H&R Block Reports Preliminary Tax Season Results
KANSAS CITY, Mo., Apr 30, 2003 /PRNewswire-FirstCall via COMTEX/ -- H&R Block Inc. (NYSE: HRB) said it expects pretax earnings growth of approximately 10 percent in its U.S. Tax Operations, excluding a second quarter charge for a litigation settlement. The expected earnings growth, based on preliminary tax season results through April 15, is due to strength in the company's online and software business, continued success in attracting clients with more complex tax returns, and increased efficiencies in retail tax offices.
H&R Block said it expected company-wide earnings per share for the fiscal year to be at the upper-end of its guidance range.
The company reported $2.1 billion in fees from tax preparation and related services from Jan. 1 through April 15, up 3.2 percent from last year. The average fee per tax return rose 8.2 percent to $119.41. Preliminary results indicate retail tax office operations will improve its operating margins by approximately 50 basis points, excluding the second quarter charge for the litigation settlement.
Total clients served increased 0.3 percent to 18.2 million in tax season 2003. Online and software clients increased 47.9 percent to more than 2 million. Tax professionals in H&R Block offices prepared 15.9 million returns, a decrease of 3.4 percent compared to the same period last year.
"This year, we made substantial progress with our multi-channel strategy, which has increased the relevance of the H&R Block brand to a broader client base," said Mark A. Ernst, chairman and chief executive officer.
"While we are still evaluating results from the tax season, it appears that this year's marketing and advertising programs may not have been effective enough in providing a compelling reason for taxpayers to choose H&R Block's office-based tax services in a year when the public did not perceive significant tax law changes," Ernst said.
H&R Block's earnings guidance is in the range of $3.10 to $3.25 per diluted share, up 34 to 41 percent from fiscal 2002, when H&R Block earned $2.31 per diluted share. Consolidated company-wide revenues will likely exceed the target growth range of 10-to-15 percent for the year.
The company's earnings guidance includes a total of 27 cents in charges for both the litigation settlement and goodwill impairment charges recorded earlier in the company's fiscal year. The analysts' earnings estimates on First Call exclude the charges, which are included in the company's expected GAAP results. Excluding these charges, the company's guidance range would be $3.37 to $3.52 per diluted share, compared to First Call consensus estimates of $3.46 per diluted share.
The company will announce financial results for the fiscal year and provide an analysis of the tax season at its year-end conference call on June 11, 2003, at 5 p.m. EDT.
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 possibility that the audited financial results of the company or the U.S. Tax Operations segment for the fiscal year ended April 30, 2003, will differ from the preliminary results, guidance and expectations expressed herein; the uncertainty that the company will achieve its revenue, earnings and earnings per share goals for fiscal year 2003; the uncertainty of the actual effect of fourth quarter performance on the final financial results of the company for fiscal year 2003, the uncertainty of the results of the evaluation of the 2003 tax season and the advertising campaign, litigation involving the company and its subsidiaries; changes in economic, political or regulatory environments; 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. As the world's largest tax services company, H&R Block served nearly 23 million clients during fiscal year 2002. Clients were served at the approximately 10,400 H&R Block retail offices worldwide and through the company's award-winning software, TaxCut(R), and its online tax services. H&R Block is the only major tax and financial services company that focuses primarily on helping middle-income taxpayers achieve their financial goals. 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 wide range of mortgage services. RSM McGladrey Inc. serves mid-sized businesses with accounting, tax and consulting services.
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
Period
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Tax preparation & related fees
Fiscal year 2003
Company owned offices $287,698 $366,075 $151,434 $142,736
Franchised offices 173,731 209,522 89,938 73,474
$461,429 $575,597 $241,372 $216,210
Fiscal year 2002 (A)
Company owned offices $260,155 $356,120 $157,205 $146,190
Franchised offices 148,706 199,176 91,062 72,841
$408,861 $555,296 $248,267 $219,031
Percent change
Company owned offices 10.6% 2.8% -3.7% -2.4%
Franchised offices 16.8% 5.2% -1.2% 0.9%
Total 12.9% 3.7% -2.8% -1.3%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Tax preparation & related fees
Fiscal year 2003
Company owned offices $138,700 $268,667 $1,355,310
Franchised offices 67,842 128,240 742,747
$206,542 $396,907 $2,098,057
Fiscal year 2002 (A)
Company owned offices $136,474 $274,100 $1,330,244
Franchised offices 65,222 125,846 702,853
$201,696 $399,946 $2,033,097
Percent change
Company owned offices 1.6% -2.0% 1.9%
Franchised offices 4.0% 1.9% 5.7%
Total 2.4% -0.8% 3.2%
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Tax returns prepared
Fiscal year 2003
Company owned offices 2,202 2,702 1,129 1,033
Franchised offices 1,460 1,764 762 619
3,662 4,466 1,891 1,652
Fiscal year 2002 (A)
Company owned offices 2,133 2,877 1,255 1,097
Franchised offices 1,350 1,811 835 658
3,483 4,688 2,090 1,755
Percent change
Company owned offices 3.2% -6.1% -10.0% -5.8%
Franchised offices 8.2% -2.6% -8.7% -5.9%
Total 5.1% -4.7% -9.5% -5.9%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Tax returns prepared
Fiscal year 2003
Company owned offices 962 1,749 9,777
Franchised offices 553 997 6,155
1,515 2,746 15,932
Fiscal year 2002 (A)
Company owned offices 979 1,886 10,227
Franchised offices 559 1,048 6,261
1,538 2,934 16,488
Percent change
Company owned offices -1.7% -7.3% -4.4%
Franchised offices -1.1% -4.9% -1.7%
Total -1.5% -6.4% -3.4%
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Total clients served
Fiscal year 2003
Company owned offices 2,218 2,725 1,137 1,039
Franchised offices 1,497 1,808 777 632
E-commerce (B) 239 596 315 228
3,954 5,129 2,229 1,899
Fiscal year 2002 (A)
Company owned offices 2,152 2,907 1,267 1,105
Franchised offices 1,403 1,872 857 669
E-commerce (B) 143 414 219 173
3,698 5,193 2,343 1,947
Percent change
Company owned offices 3.1% -6.3% -10.3% -6.0%
Franchised offices 6.7% -3.4% -9.3% -5.5%
E-commerce (B) 67.1% 44.0% 43.8% 31.8%
Total 6.9% -1.2% -4.9% -2.5%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Total clients served
Fiscal year 2003
Company owned offices 967 1,752 9,838
Franchised offices 561 1,001 6,276
E-commerce (B) 223 493 2,094
1,751 3,246 18,208
Fiscal year 2002 (A)
Company owned offices 983 1,892 10,306
Franchised offices 567 1,057 6,425
E-commerce (B) 151 316 1,416
1,701 3,265 18,147
Percent change
Company owned offices -1.6% -7.4% -4.5%
Franchised offices -1.1% -5.3% -2.3%
E-commerce (B) 47.7% 56.0% 47.9%
Total 2.9% -0.6% 0.3%
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Tax returns filed electronically (C)
Fiscal year 2003
Company owned offices 2,159 2,599 1,027 895
Franchised offices 1,441 1,671 656 490
E-commerce (B) 167 610 290 237
3,767 4,880 1,973 1,622
Fiscal year 2002 (A)
Company owned offices 2,084 2,730 1,111 913
Franchised offices 1,330 1,671 691 478
E-commerce (B) 119 382 214 165
3,533 4,783 2,016 1,556
Percent change
Company owned offices 3.6% -4.8% -7.6% -2.0%
Franchised offices 8.4% 0.0% -5.1% 2.5%
E-commerce (B) 40.3% 59.7% 35.5% 43.6%
Total 6.6% 2.0% -2.1% 4.2%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Tax returns filed electronically (C)
Fiscal year 2003
Company owned offices 800 1,376 8,856
Franchised offices 407 662 5,327
E-commerce (B) 228 428 1,960
1,435 2,466 16,143
Fiscal year 2002 (A)
Company owned offices 775 1,386 8,999
Franchised offices 375 607 5,152
E-commerce (B) 140 269 1,289
1,290 2,262 15,440
Percent change
Company owned offices 3.2% -0.7% -1.6%
Franchised offices 8.5% 9.1% 3.4%
E-commerce (B) 62.9% 59.1% 52.1%
Total 11.2% 9.0% 4.6%
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
Period
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Percent filed electronically (D)
Fiscal year 2003
Company owned offices 97.3% 95.4% 90.3% 86.1%
Franchised offices 96.3% 92.4% 84.4% 77.5%
E-commerce (B) 69.9% 102.3% 92.1% 103.9%
95.3% 95.1% 88.5% 85.4%
Fiscal year 2002 (A)
Company owned offices 96.8% 93.9% 87.7% 82.6%
Franchised offices 94.8% 89.3% 80.6% 71.4%
E-commerce (B) 83.2% 92.3% 97.7% 95.4%
95.5% 92.1% 86.0% 79.9%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Percent filed electronically (D)
Fiscal year 2003
Company owned offices 82.7% 78.5% 90.0%
Franchised offices 72.5% 66.1% 84.9%
E-commerce (B) 102.2% 86.8% 93.6%
82.0% 76.0% 88.7%
Fiscal year 2002 (A)
Company owned offices 78.8% 73.3% 87.3%
Franchised offices 66.1% 57.4% 80.2%
E-commerce (B) 92.7% 85.1% 91.0%
75.8% 69.3% 85.1%
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Average fee per client served
Fiscal year 2003
Company owned offices $129.71 $134.34 $133.19 $137.38
Franchised offices 116.05 115.89 115.75 116.26
$124.21 $126.98 $126.11 $129.39
Fiscal year 2002 (A)
Company owned offices $120.89 $122.50 $124.08 $132.30
Franchised offices 105.99 106.40 106.26 108.88
$115.01 $116.20 $116.89 $123.47
Percent change
Company owned offices 7.3% 9.7% 7.3% 3.8%
Franchised offices 9.5% 8.9% 8.9% 6.8%
Total 8.0% 9.3% 7.9% 4.8%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Average fee per client served
Fiscal year 2003
Company owned offices $143.43 $153.35 $137.76
Franchised offices 120.93 128.11 118.35
$135.17 $144.17 $130.20
Fiscal year 2002 (A)
Company owned offices $138.83 $144.87 $129.07
Franchised offices 115.03 119.06 109.39
$130.13 $135.62 $121.52
Percent change
Company owned offices 3.3% 5.9% 6.7%
Franchised offices 5.1% 7.6% 8.2%
Total 3.9% 6.3% 7.1%
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Average fee per tax return (F)
Fiscal year 2003
Company owned offices $106.94 $118.98 $124.95 $132.38
Franchised offices 97.30 103.24 109.25 112.81
$103.09 $112.76 $118.63 $125.04
Fiscal year 2002 (A)
Company owned offices $97.48 $106.34 $115.12 $126.59
Franchised offices 87.03 93.16 98.85 104.29
$93.43 $101.24 $108.62 $118.23
Percent change
Company owned offices 9.7% 11.9% 8.5% 4.6%
Franchised offices 11.8% 10.8% 10.5% 8.2%
Total 10.4% 11.4% 9.2% 5.8%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Average fee per tax return (F)
Fiscal year 2003
Company owned offices $140.29 $151.01 $126.20
Franchised offices 118.27 126.33 108.63
$132.26 $142.05 $119.41
Fiscal year 2002 (A)
Company owned offices $134.93 $142.13 $117.08
Franchised offices 111.52 117.25 99.43
$126.42 $133.23 $110.38
Percent change
Company owned offices 4.0% 6.2% 7.8%
Franchised offices 6.1% 7.7% 9.3%
Total 4.6% 6.6% 8.2%
1/1-1/31 2/1-2/15 2/16-2/28 3/1-3/15
Refund anticipation loans (E)
Fiscal year 2003
Company owned offices 1,146 1,148 223 124
Franchised offices 784 742 133 68
E-commerce (B) 19 29 9 6
1,949 1,919 365 198
Fiscal year 2002 (A)
Company owned offices 1,092 1,193 258 138
Franchised offices 709 753 151 75
E-commerce (B) 8 16 6 5
1,809 1,962 415 218
Percent change
Company owned offices 5.0% -3.8% -13.6% -10.1%
Franchised offices 10.6% -1.5% -11.9% -9.3%
E-commerce (B) 137.5% 81.3% 50.0% 20.0%
Total 7.7% -2.2% -12.1% -9.2%
3/16-3/31 4/1-4/15(G) YTD 4/15(G)
Refund anticipation loans (E)
Fiscal year 2003
Company owned offices 64 61 2,766
Franchised offices 32 31 1,790
E-commerce (B) 4 6 73
100 98 4,629
Fiscal year 2002 (A)
Company owned offices 82 75 2,838
Franchised offices 42 35 1,765
E-commerce (B) 3 4 42
127 114 4,645
Percent change
Company owned offices -22.0% -18.7% -2.5%
Franchised offices -23.8% -11.4% 1.4%
E-commerce (B) 33.3% 50.0% 73.8%
Total -21.3% -14.0% -0.3%
Offices FY 2003 FY 2002 % Change
Company owned offices 5,279 5,017 5.2%
Franchised offices 4,022 3,998 0.6%
9,301 9,015 3.2%
H&R Block, Inc.
Preliminary U.S. Tax Operating Data
Amounts in thousands, except average fee and number of offices
(A) Prior year numbers have been reclassified between company-owned and
franchise offices for franchise offices acquired during the year.
(B) Includes on-line completed and paid returns and e-filings for software
clients. Excludes returns completed for no fee.
(C) Includes Federal only. State returns also electronically filed are
not included in this total.
(D) Clients served are based on payment date. Returns filed
electronically are based on IRS acceptance date. As such, percent
filed electronically may exceed 100% in an interim period.
(E) Prior year numbers have been restated to include only refund
anticipation loans processed and funded.
(F) Includes tax preparation fees only.
(G) Fiscal year 2002 includes data through April 16, 2002 for some areas
of the country which observed a legal holiday on April 15th.
SOURCE H&R Block, Inc.
Media Relations, Bob Schneider, +1-816-932-4835, bschneider@hrblock.com , or Investor Relations, Mark Barnett, +1-816-701-4443, marbarnett@hrblock.com , both of H&R Block, Inc.
http://www.hrblock.com