e8vk
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): June 24, 2010
H&R BLOCK, INC.
(Exact name of registrant as specified in charter)
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Missouri |
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1-6089 |
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44-0607856 |
(State of Incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification Number) |
One H&R Block Way, Kansas City, MO 64105
(Address of Principal Executive Offices) (Zip Code)
(816) 854-3000
(Registrants 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))
Item 2.02. Results of Operations and Financial Condition.
On June 24, 2010, the Company issued a press release regarding the Companys results of operations
for the fiscal year ended April 30, 2010. A copy of the press release is furnished as Exhibit 99.1
to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
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Exhibit Number |
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Description |
99.1 |
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Press Release issued June 24, 2010. |
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.
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H&R BLOCK, INC.
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Date: June 24, 2010 |
By: |
/s/ Andrew J. Somora
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Andrew J. Somora |
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Assistant Secretary |
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EXHIBIT INDEX
Exhibit 99.1 |
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Press Release issued June 24, 2010. |
exv99w1
Exhibit 99.1
News Release
H&R BLOCK REPORTS FISCAL 2010 FINANCIAL RESULTS
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Consolidated net income of $479 million, or $1.43 per share, compared to $486
million, or $1.45 per share, in prior year |
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Net income from continuing operations of $489 million, or $1.46 per share,
compared to $513 million, or $1.53 per share, in prior year |
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Total revenues of $3.9 billion, down 5.1% compared to $4.1 billion in prior year |
For Immediate Release June 24, 2010
KANSAS CITY, Mo. H&R Block, Inc. (NYSE: HRB) today reported consolidated net income
for the fiscal year ended April 30, 2010 of $479.2 million, or $1.43 per share1, down
1.3 percent from the prior year period of $485.7 million, or $1.45 per share. Net income from
continuing operations fell 4.7 percent to $488.9 million, or $1.46 per share, compared to income of
$513.1 million, or $1.53 per share in the prior year period. Total revenues declined 5.1 percent to
$3.9 billion.
Our business results reflect the challenging economic conditions of this tax season,
caused by record levels of sustained unemployment that led to fewer returns being filed by our core
retail tax client base, said Russ Smyth, H&R Blocks president and chief executive officer.
Despite these difficult conditions, we were able to minimize the impact on consolidated net
income. At the same time we positioned our business for future success by improving the overall
client experience, increasing client retention rates and optimizing our operating cost structure,
added Smyth.
Tax Services
Tax Services reported pretax income of $867.4 million, down 6.4 percent from $927.0
million in the prior year. Total segment revenues fell 5.0 percent year-over-year to $3.0 billion,
primarily due to a 6.1 percent decline in total retail returns prepared, partially offset by an
increase of 1.1 percent in net average fees per retail return. Same-office tax returns prepared in
retail operations fell 3.9 percent over the prior tax season.
The companys continued focus on cost-control measures, including reductions in the size of
its retail office network and renegotiation of lease payments, resulted in a declining fixed
expense base during the fiscal year.
Total digital tax returns prepared by H&R Block increased 0.4 percent, driven by a 5.0 percent
decline in software-based returns that was entirely due to the companys decision to exit two
unprofitable distribution channels. Online returns grew by 4.3
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1 |
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All per share amounts are based on fully diluted shares. |
1
percent, while returns prepared through the Free File Alliance (FFA) increased 2.8 percent.
Overall, total tax returns prepared (including software and online) by H&R Block were down 4.3
percent compared to the prior year period. Volume declines were more
pronounced in the early-season, as total tax returns prepared were down 7.8 percent from Jan.
1 Feb. 28.
In tax season 2010, total industry-wide filings at the IRS fell by 1.7 percent to 129.3
million returns. This decline was the largest since 1971, primarily due to continued high levels of
unemployment.
RSM McGladrey
RSM McGladrey reported fiscal 2010 pretax income of $58.7 million, down nearly 39 percent
from $96.1 million in the prior year. Revenues declined 4.2 percent to $860.3 million, primarily
due to the impact of the overall weak economic environment, which continues to pressure billable
rates and hours within the industry. Profitability was negatively impacted by costs associated with
previously resolved arbitration proceedings involving McGladrey & Pullen and other costs of
litigation totaling $14.5 million in the aggregate, as well as a $15.0 million goodwill impairment
charge at our capital markets business unit.
Excluding these charges, pretax income would have been approximately $88 million and pretax
margin for the segment would have been 10.3 percent, essentially flat with the prior year. The
shortfall in revenues was partially mitigated by cost reduction efforts throughout the year. These
efforts included headcount reductions to reflect lower client demand, as well as other non-client
facing cost reduction initiatives.
Corporate
Corporate operations includes corporate support department costs, such as finance and legal,
as well as net interest margin and other gains/losses associated with H&R Block Banks mortgage
portfolio. Corporate operations reported a fiscal 2010 pretax loss of $141.9 million compared to a
loss of $183.8 million in the prior year. Lower losses were primarily due to reductions in
insurance costs, reduced loss provisions on mortgage loans held for investment and gains on
residual interest assets from the companys former mortgage business.
The companys effective tax rate for continuing operations in fiscal 2010 was 37.6 percent,
compared to 38.9 percent in the prior year. The effective tax rate declined from the prior year due
to tax-planning strategies which resulted in a reduction in the companys deferred tax valuation
allowance, and non-taxable benefits on company-owned life insurance.
Balance Sheet
At April 30, 2010, the Company had cash of $1.8 billion and total outstanding debt of
$1.1 billion. Shareholder equity at fiscal year-end was $1.4 billion, essentially flat to the prior
year as the company returned substantially all earnings to shareholders in the form of share
repurchases and dividends.
2
Share Repurchases and Dividends
The company repurchased and retired 12.8 million shares in fiscal 2010 at a cost of
$250.0 million, including repurchases of 6.0 million shares in the fourth quarter at a cost
of $100.0 million. A previously announced quarterly cash dividend of 15 cents per share is
payable July 1, 2010, to shareholders of record June 10, 2010.
Outlook
The company expects to reduce annual operating expenses by $140 $150 million per year by the
end of fiscal year 2012 as a result of a realignment of field and support services announced May
19, 2010. The realignment resulted in the elimination of 400 full-time positions and closure of 400
tax offices.
Due to the seasonality of its business and the current uncertainty in certain external
variables that could significantly impact operating results (including but not limited to
employment levels, the changing settlement product environment and tax law changes), the company is
not currently providing detailed earnings guidance. However, the company will provide directional
insights for certain key business metrics on todays earnings conference call.
Moving forward, in our retail business we will aggressively market in the early season and
leverage our access to best-in-class financial products, while continuing to improve our service
levels for all clients. In our digital business, we will attract more new clients to our online
segment and enhance the leadership talent to drive accelerated growth. At McGladrey, we will
leverage our enhanced partnership agreement to extend our leadership in the middle market segment.
In each of our business segments, we will continue to optimize our operating cost structure to
better match our future business needs. The combination of these initiatives will allow us to
provide all of our clients with an outstanding value proposition, create a rewarding work
environment for our employees, and further improve our returns to shareholders, said Smyth.
Conference Call
At 4:30 p.m. EST 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) 247-6355 or International (706) 679-0371
Conference ID: 76468825
The call will also be webcast in a listen-only format for the media and public. The link to
the webcast can be accessed directly at http://investor-relations.hrblock.com.
A replay of the call will be available beginning at 6 p.m. EST on June 24, and continuing
until July 15, 2010, by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (International).
The conference ID is 76468825. The webcast will be available for replay beginning on June 25 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 Companys guidance, are
3
based upon the Companys 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 Companys actual results could differ materially
from these statements. These risks and uncertainties relate to, among other
things, uncertainties regarding the Companys 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 Companys effective income tax rate; litigation defense expenses
and costs of judgments or settlements; 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 Companys 2009 annual report on Form 10-K and in
other filings by the Company with the Securities and Exchange Commission. The Company does not
undertake any duty to update any forward-looking statements, whether as a result of new
information, future events, or otherwise.
About H&R Block
H&R Block Inc. (NYSE: HRB) is one of the worlds largest tax services providers, having prepared
more than 550 million tax returns worldwide since 1955. In fiscal 2010, H&R Block had annual
revenues of $3.9 billion and prepared more than 23 million tax returns worldwide, utilizing more
than 100,000 highly trained tax professionals. The Company provides tax return preparation services
in person, through H&R Block At Home online and desktop software products, and through other
channels. The Company is also one of the leading providers of business services through RSM
McGladrey. For more information, visit our Online Press Center at www.hrblock.com.
For Further Information
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Investor Relations:
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Derek Drysdale, (816) 854-4513, derek.drysdale@hrblock.com |
Media Relations:
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Jennifer Love, (816)854-4448, jennifer.love@hrblock.com |
# # #
4
KEY OPERATING RESULTS
Unaudited, amounts in thousands, except per share data
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Three months ended April 30, |
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Revenues |
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Income (loss) |
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2010 |
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2009 |
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2010 |
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2009 |
Tax Services |
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$ |
2,030,299 |
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$ |
2,148,777 |
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$ |
1,080,335 |
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$ |
1,145,357 |
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Business Services |
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297,647 |
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304,936 |
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68,441 |
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72,616 |
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Corporate and Eliminations |
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9,948 |
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13,040 |
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(38,366 |
) |
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(39,919 |
) |
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$ |
2,337,894 |
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$ |
2,466,753 |
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1,110,410 |
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1,178,054 |
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Income taxes |
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417,978 |
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470,245 |
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Net income from continuing operations |
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692,432 |
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707,809 |
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Net loss from discontinued operations |
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(1,604 |
) |
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(906 |
) |
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Net income |
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$ |
690,828 |
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$ |
706,903 |
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Basic earnings (loss) per share: |
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Net income from continuing operations |
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$ |
2.11 |
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$ |
2.09 |
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Net loss from discontinued operations |
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Net income |
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$ |
2.11 |
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$ |
2.09 |
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Basic shares outstanding |
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|
326,255 |
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|
336,859 |
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Diluted earnings (loss) per share: |
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Net income from continuing operations |
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|
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$ |
2.11 |
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|
$ |
2.08 |
|
Net loss from discontinued operations |
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|
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|
|
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(0.01 |
) |
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Net income |
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$ |
2.10 |
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$ |
2.08 |
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Diluted shares outstanding |
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|
327,314 |
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|
337,963 |
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Year ended April 30, |
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Revenues |
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Income (loss) |
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2010 |
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2009 |
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2010 |
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2009 |
Tax Services |
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$ |
2,975,252 |
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$ |
3,132,077 |
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$ |
867,362 |
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$ |
927,048 |
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Business Services |
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|
860,349 |
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|
897,809 |
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|
|
58,714 |
|
|
|
96,097 |
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Corporate and Eliminations |
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|
38,731 |
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|
|
53,691 |
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|
|
(141,941 |
) |
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|
(183,775 |
) |
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|
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$ |
3,874,332 |
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|
$ |
4,083,577 |
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|
784,135 |
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|
|
839,370 |
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|
|
|
|
|
|
|
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Income taxes |
|
|
|
|
|
|
|
|
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|
295,189 |
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|
326,315 |
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|
|
|
|
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|
|
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Net income from continuing operations |
|
|
|
|
|
|
|
|
|
|
488,946 |
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|
513,055 |
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Net loss from discontinued operations |
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|
|
|
|
|
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(9,704 |
) |
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|
(27,382 |
) |
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Net income |
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$ |
479,242 |
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$ |
485,673 |
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Basic earnings (loss) per share: |
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Net income from continuing operations |
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$ |
1.47 |
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$ |
1.53 |
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Net loss from discontinued operations |
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(0.03 |
) |
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|
(0.08 |
) |
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Net income |
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$ |
1.44 |
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$ |
1.45 |
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Basic shares outstanding |
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|
332,283 |
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|
332,787 |
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|
|
|
|
|
|
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|
Diluted earnings (loss) per share: |
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|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
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|
|
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|
|
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|
$ |
1.46 |
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|
$ |
1.53 |
|
Net loss from discontinued operations |
|
|
|
|
|
|
|
|
|
|
(0.03 |
) |
|
|
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net income |
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|
|
|
|
|
|
|
|
$ |
1.43 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Diluted shares outstanding |
|
|
|
|
|
|
|
|
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|
333,236 |
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|
334,539 |
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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.
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 per share data
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April 30, |
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April 30, |
|
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|
2010 |
|
|
2009 |
|
ASSETS |
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Current assets: |
|
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|
|
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|
|
|
Cash and cash equivalents |
|
$ |
1,804,045 |
|
|
$ |
1,654,663 |
|
Cash and cash equivalents restricted |
|
|
34,350 |
|
|
|
51,656 |
|
Receivables, net |
|
|
517,986 |
|
|
|
512,814 |
|
Prepaid expenses and other current assets |
|
|
292,655 |
|
|
|
351,947 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
2,649,036 |
|
|
|
2,571,080 |
|
|
|
|
|
|
|
|
|
|
Mortgage loans held for investment, net |
|
|
595,405 |
|
|
|
744,899 |
|
Property and equipment, net |
|
|
345,470 |
|
|
|
368,289 |
|
Intangible assets, net |
|
|
367,432 |
|
|
|
385,998 |
|
Goodwill |
|
|
840,447 |
|
|
|
850,230 |
|
Other assets |
|
|
436,528 |
|
|
|
439,226 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,234,318 |
|
|
$ |
5,359,722 |
|
|
|
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|
|
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|
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|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
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Current liabilities: |
|
|
|
|
|
|
|
|
Customer banking deposits |
|
$ |
852,555 |
|
|
$ |
854,888 |
|
Accounts payable, accrued expenses and other current liabilities |
|
|
756,577 |
|
|
|
705,945 |
|
Accrued salaries, wages and payroll taxes |
|
|
199,496 |
|
|
|
259,698 |
|
Accrued income taxes |
|
|
459,175 |
|
|
|
543,967 |
|
Current portion of long-term debt |
|
|
3,688 |
|
|
|
8,782 |
|
Current Federal Home Loan Bank borrowings |
|
|
50,000 |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
2,321,491 |
|
|
|
2,398,280 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
1,035,144 |
|
|
|
1,032,122 |
|
Long-term Federal Home Loan Bank borrowings |
|
|
25,000 |
|
|
|
75,000 |
|
Other noncurrent liabilities |
|
|
412,053 |
|
|
|
448,461 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,793,688 |
|
|
|
3,953,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Common stock, no par, stated value $.01 per share |
|
|
4,314 |
|
|
|
4,442 |
|
Additional paid-in capital |
|
|
832,604 |
|
|
|
836,477 |
|
Accumulated other comprehensive income (loss) |
|
|
1,678 |
|
|
|
(11,639 |
) |
Retained earnings |
|
|
2,658,586 |
|
|
|
2,671,437 |
|
Less treasury shares, at cost |
|
|
(2,056,552 |
) |
|
|
(2,094,858 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
|
1,440,630 |
|
|
|
1,405,859 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
5,234,318 |
|
|
$ |
5,359,722 |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED INCOME STATEMENTS
Unaudited, amounts in thousands, except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended April 30, |
|
|
Year ended April 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues |
|
$ |
1,944,217 |
|
|
$ |
2,081,162 |
|
|
$ |
3,231,487 |
|
|
$ |
3,437,906 |
|
Product and other revenues |
|
|
344,018 |
|
|
|
324,573 |
|
|
|
520,440 |
|
|
|
491,155 |
|
Interest income |
|
|
49,659 |
|
|
|
61,018 |
|
|
|
122,405 |
|
|
|
154,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,337,894 |
|
|
|
2,466,753 |
|
|
|
3,874,332 |
|
|
|
4,083,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
1,024,850 |
|
|
|
1,106,566 |
|
|
|
2,467,996 |
|
|
|
2,596,218 |
|
Selling, general and administrative |
|
|
203,936 |
|
|
|
184,436 |
|
|
|
631,499 |
|
|
|
648,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,228,786 |
|
|
|
1,291,002 |
|
|
|
3,099,495 |
|
|
|
3,244,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
1,109,108 |
|
|
|
1,175,751 |
|
|
|
774,837 |
|
|
|
838,869 |
|
Other income, net |
|
|
1,302 |
|
|
|
2,303 |
|
|
|
9,298 |
|
|
|
501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before taxes |
|
|
1,110,410 |
|
|
|
1,178,054 |
|
|
|
784,135 |
|
|
|
839,370 |
|
Income taxes |
|
|
417,978 |
|
|
|
470,245 |
|
|
|
295,189 |
|
|
|
326,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
|
692,432 |
|
|
|
707,809 |
|
|
|
488,946 |
|
|
|
513,055 |
|
Net loss from discontinued operations |
|
|
(1,604 |
) |
|
|
(906 |
) |
|
|
(9,704 |
) |
|
|
(27,382 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
690,828 |
|
|
$ |
706,903 |
|
|
$ |
479,242 |
|
|
$ |
485,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
2.11 |
|
|
$ |
2.09 |
|
|
$ |
1.47 |
|
|
$ |
1.53 |
|
Net loss from discontinued operations |
|
|
|
|
|
|
|
|
|
|
(0.03 |
) |
|
|
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
2.11 |
|
|
$ |
2.09 |
|
|
$ |
1.44 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares outstanding |
|
|
326,255 |
|
|
|
336,859 |
|
|
|
332,283 |
|
|
|
332,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
2.11 |
|
|
$ |
2.08 |
|
|
$ |
1.46 |
|
|
$ |
1.53 |
|
Net loss from discontinued operations |
|
|
(0.01 |
) |
|
|
|
|
|
|
(0.03 |
) |
|
|
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
2.10 |
|
|
$ |
2.08 |
|
|
$ |
1.43 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding |
|
|
327,314 |
|
|
|
337,963 |
|
|
|
333,236 |
|
|
|
334,539 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited, amounts in thousands
|
|
|
|
|
|
|
|
|
|
|
Year ended April 30, |
|
|
|
2010 |
|
|
2009 |
|
|
Net cash provided by operating activities |
|
$ |
587,469 |
|
|
$ |
1,024,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
Purchases of available-for-sale securities |
|
|
(5,365 |
) |
|
|
(5,092 |
) |
Sales of and payments received on available-for-sale securities |
|
|
15,758 |
|
|
|
15,075 |
|
Principal payments on mortgage loans held for investment, net |
|
|
72,832 |
|
|
|
91,329 |
|
Purchases of property and equipment |
|
|
(90,515 |
) |
|
|
(97,880 |
) |
Payments made for business acquisitions, net of cash acquired |
|
|
(10,539 |
) |
|
|
(293,805 |
) |
Net cash provided by investing activities of discontinued operations |
|
|
|
|
|
|
255,066 |
|
Other, net |
|
|
49,182 |
|
|
|
40,867 |
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
|
31,353 |
|
|
|
5,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayments of commercial paper |
|
|
(1,406,013 |
) |
|
|
|
|
Proceeds from commercial paper |
|
|
1,406,013 |
|
|
|
|
|
Repayments of other borrowings |
|
|
(4,267,773 |
) |
|
|
(4,762,294 |
) |
Proceeds from other borrowings |
|
|
4,242,727 |
|
|
|
4,733,294 |
|
Customer banking deposits |
|
|
17,539 |
|
|
|
64,357 |
|
Dividends paid |
|
|
(200,899 |
) |
|
|
(198,685 |
) |
Repurchase of common stock, including shares surrendered |
|
|
(254,250 |
) |
|
|
(106,189 |
) |
Proceeds from exercise of stock options |
|
|
16,682 |
|
|
|
71,594 |
|
Proceeds from issuance of common stock, net |
|
|
|
|
|
|
141,415 |
|
Net cash provided by financing activities of discontinued operations |
|
|
|
|
|
|
4,783 |
|
Other, net |
|
|
(35,144 |
) |
|
|
11,492 |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(481,118 |
) |
|
|
(40,233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rates on cash |
|
|
11,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
149,382 |
|
|
|
989,766 |
|
Cash and cash equivalents at beginning of the period |
|
|
1,654,663 |
|
|
|
664,897 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period |
|
$ |
1,804,045 |
|
|
$ |
1,654,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary cash flow data: |
|
|
|
|
|
|
|
|
Income taxes paid (refunds received), net |
|
$ |
359,559 |
|
|
$ |
(1,593 |
) |
Interest paid on borrowings |
|
|
78,305 |
|
|
|
89,541 |
|
Interest paid on deposits |
|
|
10,156 |
|
|
|
14,004 |
|
Transfers of loans to foreclosed assets |
|
|
19,341 |
|
|
|
65,171 |
|
INTERIM U.S. TAX OPERATING DATA
(amounts in thousands, except net average fee)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended April 30, |
|
|
Percent |
|
|
|
2010 |
|
|
2009(1) |
|
|
Change |
|
Net tax preparation fees retail: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned operations |
|
$ |
1,812,715 |
|
|
$ |
1,929,751 |
|
|
|
-6.1 |
% |
Franchise operations |
|
|
882,683 |
|
|
|
906,337 |
|
|
|
-2.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total retail operations |
|
$ |
2,695,398 |
|
|
$ |
2,836,088 |
|
|
|
-5.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total returns prepared: |
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned operations |
|
|
9,182 |
|
|
|
9,844 |
|
|
|
-6.7 |
% |
Franchise operations |
|
|
5,064 |
|
|
|
5,323 |
|
|
|
-4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total retail operations |
|
|
14,246 |
|
|
|
15,167 |
|
|
|
-6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital software |
|
|
2,193 |
|
|
|
2,309 |
|
|
|
-5.0 |
% |
Digital online |
|
|
2,893 |
|
|
|
2,775 |
|
|
|
4.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Sub-total |
|
|
5,086 |
|
|
|
5,084 |
|
|
|
0.0 |
% |
Digital Free File Alliance |
|
|
810 |
|
|
|
788 |
|
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total digital tax solutions |
|
|
5,896 |
|
|
|
5,872 |
|
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,142 |
|
|
|
21,039 |
|
|
|
-4.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net average fee retail: (2, 3) |
|
|
|
|
|
|
|
|
|
|
|
|
Company-owned operations |
|
$ |
197.42 |
|
|
$ |
196.21 |
|
|
|
0.6 |
% |
Franchise operations |
|
|
174.32 |
|
|
|
170.31 |
|
|
|
2.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total retail operations |
|
$ |
189.21 |
|
|
$ |
187.12 |
|
|
|
1.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Prior year numbers have been reclassified between company-owned and franchise operations for offices which were refranchised during either year. |
|
(2) |
|
Amounts include gross tax preparation fees less coupons and discounts. |
|
(3) |
|
Amounts are calculated as net retail tax preparation fees divided by retail tax returns. |
NON-GAAP RECONCILIATION
Unaudited, amounts in thousands
We report our financial results in accordance with generally accepted accounting
principles (GAAP). However, we believe certain non-GAAP performance measures and ratios used in
managing the business may provide additional meaningful
comparisons between current year results and prior periods. Reconciliations to GAAP financial
measures are provided below. These non-GAAP financial measures should be viewed in addition to, not
as an alternative for, our reported GAAP results.
|
|
|
|
|
|
|
Year ended April 30, |
|
|
|
2010 |
|
Business Services revenues |
|
$ |
860,349 |
|
|
|
|
|
|
|
|
|
|
Business Services pretax income |
|
$ |
58,714 |
|
Add back: |
|
|
|
|
Goodwill impairment |
|
|
15,000 |
|
Cost of M&P arbitration and increases in legal reserves |
|
|
14,505 |
|
|
|
|
|
|
|
|
29,505 |
|
|
|
|
|
|
|
|
|
|
Business Services pretax income adjusted |
|
$ |
88,219 |
|
|
|
|
|
|
|
|
|
|
Pretax margin |
|
|
6.8 |
% |
Pretax margin adjusted |
|
|
10.3 |
% |