New York (June 24, 2004) -- Former Cendant subsidiary Jackson Hewitt Tax Service Inc. made its Big Board debut this week in an initial public offering priced at $17 per share.

The tax prep franchise giant's IPO of 37,500,000 shares debuted on the New York Stock Exchange trading under the symbol JTX. The offering price was below estimates of $18 to $20 a share. Shares, which dropped slightly below the offering price shortly after opening Tuesday, were trading around $17.28 late Wednesday morning.

Cendant said it will use the proceeds and a special dividend Jackson Hewitt paid it to reduce debt, repurchase shares of common stock and invest in strategic tuck-in acquisitions.

With 4,935 franchised and company-owned offices nationwide, Parsippany, N.J.-based Jackson Hewitt ranks as the second largest paid tax return preparer in the United States, behind H&R Block. In 2004, Jackson Hewitt locations filed 3.1 million tax returns, which it estimated to be less than 5 percent of the total U.S. paid preparer industry. According to its prospectus, rival Block has about 21 percent of the market.

Jackson Hewitt reported 2004 net revenues of $205.6 million, 43 percent of which came from revenues from franchisees. Service revenue including tax return prep and related service fees accounted for 28 percent of net revenues, and fees and other revenue from the sale of financial products comprised 29 percent of revenues. 2004 net income was $43.0 million, including a $10.4 million litigation charge.

The company plans to grow primarily by increasing its number of offices and the number of tax returns filed by its existing offices. JH also recently renewed its two-year agreement with Wal-Mart, by which it had approximately 1,000 offices in the retailer’s stores in 2004.

-- WebCPA staff

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