HR Block 2005 Annual Report Download - page 121

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NOTE 4: EARNINGS PER SHARE
Basic earnings per share is computed using the weighted-average Diluted earnings per share excludes the impact of common
number of common shares outstanding. The dilutive effect of shares issuable upon the lapse of certain restrictions or the
potential common shares outstanding is included in diluted exercise of options to purchase 1.2 million, 4.8 million, and
earnings per share. The computations of basic and diluted 5.2 million shares of stock for 2005, 2004 and 2003, respectively,
earnings per share before change in accounting principle are because the options’ exercise prices were greater than the
as follows: average market price of the common shares and therefore, the
(in 000s, except per share amounts) effect would be antidilutive.
Restated Restated
Year ended April 30, 2005 2004 2003
Net income before change in
accounting $ 635,857 $ 715,608 $ 477,615
Basic weighted average common
shares 331,612 354,152 359,276
Dilutive potential shares from stock
options and restricted stock 6,012 7,450 8,878
Convertible preferred stock 111
Dilutive weighted average common
shares 337,625 361,603 368,155
Earnings per share:
Basic $ 1.92 $ 2.02 $ 1.33
Diluted 1.88 1.98 1.30
NOTE 5: MARKETABLE SECURITIES AVAILABLE-FOR-SALE
The amortized cost and market value of marketable securities classified as available-for-sale at April 30, 2005 and 2004 are
summarized below:
(in 000s)
2005 2004 (Restated)
Gross Gross Gross Gross
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses(1) Value Cost Gains Losses(1) Value
Municipal bonds $ 9,797 $ 172 $ (1) $ 9,968 $ 8,846 $ 27 $ (78) $ 8,795
Common stock 4,250 308 (129) 4,429 4,661 450 (82) 5,029
Residual interests 90,525 115,411 – 205,936 85,100 125,873 – 210,973
$ 104,572 $ 115,891 $ (130) $ 220,333 $ 98,607 $ 126,350 $ (160) $ 224,797
(1) Gross unrealized losses have been in a continuous loss position for less than 12 months.
We monitor our available-for-sale investment portfolio for 2005, 2004 and 2003, respectively. Gross realized gains on those
impairment and consider many factors in determining whether sales during fiscal years 2005, 2004 and 2003 were $15.8 million,
the impairment is deemed to be other-than-temporary. These $41.8 million and $93.9 million, respectively; gross realized losses
factors include, but are not limited to, the length of time the were $0.3 million, $0.1 million and $0.7 million, respectively.
security has had a market value less than the cost basis, the Contractual maturities of available-for-sale debt securities at
severity of the loss, our intent and ability to hold the security for April 30, 2005 occur at varying dates over the next five to ten
a period of time sufficient for a recovery in value, recent events years. Because expected maturities differ from contractual
specific to the issuer or industry, external credit ratings and maturities due to the issuers’ rights to prepay certain obligations
recent downgrades in such ratings.
Proceeds from the sales of available-for-sale securities were
$26.2 million, $68.8 million and $156.6 million during fiscal years
H&R BLOCK 2005 Form 10K
59