HR Block 2005 Annual Report Download - page 91

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BUSINESS SERVICES
This segment offers middle-market companies accounting, tax Capital markets revenues declined $5.9 million as a result of an
and consulting services, wealth management, retirement 11.2% decrease in the number of business valuation projects.
resources, payroll services, corporate finance and financial Payroll, benefits and retirement services revenues increased as a
process outsourcing. result of three acquisitions completed during the last half of the
current year.
Business Services – Operating Statistics Other service revenues increased $11.8 million due to the
Year ended April 30, 2005 2004 2003 acquisition of our financial process outsourcing business in the
Accounting, tax and second quarter of last year, coupled with overall growth in this
consulting ⬎⬎⬎ business. Increases in reimbursable expenses and contractor
Chargeable hours (000s) 2,898 2,598 2,584 revenues also contributed to higher revenues.
Chargeable hours per person 1,430 1,414 1,388 Cost of services increased $62.1 million, or 20.0%, for fiscal
Net collected rate per hour $ 133 $ 124 $ 120 year 2005 compared to the prior year. Compensation and benefits
Average margin per person $ 112,573 $ 102,496 $ 97,117 related to our services increased $54.3 million, primarily as a
result of increases in the number of personnel and the average
Business Services – Financial Results (in 000s) wage per employee. The increase in the average wage is being
Restated Restated driven by marketplace competition for professional staff. Higher
Year ended April 30, 2005 2004 2003 expenses are also attributable to investments we are making in
Service revenues: early-stage businesses within this segment.
Accounting, tax and consulting $ 412,473 $ 353,750 $ 337,903 Pretax income for the year ended April 30, 2005 was
Capital markets 67,922 73,860 35,629 $29.9 million compared to $19.3 million in fiscal year 2004.
Payroll, benefits and retirement
services 27,331 21,172 20,745 FISCAL 2006 OUTLOOK ⬎⬎⬎
Other services 31,170 19,390 7,912 Our focus for fiscal year 2006 is growing the business within our
538,896 468,172 402,189 current markets by expanding our services to existing clients. We
Other 34,420 31,038 31,951 will continue to support our national business development
Total revenues 573,316 499,210 434,140 strategy and we expect the demand for risk management services
Cost of services: and financial process outsourcing to continue. We also believe
Compensation and benefits 310,950 256,640 233,303 the demand and competition for qualified professional staff will
Occupancy 24,699 20,498 20,873 continue.
Other 36,672 33,080 32,562
We expect this segment’s pretax income for fiscal year 2006 to
372,321 310,218 286,738 increase by approximately 30%.
Impairment of goodwill –– 13,459
Selling, general and administrative 171,124 169,680 149,976 FISCAL 2004 COMPARED TO FISCAL 2003 ⬎⬎⬎
Total expenses 543,445 479,898 450,173 Business Services’ revenues for fiscal year 2004 improved
Pretax income (loss) $ 29,871 $ 19,312 $ (16,033) $65.1 million, or 15.0%, over the prior year. This increase was
primarily due to a $38.2 million increase in capital markets
revenue resulting from a 38.3% increase in the number of
FISCAL 2005 COMPARED TO FISCAL 2004 ⬎⬎⬎ business valuation projects. Revenues in accounting, tax and
Business Services’ revenues for fiscal year 2005 increased consulting increased $15.8 million over the prior year as a result
$74.1 million, or 14.8%, from the prior year. This increase was of newly acquired tax businesses and increased productivity. The
primarily due to a $58.7 million increase in accounting, tax and acquisition of Tax Services’ former major franchises allowed us
consulting revenues resulting from an 11.5% increase in to acquire certain tax businesses associated with the original
chargeable hours and a 7.3% increase in the net collected rate per M&P acquisition. We were previously unable to acquire and
hour. The increase in chargeable hours is primarily due to strong operate these businesses in direct competition with major
demand for our tax and accounting services as well as our franchise territories. The acquired tax businesses contributed
consulting and risk management services. This demand stems $13.0 million in revenues in 2004. The remainder of the increase
from the current business environment and the emphasis placed
on the accounting industry.
H&R BLOCK 2005 Form 10K
29