236.1 million, or 9.6%, compared to the prior year. We
restated for franchise acquisitions.
opened nearly 300 new company-owned offices, 250 of which were part
(2) Clients who received an IMAL but did not returnfor tax preparation and/or e-filing
services.
of the expansion of our retail distribution network. This expansion
(3) Includes TaxCut federal units sold, online completed and paid federal returns,and
contributed incremental revenues of $22.3 million and pretax losses of
state returns and e-filings only when no payment was made for a federal return.
$5.7 million in fiscal year 2007.
(4) In fiscal years 2006 and 2005, the end of the Canadian tax season was extended
Taxpreparation fees from our retail offices increased $104.6 million,
from April 30 to May 1, 2006 and May 2, 2005, respectively. Clients served in our
or 5.8%, for fiscal year 2007. This increase is primarily due to an increase
international operations in fiscal years 2006 and 2005 includes approximately
of 5.9% in the net average fee per U.S. client served, while the number of
41,400 and 47,500 returns,respectively, in both company-owned and franchise
U.S. clients served in company-owned offices was essentially flat
offices which were accepted by the client on May 1 or 2. The revenues related to
these returns wererecognized in fiscal years 2007 and 2006, respectively. In the
compared to last year. Our international operations contributed
current fiscal year, the Canadian tax season ended on April 30, 2007.
$9.6 million to the increase, resulting from a 4.5% increase in clients
(5) Calculated as gross tax preparation fees, less discounts and coupons, divided by
served.
clients served (U.S. only).
Other service revenue increased $96.5 million, or 47.1%, primarily due
(6) Data is for tax season (January 1 –April 30) only.
to $34.6 million in additional license fees earned from bank products,
$25.9 million in additional revenues from our online tax preparation and
H&R BLOCK 2007 Form 10K