HR Block 2008 Annual Report Download - page 12

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10
clients such as a new audit methodology and new IT tools for our personnel that
we rolled out in 2007. It also means improving our operating margins so that
we can deliver stronger returns to our shareowners and rising incomes to our
professionals.
RSM McGladrey increased pretax income by 54% this year to just under $90
million. Pretax profi t margins grew 52% this year, rising from 6.2% to 9.4% and
we believe margins can improve even more in the future. We will continue to
focus on delivering clients excellent services at a competitive cost, while also
generating increasingly strong returns for the company. We believe that
margins among the “Big 4” fi rms and our direct competitors in the small-mid-
size business sector suggest that we are far from maximizing our potential
at RSM McGladrey. As with cost reductions in our tax business, we believe
that enhanced effi ciency within RSM McGladrey will benefi t our partners and
associates, our clients and our shareowners. Going forward we anticipate RSM
McGladrey being a major part of H&R Block’s strategic focus, complementing
our Block-branded Tax Services.
FINANCIAL SERVICES
In recent years, H&R Block’s management put enormous emphasis on fi nancial
services businesses. In addition to mortgage lending, these included securities
brokerage and banking services. While we have exited the mortgage business,
we remain in both securities brokerage through H&R Block Financial Advisors
(HRBFA) and banking through H&R Block Bank, which holds a fl exible thrift
institution charter from the federal Offi ce of Thrift Supervision.
DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS
2004 2005 2006 2007 2008
$0.76
$0.95 $0.89
$1.15
$1.39
0
IN MILLIONS
Through RSM McGladrey,
we provide nearly a half
billion dollars of tax advice to
middle-market businesses
and their owners.