HR Block 2006 Annual Report Download - page 97

Cost of services increased $27.8 million, or 14.4%, as a result of a Selling, general and administrative expenses increased $20.8 million,
higher average servicing portfolio, particularly loans with MSRs, which or 13.7%, due to $12.1 million in increased retail marketing expenses
also resulted in an increase in MSR amortization. and $7.4 million in additional consulting expenses.
Cost of other revenues increased $66.2 million, or 22.8%, over fiscal Pretax income for fiscal year 2005 decreased $192.4 million, or 27.9%,
year 2004. Compensation and benefits increased $33.8 million as a result from fiscal year 2004.
of a 25.4% increase in the number of employees, reflecting resources
needed to support higher loan production volumes.
BUSINESS SERVICES
This segment offers middle-market companies accounting, tax and primarily driven by increases in the net billed rate per hour and
business consulting services, wealth management, retirement resources, chargeable hours.
payroll services, corporate finance and financial process outsourcing. Capital markets revenues declined $8.4 million due to a 36.0% decline
in the number of business valuation projects. Payroll, benefits and
Business Services – Operating Statistics
retirement services revenues increased $9.3 million primarily due to
Year Ended April 30, 2006 2005 2004
acquisitions completed during the third and fourth quarters of fiscal
Accounting, tax and year 2005. Other service revenues increased $21.3 million as a result of
business consulting –
acquisitions completed in the fourth quarter of fiscal year 2005 in our
Chargeable hours (000s) 4,357 2,898 2,598
financial process outsourcing business and growth in wealth
Chargeable hours per person 1,385 1,430 1,414
management services.
Net billed rate per hour $141$133$124
Total expenses increased $280.4 million, or 51.6%, for fiscal year 2006
Average margin per person $ 114,755 $ 112,573 $ 102,496
compared to the prior year. Cost of services increased $221.6 million,
primarily due to a $160.7 million increase in compensation and benefits.
Business Services – Financial Results (in 000s)
Compensation and benefits increased $136.0 million due to the
Year Ended April 30, 2006 2005 2004
American Express Tax and Business Services, Inc. acquisition. In
Service revenues:
addition, baseline increases in the number of personnel and the average
Accounting, tax and consulting $ 690,817 $ 412,473 $ 353,750
wage per employee, driven by marketplace competition for professional
Capital markets 59,553 67,922 73,860
staff, also contributed to the increase. Occupancy expenses increased
Payroll, benefits and retirement
$32.2 million and other cost of services increased $28.7 million primarily
services 36,605 27,331 21,172
Other services 52,501 31,170 19,390
due to acquisitions.
Selling, general and administrative expenses increased $58.9 million
839,476 538,896 468,172
Other 37,783 34,420 31,038
primarily due to acquisitions and additional costs associated with our
business development initiatives.
Total revenues 877,259 573,316 499,210
Pretax income for the year ended April 30, 2006 was $53.4 million,
Cost of services:
compared to pretax income of $29.9 million in the prior year.
Compensation and benefits 471,619 310,950 256,640
Occupancy 56,870 24,699 20,498
FISCAL 2005 COMPARED TO FISCAL 2004 –Business Services’
Other 65,386 36,672 33,080
revenues for fiscal year 2005 increased $74.1 million, or 14.8%, from the
593,875 372,321 310,218
prior year. This increase was primarily due to a $58.7 million increase in
Selling, general and administrative 230,006 171,124 169,680
accounting, tax and consulting revenues resulting from an 11.5% increase
Total expenses 823,881 543,445 479,898
in chargeable hours and a 7.3% increase in the net billed rate per hour.
Pretax income $ 53,378 $ 29,871 $ 19,312
The increase in chargeable hours is primarily due to strong demand for
our tax and accounting services as well as our consulting and risk
FISCAL 2006 COMPARED TO FISCAL 2005 –Business Services’
management services. This demand stems from the current business
revenues for fiscal year 2006 increased $303.9 million, or 53.0%, from the
environment and the emphasis placed on the accounting industry.
prior year. This increase was primarily due to the acquisition of
Capital markets revenues declined $5.9 million as a result of an 11.2%
American Express Tax and Business Services, Inc., which increased
decrease in the number of business valuation projects. Payroll, benefits
accounting, tax and consulting revenues $251.3 million. The remaining
and retirement services revenues increased as a result of three
$27.1 million increase in tax, accounting and consulting revenues was
acquisitions completed during the last half of fiscal year 2005.
H&R BLOCK 2006 Form 10K
27