H&R Block Reports Record Annual Revenues and Earnings
Company Announces 12.5 Percent Dividend Increase
H&R Block Inc. (NYSE: HRB) today reported record revenues and net earnings for the fiscal year ended April 30. Revenues totaled $3.3 billion, an increase of 11.3 percent over the prior year. Net earnings increased 55 percent to $434.4 million, up from $281.2 million. Net earnings per diluted share increased 52 percent to $2.31, an increase of 79 cents per share from the prior year's $1.52 per diluted share.Financial results reflect the company's previously announced early adoption of Statement of Financial Accounting Standards (SFAS) No. 141 and 142. This change eliminated the amortization of goodwill and certain other intangible assets. In accordance with SFAS 142, the comparative prior year results include amortization of these intangible assets. The effect of this change improved net earnings for fiscal year 2002 by $47.9 million or 26 cents per diluted share.
"Continuing strength in our tax and mortgage businesses helped us achieve record results for 2002," said Mark A. Ernst, president and chief executive officer of H&R Block. "Our mix of businesses allowed us to perform very well despite a difficult economic environment in the United States.
"We're also making progress in building multi-service relationships with our clients," Ernst said. "At the end of the year we had more than 265,000 clients with both tax and financial service relationships."
For the company's fourth quarter, revenues totaled $1.9 billion, an 11.7 percent increase over the prior year's fourth quarter. Net earnings totaled $463.6 million, up 22.6 percent from a year ago. Earnings per diluted share rose 21.8 percent for the quarter to $2.46.
Cash earnings for the year improved by $107.7 million, a 29.4 percent increase, to $474.3 million, up from $366.6 million the prior year. Cash earnings per diluted share increased 27.3 percent to $2.52 per share, compared with $1.98 per diluted share last year. The company defines cash earnings as net earnings excluding the after-tax effect of amortization expense of acquired intangible assets.
Reflecting the company's strong financial condition and continuing performance, H&R Block's Board of Directors approved a 12.5 percent increase in the quarterly cash dividend, raising the dividend from 16 to 18 cents per share, payable Oct. 1, 2002, to shareholders of record on Sept. 10, 2002.
"Based upon the fundamental strength in our businesses, their underlying growth rates and our spending plans, we currently expect earnings per diluted share for fiscal year 2003 to increase to a range of $2.60 to $2.75," Ernst said. "Revenue growth is expected to be within our long-term guidance range of 10 to 15 percent."
The company also announced that during its fiscal year it repurchased 12.2 million shares under its existing share repurchase authorization at a total cost of $462.5 million, or $37.76 per share. During the fourth quarter, the company repurchased 2.6 million shares at a total cost of $110.7 million, or $43.24 per share.
U.S Tax Operations
H&R Block's U.S. tax operations reported fiscal 2002 revenues of $1.83 billion, a 12.8 percent increase over $1.62 billion in fiscal 2001. Pretax earnings improved 22.9 percent to $533.5 million, compared with $434.1 million for fiscal 2001. The early adoption of SFAS 141 and 142 contributed $11 million to the year-over-year earnings improvement. Operating margins improved from 26.8 percent to 29.1 percent.
Tax preparation and related fees for the year in company- and franchise- owned offices totaled $2.1 billion, or 10.8 percent above the prior year. The average fee for tax preparation and related services rose 9.1 percent to $121.83. The total number of clients served by company-owned offices, franchise operations and e-commerce increased 2.7 percent to 18.6 million.
"We saw a very solid performance from our U.S. tax operations this year," Ernst said. "Strategically we succeeded in attracting a somewhat higher income client base while increasing our share of the overall tax services market."
During the year, H&R Block filed 15.6 million returns electronically, an increase of 7.7 percent; 84 percent of all returns processed by the company were filed electronically.
The company's software business achieved 6.6 percent unit growth due primarily to the popularity of TaxCut State, TaxCut Home & Business, and legal software. The number of online paid tax clients increased 70 percent.
International Tax Operations
International tax operations, which includes Canada, Australia, the United Kingdom and overseas franchise operations, reported a 17.7 percent increase in pretax earnings to $7.1 million, compared with $6 million for fiscal 2001. Revenues grew slightly to $78.7 million.
Canada's pretax earnings rose 39.1 percent to $7.7 million for fiscal 2002, up from $5.6 million last year. Canada's revenue declined slightly to $55.8 million.
In Australia, pretax earnings declined 16.1 percent to $2.9 million on a 1.3 percent decline in revenues. Tax operations in the United Kingdom reported a $2.5 million loss for the fiscal year on a 36.9 percent decline in revenues.
"Our International management team is taking the steps necessary to position us for improved results in the future," said Ernst.
Mortgage Operations
Mortgage operations, which primarily includes Option One Mortgage Corp. and H&R Block Mortgage Corp., reported pretax earnings that increased 145.9 percent to $339.4 million for fiscal year 2002, up from $138 million the prior year. The early adoption of SFAS 141 and 142 contributed $13.6 million to the year-over-year improvement. Revenues grew 76.7 percent to $734.9 million, up from $415.8 million the prior year.
During the fourth quarter, the company recorded a $106 million pretax write-up of its interests in residuals through other comprehensive income. The write-up reflects the stronger than previously expected cash flows from the company's retained residual interests from past securitizations. Along with a write-up taken in the company's second quarter, total pretax residual write-ups through other comprehensive income totaled $151.1 million during the year.
"We had absolutely outstanding performance in our mortgage operations this year. While we clearly benefited from the declining rate environment during the year, we have also taken important steps to improve the infrastructure of all our operations for the future," Ernst said.
Option One and H&R Block Mortgage originated $11.5 billion in loans during fiscal 2002, an increase of 75.5 percent compared with last year's $6.5 billion. Option One's servicing portfolio ended the year at $23.8 billion, a 30.6 percent increase over last year's $18.2 billion.
H&R Block Mortgage, H&R Block's retail mortgage subsidiary, generated revenues of $85.9 million, a 100.7 percent increase over last year. H&R Block Mortgage reported pretax earnings of $16.6 million, compared with an $8.1 million loss last year.
"H&R Block Mortgage reached profitability each quarter this year, which is an indicator that shows our financial partner strategy is beginning to succeed," Ernst said. "Nearly 55 percent of all our retail loan originations in the fourth quarter were for H&R Block tax clients."
Investment Services
As anticipated, the weak market environment negatively affected results in H&R Block's investment services segment, which operates under the name H&R Block Financial Advisors (HRBFA).
HRBFA reported revenues of $250.7 million for fiscal 2002, down 46.9 percent from $472.4 million in fiscal 2001. HRBFA reported a $54.9 million pretax loss for fiscal 2002, compared to $9.3 million in pretax earnings the prior year. The early adoption of SFAS 141 and 142 decreased the pretax loss for the year by $17.9 million. The full-year loss includes one-time, pretax charges of $3.1 million taken in the fourth quarter for the discontinuation of certain operations.
The business suffered from significant declines in margin balances and equity trading, both reflective of broader market shifts. The company ended the year with 695,000 active accounts and margin balances of $0.8 billion.
While results were disappointing, the business made progress in serving the saving and investing needs of H&R Block clients. More than 160,000 new accounts were opened for H&R Block tax clients, including more than 130,000 IRA accounts.
Business Services
Business services, which includes RSM McGladrey Inc. and related services businesses, reported pretax earnings of $22.7 million, up 42.4 percent from pretax earnings of $16 million reported in fiscal 2001. The early adoption of SFAS 141 and 142 improved the year-over-year comparison by $19.3 million. Business services reported revenues of $416.9 million, an increase of 8 percent over fiscal 2001 revenues of $386.2 million.
During the year, the company made important investments in a variety of long-term growth initiatives within this segment. Among them were the acquisitions of a controlling interest in a payroll processing company and a business valuation and investment banking firm. The reported results are net of pretax losses of $6.7 million from these two new businesses. The broader range of services is designed to enable the company to meet more of its clients' needs in the future.
Other
At 5 p.m. EDT June 12, the company will host a conference call to brief analysts and investors on its results. Company executives will discuss year- end results, future expectations and also respond to questions. The call will be Webcast in a listen-only format for the media and public. The link to the Webcast is available at www.hrblock.com .
A replay of the call will be available beginning at 8 p.m. EDT June 12 and continuing until 8 p.m. EDT June 19, by dialing 800-642-1687 (U.S./Canada) or 706-645-9291 (International). The replay access code is 4034649. A replay of the Webcast will also be available at www.hrblock.com through June 19.
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 2003; 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 2002 served nearly 21 million clients in approximately 10,400 retail offices worldwide and with award-winning software and online services. It 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited, amounts in thousands, except per share data
Three months ended April 30,
2002 2001 2000
Revenues $1,881,327 $1,683,851 $1,587,230
Earnings before income taxes 765,881 641,635 557,743
Net earnings before change in
accounting 463,584 373,689 340,781
Cumulative effect of change in
accounting principle for derivative
& hedging activities (less applicable
income taxes of $2,717) - 4,414 -
Net earnings $463,584 $378,103 $340,781
Basic net earnings per share:
Net earnings before change in
accounting $2.54 $2.04 $1.73
Net earnings $2.54 $2.06 $1.73
Basic shares outstanding 182,530 183,307 196,498
Diluted net earnings per share:
Net earnings before change in
accounting $2.46 $2.00 $1.72
Net earnings $2.46 $2.02 $1.72
Diluted shares outstanding 188,084 186,815 197,611
Year ended April 30,
2002 2001 2000
Revenues $3,317,736 $2,981,337 $2,425,685
Earnings before income taxes 716,840 473,078 412,266
Net earnings before change in
accounting 434,405 276,748 251,895
Cumulative effect of change in
accounting principle for derivative
& hedging activities (less applicable
income taxes of $2,717) - 4,414 -
Net earnings $434,405 $281,162 $251,895
Basic net earnings per share:
Net earnings before change in
accounting $2.38 $1.50 $1.28
Net earnings $2.38 $1.53 $1.28
Basic shares outstanding 182,903 183,893 196,067
Diluted net earnings per share:
Net earnings before change in
accounting $2.31 $1.49 $1.27
Net earnings $2.31 $1.52 $1.27
Diluted shares outstanding 188,327 185,135 197,858
Notes to Consolidated Statements of Operations
On June 20, 2001, the Company's Board of Directors declared a two-for-one
stock split of its Common Stock in the form of a 100% stock distribution
effective August 1, 2001, to shareholders of record as of the close of
business on July 10, 2001. Basic net earnings per share is based on the
weighted average number of shares outstanding during each period. The
dilutive effect of potential common shares is included in diluted net
earnings per share. All periods presented have been adjusted to reflect
the stock split.
Reclassifications have been made to prior years to conform with current
period presentation.
Results for the three months and the year ended April 30, 2001 and 2000
have been adjusted to reflect the implementation of Emerging Issues Task
Force Issue No. 01-9, "Accounting for Consideration Given by a Vendor to a
Customer (Including a Reseller of the Vendor's Products)." The effect of
this change was to reduce revenues and expenses by $27.6 million and
$25.2 million for the three months ended April 30, 2001 and 2000 and by
$32.6 million and $35.3 million for the year ended April 30, 2001 and
2000. There was no impact on net earnings.
Results for the three months and the year ended April 30, 2001 and 2000
have been adjusted to reflect the implementation of Emerging Issues Task
Force Issue No. 01-14, "Income Statement Characterization of
Reimbursements Received for 'Out-of-Pocket' Expenses Incurred." The
effect of this change was to increase revenues and expenses by
$7.4 million and $4.5 million for the three months ended April 30, 2001
and 2000 and by $12.3 million and $9.1 million for the year ended April
30, 2001 and 2000. There was no impact on net earnings.
Effective May 1, 2001, the Company adopted a new methodology for
allocation of corporate services and support costs to business units.
This change was made in an effort to more accurately reflect each business
line's performance. Prior year segment results have been restated to
reflect the new methodology.
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations," and No.
142, "Goodwill and Other Intangible Assets" (SFAS 141 & 142). SFAS 141
addresses financial accounting and reporting for business combinations and
replaces APB Opinion No. 16, "Business Combinations" (APB 16). SFAS 141
no longer allows the pooling of interests method of accounting for
acquisitions, provides new recognition criteria for intangible assets and
carries forward without reconsideration the guidance in APB 16 related to
the application of the purchase method of accounting. SFAS 142 addresses
financial accounting and reporting for acquired goodwill and other
intangible assets and replaces APB Opinion No. 17, "Intangible Assets."
SFAS 142 addresses how intangible assets should be accounted for upon
their acquisition and after they have been initially recognized in the
financial statements. As of May 1, 2001, the Company elected early
adoption of both SFAS 141 & 142. The implementation of these
standards has the effect of reducing amortization expense of acquired
intangible assets.
In the fourth quarter of fiscal 2001, the Company elected the early
adoption of Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended
in June 1999 (SFAS 133) and Statement of Financial Accounting Standards
No. 138, "Accounting for Derivative Instruments and Hedging Activities,
an Amendment of FASB Statement No. 133" (SFAS 138). SFAS 133 and SFAS 138
establish accounting and reporting standards for derivatives and hedging
activities, and requires companies to record derivative instruments as
assets or liabilities, measured at fair value. The Company has identified
derivative instruments related to certain of its commitments
to originate residential mortgage loans. The net transition adjustment
for adoption of SFAS 133 and SFAS 138 of $4.4 million is shown as the
cumulative effective of a change in accounting principle in the
consolidated statement of earnings for the year ended April 30, 2001.
On December 1, 1999, the Company completed the acquisition of the
outstanding capital stock of Olde Financial Corporation and Financial
Marketing Services, Inc. (collectively, OLDE). The purchase price was
$850 million in cash plus net tangible book value payments of $48.5
million. The acquisition was accounted for as a purchase and,
accordingly, OLDE's results are included since the date of the
acquisition. The acquisition was funded with short-term borrowings and
the issuance of $500 million in Senior Notes in the fourth quarter of
fiscal 2000.
On August 2, 1999, the Company, through a subsidiary, RSM McGladrey, Inc.,
completed the purchase of substantially all of the non-attest assets of
McGladrey & Pullen, LLP. The purchase price was $240 million in cash
payments over four years and the assumption of certain pension liabilities
with a present value of $52.7 million. The acquisition was accounted for
as a purchase, and accordingly, results are included since the date of
acquisition.
During the fiscal years ended April 30, 2002, 2001 and 2000, the Company
issued shares of its common stock pursuant to provisions for exercise of
the Company's stock option plans as follows: 2002 - 9,647,182 shares;
2001 - 983,542 shares; 2000 - 2,047,164 shares. During the same periods,
the Company reacquired shares of its common stock as follows: 2002 -
12,259,158 shares at an aggregate cost of $462,938,000; 2001 - 13,632,196
shares at an aggregate cost of $222,894,000; 2000 - 2,272,600 shares at an
aggregate cost of $50,654,000.
H&R BLOCK, INC.
SELECTED OPERATIONAL INFORMATION
Unaudited, amounts in thousands
Three months ended April 30,
Revenues Earnings (loss)
2002 2001 2002 2001
U.S. tax operations $1,411,838 $1,267,844 $693,581 $603,855
International tax operations 52,259 50,896 18,979 19,716
Mortgage operations 225,993 136,343 101,991 57,978
Investment services 55,848 92,021 (27,329) (21,542)
Business services 137,060 134,174 20,553 19,448
Corporate operations (1,671) 2,573 (24,216) (11,633)
Interest expense on
acquisition debt - - (19,001) (22,999)
$1,881,327 $1,683,851 764,558 644,823
Investment income, net 419 (377)
Intercompany interest* 904 (2,811)
765,881 641,635
Taxes on earnings 302,297 267,946
Net earnings before change
in accounting principle 463,584 373,689
Cumulative effect of change
in accounting principle - 4,414
Net earnings $463,584 $378,103
Year ended April 30,
Revenues Earnings (loss)
2002 2001 2002 2001
U.S. tax operations $1,830,752 $1,622,636 $533,468 $434,067
International tax operations 78,710 78,469 7,093 6,024
Mortgage operations 734,890 415,802 339,388 137,992
Investment services 250,685 472,425 (54,862) 9,298
Business services 416,926 386,168 22,716 15,953
Corporate operations 5,773 5,837 (56,133) (30,899)
Interest expense on
acquisition debt - - (79,002) (98,759)
$3,317,736 $2,981,337 712,668 473,676
Investment income, net 3,097 5,977
Intercompany interest* 1,075 (6,575)
716,840 473,078
Taxes on earnings 282,435 196,330
Net earnings before change
in accounting principle 434,405 276,748
Cumulative effect of change
in accounting principle - 4,414
Net earnings $434,405 $281,162
* Intercompany interest represents net interest expense charged to
financial related businesses for corporate cash that was borrowed to
fund their operating activities and net unallocated interest expense
attributable to commitment fees on the Company's credit facility.
H&R BLOCK, INC.
SELECTED OPERATIONAL INFORMATION
WITH FISCAL 2001 ADJUSTED FOR SFAS 142 **
Unaudited, amounts in thousands, except per share amounts
Year ended April 30,
Revenues Earnings (loss)
2001
2001 2001 (adjusted)
2002 (reported) 2002 (reported) **
U.S. tax
operations $1,830,752 $1,622,636 $533,468 $434,067 $445,031
International tax
operations 78,710 78,469 7,093 6,024 6,651
Mortgage
operations 734,890 415,802 339,388 137,992 151,569
Investment
services 250,685 472,425 (54,862) 9,298 27,237
Business services 416,926 386,168 22,716 15,953 35,247
Corporate
operations 5,773 5,837 (56,133) (30,899) (30,899)
Interest expense
on acquisition
debt - - (79,002) (98,759) (98,759)
$3,317,736 $2,981,337 712,668 473,676 536,077
Investment income,
net 3,097 5,977 5,977
Intercompany
interest* 1,075 (6,575) (6,575)
716,840 473,078 535,479
Taxes on earnings 282,435 196,330 210,865
Net earnings
before change in
accounting
principle 434,405 276,748 324,614
Cumulative effect
of change in
accounting
principle - 4,414 4,414
Net earnings $434,405 $281,162 $329,028
Diluted earnings
per share $2.31 $1.52 $1.78
Year ended April 30,
% Change Better (Worse)
2001 2001
(reported) (adjusted)**
U.S. tax operations 22.9% 19.9%
International tax operations 17.7% 6.6%
Mortgage operations 145.9% 123.9%
Investment services - -
Business services 42.4% -35.6%
Corporate operations -81.7% -81.7%
Interest expense on acquisition
debt 20.0% 20.0%
50.5% 32.9%
Investment income, net -48.2% -48.2%
Intercompany interest* - -
51.5% 33.9%
Taxes on earnings 43.9% 33.9%
Net earnings before change in
accounting principle 57.0% 33.8%
Cumulative effect of change in
accounting principle -100.0% -100.0%
Net earnings 54.5% 32.0%
Diluted earnings per share 52.0% 29.8%
* Intercompany interest represents net interest expense charged to
financial related businesses for corporate cash that was borrowed to
fund their operating activities and net unallocated interest expense
attributable to commitment fees on the Company's credit facility.
** Fiscal year 2001 results adjusted to remove the effects of
amortization of goodwill and certain intangible assets consistent
with the accounting treatment applied for fiscal year 2002 in
accordance with the adoption of SFAS 142.
H&R Block, Inc.
Consolidated Balance Sheets
Unaudited, amounts in thousands, except share data
April 30,
2002 2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $436,145 $187,616
Cash and cash equivalents -
restricted 152,173 84,197
Marketable securities --
available-for-sale - 8,266
Marketable securities -- trading 28,370 46,158
Receivables from customers,
brokers, dealers and clearing
organizations, less allowance for
doubtful accounts of $1,785 and $1,692 844,538 1,310,804
Receivables, less allowance for doubtful
accounts of $64,057 and $47,125 368,345 365,304
Prepaid expenses and other
current assets 415,572 260,942
Total current assets 2,245,143 2,263,287
OTHER ASSETS:
Investments in available-for-
sale marketable securities 15,260 31,559
Residual interests in securitizations 365,371 238,600
Intangible assets 380,657 402,209
Goodwill 726,284 649,617
Property and equipment, at cost
less accumulated depreciation and
amortization 286,500 288,847
Other 211,576 239,586
$4,230,791 $4,113,705
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable to customers,
brokers and dealers $903,201 $1,058,000
Accounts payable, accrued
expenses and deposits 410,622 353,291
Accrued salaries, wages and
payroll taxes 253,401 221,830
Accrued taxes on earnings 252,822 295,599
Current portion of long-term
debt 59,656 51,763
Total current liabilities 1,879,702 1,980,483
LONG-TERM DEBT 868,387 870,974
OTHER NONCURRENT LIABILITIES 113,282 88,507
STOCKHOLDERS' EQUITY:
Common stock, no par, stated
value $.01 per share 2,179 2,179
Additional paid-in capital 468,052 419,957
Accumulated other comprehensive
income (loss) 44,128 (42,767)
Retained earnings 1,767,702 1,449,022
2,282,061 1,828,391
Less cost of 36,819,739 and
34,336,910 shares of common
stock in treasury 912,641 654,650
Total stockholders' equity 1,369,420 1,173,741
$4,230,791 $4,113,705
H&R Block, Inc.
Consolidated Statements of Cash Flows
Unaudited, amounts in thousands
Year ended April 30,
2002 2001
Cash flows from operating
activities:
Net earnings $434,405 $281,162
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and amortization 155,386 205,608
Provision for bad debt 76,804 84,422
Accretion of acquisition liabilities 11,700 11,863
Provision for deferred taxes on earnings 35,869 (38,870)
Net (gain) loss on sale of operating unit 1,666 (2,040)
Effect of change in accounting principle - (4,414)
Tax benefit from stock option exercises 57,809 2,235
Accretion of residual interests
in securitizations, net (19,596) (12,357)
Net gain on sales of available-
for-sale securities (423) (17,744)
Changes in:
Cash and cash equivalents - restricted (67,976) (51,014)
Receivables from customers, brokers,
dealers and clearing organizations 465,926 1,544,640
Receivables (112,588) (480,032)
Mortgage loans held for sale:
Originations and purchases (11,771,688) (7,254,552)
Sales and principal repayments 11,780,758 7,336,659
Marketable securities - trading 17,788 (755)
Prepaid expenses and other
current assets (179,694) (88,515)
Accounts payable to customers,
brokers and dealers (154,799) (1,512,200)
Accounts payable, accrued
expenses and deposits 57,608 133,695
Accrued salaries, wages and payroll taxes 31,751 48,901
Accrued taxes on earnings (42,777) 66,465
Other, net (16,543) (4,806)
Net cash provided by operating activities 761,386 248,351
Cash flows from investing activities:
Purchases of available-for-sale securities (7,241) (10,636)
Maturities of available-for-sale securities 75,320 21,524
Sales of available-for-sale securities 23,173 356,192
Purchases of property and equipment, net (108,063) (90,033)
Payments made for business acquisitions,
net of cash acquired (46,030) (21,143)
Proceeds from sale of operating units 121 23,200
Other, net (16,253) (24,347)
Net cash provided by (used in)
investing activities (78,973) 254,757
Cash flows from financing activities:
Repayments of notes payable (10,622,011) (18,219,741)
Proceeds from issuance of notes payable 10,622,011 17,935,944
Payments on acquisition debt (50,594) (68,743)
Dividends paid (115,725) (108,374)
Payments to acquire treasury shares (462,938) (222,895)
Proceeds from stock options exercised 195,233 19,550
Other, net 140 2,049
Net cash used in financing activities (433,884) (662,210)
Net increase(decrease) in cash and
cash equivalents 248,529 (159,102)
Cash and cash equivalents at
beginning of the period 187,616 346,718
Cash and cash equivalents at end of
the period $436,145 $187,616
Supplementary cash flow data:
Income taxes paid $236,784 $150,784
Interest paid 105,072 230,448
H&R Block, Inc.
Consolidated Statements of Operations
Unaudited, amounts in thousands, except per share data
Three Months Ended Twelve Months Ended
April 30, April 30,
2002 2001 2002 2001
Revenues:
Service revenues $1,494,740 $1,360,924 $2,333,064 $2,179,896
Interest income 58,311 60,814 206,433 279,833
Gain on sale of mortgage
loans 134,656 81,982 456,958 244,789
Product sales 63,508 52,832 127,226 101,489
Royalties 126,843 115,854 164,615 149,683
Other income 3,269 11,445 29,440 25,647
1,881,327 1,683,851 3,317,736 2,981,337
Operating expenses:
Employee compensation
and benefits 610,636 567,450 1,308,705 1,192,294
Occupancy and equipment 111,281 103,006 305,387 283,181
Interest 25,818 47,332 116,141 242,551
Depreciation and
amortization 48,291 56,618 155,386 205,608
Marketing and
advertising 80,763 55,022 155,729 110,973
Supplies, freight and
postage 37,659 33,317 75,710 70,440
Bad debt 26,610 40,974 76,804 84,422
Other 172,607 138,098 408,446 326,802
1,113,665 1,041,817 2,602,308 2,516,271
Operating earnings 767,662 642,034 715,428 465,066
Other income:
Investment income, net 419 (377) 3,097 5,977
Other, net (2,200) (22) (1,685) 2,035
(1,781) (399) 1,412 8,012
Earnings before income
taxes 765,881 641,635 716,840 473,078
Taxes on earnings 302,297 267,946 282,435 196,330
Net earnings before change
in accounting principle 463,584 373,689 434,405 276,748
Cumulative effect of
change in accounting
principle - 4,414 - 4,414
Net earnings $463,584 $378,103 $434,405 $281,162
Basic net earnings per share $2.54 $2.06 $2.38 $1.53
Basic shares outstanding 182,530 183,307 182,903 183,893
Diluted net earnings per share $2.46 $2.02 $2.31 $1.52
Diluted shares outstanding 188,084 186,815 188,327 185,135
H&R BLOCK, INC.
FINANCIAL SERVICES OPERATING DATA
Unaudited
H&R Block Financial Advisors, Inc.
For the
year ended For the three months ended
04/26/2002 04/26/2002 04/27/2001 % Change 01/25/2002
Customer
trades
(000's) 1,448 279 489 -42.9% 402
Customer
daily
average
trades 5,767 5,849 7,760 -24.6% 6,241
Average
commission
per trade $62.03 $60.70 $67.21 -9.7% $64.61
Number of
active
accounts
(000's) 695 701 620 13.2% 603
Average trades
per active
account per
quarter n/a 0.40 0.79 -49.6% 0.67
Average trades
per active
account per year
(annualized) 2.08 1.59 3.15 -49.6% 2.67
Ending balance
of assets
under
administration
($ bn's) $25.5 $25.5 $31.5 -19.0% $27.2
Average assets
per active
account $36,672 $36,672 $50,817 -27.8% $45,191
Ending debit
balances
($ bn's) $0.8 $0.8 $1.3 -38.4% $0.9
Ending credit
balances
($ bn's) $0.8 $0.8 $0.8 3.1% $0.9
Option One Mortgage Corporation
For the
year ended For the three months ended
04/30/2002 04/30/2002 04/30/2001 % Change 01/31/2002
Number of loans
originated
Wholesale 74,208 20,693 14,160 46.1% 17,344
Retail 15,125 4,022 3,520 14.3% 4,056
Total 89,333 24,715 17,680 39.8% 21,400
Volume of loans
originated
(000's)
Wholesale $9,457,331 $2,784,076 $1,579,171 76.3% $2,346,687
Retail 1,995,842 505,154 467,579 8.0% 549,112
Total $11,453,173 $3,289,230 $2,046,750 60.7% $2,895,799
Loan
sales $11,440,190 $3,334,989 $2,127,493 56.8% $2,868,690
Servicing
portfolio
Number of
loans
serviced
(000's) 209.6 209.6 173.9 20.5% 202.4
Servicing
portfolio
($ bn's) $23.8 $23.8 $18.2 30.6% $22.7
SOURCE H&R Block Inc.
CONTACT: Bob Schneider, Media Relations, +1-816-932-4835, or Mark Barnett, Investor Relations, +1-816-701-4443, both of H&R Block Inc. URL: http://www.hrblock.com
Copyright (C) 2002 PR Newswire. All rights reserved.