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 21, 2011
H&R BLOCK, INC.
(Exact name of registrant as specified in charter)
|
Missouri
(State of Incorporation)
|
1-6089
(Commission File Number)
|
44-0607856
(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
(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):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02.
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Results of Operations and Financial Condition.
|
On June 23, 2011, the Company issued a press release regarding the Company’s results of operations for the fiscal year ended April 30, 2011. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
|
Item 5.02.
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
|
(e) On June 21, 2011, the Board of Directors of H&R Block, Inc. (the “Company”), based on the recommendation of the Board’s Compensation Committee (the “Committee”), adopted a performance-based long-term incentive program (the “Performance Share Program”) that provides for performance shares to be issued to executive officers of the Company and its affiliates pursuant to the 2003 Long-Term Executive Compensation Plan.
The Performance Share Program is designed to increase the pay-for-performance relationship in our overall long-term equity compensation program. Eligible participants are executives of the Company, including the Company’s named executive officers, who are selected for awards by the Committee. Under the Performance Share Program:
|
·
|
A participating executive has the opportunity to earn a performance share payout between 0% and 250% of the target award based on performance against pre-established performance metrics.
|
|
·
|
Performance is measured over three separate twelve-month performance periods with the performance metrics established at the beginning of each fiscal year, with the average results for the three performance periods determining the number of performance shares earned at the end of the three-year period. This amount is then subject to a potential modification of up to plus or minus 25% based on the Company’s total shareholder return (“TSR”) over the entire three-year performance period relative to the S&P 500. As a result of the TSR modification, the maximum award of 250% of target can only be achieved if the maximum performance goals were met in each of three separate and distinct twelve-month performance periods and TSR over the entire three-year performance period equals or exceeds the 80th percentile relative to the S&P 500.
|
|
·
|
The performance metrics for fiscal year 2012, the first of the three, twelve-month performance periods, are (in equal weights): (i) the Company’s revenue growth (excluding the Business Services segment); and (ii) the Company’s earnings growth from continuing operations (excluding the Business Services segment) before interest, taxes, depreciation and amortization (depreciation and amortization include, if any, asset impairment).
|
|
·
|
Vesting of earned shares, if any, occurs at the end of the three-year performance period, subject to the following: (i) an executive will forfeit their award if they are terminated for cause or voluntarily terminate employment prior to vesting; and (ii) an executive will receive a pro-rata portion of their award based on death, disability, retirement or involuntary termination without cause prior to vesting.
|
|
·
|
Performance shares are settled upon vesting at the end of the related three-year performance period using shares of our common stock and do not pay dividends during the vesting period. Instead, dividend equivalents are carried as fractional performance shares until vesting, at which time they are settled as additional shares of common stock.
|
|
·
|
Unvested performance shares do not carry voting rights; shares earned through achievement of performance objectives carry voting rights once the shares are paid out in common stock.
|
The award agreements for performance share grants will include termination, change-in-control, and clawback provisions. These award agreements will be filed as exhibits to the Company’s next Quarterly Report on Form 10-Q.
|
Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits
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Exhibit Number
|
Description
|
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.
|
|
|
Date: June 23, 2011
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By:/s/ Andrew J. Somora
|
|
Andrew J. Somora
|
|
|
Secretary
|
EXHIBIT INDEX
Exhibit 99.1
News Release
For Further Information
Investor Relations: Derek Drysdale, (816) 854-4513, derek.drysdale@hrblock.com
Media Relations: Kate O’Neill Rauber, (816) 854-4548, kate.rauber@hrblock.com
H&R BLOCK REPORTS FISCAL 2011 FOURTH QUARTER AND FULL YEAR RESULTS
|
·
|
Fourth quarter net income from continuing operations of $2.14 per share includes after-tax litigation charge of $17.0 million, or $0.06 per share1
|
|
·
|
Fiscal 2011 net income from continuing operations of $419 million, or $1.35 per share
|
|
·
|
Adjusted non-GAAP net income from continuing operations of $471 million in fiscal 2011, or $1.52 per share, compared to $474 million, or $1.42 per share in prior year
|
|
·
|
U.S. tax returns prepared up 6.5 percent, or 1.3 million returns; U.S.market share up 80 basis points to 16.4 percent
|
For Immediate Release June 23, 2011
KANSAS CITY, Mo. – H&R Block, Inc. (NYSE: HRB) today reported net income from continuing operations for the fiscal year ended April 30, 2011 of $419.4 million, or $1.35 per share. In addition to previously announced charges, the company’s Business Services segment incurred an after-tax litigation charge in the fourth quarter of $17.0 million, or $0.06 per share. Adjusted (non-GAAP) income from continuing operations for fiscal 2011 was $470.6 million, essentially flat to adjusted net income in the prior year. Adjusted earnings per share increased 7 percent to $1.52 due to a decline in weighted average shares outstanding. Total revenues of $3.8 billion were down 2.6 percent compared to the prior year.
“The actions taken this year have strengthened important fundamentals in our business,” said William C. Cobb, H&R Block’s president and chief executive officer. “We achieved our highest level of U.S. client growth since 2001 and maintained strong earnings results despite a number of special items. We also reversed years of market share declines and have built a solid pipeline of new and younger clients. All of this positions us well for the future.”
Tax Services
The segment reported fiscal 2011 pretax income of $767.5 million. Adjusting for special items, the segment’s pretax income was $829.9 million, essentially flat to the prior year. Adjusted pretax margin for the segment improved to 28.5 percent, compared with adjusted pretax margin of 27.9 percent in the prior year, as a result of cost savings achieved through reductions in force and the office network.
1 All per share amounts are based on fully diluted shares
2 Total online returns prepared exclude software-based and Free File Alliance (“FFA”) returns.
1
Fiscal 2011 segment revenues declined 2.1 percent to $2.9 billion. This decline was primarily attributable to the strategic sale of 280 company owned locations to franchisees, as well as lower revenues stemming from the company’s inability to offer refund anticipation loans this tax season.
Total U.S. tax returns prepared by H&R Block in fiscal 2011 grew 6.5 percent, or 1.3 million returns. Total retail returns prepared grew 3.6 percent, while the net average retail fee per tax return prepared declined 3.3 percent. Total digital tax returns prepared increased 13.5 percent, led by growth of 28.7 percent in online filings2.
In tax season 2011, the company believes total industry-wide filings at the IRS increased by 1.1 percent to approximately 131 million returns. The company estimates it gained 80 basis points of total U.S. market share in tax season 2011, including 60 basis points of share in retail and 90 basis points in the digital online category.
“The significant improvement in many of our key client satisfaction indicators gives us confidence that we can attract more clients to our brand, retain clients at higher rates, and continue driving organic growth in our business,” said Cobb.
RSM McGladrey
Segment pretax income of $49.0 million was down 16.5 percent compared to fiscal 2010. Adjusting for legal charges, fiscal 2011 pretax income was $77.3 million and the pretax margin was 9.3 percent. This compares to adjusted pretax income of $88.2 million and pretax margin of 10.3 percent in the prior year. Fiscal 2011 segment revenues fell 3.6 percent to $829.8 million.
Corporate
Corporate operations include corporate support department costs, as well as net interest margin and other gains/losses associated with H&R Block Bank’s mortgage portfolio. Corporate operations reported a pretax loss of $139.5 million in fiscal 2011 compared to a loss of $141.9 million in the prior year.
The company’s effective tax rate for continuing operations in fiscal 2011 was 38.1 percent compared to 37.6 percent in the prior year.
Discontinued Operations
Sand Canyon Corporation (“SCC”), formerly known as Option One Mortgage Corporation, ceased originating mortgage loans in December 2007 and, in April 2008, sold its servicing assets and discontinued its remaining operations. SCC is a separate legal entity from H&R Block, Inc. At April 30, 2011, SCC had net assets of approximately $300 million, in addition to an accrual for representation and warranty liabilities of $126.3 million.
New claims for alleged breaches of representation and warranties in the principal amount of $55 million were received during the fourth quarter. SCC completed a review of claims of approximately $41 million during the quarter, with incurred losses totaling $4.5 million. At April 30, 2011, total claims of $79 million remain subject to review.
2
As previously announced on March 9, 2011, SCC made its final payment of $24.2 million for reserved losses under a $50.0 million indemnification agreement dated April 2008. The indemnification agreement was entered into with a specific counterparty in exchange for a full and complete release of such party’s ability to assert representation and warranty claims. SCC has fulfilled its obligation under this agreement.
Balance Sheet
At April 30, 2011, the Company had unrestricted cash of $1.7 billion and total outstanding debt of $1.1 billion. Shareholder equity at April 30 was $1.4 billion, essentially flat to the prior year.
Dividend
A previously announced quarterly cash dividend of 15 cents per share is payable on July 1, 2011, to shareholders of record as of June 10, 2011.
Conference Call
At 4:30 p.m. Eastern time today, the company will host a conference call for analysts, institutional investors and shareholders. To access the call, please dial the number below approximately 5 to 10 minutes prior to the scheduled starting time:
U.S./Canada (877) 809-6980 or International (706) 634-7287
Conference ID: 70449405
The call will also be webcast in a listen-only format for the media and public. The link to the webcast can be accessed on the company’s investor relations Web site at www.hrblock.com.
A replay of the call will be available beginning at 5:30 p.m. Eastern on June 23 and continuing until July 23, 2011, by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (International). The conference ID is 70449405. The webcast will be available for replay beginning on June 24.
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 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 Company’s 2011 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.
3
About H&R Block
H&R Block Inc. (NYSE: HRB) is one of the world’s largest tax services providers, having prepared more than 575 million tax returns worldwide since 1955. In fiscal 2011, H&R Block had annual revenues of $3.8 billion and prepared more than 24.5 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.
# # #
4
|
KEY OPERATING RESULTS
|
|
Unaudited, amounts in thousands, except per share data
|
|
Three months ended April 30,
|
||||||||
|
Revenues
|
Income (loss)
|
|||||||
|
2011
|
2010
|
2011
|
2010
|
|||||
|
Tax Services
|
$ 2,036,985
|
$ 2,030,299
|
$ 1,092,363
|
$ 1,080,335
|
||||
|
Business Services
|
280,349
|
297,647
|
32,452
|
68,441
|
||||
|
Corporate and Eliminations
|
8,117
|
9,948
|
(47,905)
|
(38,366)
|
||||
|
$ 2,325,451
|
$ 2,337,894
|
1,076,910
|
1,110,410
|
|||||
|
Income taxes
|
418,680
|
417,978
|
||||||
|
Net income from continuing operations
|
658,230
|
692,432
|
||||||
|
Net income (loss) from discontinued operations
|
331
|
(1,604)
|
||||||
|
Net income
|
$ 658,561
|
$ 690,828
|
||||||
|
Basic earnings (loss) per share:
|
||||||||
|
Net income from continuing operations
|
$ 2.15
|
$ 2.11
|
||||||
|
Net income (loss) from discontinued operations
|
-
|
-
|
||||||
|
Net income
|
$ 2.15
|
$ 2.11
|
||||||
|
Basic shares outstanding
|
305,283
|
326,255
|
||||||
|
Diluted earnings (loss) per share:
|
||||||||
|
Net income from continuing operations
|
$ 2.14
|
$ 2.11
|
||||||
|
Net income (loss) from discontinued operations
|
-
|
(0.01)
|
||||||
|
Net income
|
$ 2.14
|
$ 2.10
|
||||||
|
Diluted shares outstanding
|
306,118
|
327,314
|
||||||
|
Year ended April 30,
|
||||||||
|
Revenues
|
Income (loss)
|
|||||||
|
2011
|
2010
|
2011
|
2010
|
|||||
|
Tax Services
|
$ 2,912,361
|
$ 2,975,252
|
$ 767,498
|
$ 867,362
|
||||
|
Business Services
|
829,794
|
860,349
|
49,003
|
58,714
|
||||
|
Corporate and Eliminations
|
32,141
|
38,731
|
(139,476)
|
(141,941)
|
||||
|
$ 3,774,296
|
$ 3,874,332
|
677,025
|
784,135
|
|||||
|
Income taxes
|
257,620
|
295,189
|
||||||
|
Net income from continuing operations
|
419,405
|
488,946
|
||||||
|
Net loss from discontinued operations
|
(13,295)
|
(9,704)
|
||||||
|
Net income
|
$ 406,110
|
$ 479,242
|
||||||
|
Basic earnings (loss) per share:
|
||||||||
|
Net income from continuing operations
|
$ 1.35
|
$ 1.47
|
||||||
|
Net loss from discontinued operations
|
(0.04)
|
(0.03)
|
||||||
|
Net income
|
$ 1.31
|
$ 1.44
|
||||||
|
Basic shares outstanding
|
309,230
|
332,283
|
||||||
|
Diluted earnings (loss) per share:
|
||||||||
|
Net income from continuing operations
|
$ 1.35
|
$ 1.46
|
||||||
|
Net loss from discontinued operations
|
(0.04)
|
(0.03)
|
||||||
|
Net income
|
$ 1.31
|
$ 1.43
|
||||||
|
Diluted shares outstanding
|
309,777
|
333,236
|
||||||
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, except in those periods with a loss from continuing operations.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
Amounts in thousands, except per share data
|
|
April 30,
|
April 30,
|
|||
|
2011
|
2010
|
|||
|
ASSETS
|
||||
|
Current assets:
|
||||
|
Cash and cash equivalents
|
$ 1,677,844
|
$ 1,804,045
|
||
|
Cash and cash equivalents - restricted
|
48,383
|
34,350
|
||
|
Receivables, net
|
492,290
|
517,986
|
||
|
Prepaid expenses and other current assets
|
259,214
|
292,655
|
||
|
Total current assets
|
2,477,731
|
2,649,036
|
||
|
Mortgage loans held for investment, net
|
485,008
|
595,405
|
||
|
Property and equipment, net
|
307,320
|
345,470
|
||
|
Intangible assets, net
|
367,919
|
367,432
|
||
|
Goodwill
|
846,245
|
840,447
|
||
|
Other assets
|
723,738
|
436,528
|
||
|
Total assets
|
$ 5,207,961
|
$ 5,234,318
|
||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||
|
Current liabilities:
|
||||
|
Customer banking deposits
|
$ 852,220
|
$ 852,555
|
||
|
Accounts payable, accrued expenses and other current liabilities
|
618,070
|
756,577
|
||
|
Accrued salaries, wages and payroll taxes
|
257,038
|
199,496
|
||
|
Accrued income taxes
|
458,910
|
459,175
|
||
|
Current portion of long-term debt
|
3,437
|
3,688
|
||
|
Federal Home Loan Bank borrowings
|
25,000
|
50,000
|
||
|
Total current liabilities
|
2,214,675
|
2,321,491
|
||
|
Long-term debt
|
1,049,754
|
1,035,144
|
||
|
Federal Home Loan Bank borrowings
|
-
|
25,000
|
||
|
Other noncurrent liabilities
|
493,958
|
412,053
|
||
|
Total liabilities
|
3,758,387
|
3,793,688
|
||
|
Stockholders' equity:
|
||||
|
Common stock, no par, stated value $.01 per share
|
4,124
|
4,314
|
||
|
Additional paid-in capital
|
812,666
|
832,604
|
||
|
Accumulated other comprehensive income
|
11,233
|
1,678
|
||
|
Retained earnings
|
2,658,103
|
2,658,586
|
||
|
Less treasury shares, at cost
|
(2,036,552)
|
(2,056,552)
|
||
|
Total stockholders' equity
|
1,449,574
|
1,440,630
|
||
|
Total liabilities and stockholders' equity
|
$ 5,207,961
|
$ 5,234,318
|
||
|
CONDENSED CONSOLIDATED INCOME STATEMENTS
|
|
|
Unaudited, amounts in thousands, except per share data
|
|
Three months ended April 30,
|
Year ended April 30,
|
||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||
|
Revenues:
|
|||||||||
|
Service revenues
|
$ 2,005,008
|
$ 1,944,217
|
$ 3,225,861
|
$ 3,231,487
|
|||||
|
Product and other revenues
|
263,336
|
344,018
|
414,282
|
520,440
|
|||||
|
Interest income
|
57,107
|
49,659
|
134,153
|
122,405
|
|||||
|
2,325,451
|
2,337,894
|
3,774,296
|
3,874,332
|
||||||
|
Operating expenses:
|
|||||||||
|
Cost of revenues
|
1,018,461
|
1,024,850
|
2,414,590
|
2,467,996
|
|||||
|
Selling, general and administrative
|
232,365
|
203,936
|
694,136
|
631,499
|
|||||
|
1,250,826
|
1,228,786
|
3,108,726
|
3,099,495
|
||||||
|
Operating income
|
1,074,625
|
1,109,108
|
665,570
|
774,837
|
|||||
|
Other income, net
|
2,285
|
1,302
|
11,455
|
9,298
|
|||||
|
Income from continuing operations before tax
|
1,076,910
|
1,110,410
|
677,025
|
784,135
|
|||||
|
Income taxes
|
418,680
|
417,978
|
257,620
|
295,189
|
|||||
|
Net income from continuing operations
|
658,230
|
692,432
|
419,405
|
488,946
|
|||||
|
Net income (loss) from discontinued operations
|
331
|
(1,604)
|
(13,295)
|
(9,704)
|
|||||
|
Net income
|
$ 658,561
|
$ 690,828
|
$ 406,110
|
$ 479,242
|
|||||
|
Basic earnings (loss) per share:
|
|||||||||
|
Net income from continuing operations
|
$ 2.15
|
$ 2.11
|
$ 1.35
|
$ 1.47
|
|||||
|
Net income (loss) from discontinued operations
|
-
|
-
|
(0.04)
|
(0.03)
|
|||||
|
Net income
|
$ 2.15
|
$ 2.11
|
$ 1.31
|
$ 1.44
|
|||||
|
Basic shares outstanding
|
305,283
|
326,255
|
309,230
|
332,283
|
|||||
|
Diluted earnings (loss) per share:
|
|||||||||
|
Net income from continuing operations
|
$ 2.14
|
$ 2.11
|
$ 1.35
|
$ 1.46
|
|||||
|
Net income (loss) from discontinued operations
|
-
|
(0.01)
|
(0.04)
|
(0.03)
|
|||||
|
Net income
|
$ 2.14
|
$ 2.10
|
$ 1.31
|
$ 1.43
|
|||||
|
Diluted shares outstanding
|
306,118
|
327,314
|
309,777
|
333,236
|
|||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||
|
Unaudited, amounts in thousands
|
|
Year ended April 30,
|
|||||||||
|
2011
|
2010
|
||||||||
|
Net cash provided by operating activities
|
$ 512,503
|
$ 587,469
|
|||||||
|
Cash flows from investing activities:
|
|||||||||
|
Available-for-sale securities:
|
|||||||||
|
Purchases of available-for-sale securities
|
(138,824)
|
(5,365)
|
|||||||
|
Maturities of and payments received on available-for-sale securities
|
16,797
|
15,758
|
|||||||
|
Principal payments on mortgage loans held for investment, net
|
58,471
|
72,832
|
|||||||
|
Purchases of property and equipment
|
(62,959)
|
(90,515)
|
|||||||
|
Payments made for business acquisitions, net of cash acquired
|
(54,171)
|
(10,539)
|
|||||||
|
Proceeds from sales of businesses, net
|
71,083
|
66,623
|
|||||||
|
Franchise loans:
|
|||||||||
|
Loans funded
|
(92,455)
|
(89,664)
|
|||||||
|
Payments received
|
57,552
|
40,710
|
|||||||
|
Other, net
|
34,349
|
31,513
|
|||||||
|
Net cash provided by (used in) investing activities
|
(110,157)
|
31,353
|
|||||||
|
Cash flows from financing activities:
|
|||||||||
|
Repayments of commercial paper
|
(4,818,766)
|
(1,406,013)
|
|||||||
|
Proceeds from issuance of commercial paper
|
4,818,766
|
1,406,013
|
|||||||
|
Repayments of other borrowings
|
(50,000)
|
(4,267,773)
|
|||||||
|
Proceeds from other borrowings
|
-
|
4,242,727
|
|||||||
|
Customer banking deposits, net
|
(11,440)
|
17,539
|
|||||||
|
Dividends paid
|
(186,802)
|
(200,899)
|
|||||||
|
Repurchase of common stock, including shares surrendered
|
(283,534)
|
(254,250)
|
|||||||
|
Proceeds from exercise of stock options
|
424
|
16,682
|
|||||||
|
Other, net
|
(3,039)
|
(35,144)
|
|||||||
|
Net cash used in financing activities
|
(534,391)
|
(481,118)
|
|||||||
|
Effects of exchange rates on cash
|
5,844
|
11,678
|
|||||||
|
Net increase (decrease) in cash and cash equivalents
|
(126,201)
|
149,382
|
|||||||
|
Cash and cash equivalents at beginning of the year
|
1,804,045
|
1,654,663
|
|||||||
|
Cash and cash equivalents at end of the year
|
$ 1,677,844
|
$ 1,804,045
|
|||||||
|
Supplementary cash flow data:
|
|||||||||
|
Income taxes paid, net of refunds received
|
$ 244,917
|
$ 359,559
|
|||||||
|
Interest paid on borrowings
|
73,791
|
78,305
|
|||||||
|
Interest paid on deposits
|
8,541
|
10,156
|
|||||||
|
Transfers of foreclosed loans to other assets
|
16,463
|
19,341
|
|||||||
|
U.S. Tax Operating Data
|
|||||
|
(in thousands, except net average fee)
|
|
Year ended April 30,
|
Percent
|
||||||
|
2011
|
2010
|
Change
|
|||||
|
Net tax preparation fees - retail: (1,2)
|
|||||||
|
Company-owned operations
|
$ 1,739,490
|
$ 1,742,517
|
-0.2%
|
||||
|
Franchise operations
|
960,219
|
954,291
|
0.6%
|
||||
|
$ 2,699,709
|
$ 2,696,808
|
0.1%
|
|||||
|
Total returns prepared: (2,4)
|
|||||||
|
Company-owned operations
|
9,168
|
8,817
|
|
4.0%
|
|||
|
Franchise operations
|
5,588
|
5,429
|
2.9%
|
||||
|
Total retail operations
|
14,756
|
14,246
|
|
3.6%
|
|||
|
Software
|
2,201
|
2,193
|
0.4%
|
||||
|
Online
|
3,722
|
2,893
|
28.7%
|
||||
|
Sub-total
|
5,923
|
5,086
|
16.5%
|
||||
|
Free File Alliance
|
767
|
810
|
-5.3%
|
||||
|
Total digital tax solutions
|
6,690
|
5,896
|
13.5%
|
||||
|
21,446
|
20,142
|
|
6.5%
|
||||
|
Net average fee - retail: (2,3)
|
|||||||
|
Company-owned operations
|
$ 189.73
|
$ 197.63
|
-4.0%
|
||||
|
Franchise operations
|
171.86
|
175.65
|
-2.2%
|
||||
|
$ 182.96
|
$ 189.25
|
-3.3%
|
|||||
|
(1)
|
Amounts include gross tax preparation fees less coupons and discounts.
|
|
(2)
|
Prior year tax preparation fees (in thousands) of $70,199 and returns prepared (in thousands) of 365 have been reclassified between company-owned and franchise operations for offices which were refranchised during either year.
|
|
(3)
|
Amounts are calculated as net retail tax preparation fees divided by retail tax returns.
|
|
(4)
|
Total returns prepared include the filing (in thousands) of 93 and 38 extensions for 2011 and 2010 respectively.
|
|
NON-GAAP RECONCILIATION
|
|
|
Unaudited, amounts in millions, except per share amounts
|
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.
|
Segment Pretax Income
|
|||||||
|
Tax Services
|
Business Services
|
||||||
|
Year ended April 30,
|
Year ended April 30,
|
||||||
|
2011
|
2010
|
2011
|
2010
|
||||
|
Pretax income - as reported
|
$ 767.5
|
$ 867.4
|
$ 49.0
|
$ 58.7
|
|||
|
Add back (pretax):
|
|||||||
|
Litigation and arbitration
|
15.0
|
-
|
28.3
|
14.5
|
|||
|
Incremental Emerald Advance credit losses (1)
|
40.5
|
-
|
-
|
-
|
|||
|
Severance
|
27.4
|
11.9
|
-
|
-
|
|||
|
Asset impairments
|
24.6
|
-
|
-
|
15.0
|
|||
|
Gain on sale of tax offices to franchisees
|
(45.1)
|
(49.0)
|
-
|
-
|
|||
|
62.4
|
(37.1)
|
28.3
|
29.5
|
||||
|
Pretax income - as adjusted
|
$ 829.9
|
$ 830.3
|
$ 77.3
|
$ 88.2
|
|||
|
Revenues - as reported
|
$ 2,912.4
|
$ 2,975.3
|
$ 829.8
|
$ 860.3
|
|||
|
Pretax margin - as reported
|
26.4%
|
29.2%
|
5.9%
|
6.8%
|
|||
|
Pretax margin - as adjusted
|
28.5%
|
27.9%
|
9.3%
|
10.3%
|
|||
|
Consolidated Net Income
|
|||||||
|
Year ended April 30,
|
|||||||
|
2011
|
2010
|
||||||
|
After-tax
|
Per share
|
After-tax
|
Per share
|
||||
|
Net income from continuing operations - as reported
|
$ 419.4
|
$ 1.35
|
$ 488.9
|
$ 1.46
|
|||
|
Add back (net of tax):
|
|||||||
|
Litigation and arbitration
|
26.8
|
0.09
|
9.1
|
0.03
|
|||
|
Incremental Emerald Advance credit losses (1)
|
25.1
|
0.08
|
-
|
-
|
|||
|
Severance
|
18.3
|
0.06
|
8.4
|
0.03
|
|||
|
Asset impairments
|
15.2
|
0.05
|
9.4
|
0.03
|
|||
|
Gain on sale of tax offices to franchisees
|
(27.9)
|
(0.09)
|
(30.6)
|
(0.09)
|
|||
|
Other gains (2)
|
(6.3)
|
(0.02)
|
(11.5)
|
(0.04)
|
|||
|
51.2
|
0.17
|
(15.2)
|
(0.04)
|
||||
|
Net income from continuing operations - as adjusted
|
$ 470.6
|
$ 1.52
|
$ 473.7
|
$ 1.42
|
|||
|
Diluted shares
|
309.8
|
333.2
|
|||||
|
(1)
|
Credit losses were higher in fiscal 2011 compared to fiscal 2010 as a result of higher levels of Emerald Advance clients not returning for tax preparation. Incremental credit losses were calculated based on the difference between the fiscal 2011 loss rate assumption and the actual loss rate multiplied by the principal amount of fiscal 2011 loan originations.
|
|
(2)
|
Represents gain on commutation of insurance liability in fiscal year 2010 and gains on residual interests in securitizations in fiscal years 2011 and 2010. Both gains were recorded in corporate operations.
|