HR Block 2007 Annual Report Download - page 56

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Other service revenues increased $36.4 million, due to revenues revenue. Higher annuitized revenues resulted from increased sales of
earned from our new H&R Block Prepaid Emerald MasterCard˛annuities and insurance, wealth management accounts, mutual funds,
program, coupled with positive sweep account rate variances and and unit investment trusts.
higher underwriting fees. Annualized productivity averaged approximately $194,000 per advisor
Net interest income on banking activities totaled $24.0 million for during fiscal year 2006 compared to $166,000 in the prior year.
fiscal year 2007. The following table summarizes the key drivers of net Increased productivity was due to minimum production standards put
interest revenue on banking activities: into place during the fourth quarter of fiscal year 2005.
(dollars in 000s)
Net interest income increased $13.6 million, or 33.4%, from the prior
Average BalanceAverage Rate
year, as a result of higher interest rates earned, partially offset by a
decline in average margin balances.
Loans $746,387 6.80%
Investments 117,350 5.25%
Total expenses increased $2.6 million, or 0.8%. Cost of services
Deposits 700,707 4.59%
increased $19.2 million, or 12.1%, primarily as a result of $18.7 million of
additional compensation and benefits expenses resulting from higher
Total expenses increased $5.7 million, or 1.8%. Cost of services production revenues.
increased $6.7 million, or 3.8%, primarily due to the expenses of HRB Selling, general and administrative expenses decreased $16.5 million,
Bank, which opened May 1, 2006. or 14.2%, primarily due to a $4.8 million decline in legal expenses, due in
Pretax income for Consumer Financial Services for fiscal year 2007 part to a favorable arbitration outcome. Fiscal year 2006 results also
was $19.8 million compared to the prior year loss of $32.8 million. improved due to reduced back-office headcount relating to cost
containment efforts and gains on the disposition of certain assets during
FISCAL 2006 COMPARED TO FISCAL 2005 –Consumer Financial the year. These decreases were partially offset by increased bonus
Services’ revenues, net of interest expense, increased $45.2 million, or accruals associated with the segment’s improved performance.
19.1% over fiscal year 2005. The pretax loss for Consumer Financial Services for fiscal year 2006
Financial advisor production revenue increased $24.6 million, or was $32.8 million compared to a loss of $75.4 million in 2005.
14.8%, over fiscal year 2005, primarily due to additional annuitized
m28
DISCONTINUED OPERATIONS
Discontinued operations includes OOMC and HRBMC, mortgage are the results of three smaller lines of business previously reported in
businesses primarily engaged in the origination and acquisition of non- our Business Services segment, as well as our tax operations in the
prime and prime mortgage loans, the sale and securitization of mortgage United Kingdom previously reported in our Tax Services segment.
loans and residual interests, and the servicing of non-prime loans. These Operating results presented below are net of eliminations of
businesses were previously reported in our Mortgage Services segment intercompany activities.
in our Annual Report on Form 10-K for fiscal year 2006. Also included
H&R BLOCK 2007 Form 10K