H&R Block reports 4Q loss due to mortgage operations
H&R Block Inc. (NYSE: HRB) today reported that fiscal 2007 earnings from continuing operations rose 26 percent to $374.3 million from $297.5 million, earnings per diluted share from continuing operations increased 29 percent to $1.15 from 89 cents, and revenues rose 12 percent to $4.0 billion from $3.6 billion. The 2006 earnings include an after tax charge of $42.5 million, or 13 cents per share, for litigation settlements and associated legal costs.
For the 2007 fourth quarter ended April 30, earnings from continuing operations were $591.2 million, up 9 percent from $541.7 million in the 2006 period, while earnings per diluted share from continuing operations gained 11 percent to $1.81 from $1.63. Revenues of $2.4 billion in the 2007 fourth quarter were 8 percent higher than $2.2 billion in 2006.
"Our Tax Services business performed well during the 2007 season. We served a record number of clients, brought out new products and marketing programs, and experienced outstanding execution," said Mark A. Ernst, chairman and chief executive officer. "Fourth quarter and 2007 results were also strong in Consumer Financial Services, reflecting a successful first year for H&R Block Bank and a good, solid year of improvement for H&R Block Financial Advisors."
The company is proceeding as planned with the transaction announced April 20 to sell Option One Mortgage Corp. to an affiliate of Cerberus Capital Management, L.P. and continues to expect closing to occur during the fiscal quarter ending Oct. 31, 2007. Results of both the Option One business and H&R Block Mortgage Corp., whose closure was previously announced, are reported as discontinued operations.
Net loss from discontinued operations (which includes several small non-mortgage businesses) was $808.0 million, or $2.48 per diluted share, for fiscal 2007, and $676.8 million, or $2.07 per share, in the fourth quarter, reflecting previously announced impairment charges and sales costs in connection with the pending sale of Option One, the write-down of residual interests, loss provisions on mortgage loans and the impact of mortgage pricing conditions in the secondary market.
"We continue to operate Option One with a focus on positioning it for success in the changing non-prime mortgage market," Ernst said.
Including discontinued operations, the consolidated net loss for fiscal 2007 of $433.7 million, or $1.33 per diluted share, compares with prior-year net income of $490.4 million, or $1.47 per share. The consolidated net loss for the fourth quarter was $85.6 million, or 26 cents per share, versus net income of $587.5 million, or $1.77 per share, in the prior-year period.
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