HR Block 2007 Annual Report Download - page 54

BUSINESS SERVICES
This segment offers middle-market companies accounting, tax and Capital markets revenues declined $10.7 million. Valuation and
business consulting services, wealth management and capital market seminar revenues declined $23.2 million due to a 59.2% decline in the
services. The following discussion excludes the results of the three number of business valuation projects. This decrease was partially
businesses reported in discontinued operations for all periods offset by a $12.6 million increase in underwriting revenues due to a
presented. 28.6% increase in transactions and a 32.2% increase in revenue per
transaction. Other revenues increased primarily due to higher computer
Business Service :: Operating Statistics
hardware and software sales.
Year Ended April 30, 2007 2006 2005
Total expenses increased $117.2 million, or 15.5%, compared to the
ACCOUNTING, TAX AND
prior year. Cost of services increased $77.0 million, due to increases in
BUSINESS CONSULTING –
compensation and benefits and occupancy expenses. Compensation
Chargeable hours (000s) 5,075 4,357 2,898
Chargeable hours per person 1,373 1,385 1,430 and benefits increased $54.2 million, or 11.9%, due to an increase in the
Net billed rate per hour $148 $141$ 133
number of personnel, primarily as a result of the AmexTBS acquisition,
Average margin per person $118,415 $114,755 $112,573
and an increase in the average wage per employee. Occupancy expenses
increased $13.0 million due to higher rent expense resulting from office
Business Services :: Financial Results(in 000s)
locations added with the AmexTBS acquisition in fiscal year 2006. These
Year Ended April 30, 2007 2006 2005
offices only contributed seven months of expense in the prior year,
Service revenues:
compared to twelve months in the current year.
Accounting, tax and consulting $808,223 $704,338 $425,329
Cost of other revenues, selling, general and administrative expenses
Capital markets 48,886 59,553 67,922
increased $40.8 million, or 24.3%, due to seven months of expense from
Other services 29,993 26,248 19,692
the AmexTBS acquisition in the prior year, compared to twelve months
887,102 790,139 512,943
in the current year, $5.9 million of costs incurred related to international
Other 45,259 37,994 34,242
acquisitions that will not be completed and additional costs associated
Total revenues 932,361 828,133 547,185
with our business development initiatives.
m26 Cost of services:
Pretax income for the year ended April 30, 2007 of $57.7 million
Compensation and benefits 511,257 457,050 307,301
compares to $70.7 million in the prior year. The decline was primarily
Occupancy 68,859 55,883 21,072
due to off-season losses of AmexTBS.
Other 69,941 60,101 53,218
650,057 573,034 381,591
FISCAL 2006 COMPARED TO FISCAL 2005 –Business Services’
Amortization of intangible assets 15,521 16,165 14,442
revenues for fiscal year 2006 increased $280.9 million, or 51.3%, from
Cost of other revenues, selling,
general and administrative 209,122 168,273 107,945
fiscal year 2005. This increase was primarily due to the acquisition of
AmexTBS, which increased accounting, tax and consulting revenues
Total expenses 874,700 757,472 503,978
$251.3 million. The remaining $27.7 million increase in tax, accounting
Pretax income $57,661 $70,661 $ 43,207
and consulting revenues was primarily driven by increases in the net
FISCAL 2007 COMPARED TO FISCAL 2006 –Business Services’ billed rate per hour and chargeable hours.
revenues for fiscal year 2007 increased $104.2 million, or 12.6%, over the Capital markets revenues declined $8.4 million due to a 36.0% decline
prior year. in the number of business valuation projects. Other service revenues
Accounting, tax and consulting revenues increased $103.9 million, or increased $6.6 million as a result of growth in wealth management
14.7%, over the prior year. This increase resulted primarily from the services.
acquisition of AmexTBS, which contributed $98.7 million in additional Total expenses increased $253.5 million, or 50.3%, for fiscal year 2006
service revenues. This acquisition, coupled with an increase in our compared to the prior year. Cost of services increased $191.4 million,
existing business, was partially offset by a decline in consulting primarily due to a $149.7 million increase in compensation and benefits.
revenue, resulting from a change in organizational structure between Compensation and benefits increased primarily due to the AmexTBS
the businesses we acquired from AmexTBS and the attest firms that, acquisition. In addition, baseline increases in the number of personnel
while not affiliates of our company, also serve our clients. As a result, and the average wage per employee, driven by marketplace competition
we no longer record the revenues and expenses associated with leasing for professional staff, also contributed to the increase. Occupancy
employees in these offices to the attest firms. expenses increased $34.8 million primarily due to acquisitions.
H&R BLOCK 2007 Form 10K