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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): June 9, 2004

H&R BLOCK, INC.


(Exact name of registrant as specified in charter)
         
Missouri   1-6089   44-0607856

 
 
 
 
 
(State of Incorporation)   (Commission File Number)   (I.R.S. Employer
Identification Number)
     
4400 Main Street, Kansas City, MO   64111

 
 
 
(Address of Principal Executive Offices)   (Zip Code)

(816) 753-6900


(Registrant’s telephone number, including area code)

Not Applicable


(Former name or former address, if changed since last report)

 


TABLE OF CONTENTS

Item 12. Results of Operations and Financial Condition.
SIGNATURES
EXHIBIT INDEX
Press Release


Table of Contents

Item 12. Results of Operations and Financial Condition.

On June 9, 2004, H&R Block, Inc. (the “Company”) issued a press release regarding the Company’s results of operations for the fiscal year ended April 30, 2004. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
  H&R BLOCK, INC.
 
       
Date: June 10, 2004
  By:   /s/ Bret G. Wilson
     
 
      Bret G. Wilson
      Vice President and Secretary

 


Table of Contents

EXHIBIT INDEX

     
Exhibit 99.1
  Press Release issued June 9, 2004.

 

exv99w1
 

Exhibit 99.1

(H&R BLOCK LOGO)

News Release
For Further Information

Media Relations:
Bob Schneider, 816.932.4835, bschneider@hrblock.com
Investor Relations:
Mark Barnett, 816.701.4443, marbarnett@hrblock.com

H&R BLOCK REPORTS RECORD ANNUAL REVENUES AND EARNINGS
Company Announces Dividend and Share Repurchases Authorization Increases

FOR RELEASE JUNE 9, 2004 4 P.M. EDT

     KANSAS CITY, Mo. — H&R Block Inc. (NYSE: HRB) today reported record revenues and net income for both its fourth quarter and fiscal year ended April 30.

     Fourth quarter revenues totaled $2.2 billion, a 14.8 percent increase over the fourth quarter last year. Consolidated net income for the quarter increased 16.4 percent to $575.6 million. Fourth quarter earnings per diluted share increased 19.2 percent to $3.23.

     Fiscal year revenues increased 12.3 percent to $4.2 billion. Consolidated net income for the fiscal year increased 20.3 percent to $697.9 million. Earnings per diluted share increased 23.8 percent to $3.90, excluding a change in accounting principle. After the change in accounting principle, earnings per share increased 22.5 percent to $3.86. The company adopted Emerging Issues Task Force No. 00-21 (EITF 00-21) in its second quarter.

     “Fourth quarter results completed a year that saw record revenues, record earnings and balanced growth from our mix of businesses,” said H&R Block Chairman and Chief Executive Officer Mark A. Ernst. “We experienced improved results across all business lines in our fourth quarter.

     “H&R Block’s combined annual growth rate for earnings per share has increased 29 percent in the past five years. Our mix of businesses has generated solid results, even in challenging business environments,” Ernst said.

     H&R Block began to expense the costs of all stock-based compensation at the beginning of fiscal year 2004. The fiscal year results include $25.7 million, or 9 cents per diluted share, in stock-based compensation expense, compared with $2.1 million last year.

- more -

 


 

Fiscal 2005 Outlook

     “Next year, we expect earnings per share in the range of $4.00 to $4.25 per share. We expect solid growth in our mix of businesses. We continue to believe that, over the long-term, the company’s mix of businesses can generate earnings consistent with our long-term guidance of earnings per share growth in the range of 13 to 18 percent per year,” Ernst said.

     “A changing interest rate environment will likely result in a flattening or slight decline in mortgage earnings, which will partially offset solid earnings growth in our other businesses,” he said.

Board Actions

     Reflecting the company’s strong financial condition and continuing performance, H&R Block’s board of directors approved an increase of the quarterly cash dividend from 20 cents to 22 cents per share, a ten percent increase, effective with the quarterly dividend payment on Oct. 1, 2004 to shareholders of record on Sept. 10, 2004. This payment will be the company’s 168th consecutive quarterly dividend.

     Also, the board authorized the company to repurchase up to 15 million of its shares, in addition to the 11.3 million shares remaining at year end on its previous repurchase authorization from June 11, 2003.

     “In the past year, the company has returned significant value to shareholders by repurchasing $518.5 million, or 10.6 million, of its shares,” Ernst said. “The new repurchase authorization reflects the confidence that the board of directors has in H&R Block’s future. Given our strong cash position, share repurchase continues to be a great way for us to enhance shareholder value.”

     During the fourth quarter, the company repurchased 2.8 million shares at an average cost of $52.77 per share.

U.S. Tax Operations

     For the fiscal year, U.S. tax operations reported pretax income of $627.6 million, an increase of 14.7 percent from pretax income of $547.1 million in fiscal 2003.

     U.S. tax operations reported a 3.2 percent increase in fourth quarter pretax income, which totaled $783.5 million, up from $759.3 million in the fourth quarter of fiscal 2003.

     The segment’s revenues for the year increased 12.5 percent to $2.1 billion. The increase was driven by an 8 percent increase in the average fee per client served, the acquisition of former major franchise territories during fiscal year 2004, and a change from last year’s contractual agreement with Household Taxmasters Inc. that resulted in increased revenues from refund anticipation loan (RAL) participation.

     The segment reported $1.5 billion in revenues for the fourth quarter, an increase of 10.1 percent compared with last year’s fourth quarter.

 


 

     “We improved client satisfaction with our combination of financial information and tax services, which is a unique value of the H&R Block brand. And we made solid progress with our multi-channel strategy. The number of software and online clients increased 12.2 percent to 3.2 million, with the fastest growth in tax solutions that blend the services of a tax professional with software and online products,” Ernst said.

     “While we’re disappointed in the 0.8 percent decline in clients served, we understand the factors behind the decline and are taking steps to strengthen our market position. We will open 500 to 600 new offices in underserved areas where we could not provide the convenience clients wanted. And we are reviewing our marketing plans to identify the best mix of messages, products and services to drive client growth in the early part of tax season.”

Mortgage Operations

     Mortgage operations, which includes Option One Mortgage Corp. and H&R Block Mortgage Corp., reported fourth quarter pretax income of $175.9 million, a 34.4 percent increase, compared with $130.9 million in the fourth quarter last year.

     For fiscal 2004, the mortgage segment reported pretax income of $678.3 million, a 2.3 percent decrease compared with $694.0 million in pretax income in fiscal 2003.

     Fourth quarter revenues grew 28.4 percent to $344.3 million, up from $268.3 million the prior year. Fiscal 2004 revenues increased 10 percent to $1.3 billion, up from $1.2 billion in fiscal 2003.

     For fiscal 2004, gains on sales of mortgage loans increased 8 percent to $716.7 million, compared with $663.6 million in fiscal 2003. In fiscal year 2003, the company reported a $130.9 million gain on the sale of previously securitized residual interests, compared to $40.7 million in the current year. Net of $30.7 million in impairments of older residuals, compared with $54.1 million in 2003, the mortgage segment’s total gains on sales were $726.7 million for fiscal 2004, compared to $740.3 million in the prior year.

     Loan production increased to $23.3 billion in fiscal 2004, a 40.3 percent increase over the previous year. An increase in the number of loan specialists, improvements in the company’s closing ratio, and a 4.9 percent increase in the average loan size all contributed to this growth.

     Included within these results, H&R Block Mortgage Corp., H&R Block’s retail mortgage subsidiary, originated 6.4 percent more loans, 48.9 percent of which were made to retail clients of other H&R Block businesses.

     “The mortgage business performed as we expected it would. We saw continued growth in mortgage originations and lower margins due to the anticipated increase in interest rates,” Ernst said.

     “Originations have been strong across all of our origination channels, and loan performance has exceeded modeled expectations. We continue to manage our mortgage business to optimize cash earnings, and we remain confident that mortgage operations will continue to perform well,” he said.

 


 

     Option One’s mortgage servicing business increased the number of loans serviced 31.6 percent to 324,364. The servicing portfolio at year-end increased 44.7 percent to $45.3 billion, compared with last year’s portfolio.

     The segment’s residual interests continued to perform better than expected, primarily due to better than modeled credit losses and interest rates. Consequently, the company realized a net write-up to residual balances of $167.1 million during fiscal year 2004, including $67.1 million in the fourth quarter, which was recorded in other comprehensive income on the balance sheet, net of deferred taxes.

Business Services

     RSM McGladrey Business Services, Inc. reported fourth quarter pretax earnings of $26.8 million, compared with a net loss of $1.9 million in the same quarter last year. For fiscal 2004, the segment reported pretax earnings of $19.3 million, compared with a net loss of $14.1 million in 2003.

     In the fourth quarter, the business services segment reported revenues of $179.4 million, an increase of 28 percent. For the fiscal year, revenues increased 15 percent to $499.2 million.

     “We are beginning to realize the potential that exists in this business segment. Our capital markets business enjoyed a strong year, and an improving economic environment for our middle market clients resulted in higher revenues in our core accounting and tax services,” Ernst said.

     Fiscal year 2003 includes a goodwill impairment charge of $11.8 million related to the segment’s payroll and benefits processing company. The segment wrote off $576,000 in intangible assets in the fourth quarter of 2004.

Investment Services

     Investment services reported a fourth quarter pretax loss of $22.5 million, an improvement of $13.3 million from a fourth quarter loss last year of $35.8 million. For the fiscal year, investment services recorded a pretax loss of $64.4 million, an improvement of $63.8 million compared with a loss of $128.3 million in fiscal 2003. Fiscal year 2003 results include $24 million of goodwill impairment charges.

     Investment services reported fourth quarter revenues of $62 million, a 40.8 percent increase from the same quarter last year. Revenues for the fiscal year increased 14.3 percent to $229.5 million.

     “We see continued improvement in H&R Block Financial Advisors’ results. We believe that this business has been restructured in a way that allows us to compete effectively as the investment climate improves,” Ernst said.

     “The retention and recruitment of experienced advisors continues to be a key initiative in the upcoming year, along with building stronger links between financial advisors and tax professionals in our U.S. tax operations.”

 


 

Other

     The company will host a conference call for analysts and institutional investors at 5 p.m. EDT (4 p.m. CDT) June 9. Ernst and Jeff Yabuki, executive vice president and chief operating officer, will discuss the quarter and year-end results and future expectations, as well as respond to analysts’ questions. To access the call, please dial the number approximately five to 10 minutes prior to the scheduled starting time:

U.S./Canada (888) 425-2715

International (706) 679-8257

     The call will be Webcast in a listen-only format for the media and public. The link to the Webcast can be obtained at www.hrblock.com. Supplemental slides will be available in connection with the Webcast, or can be accessed directly on H&R Block’s Investor Relations website at www.hrblock.com/about/investor following market close.

     A replay of the call will be available beginning at 8 p.m. EDT June 9 until 8 p.m. EDT June 23, by dialing 800-642-1687 (U.S./Canada) or 706-645-9291 (International). The replay access code is 6540535. A replay of the Webcast will also be available on the company’s Web site at www.hrblock.com through June 30.

###

     Except for historical information contained herein, the matters set forth in this press release are forward-looking statements based upon current information and expectations. Such statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that could cause actual results to differ materially from what is expressed, implied or forecast in such forward-looking statements. Such differences could be caused by a number of factors, including, but not limited to: the uncertainty that the company will achieve or exceed its revenue, earnings, and earnings per share growth goals or expectations for fiscal year 2005; the uncertainty of the company’s ability to purchase shares of its common stock pursuant to the board’s authorization; the uncertainty of the effect of any share repurchases upon the company and its shareholders; changes in interest rates; changes in economic, political or regulatory environments; changes in competition; litigation involving the company and its subsidiaries; and risks described from time to time in reports and registration statements filed by H&R Block Inc. and its subsidiaries with the Securities and Exchange Commission.

     Readers should take these factors into account in evaluating such forward-looking statements.

About H&R Block:

     H&R Block Inc. (www.hrblock.com) is a diversified company with subsidiaries that deliver tax services and financial advice, investment and mortgage products and

 


 

     services, and business accounting and consulting services. The world’s largest tax preparation company, H&R Block in fiscal year 2004 served 21.6 million clients at more than 11,000 retail offices worldwide and with software and online services. H&R Block is the only major tax preparation and financial services company that focuses primarily on helping middle-income Americans achieve their financial objectives. Investment services and securities products are offered through H&R Block Financial Advisors Inc., member NYSE, SIPC. H&R Block Inc is not a registered broker-dealer. H&R Block Mortgage Corp. offers retail mortgage products. Option One Mortgage Corp offers wholesale mortgage products and a range of mortgage services. RSM McGladrey Inc. serves mid-sized businesses with accounting, tax and consulting services.

 


 

H&R BLOCK, INC.
KEY OPERATING RESULTS

Unaudited, amounts in thousands, except per share data

                   
    Three months ended April 30,
    2004
  2003
Revenues
  $ 2,191,793     $ 1,909,755  
 
   
 
     
 
 
Income before taxes
    952,074       842,294  
Net income
  $ 575,635     $ 494,642  
 
   
 
     
 
 
Basic earnings per share
  $ 3.30     $ 2.76  
 
   
 
     
 
 
Basic shares outstanding
    174,300       179,314  
Diluted earnings per share
  $ 3.23     $ 2.71  
 
   
 
     
 
 
Diluted shares outstanding
    178,194       182,615  
                   
    Year ended April 30,
    2004
  2003
Revenues
  $ 4,205,570     $ 3,746,457  
 
   
 
     
 
 
Income before taxes
    1,164,157       987,077  
Net income before change in accounting principle
    704,256       580,064  
Cumulative effect of change in accounting principle, net of taxes
    (6,359 )      
Net income
  $ 697,897     $ 580,064  
 
   
 
     
 
 
Basic earnings per share:
               
Before change in accounting principle
  $ 3.98     $ 3.23  
Net income
  $ 3.94     $ 3.23  
 
   
 
     
 
 
Basic shares outstanding
    177,076       179,638  
Diluted earnings per share:
               
Before change in accounting principle
  $ 3.90     $ 3.15  
Net income
  $ 3.86     $ 3.15  
 
   
 
     
 
 
Diluted shares outstanding
    180,802       184,078  

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the second quarter of fiscal year 2004, the Company adopted Emerging Issues Task Force Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (EITF 00-21) as of May 1, 2003. As a result of the adoption of EITF 00-21, the Company recorded a cumulative effect of a change in accounting principle of $6.4 million, net of taxes of $4.0 million.

Basic earnings per share is based on the weighted average number of shares outstanding. The dilutive effect of potential common shares is included in diluted earnings per share.

Certain reclassifications have been made to prior year amounts to conform to the current period presentation. These reclassifications had no effect on the results of operations or stockholders’ equity as previously reported.

 


 

H&R BLOCK, INC.
SEGMENT FINANCIAL RESULTS

Unaudited, amounts in thousands

                                 
    Three months ended April 30,
    Revenues
  Income (loss)
    2004
  2003
  2004
  2003
U.S. Tax Operations
  $ 1,542,260     $ 1,401,120     $ 783,466     $ 759,270  
Mortgage Operations
    344,347       268,285       175,930       130,879  
Business Services
    179,394       140,202       26,777       (1,863 )
Investment Services
    62,027       44,057       (22,542 )     (35,804 )
International Tax Operations
    62,157       56,694       23,359       22,900  
Corporate Operations
    1,608       (603 )     (34,916 )     (33,088 )
 
   
 
     
 
     
 
     
 
 
 
  $ 2,191,793     $ 1,909,755       952,074       842,294  
 
   
 
     
 
                 
Income taxes
                    376,439       347,652  
 
                   
 
     
 
 
Net income
                  $ 575,635     $ 494,642  
 
                   
 
     
 
 
                                 
    Year ended April 30,
    Revenues
  Income (loss)
    2004
  2003
  2004
  2003
U.S. Tax Operations
  $ 2,093,617     $ 1,861,681     $ 627,592     $ 547,078  
Mortgage Operations
    1,281,399       1,165,411       678,261       693,950  
Business Services
    499,210       434,140       19,321       (14,118 )
Investment Services
    229,470       200,794       (64,446 )     (128,292 )
International Tax Operations
    97,560       85,082       11,097       10,464  
Corporate Operations
    4,314       (651 )     (107,668 )     (122,005 )
 
   
 
     
 
     
 
     
 
 
 
  $ 4,205,570     $ 3,746,457       1,164,157       987,077  
 
   
 
     
 
                 
Income taxes
                    459,901       407,013  
 
                   
 
     
 
 
Net income before change in accounting principle
                    704,256       580,064  
Cumulative effect of change in accounting principle, net of taxes
                    (6,359 )      
 
                   
 
     
 
 
Net income
                  $ 697,897     $ 580,064  
 
                   
 
     
 
 

 


 

H&R BLOCK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

Amounts in thousands, except share data

                 
    April 30,   April 30,
    2004
  2003
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 1,071,676     $ 875,353  
Cash and cash equivalents — restricted
    545,428       438,242  
Receivables from customers, brokers, dealers and clearing organizations, net
    625,076       517,037  
Receivables, net
    347,910       403,197  
Prepaid expenses and other current assets
    371,209       391,402  
 
   
 
     
 
 
Total current assets
    2,961,299       2,625,231  
 
   
 
     
 
 
Residual interests in securitizations — available-for-sale
    210,973       264,337  
Beneficial interest in Trust — trading
    137,757       122,130  
Mortgage servicing rights
    113,821       99,265  
Property and equipment, net
    279,220       288,594  
Intangible assets, net
    325,829       341,865  
Goodwill, net
    959,418       714,215  
Other
    391,709       148,268  
 
   
 
     
 
 
Total assets
  $ 5,380,026     $ 4,603,905  
 
   
 
     
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Current portion of long-term debt
  $ 275,669     $ 55,678  
Accounts payable to customers, brokers and dealers
    1,065,793       862,694  
Accounts payable, accrued expenses and other
    456,167       468,933  
Accrued salaries, wages and payroll taxes
    268,747       210,629  
Accrued income taxes
    405,667       299,262  
 
   
 
     
 
 
Total current liabilities
    2,472,043       1,897,196  
 
   
 
     
 
 
Long-term debt
    545,811       822,302  
Other non-current liabilities
    465,163       220,698  
 
   
 
     
 
 
Total liabilities
    3,483,017       2,940,196  
 
   
 
     
 
 
Stockholders’ equity:
               
Common stock, no par, stated value $.01 per share
    2,179       2,179  
Additional paid-in capital
    545,065       496,393  
Accumulated other comprehensive income
    57,953       36,862  
Retained earnings
    2,781,368       2,221,868  
Less cost of 44,849,128 and 38,343,944 shares of common stock in treasury
    (1,489,556 )     (1,093,593 )
 
   
 
     
 
 
Total stockholders’ equity
    1,897,009       1,663,709  
 
   
 
     
 
 
Total liabilities and stockholders’ equity
  $ 5,380,026     $ 4,603,905  
 
   
 
     
 
 

 


 

H&R BLOCK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited, amounts in thousands

                 
    Year ended April 30,
    2004
  2003
Cash flows from operating activities:
               
Net income
  $ 697,897     $ 580,064  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    172,038       161,821  
Accretion of residual interests in securitizations
    (168,029 )     (145,165 )
Impairment of residual interests in securitizations
    30,661       54,111  
Additions to trading securities — residual interests in securitizations
    (327,996 )     (542,544 )
Proceeds from net interest margin transactions
    310,358       541,791  
Realized gain on sale of previously securitized residuals
    (40,689 )     (130,881 )
Additions to mortgage servicing rights
    (84,274 )     (65,345 )
Amortization of mortgage servicing rights
    69,718       47,107  
Net change in beneficial interest in Trust
    (15,627 )     (69,529 )
Cumulative effect of change in accounting principle
    6,359        
Impairment of goodwill
          35,777  
Mortgage loans held for sale:
               
Originations and purchases
    (23,256,013 )     (16,577,621 )
Sales and principal repayments
    23,227,547       16,587,116  
Other net changes in working capital, net of acquisitions
    304,857       214,123  
 
   
 
     
 
 
Net cash provided by operating activities
    926,807       690,825  
 
   
 
     
 
 
Cash flows from investing activities:
               
Available-for-sale securities:
               
Purchases of available-for-sale securities
    (11,434 )     (14,614 )
Cash received from residual interests in securitizations
    193,606       140,795  
Cash received from sale of previously securitized residuals
    53,391       142,486  
Sales of other available-for-sale securities
    14,377       14,081  
Purchases of property and equipment, net
    (112,153 )     (150,897 )
Payments made for business acquisitions, net of cash acquired
    (280,865 )     (26,408 )
Other, net
    11,945       19,896  
 
   
 
     
 
 
Net cash provided by (used in) investing activities
    (131,133 )     125,339  
 
   
 
     
 
 
Cash flows from financing activities:
               
Repayments of notes payable
    (4,618,853 )     (9,925,516 )
Proceeds from issuance of notes payable
    4,618,853       9,925,516  
Payments on acquisition debt
    (59,003 )     (57,469 )
Dividends paid
    (138,397 )     (125,898 )
Payments to acquire treasury shares
    (519,862 )     (317,570 )
Proceeds from issuance of common stock
    119,956       126,325  
Other, net
    (2,045 )     (2,344 )
 
   
 
     
 
 
Net cash used in financing activities
    (599,351 )     (376,956 )
 
   
 
     
 
 
Net increase in cash and cash equivalents
    196,323       439,208  
Cash and cash equivalents at beginning of the period
    875,353       436,145  
 
   
 
     
 
 
Cash and cash equivalents at end of the period
  $ 1,071,676     $ 875,353  
 
   
 
     
 
 
Supplementary cash flow data:
               
Income taxes paid
  $ 329,752     $ 247,057  
Interest paid
    84,551       84,094  

 


 

H&R BLOCK, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS

Unaudited, amounts in thousands, except per share data

                                 
    Three Months Ended   Year Ended
    April 30,
  April 30,
    2004
  2003
  2004
  2003
Revenues:
                               
Service revenues
  $ 1,694,888     $ 1,487,807     $ 2,740,983     $ 2,398,081  
Gain on sale of mortgage assets
    193,750       162,342       726,718       740,343  
Interest income
    102,602       69,009       379,064       297,185  
Product sales
    58,361       52,260       157,417       123,510  
Royalties
    135,472       131,577       184,882       174,659  
Other income
    6,720       6,760       16,506       12,679  
 
   
 
     
 
     
 
     
 
 
 
    2,191,793       1,909,755       4,205,570       3,746,457  
 
   
 
     
 
     
 
     
 
 
Operating expenses:
                               
Employee compensation and benefits
    751,272       605,841       1,610,103       1,387,731  
Occupancy and equipment
    131,393       122,318       384,622       345,960  
Depreciation and amortization
    49,541       47,083       172,038       161,821  
Marketing and advertising
    88,551       65,512       188,317       150,847  
Interest
    20,099       22,855       84,556       92,644  
Supplies, freight and postage
    37,839       33,276       89,189       88,748  
Impairment of goodwill
          11,777             35,777  
Other
    166,403       161,058       522,442       502,687  
 
   
 
     
 
     
 
     
 
 
 
    1,245,098       1,069,720       3,051,267       2,766,215  
 
   
 
     
 
     
 
     
 
 
Operating income
    946,695       840,035       1,154,303       980,242  
Other income, net
    5,379       2,259       9,854       6,835  
 
   
 
     
 
     
 
     
 
 
Income before taxes
    952,074       842,294       1,164,157       987,077  
Income taxes
    376,439       347,652       459,901       407,013  
 
   
 
     
 
     
 
     
 
 
Net income before cumulative effect of change in accounting principle
    575,635       494,642       704,256       580,064  
Cumulative effect of change in accounting principle for multiple deliverable revenue arrangements, less income taxes of $4,031
                (6,359 )      
 
   
 
     
 
     
 
     
 
 
Net income
  $ 575,635     $ 494,642     $ 697,897     $ 580,064  
 
   
 
     
 
     
 
     
 
 
Basic earnings per share:
                               
Before change in accounting principle
  $ 3.30     $ 2.76     $ 3.98     $ 3.23  
Cumulative effect of change in accounting
                (0.04 )      
 
   
 
     
 
     
 
     
 
 
Net income
  $ 3.30     $ 2.76     $ 3.94     $ 3.23  
 
   
 
     
 
     
 
     
 
 
Basic shares outstanding
    174,300       179,314       177,076       179,638  
Diluted earnings per share:
                               
Before change in accounting principle
  $ 3.23     $ 2.71     $ 3.90     $ 3.15  
Cumulative effect of change in accounting
                (0.04 )      
 
   
 
     
 
     
 
     
 
 
Net income
  $ 3.23     $ 2.71     $ 3.86     $ 3.15  
 
   
 
     
 
     
 
     
 
 
Diluted shares outstanding
    178,194       182,615       180,802       184,078  

 


 

H&R BLOCK, INC.
SELECTED OPERATING DATA
Unaudited

                                         
Option One Mortgage Corporation   Year ended
  Three months ended
    4/30/2004
  4/30/2004
  4/30/2003
  % change
  1/31/2004
Number of loans originated:
                                       
Wholesale (non-prime)
    130,356       34,951       26,126       33.8 %     30,678  
Retail: Prime
    9,763       2,523       3,813       -33.8 %     1,291  
     Non-prime
    15,220       4,281       2,566       66.8 %     3,826  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    155,339       41,755       32,505       28.5 %     35,795  
 
   
 
     
 
     
 
     
 
     
 
 
Volume of loans originated (000’s):
                                       
Wholesale (non-prime)
  $ 20,150,992     $ 5,410,469     $ 3,981,480       35.9 %   $ 4,732,182  
Retail: Prime
    1,258,347       312,923       503,130       -37.8 %     157,438  
         Non-prime
    1,846,674       523,438       305,841       71.1 %     464,926  
 
   
 
     
 
     
 
     
 
     
 
 
Total
  $ 23,256,013     $ 6,246,830     $ 4,790,451       30.4 %   $ 5,354,546  
 
   
 
     
 
     
 
     
 
     
 
 
Loan sales
  $ 23,234,935     $ 6,294,346     $ 4,813,186       30.8 %   $ 5,308,800  
 
   
 
     
 
     
 
     
 
     
 
 
Servicing portfolio:
                                       
Number of loans serviced
    324,364       324,364       246,463       31.6 %     308,305  
Servicing portfolio ($ bn’s)
  $ 45.3     $ 45.3     $ 31.3       44.7 %   $ 42.2  
                                         
H&R Block Financial Advisors, Inc.   Year ended
  Three months ended
    4/30/2004
  4/30/2004
  4/25/2003
  % change
  1/31/2004
Customer trades
    1,514,969       390,750       244,843       59.6 %     413,338  
Customer daily average trades
    5,918       6,202       4,221       46.9 %     6,776  
Average revenue per trade
  $ 119.36     $ 121.58     $ 128.89       -5.7 %   $ 113.61  
Number of active accounts
    863,116       863,116       752,903       14.6 %     741,824  
Ending balance of assets under administration ($ bn’s)
  $ 26.7     $ 26.7     $ 22.3       19.7 %   $ 27.5  
Average assets per active account
  $ 30,970     $ 30,970     $ 29,616       4.6 %   $ 37,122  
Ending customer margin balances ($ millions)
  $ 608     $ 608     $ 486       25.1 %   $ 594  
Ending payables to customers ($ millions)
  $ 1,007     $ 1,007     $ 848       18.8 %   $ 1,076