Exhibit 99.1
News Release
For Further Information
Investor Relations: Derek Drysdale, (816) 854-4513, derek.drysdale@hrblock.com
Media Relations: Gene King, (816) 854-4672, gene.king@hrblock.com
H&R Block Reports Fiscal 2012 First Quarter Results
| · | First quarter net loss from continuing operations of $0.57 per share includes charges of $0.20 per share |
| · | Adjusted non-GAAP net loss from continuing operations of $111.2 million, or $0.37 per share, compared to a loss of $110.8 million, or $0.35 per share in prior year |
| · | Total revenues down 2.5 percent to $267.6 million |
For Immediate Release: Sept. 1, 2011
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, 2011, of $173.4 million, or $0.57 per share, compared to a loss of $127.6 million, or $0.40 per share in the prior year period. The company recorded after-tax charges of $62.2 million, or $0.20 per share, largely related to the pending sale of its RSM McGladrey (“RSM”) subsidiary. The adjusted net loss from continuing operations of $111.2 million was essentially flat to the prior year. The adjusted loss per share increased to $0.37 compared to a loss of $0.35 per share a year ago due to fewer shares outstanding. Total revenues fell 2.5 percent to $267.6 million due to declining revenues at RSM.
“Our first quarter results were in-line with our expectations,” said Bill Cobb, H&R Block’s president and chief executive officer. “As we finalize our plans for next tax season, we are confident that we can continue driving organic growth in our core business by attracting and retaining more clients.”
Tax Services
First quarter Tax Services revenues of $91.4 million were essentially flat to the prior year. The segment’s pretax loss of $169.5 million improved by $5.1 million compared to the prior year. Results included a pretax litigation charge of $15.0 million in the current quarter, and a pretax severance charge of $16.8 million in the prior year.
RSM McGladrey
As previously announced, H&R Block signed a non-binding letter of intent to sell substantially all of the assets of RSM to McGladrey & Pullen, LLP (“M&P”). In connection with this sale, as well as the sale or closure of RSM’s remaining operations
that are not part of this transaction, the segment recorded a non-cash pretax charge of $89.7 million in the first quarter.
The sale of RSM is expected to close by calendar year end and is subject to a number of customary closing conditions, including the signing of a definitive agreement and finalization of M&P’s financing for the transaction.
First quarter revenues fell 4.3 percent to $167.3 million. Due to the aforementioned charge, the pretax loss increased to $92.5 million compared to a loss of $0.4 million in the prior year.
Corporate
Corporate includes 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 $31.1 million for the first quarter ended July 31, 2011, compared to a loss of $32.3 million in the prior year.
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 July 31, 2011, SCC had net assets of approximately $300 million, in addition to an accrual for representation and warranty liabilities of $125.8 million.
New and reasserted claims for alleged breaches of representation and warranties in the principal amount of $35 million were received during the first quarter. SCC completed a review of claims of approximately $48 million during the quarter, with incurred losses totaling $0.5 million. At July 31, 2011, total claims of $66 million remain subject to review.
Conference Call
At 4:30 p.m. Eastern, 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) 809-6980 or International (706) 634-7287
Conference ID: 90488283
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 6:30 p.m. Eastern on September 1 and continuing until September 15, 2011, by dialing (855) 859-2056 (U.S./Canada) or
(404) 537-3406 (International). The conference ID is 90488283. The webcast will be available for replay beginning on September 2.
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.
About H&R Block
H&R Block Inc. (NYSE: HRB) has prepared more than 575 million tax returns worldwide since 1955, making it the country’s largest tax services provider. In fiscal 2011, H&R Block had annual revenues of $3.8 billion and prepared more than 24.5 million tax returns worldwide, including Canada and Australia. Tax return preparation services are provided in company-owned and franchise retail tax offices by more than 100,000 professional tax preparers, and through H&R Block At Home™ digital products. H&R Block Bank provides affordable banking products and services, and RSM is a top provider of tax, accounting and wealth management services to mid-sized businesses. For more information, visit the H&R Block Online Press Center.
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