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): September 4, 2009

 

H&R BLOCK, INC.

(Exact name of registrant as specified in charter)

 

One H&R Block Way, Kansas City, MO 64105

(Address of Principal Executive Offices) (Zip Code)

 

(816) 854-3000

(Registrant's telephone number, including area code)

 

Not Applicable

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

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On September 4, 2009, the Company issued a press release regarding the Company’s results of operations for the fiscal quarter ended July 31, 2009. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

 

 

 

 

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.

 

EXHIBIT INDEX

 

 

 

 

 

 

 

                

H&R Block Reports Fiscal 2010 First Quarter Results

 

   

 

 

KANSAS CITY, Mo. – H&R Block, Inc. (NYSE: HRB) today reported a net loss from continuing operations for the fiscal first quarter ended July 31, 2009, of $130.6 million, or 39 cents per share compared to a loss of $128.4 million, or 39 cents per share in the first quarter a year ago. Improved pre-season results from Business Services and lower corporate expenses were partially offset by an expected larger loss in Tax Services. The increase in Tax Services expense reflects the anticipated inclusion of additional expense attributable to tax offices acquired as part of last year’s acquisition of the Company’s major Southwest franchise operation, severance costs and the timing of some planned expenses as part of the Company’s preparation for tax season 2010.

 

“First quarter results were in-line with our expectations and reflected our continuing success in driving out non-value added costs while making the necessary investments to ensure our success in fiscal 2010 and beyond,” said Russ Smyth, president and chief executive officer of H&R Block. “We are focused on efforts to enhance our field-level performance and marketing effectiveness to improve client attraction, retention and satisfaction,” added Smyth.

 

Fiscal first quarter revenues from continuing operations grew 1.3% over the prior-year period to $275.5 million. Results from discontinued operations improved to a net loss of $3.0 million compared to a net loss of $4.3 million in the first quarter a year ago. Consolidated net loss for the quarter was $133.6 million, or 40 cents per share, essentially flat compared to a loss of $132.7 million, or 41 cents per share a year ago.

 

Segment Reporting Changes

 

The Company changed its segment reporting effective May 1, 2009. Net interest margin and other gains / losses associated with H&R Block Bank’s mortgage portfolio and related assets are now reported in corporate operations. The

 

remainder of the Bank’s operations is reported in the Tax Services segment. The Bank, through its Emerald suite of products provided to tax clients, primarily supports H&R Block’s tax network in growing its business. In making these changes, the Company eliminated its previous reporting of a Consumer Financial Services segment.

 

Tax Services

 

First quarter Tax Services revenues rose 7.7% year-over-year to $88.0 million. Tax preparation fees increased $4.2 million, or 14.2%, primarily due to favorable results in the Company’s Australian tax operations.

 

The segment reported a pretax loss of $172.0 million compared to $163.7 million a year ago. This primarily reflects a net impact of $7.4 million due to the Southwest franchise acquisition that occurred in the fiscal third quarter of last year, $3.5 million of severance expense, and $2.9 million of incremental expenses for information technology projects to prepare for the upcoming tax season. Expense increases were partially offset by savings achieved through closing underperforming retail office locations and renegotiating leases.

 

The Company continues to expect that the Tax Services segment will deliver improved margins totaling 100 basis points over the next two fiscal years.

 

Business Services

 

First quarter segment revenues rose 1.7% year-over-year to $177.6 million. Core revenues, primarily tax and consulting, increased $8.3 million, or 5.8%, over the prior-year period. Those gains were partially offset by a decline in capital markets revenues.

 

The segment’s fiscal first quarter pretax income was $1.3 million compared to a pretax loss of $0.3 million a year ago, reflecting revenue growth and continued cost reduction efforts.

 

Corporate

 

Corporate operations reported a pretax loss of $40.2 million for the first quarter ended July 31, 2009, compared to a loss of $49.0 million in the prior year. The improvement was due to prior-year impairments of residual interests in mortgage loan securitizations and other real estate owned totaling $9.1 million that did not recur. The total allowance for loan loss reserves was $91.7 million at July 31, 2009, compared to $84.1 million at fiscal 2009 year-end.

 

Guidance

 

The Company continues to expect its fiscal 2010 earnings from continuing operations will be in the range of $1.60 to $1.80 per share.  

 

 

 

Conference Call

 

At 8:30 a.m. Eastern time today, the Company will conduct a conference call for analysts and investors. To access the call, please dial the number below approximately five to 10 minutes prior to the scheduled starting time:

 

 

The call also will be webcast in a listen-only format for the media and public. The webcast link is http://investor-relations.hrblock.com. A replay of the call will be available beginning at 10:00 a.m. Eastern time Sept. 4, 2009, and continuing until Sept. 18, 2009, by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (international). The replay passcode is 27388973. The webcast will be available for replay at http://investor-relations.hrblock.com.

 

Forward Looking Statements

This announcement may contain forward-looking statements, which are any statements that are not historical facts. These forward-looking statements, as well as the Company’s guidance, are based upon the Company’s current expectations and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties and speak only as of the date on which they are made, the Company’s actual results could differ materially from these statements. These risks and uncertainties relate to, among other things, uncertainties regarding the Company’s ability to attract and retain clients; meet its prepared returns targets; uncertainties and potential contingent liabilities arising from our former mortgage loan origination and servicing business; uncertainties in the residential mortgage market and its impact on loan loss provisions; uncertainties pertaining to the commercial debt market; competitive factors; the Company’s effective income tax rate; litigation; uncertainties regarding the level of share repurchases; and changes in market, economic, political or regulatory conditions. Information concerning these risks and uncertainties is contained in Item 1A of the Company’s 2009 annual report on Form 10-K and in other filings by the Company with the Securities and Exchange Commission.

 

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About H&R Block

H&R Block Inc. (NYSE: HRB) is the world’s preeminent tax services provider, having prepared more than 500 million tax returns since 1955.  In fiscal 2009, H&R Block had annual revenues of $4.1 billion and prepared more than 24 million tax returns worldwide, utilizing more than 120,000 highly trained tax professionals.  The Company provides tax return preparation services in person, online through H&R Block Online, through its TaxCut® software and through other channels.  The Company is also one of the leading providers of business services through RSM McGladrey. For more information visit our Online Press Center at www.hrblock.com.

 

For Further Information

 

 

 

KEY OPERATING RESULTS

Unaudited, amounts in thousands, except per share data

 

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, except in those periods with a loss from continuing operations.

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. Effective May 1, 2009, we realigned certain segments of our business to reflect a new management reporting structure. The operations of H&R Block Bank, which were previously reported as the Consumer Financial Services segment, have now been reclassified, with activities that support our retail tax network included in the Tax Services segment, and income and expenses of our static portfolio of mortgage loans held for investment and related assets included in Corporate. These reclassifications had no effect on our total operating expenses, results of operations or stockholders’ equity as previously reported.

CONDENSED CONSOLIDATED BALANCE SHEETS

Amounts in thousands, except share data

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited, amounts in thousands, except per share data

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited, amounts in thousands