HR Block 2006 Annual Report Download - page 122

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agreements will be amortized on a straight-line basis over three years. During fiscal years 2006, 2005 and 2004, we made other acquisitions
Goodwill recognized in these transactions is included in the Tax which were accounted for as purchases with cash payments totaling
Services segment and all but $3.9 million is deductible for tax purposes. $19.7 million, $14.4 million and $7.9 million, respectively. Their operations,
During fiscal year 2004, we acquired three accounting firms. Cash which are not material, are included in the consolidated income statements
payments related to these acquisitions totaled $6.2 million, with since the date of acquisition. During fiscal years 2006, 2005 and 2004, we
additional cash payments of $1.0 million over the next five years. The also paid $2.1 million, $3.4 million and $27.3 million, respectively, for
purchase agreements also provide for possible future contingent contingent payments on prior acquisitions.
consideration of approximately $3.0 million. Goodwill recognized in
these transactions is deductible for tax purposes and is included in the
Business Services segment.
NOTE 3: EARNINGS PER SHARE
Basic earnings per share is computed using the weighted-average Diluted earnings per share excludes the impact of common shares
number of common shares outstanding. The dilutive effect of potential issuable upon the lapse of certain restrictions or the exercise of options
common shares outstanding is included in diluted earnings per share. to purchase 8.7 million, 1.2 million, and 4.8 million shares of stock for
The computations of basic and diluted earnings per share before change 2006, 2005 and 2004, respectively.
in accounting principle are as follows:
(in 000s, except per share amounts)
Year Ended April 30, 2006 2005 2004
Net income before change in
accounting principle $ 490,408 $ 623,910 $ 700,452
Basic weighted average
common shares 328,118 331,612 354,152
Dilutive potential shares from stock
options and restricted stock 5,067 6,011 7,449
Convertible preferred stock 222
Dilutive weighted average
common shares 333,187 337,625 361,603
Earnings per share:
Basic $1.49$1.88$1.98
Diluted 1.47 1.85 1.94
NOTE 4: MARKETABLE SECURITIES AVAILABLE-FOR-SALE
The amortized cost and market value of marketable securities classified as available-for-sale at April 30, 2006 and 2005 are summarized below:
(in 000s)
2006 2005
Gross Gross Gross Gross
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses(1) Value Cost Gains Losses(1) Value
Municipal bonds $ 8,556 $ 5 $ (53) $ 8,508 $9,797 $ 172 $(1) $9,968
Common stock 3,998 382 (100) 4,280 4,250 308 (129) 4,429
Residual interests 114,922 44,136 – 159,058 90,525 115,411 – 205,936
$ 127,476 $ 44,523 $ (153) $ 171,846 $ 104,572 $ 115,891 $ (130) $ 220,333
(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 impairment limited to, the length of time the security has had a market value less
and consider many factors in determining whether the impairment is than the cost basis, the severity of the loss, our intent and ability to hold
deemed to be other-than-temporary. These factors include, but are not the security for a period of time sufficient for a recovery in value, recent
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H&R BLOCK 2006 Form 10K