H&R Block Early Tax Season Results Consistent with Expectations; Digital Tax Solutions Business Shows Strong Growth
KANSAS CITY, Mo.--(BUSINESS WIRE)--March 18, 2004--H&R Block Inc. (NYSE:HRB) said early tax season results are consistent with its expectations for the year, according to interim results for the current tax season through Feb. 29.
Total clients served increased 1.2 percent to more than 12.3 million. The number of digital tax solutions clients increased 16.6 percent. Retail office clients declined 1.9 percent.
Tax preparation and related fees increased 6.1 percent for Jan. 1 through Feb. 29. The average fee per client was $135.60, an increase of 8.2 percent.
"We saw strong growth in our digital tax solutions business. After a slow start, the retail office business showed solid growth in the second half of February. This preliminary data is consistent with our expectations for a tax season that is good, but not great," Chairman and Chief Executive Mark A. Ernst said.
H&R Block plans to release more preliminary business results for its U.S. tax operations before market opening on April 1, April 16 and April 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 2004 and that actual financial results for fiscal year 2004 will fall within the guidance provided by the company; the uncertainty of the company's ability to purchase shares of its common stock; the uncertainty of the effect of any share repurchases upon the company and its shareholders; the uncertainty as to the effect on financial results of the adoption of accounting pronouncements; changes in interest rates; changes in economic, political or regulatory environments; the uncertainty of assumptions utilized to estimate cash flows from residual interests in mortgage securitizations and mortgage servicing rights; risks associated with sources of liquidity for each of the lines of business of the company; 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, financial, mortgage and business products and services. It is the only major company with subsidiaries offering a full range of software, online and in-office tax solutions, combined with personalized financial advice about retirement savings, home ownership, and other opportunities to help clients build a better financial future. As the world's largest tax services company, H&R Block served nearly 21 million clients in the U.S. and 11 countries in 2003. H&R Block Financial Advisors Inc. offers investment services and securities products. With more than 1,000 financial advisors serving clients at more than 400 offices, H&R Block Financial Advisors Inc. is a member NYSE, SIPC, a registered broker-dealer and a registered investment advisor. H&R Block Inc. is not a registered broker-dealer and is not a registered investment advisor. H&R Block Mortgage Corp. offers a full range of retail mortgage products. Option One Mortgage Corp. provides mortgage services and offers wholesale mortgage products through large financial institutions and a network of 24,000 independent mortgage brokers. RSM McGladrey Business Services Inc. and its subsidiaries serve mid-sized businesses and their owners with tax, accounting and business consulting services, as well as personal wealth management 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 2/15-2/29 YTD 2/29
-------- -------- --------- ---------
Tax preparation & related
fees(1)
----------------------------
Fiscal year 2004
Company-owned offices(2) $309,034 $364,345 $180,131 $853,510
Former major franchise
territories(3) 21,889 27,146 11,846 60,881
--------- --------- --------- -----------
Total company-owned
offices 330,923 391,491 191,977 914,391
Franchise offices(4) 169,338 182,173 86,199 437,710
--------- --------- --------- -----------
$500,261 $573,664 $278,176 $1,352,101
========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned offices(2) $288,175 $365,196 $151,759 $805,130
Former major franchise
territories(3) 18,714 28,246 11,742 58,702
--------- --------- --------- -----------
Total company-owned
offices 306,889 393,442 163,501 863,832
Franchise offices(4) 153,725 180,043 76,308 410,076
--------- --------- --------- -----------
$460,614 $573,485 $239,809 $1,273,908
========= ========= ========= ===========
Percent change
Company-owned offices 7.2% -0.2% 18.7% 6.0%
Former major franchise
territories 17.0% -3.9% 0.9% 3.7%
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Total company-owned
offices 7.8% -0.5% 17.4% 5.9%
-------------------------------------------------------------------
Franchise offices 10.2% 1.2% 13.0% 6.7%
-------------------------------------------------------------------
Total retail offices 8.6% 0.0% 16.0% 6.1%
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Total clients served
----------------------------
Fiscal year 2004
Company-owned offices(2) 2,191 2,553 1,263 6,007
Former major franchise
territories(3) 168 208 89 465
--------- --------- --------- -----------
Total company-owned
offices 2,359 2,761 1,352 6,472
Franchise offices(4) 1,347 1,460 692 3,499
Digital tax solutions(6) 1,268 737 337 2,342
--------- --------- --------- -----------
4,974 4,958 2,381 12,313
========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned offices(2) 2,228 2,734 1,153 6,115
Former major franchise
territories(3) 157 233 98 488
--------- --------- --------- -----------
Total company-owned
offices 2,385 2,967 1,251 6,603
Franchise offices(4) 1,330 1,565 663 3,558
Digital tax solutions(6) 1,042 634 333 2,009
--------- --------- --------- -----------
4,757 5,166 2,247 12,170
========= ========= ========= ===========
Percent change
Company-owned offices -1.7% -6.6% 9.5% -1.8%
Former major franchise
territories 7.0% -10.7% -9.2% -4.7%
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Total company-owned
offices -1.1% -6.9% 8.1% -2.0%
-------------------------------------------------------------------
Franchise offices 1.3% -6.7% 4.4% -1.7%
-------------------------------------------------------------------
Total retail offices -0.2% -6.9% 6.8% -1.9%
-------------------------------------------------------------------
Digital tax solutions 21.7% 16.3% 1.2% 16.6%
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Total 4.6% -4.0% 6.0% 1.2%
-------------------------------------------------------------------
Average fee per client
served(7)
----------------------------
Fiscal year 2004
Company-owned offices(2) $141.05 $142.71 $142.62 $142.09
Former major franchise
territories(3) 130.29 130.51 133.10 130.93
--------- --------- --------- -----------
Total company-owned
offices 140.28 141.79 141.99 141.28
Franchise offices(4) 125.71 124.78 124.57 125.10
--------- --------- --------- -----------
$134.99 $135.91 $136.09 $135.60
========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned offices(2) $129.34 $133.58 $131.62 $131.66
Former major franchise
territories(3) 119.20 121.23 119.82 120.29
--------- --------- --------- -----------
Total company-owned
offices 128.67 132.61 130.70 130.82
Franchise offices(4) 115.58 115.04 115.10 115.25
--------- --------- --------- -----------
$123.99 $126.54 $125.29 $125.37
========= ========= ========= ===========
Percent change
Company-owned offices 9.1% 6.8% 8.4% 7.9%
Former major franchise
territories 9.3% 7.7% 11.1% 8.8%
-------------------------------------------------------------------
Total company-owned
offices 9.0% 6.9% 8.6% 8.0%
-------------------------------------------------------------------
Franchise offices 8.8% 8.5% 8.2% 8.5%
-------------------------------------------------------------------
Total retail offices 8.9% 7.4% 8.6% 8.2%
-------------------------------------------------------------------
Refund anticipation loans
----------------------------
Fiscal year 2004
Company-owned offices(2) 1,112 1,042 206 2,360
Former major franchise
territories(3) 81 77 16 174
--------- --------- --------- -----------
Total company-owned
offices 1,193 1,119 222 2,534
Franchise offices(4) 713 610 109 1,432
Digital tax solutions(6) 20 25 7 52
--------- --------- --------- -----------
1,926 1,754 338 4,018
========= ========= ========= ===========
Fiscal year 2003(5)
Company-owned offices(2) 1,146 1,148 211 2,505
Former major franchise
territories(3) 81 74 16 171
--------- --------- --------- -----------
Total company-owned
offices 1,227 1,222 227 2,676
Franchise offices(4) 703 653 122 1,478
Digital tax solutions(6) 19 29 9 57
--------- --------- --------- -----------
1,949 1,904 358 4,211
========= ========= ========= ===========
Percent change
Company-owned offices -3.0% -9.2% -2.4% -5.8%
Former major franchise
territories 0.0% 4.1% 0.0% 1.8%
-------------------------------------------------------------------
Total company-owned
offices -2.8% -8.4% -2.2% -5.3%
-------------------------------------------------------------------
Franchise offices 1.4% -6.6% -10.7% -3.1%
-------------------------------------------------------------------
Total retail offices -1.2% -7.8% -5.2% -4.5%
-------------------------------------------------------------------
Digital tax solutions 5.3% -13.8% -22.2% -8.8%
-------------------------------------------------------------------
Total -1.2% -7.9% -5.6% -4.6%
-------------------------------------------------------------------
Offices FY 2004 FY 2003
------------------------ ------- -------
Company-owned offices(2) 4,746 4,672
Former major franchise
territories(3) 459 --
Company-owned shared office
locations(8) 947 607
------ -------
Total company-owned offices 6,152 5,279
------ -------
Franchise offices(4) 3,374 3,398
Former major franchise
territories(3) -- 529
Franchise shared office
locations(8) 325 95
------ -------
Total franchise
offices 3,699 4,022
------ -------
9,851 9,301
====== =======
(1) Includes fees received for tax return preparation services and
system administration fees.
(2) Excludes company-owned offices in former major franchise
territories which commenced operations during fiscal year 2004.
(3) Impact of company-owned offices in former major franchise
territories which commenced operations during fiscal year 2004.
(4) Represents remaining major franchise territories and other
franchises.
(5) Prior year numbers have been reclassified between company-owned
and franchise offices for offices in former franchise territories
which commenced company-owned operations during fiscal year 2004.
(6) Includes on-line completed and paid returns and federal software
units sold.
(7) Calculated as tax preparation and related fees divided by clients
served.
(8) Shared locations include offices located within Wal-Mart, Sears
and other third-party businesses.
CONTACT: H&R Block Inc.
Media Relations:
Bob Schneider, 816-932-4835
bschneider@hrblock.com
or
Investor Relations:
Mark Barnett, 816-701-4443
marbarnett@hrblock.com
SOURCE: H&R Block Inc.