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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. Additionally, this segment includes the
product offerings and activities of HRB Bank that primarily support the tax network, our participations in refund
anticipation loans, and our commercial tax businesses, which provide tax preparation software to CPAs and other
tax preparers.
Year Ended April 30, 2010 2009 2008
(in 000s, except average fee)Tax Services – Operating Statistics
TAX RETURNS PREPARED :
United States:
Company-owned operations 9,182 10,231 10,530
Franchise operations 5,064 4,936 5,577
Total retail operations 14,246 15,167 16,107
Software 2,193 2,309 2,378
Online 2,893 2,775 1,911
Free File Alliance 810 788 1,453
Total digital tax solutions 5,896 5,872 5,742
Total U.S operations 20,142 21,039 21,849
International operations 3,019 2,864 2,725
23,161 23,903 24,574
NET AVERAGE FEE PER U.S. TAX RETURN PREPARED
(1)
:
Company-owned operations $ 197.42 $ 196.16 $ 183.68
Franchise operations 174.32 169.04 157.72
$ 189.21 $ 187.36 $ 174.70
(1)
Calculated as net tax preparation fees divided by retail tax returns prepared.
Year Ended April 30, 2010 2009 2008
Tax Services – Financial Results (dollars in 000s)
Tax preparation fees $ 1,991,989 $ 2,154,822 $ 2,096,236
Royalties 275,559 255,536 237,986
Loan participation fees and related revenue 146,160 139,770 190,201
Fees from Emerald Card activities 99,822 98,031 78,385
Interest income on Emerald Advance 77,882 91,010 45,339
Fees from Peace of Mind guarantees 79,888 78,205 80,503
Other 303,952 314,703 332,011
Total revenues 2,975,252 3,132,077 3,060,661
Compensation and benefits:
Field wages 713,792 757,835 771,598
Other wages 111,326 117,291 137,457
Benefits and other compensation 175,904 167,005 172,728
1,001,022 1,042,131 1,081,783
Occupancy and equipment 410,709 412,335 409,214
Marketing and advertising 233,748 226,483 179,853
Bad debt 104,716 112,032 129,595
Depreciation and amortization 93,424 79,543 74,916
Supplies 49,781 52,438 63,107
Other 263,556 294,983 296,472
Gains on sale of tax offices (49,066) (14,916) –
Total expenses 2,107,890 2,205,029 2,234,940
Pretax income $ 867,362 $ 927,048 $ 825,721
Pretax margin 29.2% 29.6% 27.0%
FISCAL 2010 COMPARED TO FISCAL 2009 –Tax Services’ revenues decreased $156.8 million, or 5.0%, compared
to the prior year. Tax preparation fees decreased $162.8 million, or 7.6%, due to a 10.3% decrease in U.S. retail tax
returns prepared in company-owned offices, partially offset by a 0.6% increase in the net average fee per U.S. retail
tax return. Adjusting for the effect of company-owned offices sold to franchisees during fiscal year 2010, the
H&R BLOCK 2010 Form 10K 19