HR Block 2008 Annual Report Download - page 5

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Our improved results came
from focusing on business
fundamentals.
33
tax of $434 million ($1.33 per diluted share) in FY07, and another net loss of
$309 million ($0.94 per share) in FY08. Losses in discontinued operations, which
were almost entirely a result of the Company’s sub-prime mortgage lending
subsidiary, were $1.6 billion ($4.81 per share) during these two years.
While one cannot ignore nearly $1.6 billion in sub-prime losses merely by branding
them as losses from discontinued operations in accounting terms, it is relevant
to look at the underlying earnings from continuing, non-mortgage operations.
Here the picture for FY 2008 was good, with continuing earnings of just over
$454 million, or $1.39 per diluted share compared with just over $374 million,
or $1.15 per share in FY 2007. The fourth quarter of FY08 was even better, with
$543.6 million, or $1.66 per diluted share, in consolidated net income, compared
to a consolidated net loss of $85.6 million, or $0.26 per diluted share in the prior
year.
Our results for tax season 2008 were the best we have had in many years.
Revenues in Tax Services grew 11.3% to reach $3 billion for the fi rst time. Even
more importantly, pretax income grew 11.4% to more than $785 million. We
increased the number of retail clients by 3.8% overall, and nearly 2% without the
Economic Stimulus Plan (ESP) fi lers included. Two percent may sound small,
but that is a considerable jump in one year on a very large base. We believe
this shows signifi cant traction in the marketplace for our initiatives, and it’s the
principle reason we feel we enter FY 2009 with very positive momentum.
TAX: OUR CORE BUSINESS
In FY08, H&R Block helped a record 23.5 million clients in the U.S., Canada
and Australia meet their tax fi ling obligations quickly and accurately. More than
120,000 trained tax professionals in the fi eld, as well as tax specialists at the H&R