H&R Block Reports Interim U.S. Tax Results Through Feb. 28; Fiscal 2012 Third Quarter Results Ended Jan. 31
(firmenpresse) - KANSAS CITY, MO -- (Marketwire) -- 03/07/12 -- H&R Block, Inc. (NYSE: HRB)
Total tax returns prepared grow 5.1 percent
Total retail returns prepared up 1.6 percent
Total online(1) returns prepared increase more than 20 percent; total digital returns up nearly 13 percent
Total H&R Block Emerald Prepaid MasterCard® units up 22 percent to 2.6 million
Net loss from continuing operations of $3.6 million, or $0.01 per share(2), compared to prior year loss of $11.0 million, or $0.04 per share
Total revenues down 2.5 percent to $663.3 million
Minimum equity covenant on company's committed line of credit lowered by $150 million to $500 million
H&R Block, Inc. (NYSE: HRB) today released interim period U.S. tax results through Feb. 28, 2012. Total U.S. tax returns prepared fiscal year-to-date through Feb. 28 grew 5.1 percent compared to the prior year. Total retail returns prepared increased 1.6 percent for the comparable period. Total digital tax returns increased 12.6 percent, including a 20.4 percent increase in online filings.
"With the first half of the tax season now behind us, I am pleased by the 5 percent growth in U.S. tax returns prepared to date," said Bill Cobb, H&R Block's president and chief executive officer. "We continue to work to position the company for long-term growth in revenue and earnings."
The company also reported fiscal third quarter results ended Jan. 31, 2012. The company reported a net loss from continuing operations of $3.6 million, or $0.01 per share for the quarter, compared to a loss of $11.0 million, or $0.04 per share in the prior year period. Total revenues fell 2.5 percent to $663.3 million.
Due to the seasonality of its Tax Services business segment, the company normally reports an operating loss for the first nine months of its fiscal year. For the nine months ended Jan. 31, 2012, the company reported a net loss from continuing operations of $245.7 million, or $0.82 per share, compared with a prior year loss of $250.3 million, or $0.80 cents per share. Nine-month revenues fell 0.7 percent to $893.1 million.
Total segment revenues for the third quarter ended Jan. 31, declined 2.5 percent year-over-year to $655.7 million. Tax preparation and related revenues through Jan. 31 increased 10.0 percent, or $48.5 million, due to growth in total tax returns prepared.
Higher tax preparation revenues were offset by a decline in financial product revenues. In line with the company's continued focus on attracting and retaining clients through value offerings, refund anticipation checks ("RACs") were offered free to clients electing to deposit their refund on an H&R Block Emerald Prepaid MasterCard®. This promotion, which expired on Feb. 4, resulted in a significant increase in Emerald Card units from tax preparation clients through Jan. 31, but a decline of $30.3 million in quarterly RAC revenues. The company also changed its underwriting criteria for its Emerald Advance program in fiscal 2012. While this change led to a $16.1 million decline in interest income, associated credit losses fell by $36.6 million compared to the prior year. Prior year results also included $16.3 million of non-recurring revenue from a terminated RAL contract.
The segment's pretax income increased to $31.7 million, compared to income of $4.1 million a year ago. This improvement was primarily due to the lower credit losses and a decline in impairment and litigation related charges, partially offset by increased marketing expense and the decline in revenues.
Nine-month segment revenues fell 0.8 percent to $868.1 million. The pretax loss for the first nine months of fiscal 2012 was $311.7 million, compared to a loss of $324.9 million in the prior-year period.
Corporate includes support department costs, such as finance and legal, as well as net interest margin and other gains/losses associated with H&R Block Bank's mortgage portfolio. Third quarter corporate revenues of $7.6 million were essentially flat to the prior year. The segment's pretax loss of $32.7 million for the third quarter ended Jan. 31, 2012, compared to a loss of $30.1 million in the prior year.
Nine-month corporate revenues grew 2.5 percent to $25.0 million. The pretax loss for the first nine months of fiscal 2012 was $93.8 million, compared to a loss of $91.8 million in the prior-year period.
Discontinued operations includes the results of RSM McGladrey ("RSM") and Sand Canyon Corporation, formerly known as Option One Mortgage Corporation, and its subsidiaries ("SCC").
During the third quarter, SCC received new claims for alleged breaches of representations and warranties in the principal amount of $35 million. SCC completed a review of prior period claims with an approximate principal balance of $220 million. Claims found to be valid in the third quarter have estimated losses totaling $1.2 million. As payments related to these valid claims remained pending at Jan. 31, SCC's accrual for representation and warranty liabilities remained unchanged from the prior quarter at $143 million. At Jan. 31, total claims of $399 million remain subject to review.
Discontinued operations reported third quarter net income of $0.2 million compared to a net loss of $1.7 million in the prior-year period. For the first nine months of fiscal 2012, the net loss in discontinued operations increased to $74.4 million, or $0.25 per share, compared to a loss of $2.2 million, or $0.01 per share in the prior year period. The increase fiscal year-to-date is primarily due to the net loss of $37.1 million on the sale of RSM and increased loss provisions for litigation and representation and warranty claims.
The company also announced today an amendment of its CLOC that reduced its minimum equity covenant by $150 million to $500 million. The company expects to refinance the CLOC, which expires in July 2013, during fiscal year 2013.
A previously announced quarterly cash dividend of 20 cents per share is payable April 2, 2012, to shareholders of record March 12, 2012.
At 4:30 p.m. Eastern today, the company will host a conference call for analysts, institutional investors and shareholders. To access the call, please dial the number below approximately five to 10 minutes prior to the scheduled starting time:
U.S./Canada (877) 809-6980 or International (706) 634-7287
Conference ID: 48334982
The call will also be webcast in a listen-only format for the media and public. The link to the webcast can be accessed on the company's investor relations Web site at
A replay of the call will be available beginning at 6:30 p.m. Eastern on March 7 and continuing until March 20, 2012, and may be accessed by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 48334982. The webcast will be available for replay beginning on March 8.
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "would," "should," "could" or "may." Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. They may include estimates of revenues, income, earnings per share, capital expenditures, dividends, liquidity, capital structure or other financial items, descriptions of management's plans or objectives for future operations, products or services, or descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect the company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes, except as required by federal securities laws. By their nature, forward-looking statements are subject to risks and uncertainties. For a discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the company's 2011 Annual Report on Form 10-K and in other filings by the company with the Securities and Exchange Commission.
H&R Block, Inc. (NYSE: HRB) has prepared more than 575 million tax returns worldwide since 1955, making it the country's largest tax services provider. In fiscal 2011, H&R Block had annual revenues of nearly $3.0 billion and prepared more than 24.5 million tax returns worldwide, including Canada and Australia. Tax return preparation services are provided in and retail tax offices by approximately 100,000 professional tax preparers, and through H&R Block At Home™ digital products. H&R Block Bank provides affordable banking products and services. For more information, visit the .
(1) Total online returns prepared exclude software-based and Free File Alliance ("FFA") returns.
(2) All per share amounts are based on fully diluted shares.
Basic earnings per share is computed using the two-class method and is based on the weighted average number of shares outstanding. The dilutive effect of potential common shares is included in diluted earnings per share, except in those periods with a loss from continuing operations.
In November 2011, we sold substantially all assets of RSM McGladrey, Inc. (RSM) to McGladrey & Pullen LLP (M&P) for net cash proceeds of $495.6 million. We also received a short-term note in the amount of $32.3 million and a long-term note in the amount of $54.0 million. M&P assumed substantially all liabilities of RSM, including contingent payments and lease obligations. We have indemnified M&P for certain litigation matters as discussed in note 13. The net after tax loss on the sale of RSM totaled $37.1 million, which includes an $85.4 million impairment of goodwill recorded in our first quarter and tax benefits of $20.5 million recorded in the third quarter associated with capital loss carry-forwards utilized.
In the first quarter, we also announced we were evaluating strategic alternatives for RSM EquiCo, Inc. (EquiCo), and effective January 31, 2012, we sold the assets of EquiCo's subsidiary, McGladrey Capital Markets LLC (MCM), for cash proceeds of $1.0 million. We have indemnified the buyer for certain litigation matters related to this business. The net after tax loss on the sale of MCM totaled $12.4 million and included a $14.3 million impairment of goodwill recorded in our first quarter. The remaining EquiCo businesses will be wound down.
As of January 31, 2012, the results of operations of these businesses are presented as discontinued operations in the condensed consolidated financial statements. All periods presented in our condensed consolidated balance sheets and statements of operations have been reclassified to reflect our discontinued operations.
Derek Drysdale
(816) 854-4513
Gene King
(816) 854-4672
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Datum: 07.03.2012 - 21:05 Uhr
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