HR Block 2005 Annual Report Download - page 101

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REGULATORY ENVIRONMENT
The U.S., various state, local, provincial and foreign governments regarding the applicability of Laws to our services and products.
and some self-regulatory organizations have enacted statutes and In response to past inquiries, we have agreed to comply with such
ordinances, and/or adopted rules and regulations, regulating Laws, convinced the authorities that such Laws were not
aspects of our business. These aspects include, but are not applicable or that compliance already exists, and/or modified our
limited to, commercial income tax return preparers, income tax activities in the applicable jurisdiction to avoid the application of
courses, the electronic filing of income tax returns, the all or certain parts of such Laws. We believe that the past
facilitation of RALs, loan originations and assistance in loan resolution of such inquiries and our ongoing compliance with
originations, mortgage lending, privacy, consumer protection, Laws have not had a material adverse effect on our consolidated
franchising, sales methods, brokers, broker-dealers and various financial statements. We cannot predict what effect future Laws,
aspects of securities transactions, financial planners, investment changes in interpretations of existing Laws, or the results of
advisors, accountants and the accounting practice. We seek to future regulator inquiries with respect to the applicability of Laws
determine the applicability of such statutes, ordinances, rules and may have on our consolidated financial statements.
regulations (collectively, ‘‘Laws’’) and comply with those Laws.
From time to time in the ordinary course of business, we
receive inquiries from governmental and self-regulatory agencies
NEW ACCOUNTING PRONOUNCEMENTS
See Item 8, note 1 to our consolidated financial statements for a discussion of recently issued accounting pronouncements.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
We report our financial results in accordance with generally accepted accounting principles (‘‘GAAP’’). However, we believe certain
non-GAAP performance measures and ratios used in managing the business may provide additional meaningful comparisons between
current year results and prior periods, by excluding certain items that do not represent results from our basic operations.
Reconciliations to GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to,
not as an alternative for, our reported GAAP results.
Origination Margin (in 000s)
Restated Restated
Year Ended April 30, 2005 2004 2003
Total expenses $ 749,925 $ 635,186 $ 493,756
Add: Expenses netted
against gain on sale
revenues 378,304 267,780 162,332
Less:
Cost of services 221,300 193,018 141,419
Cost of acquisition 169,621 114,707 59,637
Allocated support
departments 24,161 21,124 7,630
Other 20,323 31,378 28,238
$ 692,824 $ 542,739 $ 419,164
Divided by origination
volume $ 31,001,724 $ 23,256,013 $ 16,577,621
Total cost of origination 2.23% 2.33% 2.53%
H&R BLOCK 2005 Form 10K
39