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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Our subsidiaries provide tax preparation, retail banking and various business advisory and consulting services. We
are the only major company offering a full range of software, online and in-office tax preparation solutions to
individual tax clients.
OVERVIEW
A summary of our fiscal year 2011 results is as follows:
쐍Revenues for the fiscal year were $3.8 billion, down 2.6% from prior year results.
쐍Diluted earnings per share from continuing operations decreased 7.5% from the prior year to $1.35.
쐍U.S. tax returns prepared by us increased 6.5% from the prior year primarily due to strong results in our retail
offices related to a free Federal 1040 EZ offer during the first half of the season as well as improved results
during the second half. Online results also improved due to enhancements to our client interface and
improved traffic to our website.
쐍Revenues in our Tax Services segment decreased 2.1% from the prior year, primarily due to the sale of
280 company-owned offices to franchisees and a decline in revenues from RAL participations, which were
partially offset by higher RAC fees.
쐍Pretax income for the Tax Services segment decreased $99.9 million, or 11.5%, due primarily to a $34.3 million
increase in bad debt expense, goodwill impairment of $22.7 million and litigation charges of $15.0 million.
쐍Pretax income for the Business Services segment decreased $9.7 million, or 16.5%, primarily due to lower
revenues and higher litigation expenses, partially offset by a goodwill impairment charge recorded in the prior
year.
Year Ended April 30, 2011 2010 2009
Consolidated Results of Operations Data (in 000s, except per share amounts)
REVENUES:
Tax Services $ 2,912,361 $ 2,975,252 $ 3,132,077
Business Services 829,794 860,349 897,809
Corporate and eliminations 32,141 38,731 53,691
$ 3,774,296 $ 3,874,332 $ 4,083,577
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE TAXES:
Tax Services $ 767,498 $ 867,362 $ 927,048
Business Services 49,003 58,714 96,097
Corporate and eliminations (139,476) (141,941) (183,775)
677,025 784,135 839,370
Income taxes 257,620 295,189 326,315
Net income from continuing operations 419,405 488,946 513,055
Net loss of discontinued operations (13,295) (9,704) (27,382)
Net income $ 406,110 $ 479,242 $ 485,673
BASIC EARNINGS (LOSS) PER SHARE:
Net income from continuing operations $ 1.35 $ 1.47 $ 1.53
Net loss of discontinued operations (0.04) (0.03) (0.08)
Net income $ 1.31 $ 1.44 $ 1.45
DILUTED EARNINGS (LOSS) PER SHARE:
Net income from continuing operations $ 1.35 $ 1.46 $ 1.53
Net loss of discontinued operations (0.04) (0.03) (0.08)
Net income $ 1.31 $ 1.43 $ 1.45
18 H&R BLOCK 2011 Form 10K