H&R Block saw its first profitable year in four years, after the tax prep giant shed its money-losing mortgage operation.
Consolidated net income for the fiscal year ending April 30, 2009, increased to $486 million, or $1.45 per share, compared with a net loss of $309 million or $0.94 per share, in fiscal year 2008. Income from continuing operations in fiscal 2009 grew 15.0 percent to $513.1 million, or $1.53 per share, compared to $445.9 million, or $1.36 per share, in the prior year.
A positive swing of $1 billion moved us from a net debt position to a net cash balance sheet at the end of our fiscal year for the first time in four years, said H&R Block chairman Richard C. Breeden in a statement.
The year was not without its challenges, however, including a significant drop in tax returns processed at Blocks offices. The total number of tax returns prepared in U.S. company-owned offices declined 2.8 percent, but on the other hand, the net average fee per tax return in company-owned offices increased 6.8 percent.
Tax returns prepared using H&R Block Online tax products and TaxCut software increased in fiscal 2009 by more than 900,000, or 21.1 percent. Returns prepared online grew 45.2 percent and software-prepared returns increased 1.7 percent. Block attributed the online growth to the introduction this year of new products, including a free federal online filing product and associated fee-bearing upgrades, including state tax returns. Returns prepared through the IRS Free File Alliance declined by 665,000, or 45.8 percent, as clients migrated to H&R Block Online offerings.
Block-owned accounting provider RSM McGladrey reported an 8.2 percent improvement in fiscal 2009 pretax income to $96.1 million, despite revenues declining 4.7 percent to $897.8 million. RSM McGladreys margin improved to 10.7 percent from 9.4 percent in the prior year, reflecting growth in its core businesses and the benefit of cost reduction efforts. Revenues for the segments core tax and consulting services were up 3.6 percent and 5.2 percent, respectively, for a combined increase of $28.2 million, driven in part by higher billed rates per hour in tax. Those gains were offset by a $32.9 million decline in capital markets revenues, and by lower contract services revenues and a change in financial reporting.
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