HR Block 2005 Annual Report Download - page 92

was driven primarily by a 3.3% increase in the net collected rate consulting business. A goodwill impairment charge of
per hour. $13.5 million was recorded in the prior year. No such impairment
Cost of services increased $23.5 million, or 8.2%, over the prior was recorded in fiscal year 2004.
year. Compensation and benefits increased $23.3 million, Pretax income for the year ended April 30, 2004 was
primarily as a result of increased activity in the capital markets $19.3 million compared to a loss of $16.0 million in fiscal
business and increased costs in our accounting, tax and year 2003.
INVESTMENT SERVICES
Investment Services – Financial Results (in 000s)
This segment is primarily engaged in offering advice-based
investment services. Our integration of investment advice and Restated Restated
Year ended April 30, 2005 2004 2003
new service offerings has allowed us to shift our focus from a
transaction-based client relationship to a more advice- Service revenues:
Transactional revenue $ 88,516 $ 99,559 $ 91,587
based focus.
Annuitized revenue 77,386 60,950 38,507
Investment Services – Operating Statistics Production revenue 165,902 160,509 130,094
Other service revenue 29,206 35,619 34,311
Year ended April 30, 2005 2004 2003
195,108 196,128 164,405
Customer trades (1) 885,796 1,004,235 860,784
Customer daily average trades 3,529 3,923 3,429 Margin interest revenue 43,698 33,408 37,300
Average revenue per trade (2) $ 123.33 $ 119.36 $ 120.15 Less: interest expense (3,114) (1,358) (4,830)
Customer accounts: (3)
Net interest revenue 40,584 32,050 32,470
Traditional brokerage 431,749 463,736 501,001
Other 438 (66) (911)
Express IRAs 380,539 366,040 216,351
Total revenues (1) 236,130 228,112 195,964
812,288 829,776 717,352
Cost of services:
Ending balance of assets under
Compensation and benefits 116,552 108,956 89,473
administration (billions) $ 27.8 $ 26.7 $ 22.3
Occupancy 22,178 21,571 24,299
Average assets per traditional
Other 19,555 24,091 25,604
brokerage account $ 63,755 $ 57,204 $ 43,991
Average margin balances (millions) $ 597 $ 545 $ 577 158,285 154,618 139,376
Average customer payables Impairment of goodwill –– 108,792
balances (millions) $ 975 $ 984 $ 819 Selling, general and administrative 153,215 149,108 167,217
Number of advisors 1,010 1,009 984 Total expenses 311,500 303,726 415,385
Included in the numbers above Pretax loss $ (75,370) $ (75,614) $ (219,421)
are the following relating to
fee-based accounts: (1) Total revenues, less interest expense
Customer accounts 7,668 6,964 4,680
Average revenue per account $ 2,301 $ 1,572 $ 1,442
Assets under administration FISCAL 2005 COMPARED TO FISCAL 2004 ⬎⬎⬎
(millions) $ 1,975 $ 1,494 $ 789 Investment Services’ revenues, net of interest expense, for fiscal
Average assets per active year 2005 increased $8.0 million, or 3.5%. The increase is
account $ 260,238 $ 214,537 $ 168,522 primarily due to higher margin interest revenue.
(1) Includes only trades on which revenues are earned (‘‘revenue trades’’). Revenues Production revenue increased $5.4 million, or 3.4% over the
are earned on both transactional and annuitized trades. prior year. Transactional revenue, which is based on individual
(2) Calculated as total trade revenues divided by revenue trades. securities transactions, decreased $11.0 million, or 11.1%, from(3) Includes only accounts with a positive balance. the prior year due primarily to an 18.7% decline in transactional
trading volume. This decline was partially offset by an increase in
the average revenue per trade. Annuitized revenue, which
consists of sales of mutual funds, insurance, fee-based products
and unit investment trusts, increased $16.4 million, or 27.0%, due
to increased sales of annuities, mutual funds and our fee-based
wealth management accounts. Annuitized revenues represent
H&R BLOCK 2005 Form 10K
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