HR Block 2005 Annual Report Download - page 84

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RESULTS OF OPERATIONS ⬎⬎⬎
Our business is divided into four reportable segments: Tax Services, Mortgage Services, Business Services and Investment Services.
TAX SERVICES
This segment primarily consists of our income tax preparation
Tax Services – Financial Results (in 000s)
businesses – retail, online and software. The previously reported
U.S. Tax Operations has been aggregated with the International Restated Restated
Year ended April 30, 2005 2004 2003
Tax Operations segment in the Tax Services segment.
Service revenues:
Tax Services – Operating Statistics (in 000s, except average fee) Tax preparation and related
Year ended April 30, 2005 2004(1) 2003(1) fees $ 1,718,867 $ 1,589,439 $ 1,437,835
Online tax services 49,515 44,915 25,892
Clients served ⬎⬎⬎
Other service revenues 143,648 127,602 97,794
United States:
Company-owned offices 10,608 10,627 10,105 1,912,030 1,761,956 1,561,521
Franchise offices 5,428 5,460 6,488 Royalties 197,551 184,882 174,659
16,036 16,087 16,593 RAL participation fees 182,784 168,375 896
RAL waiver fees –6,548 138,242
Digital tax solutions:
Software sales 44,419 43,823 39,314
Software (2) 1,804 2,027 1,963
Other 21,509 25,593 32,131
Online (3) 1,213 1,207 920
Total revenues 2,358,293 2,191,177 1,946,763
19,053 19,321 19,476
International(4) 2,333 2,253 2,227 Cost of services:
21,386 21,574 21,703 Compensation and benefits 726,654 672,066 591,556
Occupancy 281,772 255,516 225,045
Average fee per client served (5) ⬎⬎⬎
Depreciation and
Company-owned offices $ 158.19 $ 146.34 $ 137.16
amortization 54,579 48,808 42,505
Franchise offices 135.98 127.91 118.05
Supplies 47,703 40,792 40,992
$ 150.67 $ 140.09 $ 129.69 Bad debt 33,046 27,328 32,653
RALs (6) ⬎⬎⬎ Other 103,560 92,137 125,653
Company-owned offices 2,667 2,713 2,768 1,247,314 1,136,647 1,058,404
Franchise offices 1,499 1,508 1,790
Cost of software sales 37,819 41,895 34,842
Digital tax solutions:
Selling, general and
Software 25–
administrative 409,642 374,142 296,814
Online 32 57 75
Total expenses 1,694,775 1,552,684 1,390,060
4,200 4,283 4,633
Pretax income $ 663,518 $ 638,493 $ 556,703
(1) Company-owned and franchise data for fiscal years 2004 and 2003 have not been
restated for franchise acquisitions.
(2) Includes TaxCut federal units sold. FISCAL 2005 COMPARED TO FISCAL 2004 ⬎⬎⬎
(3) Includes online completed and paid federal returns, and state returns only when Tax Services’ revenues increased $167.1 million, or 7.6%,
no payment was made for a federal return. compared to the prior year. Fiscal year 2005 was the first year of
(4) The end of the Canadian tax season was extended from April 30 to May 2, 2005. a multi-year strategy to expand our retail distribution network, to
Clients served in our international operations in fiscal year 2005 includes
increase client growth by providing more convenient access to
approximately 47,500 returns in both company-owned and franchise offices which
were accepted by the client on May 1 and 2, 2005. The revenues related to these our services and to react to increased competition in the tax
returns will be recognized in fiscal year 2006. preparation market. In the U.S., we opened a net 1,252 new
(5) Calculated as gross tax preparation and related fees divided by clients served offices, 609 of which were part of the expansion of our
(U.S. only).
(6) Data is for tax season (January 1 – April 30) only.
H&R BLOCK 2005 Form 10K
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