Exhibit 99.1
News Release
H&R Block Reports Fiscal 2011 First Quarter Results
| · | Net loss from continuing operations of $114.8 million, or $0.36 per share prior to severance charge, compared to prior-year loss of $130.6 million, or $0.39 per share* |
| · | Consolidated net loss of $130.7 million, or $0.41 per share, compared to prior-year loss of $133.6 million, or $0.40 per share |
| · | Total revenues of $274.5 million essentially flat to prior year |
| · | Company repurchases and retires 15.5 million shares at a cost of $235.7 million |
For Immediate Release: Sept. 2, 2010
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, 2010, of $114.8 million, or $0.36 per share prior to a severance charge, compared to a loss of $130.6 million, or $0.39 per share in the prior-year period. The Company incurred a pretax charge in the current period of $21.2 million, or $0.04 per share, for the cost of termination benefits in connection with its realignment of field and support services announced May 19, 2010. The net loss from continuing operations in the current period after the severance charge was $127.6 million, or $0.40 per share.
“Our first quarter results demonstrate the progress we have made in reducing embedded costs, and we believe we can achieve more in this area,” said Alan Bennett, president and chief executive officer of H&R Block. “Our balance sheet reflects a strong position that gives us considerable financial flexibility going forward. We are working diligently to reverse the early-season client losses we have experienced in each of the past two years. Our goal is to further innovate our best-in-class financial products, demonstrate continued client-centric service improvements, and use a more compelling marketing approach to increase traffic throughout our network,” added Bennett.
First quarter total revenues were down $1.0 million from the prior year to $274.5 million. The net loss from discontinued operations of $3.0 million was flat to the prior year. The consolidated net loss was $130.7 million, or $0.41 cents per share, compared to a loss of $133.6 million, or $0.40 cents per share, in the prior year period.
Tax Services
First quarter Tax Services revenues rose 4.2 percent year-over-year to $91.6 million. The segment reported a pretax loss of $174.6 million compared to $172.0 million a year ago. Absent a $19.2 million charge for severance costs and related payroll taxes associated with staff reductions, total expenses fell by $12.8 million, or
* All per share amounts are based on fully diluted shares.
4.9 percent. These savings were achieved primarily through those staff reductions and the closing of certain underperforming retail office locations during the first quarter.
On August 31, the Company promoted Phil Mazzini to President of retail tax services. Over the past six years, Mr. Mazzini has served in a number of senior executive roles at H&R Block, including Managing Director, Senior Vice President of Operations, and President of the Eastern U.S. area.
“Phil has a strong background in senior executive P&L roles both domestically and internationally. His expertise in products and services, extensive knowledge of the tax industry, and leadership qualities made him a great choice for this role," said Alan Bennett.
RSM McGladrey
First quarter segment revenues fell 1.6 percent compared with the prior year to $174.7 million. The segment recorded a first quarter pretax loss of $0.4 million compared to pretax income of $1.3 million a year ago. Total expenses declined $1.2 million, or 0.7 percent, from the prior year.
In July, RSM McGladrey acquired the Boston-based accounting firm Caturano & Company. The acquisition is expected to add approximately $30 million to fiscal 2011 revenues and be neither accretive nor dilutive to fiscal 2011 earnings.
Corporate
Corporate 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 Bank’s mortgage portfolio. Corporate reported a pretax loss of $32.3 million for the first quarter ended July 31, 2010, compared to a loss of $40.2 million in the prior year. Lower losses were due to reduced loss provisions on mortgage loans held for investment and gains on residual interest assets from the company’s former mortgage business.
Net mortgage loans held for investment declined 20 percent from $707.7 million at July 31, 2009 to $563.1 million at July 31, 2010. Loss provisions on mortgage loans totaled $8.0 million during the quarter ended July 31, 2010, a decline of $5.6 million compared with the prior year quarter.
Share Repurchases and Dividends
The company repurchased and retired 15.5 million shares in the fiscal first quarter at a cost of $235.7 million. A previously announced quarterly cash dividend of 15 cents per share is payable Oct. 1, 2010, to shareholders of record Sept. 10, 2010.
Conference Call
At 4:30 p.m. EDT, 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) 679-0317
Conference ID: 93951013
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 6:30 p.m. EDT on Sept. 2, and continuing until Sept. 30, 2010, by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (International). The conference ID is 93951013. The webcast will be available for replay beginning on Sept. 3 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 th e 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 2010 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 world’s 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
Investor Relations: Derek Drysdale, (816) 854-4513, derek.drysdale@hrblock.com
Media Relations: Jennifer Love, (816) 854-4448, jennifer.love@hrblock.com
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