H&R Block doesn't meet expectations in first quarter

Friday, September 4, 2009 | 9:56 a.m. CDT

KANSAS CITY — H&R Block Inc. said Friday it lost a larger-than-expected $133.6 million in the first quarter, about the same as a year ago, as acquisition expenses and other costs offset slightly higher revenues.

The nation's largest tax preparer typically records losses in its first two fiscal quarters outside the normal tax season.

The Kansas City-based company said its loss amounted to 40 cents per share. It lost $132.7 million, or 41 cents per share, at the same time last year.

Not including discontinuing operations, the company said it would have lost 39 cents per share, slightly above the loss of 37 cents a share expected by analysts.

Revenue edged up 1.3 percent to $275.5 million from $271.9 million but fell short of analysts' expectations of $280 million.

The company said revenues in its tax division rose almost 8 percent, thanks to tax return business in Australia. But expenses rose as well, including $7.4 million from last year's acquisition of franchisee offices in Texas, Oklahoma and Arkansas, $3.5 million in severance expenses and $2.9 million in technology upgrades in preparation for next year's tax season.

Revenues for the company's business services division increased 1.7 percent and recorded a $1.3 million profit versus a $295,000 loss a year ago.

H&R Block's corporate division, which includes the H&R Block Bank, said its losses improved because of better performance of its mortgage loan securitization portfolio. The company still set aside an additional $7.6 million to cover potential loan losses.

The company said it still expects annual earnings of between $1.60 and $1.80 per share. Analysts are expecting $1.65 per share on $4.17 billion in revenue.


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