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RESULTS OF OPERATIONS
TAX SERVICES
This segment primarily consists of our income tax preparation businesses – retail, online and software. This
segment includes our tax operations in the U.S., Canada and Australia. The following discussion excludes the
results of our former tax business in the United Kingdom, which is reported in discontinued operations for fiscal
year 2007.
Year Ended April 30, 2009 2008 2007
(in 000s, except average fee)Tax Services – Operating Statistics
TAX RETURNS PREPARED
(1)
:
United States:
Company-owned operations 10,231 10,530 10,336
Franchise operations 4,936 5,577 5,460
Total retail operations 15,167 16,107 15,796
Software 2,418 2,378 2,708
Online 2,775 1,911 1,723
Free File Alliance 788 1,453 1,224
Total digital tax solutions 5,981 5,742 5,655
Total U.S operations 21,148 21,849 21,451
International operations 2,864 2,725 2,569
24,012 24,574 24,020
NET AVERAGE FEE PER U.S. TAX RETURN PREPARED
(2)
:
Company-owned operations $ 196.16 $ 183.68 $ 172.45
Franchise operations 169.04 157.72 151.06
$ 187.36 $ 174.70 $ 165.06
LOAN PRODUCTS :
RALs
(3)
:
Company-owned operations 1,904 2,446 2,402
Franchise operations 1,042 1,460 1,450
2,946 3,906 3,852
Emerald Advance lines of credit 1,047 887 –
(1)
Fiscal year 2009 tax returns prepared in company-owned offices include approximately 470,000 returns prepared in offices of our last
major franchise operator, which we acquired in November 2008. Tax returns prepared in the same acquired offices are reported in
franchise operations for fiscal years 2008 and 2007. Clients who were prompted to file a tax return to receive a rebate under the
Economic Stimulus Act of 2008 have been excluded from all periods.
(2)
Calculated as net tax preparation fees divided by retail tax returns prepared.
(3)
Data is for tax season (January 1 – April 30) only.
Year Ended April 30, 2009 2008 2007
Tax Services – Financial Results (dollars in 000s)
Service revenues:
Tax preparation fees $2,155,217 $2,096,236 $1,896,269
Other services 367,153 363,579 301,411
2,522,370 2,459,815 2,197,680
Royalties 255,536 237,986 220,136
Loan participation fees and related revenue 142,740 190,201 210,040
Other 112,477 100,615 58,002
Total revenues 3,033,123 2,988,617 2,685,858
Cost of services:
Compensation and benefits 870,044 889,923 826,064
Occupancy 377,846 376,350 346,937
Supplies 47,852 56,731 58,013
Bad debt 43,327 42,248 25,228
Depreciation and amortization 37,521 36,378 42,043
Allocated shared services and other 209,473 203,695 189,595
1,586,063 1,605,325 1,487,880
Cost of other revenues, selling, general and administrative 553,255 597,453 492,807
Total expenses 2,139,318 2,202,778 1,980,687
Pretax income $ 893,805 $ 785,839 $ 705,171
Pretax margin 29.5% 26.3% 26.3%
18 H&R BLOCK 2009 Form 10K