EXHIBIT 99.1
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H&R BLOCK
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NEWS RELEASE
For further information:
Media Relations: Linda McDougall, H&R Block Steve Conway, CompuServe
816-932-7542 614-538-3829
Investor Relations: Brian Schell, H&R Block Herb Kahn, CompuServe
816-932-7561 614-538-3854
COMPUSERVE TO BE SOLD TO WORLDCOM
- Transaction Valued at $1.2 Billion
- CompuServe Shareholders to Receive Stock in Fast-Growing WorldCom
- Block Plans to Use Proceeds to Repurchase Stock and Continue Growing
Tax and Financial Services Business
FOR RELEASE MONDAY SEPTEMBER 8, 1997
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KANSAS CITY, Mo. and COLUMBUS, Ohio - H&R Block Inc. (NYSE:HRB) and
CompuServe Corporation (NASDQ:CSRV) today announced that they have entered into
an agreement with WorldCom Inc. (NASDAQ:WCOM) under which WorldCom will acquire
CompuServe in a stock for stock transaction. Based on the closing price of
WorldCom stock on Friday, September 5, the value of the transaction is
approximately $1.2 billion. H&R Block owns approximately 80 percent of
CompuServe.
The transaction was unanimously approved by the Board of Directors of
all three companies.
Frank. L. Salizzoni, president and chief executive officer of H&R Block
and chairman and acting chief executive officer of CompuServe, said: "I am
delighted we have achieved the goal we have been working toward for the past
year. This is a strategic transaction that provides significant value to both
H&R Block and CompuServe shareholders and places CompuServe's assets in
excellent hands for the benefit of its networking and online customers.
"This is the right time, the right price and the right path for future
growth," he continued. "Block shareholders will now be well positioned to reap
the benefits of our ability to focus all of our attention and resources on the
dynamic growth opportunities in our tax and financial services business. And
CompuServe shareholders will receive a stake in one of the fastest growing and
most well regarded telecommunications companies in the country."
H&R Block - page 2
Under the terms of the agreement, CompuServe shareholders, including H&R
Block, will receive a fixed exchange ratio of .40625 shares of WorldCom stock
for each share of CompuServe, subject to adjustment as described below. Based
on the price of WorldCom's stock at the close of the market on Friday, September
5, the transaction is valued at approximately $12.80 per CompuServe share.
The fixed exchange rate pricing mechanism will allow CompuServe
shareholders to share in the benefits of the transaction and any increase in
WorldCom's stock price between announcement and the close of the transaction.
In addition, CompuServe shareholders would be provided with certain protections
in the event of a downturn in the price of WorldCom stock. If WorldCom's stock
price drops below $28.54 per share from its current level of $31.50, the fixed
exchange ratio converts to a fixed price of $12 per share. If WorldCom stock
drops below $24 per share, the pricing structure converts to a fixed exchange
ratio of .50 and CompuServe has the right to terminate the transaction.
"We see this as an opportunity to enhance our long distance, local
service and data transmission businesses with strong new capabilities, and
CompuServe's outstanding network services fits perfectly with our plans," said
John W. Sidgmore, vice chairman and chief operations officer of WorldCom.
"Network services will provide a strong complement of our highly successful
UUNET Internet division, driving future growth opportunities in the fastest
growing segment of the telecommunications market."
Upon completion of the transaction, H&R BLock will hold an approximate 3
percent stake in WorldCom and will evaluate various alternatives to convert its
holdings into cash in a timely manner. The proceeds will be used to assist
Block in growing its business through network expansion and the introduction of
new financial products and services and to fund the company's stock repurchase
program.
H&R Block purchased about 250 franchise and competitors' offices as well
as opened approximately 200 new offices in the United States in fiscal 1997. In
addition, Block acquired The Tax Team Limited a tax preparation company with 12
offices in the United Kingdom, and Cashplan Systems Inc., a Canadian financial
services company with 45 offices throughout the country.
H&R Block made a major entry into financial services with the purchase
of Option One Mortgage Corporation from Fleet Financial Group in June. Option
One is an originator of nonconforming mortgages with more than $1 billion in
originations last year and a network of 5,000 mortgage brokers nationwide. Its
operations will complement Block's existing retail mortgage business which was
tested in four states last tax season.
H&R Block also plans to move ahead with its program to repurchase up to
15 million of its shares in the open market. However, this program will depend
on the price of the stock, availability of excess cash, the ability to maintain
financial flexibility, and other investment opportunities available.
H&R Block - page 3
The transaction with WorldCom is subject to a vote of CompuServe's
shareholders, Hart-Scott-Rodino review, and customary closing conditions. Block
has agreed with WorldCom to vote its shares of CompuServe in favor of the merger
at the special meeting of CompuServe shareholders to consider the merger. In
addition, Block has granted an option to WorldCom to acquire the shares of
CompuServe owned by Block in certain circumstances. The transaction will be
treated as a sale of CompuServe's assets for tax purposes. It is expected to
close within six months.
Salomon Brothers Inc served as financial advisor to H&R Block in the
structuring and negotiation of the transaction, and Goldman, Sachs & Co. served
as financial advisor to CompuServe.
Founded in 1955, H&R Block is a diversified company offering tax
preparation services and financial products and services. H&R Block served more
than 18 million taxpayers in nearly 10,000 offices in the United States, Canada
and Australia in fiscal year 1997. The company handled approximately one in
every seven regular returns and 51 percent of all electronic returns filed with
the Internal Revenue Service last tax season. H&R Block also develops and
provides Kiplinger TaxCut/R/ software for personal computers. In addition, the
company offers mortgage loans through its own retail operations and through a
network of 5,000 mortgage brokers nationwide. Quarterly results and other
information regarding H&R Block are available on the company's Web page at
www.hrblock.com.
Founded in 1969, CompuServe Corporation provides the world's most
comprehensive online/Internet access through its two brands, CompuServe
Interactive an SPRYNET. Through CompuServe, its Japanese licensee NIFTY-Serve
and its affiliates around the world, more than 5 million home and business users
in more than 185 countries are connected online and to the Internet. CompuServe
Network Services, a leading network integrator, provides more than 1,250
companies around the world with complete, fully integrated, Internet, Intranet
and Extranet connectivity solutions. With world headquarters in Columbus, Ohio,
the CompuServe organization includes offices in the United Kingdom, Germany,
France, Switzerland and the Netherlands.
WorldCom is a global business telecommunications company. Operating in
more than 50 countries, the company is a premier provider of facilities-based
and fully integrated local, long distance, international and Internet services.
WorldCom's subsidiary, UUNET Technologies, Inc., is the world's largest provider
of Internet services with over 1,000 Points of Presence (PoPs) throughout the
United States and in Canada, Europe and the Asia-Pacific region. WorldCom's
World Wide Web address is http://www.wcom.com. The common shares of WorldCom
trade on the Nasdaq national market (US) under the symbols WCOM and WCOMP,
respectively.
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