This excerpt taken from the JTX 8-K filed Nov 28, 2006.
$80 Million of Common Stock Repurchased in First Six Months
PARSIPPANY, NJ November 28, 2006 Jackson Hewitt Tax Service Inc. (NYSE: JTX) today reported financial results for the second quarter and first six months of fiscal 2007. Total revenues in the current quarter were $6.2 million as compared to $9.0 million in the prior year period. Net loss in the current quarter was $15.5 million ($0.46 per share) as compared to a net loss of $11.3 million ($0.31 per share) in the prior year period. Net loss would have been $0.38 per share, adjusting for changes in the Companys financial product agreements that became effective in the 2006 tax season ($0.05 per share) and the lower share count primarily resulting from the Companys share repurchase programs ($0.03 per share). Jackson Hewitt typically generates a loss in the first and second fiscal quarters due to the seasonal nature of the tax service business.
The Company sold 151 territories during the first six months as compared to 133 territories in the prior year period, representing a 14% increase, and remains on target to sell approximately 200 territories for the year.
Jackson Hewitt expects to open 600-650 additional offices for the 2007 tax season. This will bring the office count to over 6,600 and represents 10% growth in offices over the prior year, in line with historical experience.
Our tax season began in November with customer year-end tax planning and the Holiday Express Loan Program® for which we have seen a significant increase in customer traffic in advance of the filing season, said Michael Lister, Chairman and Chief Executive Officer. This growth demonstrates the success of our strategy of improved convenience and enhanced products and services to meet consumer demand.
3 Sylvan Way, Parsippany, New Jersey 07054 Phone: 973.630.0821 Fax: 973.630.0812
The Company repurchased 1.4 million shares of common stock at a total cost of $45.5 million during the quarter and 2.5 million shares of common stock at a total cost of $79.6 million during the first six months. As previously announced during the quarter, the Company completed its $75 million share repurchase program and repurchased an additional $4.6 million of stock under its recently authorized $200 million multi-year share repurchase program.
For the first six months of the year, the Company generated revenues of $12.0 million, as compared to $15.1 million in the prior year period, and a net loss of $28.2 million ($0.82 per share) as compared to a net loss of $24.5 million ($0.67 per share). The reduced share count, primarily as a result of the share repurchase programs $(0.06 per share), and changes in the financial product agreements resulting in revenues being earned in the third and fourth fiscal quarters ($0.07 per share) resulted in a $0.13 increase in loss per share for the first six months. In the first six months of the prior year, the Company incurred a $2.7 million non-cash charge ($0.04 per share) associated with debt refinancing.
Revenues in the current quarter were $5.7 million, as compared to $8.5 million in the prior year period due to the elimination of $2.8 million of other financial product revenues under the Companys financial product agreements that became effective with the 2006 tax season.
Prior to the new agreements, a portion of the financial product related revenues had been earned in the first and second quarters. Under the new agreements, financial product fees are earned during the tax season in the third and fourth fiscal quarters for providing access to Jackson Hewitts offices and supporting the technology needs of the programs. Financial product fees earned in the first and second quarters are now primarily related to the Gold Guarantee product which is recognized in all four quarters of the fiscal year.
Other revenues included the sale of 76 territories as compared to 81 in the prior year period.
Cost of operations increased by $1.0 million largely due to costs associated with the cumulative growth over the prior three years in the Gold Guarantee program, as well as increased personnel related to expected growth in the business. Loss before income taxes was $8.6 million, as compared to $4.1 million in the prior year period.
Company Owned-Office Operations
Loss before income taxes increased by $1.5 million to $7.6 million in the quarter primarily due to higher planned off-season occupancy and personnel costs associated with operating the increased number of offices that were opened in 2006 and that are planned for 2007.
Corporate and Other
Stock-based compensation increased by $0.3 million as the Company granted additional stock options in the first quarter for which the associated cost is incurred over the four year vesting period following the grant date. Interest expense increased by $0.6 million as a result of higher average debt outstanding, primarily to fund the share repurchase programs, and higher interest rates.
Michael Lister, Chairman and Chief Executive Officer, and Mark Heimbouch, Chief Financial Officer, will host a live webcast over the internet later this morning at 11:00 a.m. Eastern Time to discuss the quarters results. Please visit the Investor Relations tab of the Companys website, www.jacksonhewitt.com, at least 10 minutes prior to the beginning of the call in order to access the webcast.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX), with over 6,000 franchised and company-owned offices throughout the United States during the 2006 tax season, is an industry leader providing full service individual federal and state income tax preparation. Most offices are independently owned and operated. The Company is based in Parsippany, New Jersey. More information may be obtained at www.jacksonhewitt.com. To locate the Jackson Hewitt Tax Service® office nearest to you, call 1-800-234-1040.
This press release contains statements including, without limitation, those statements relating to territory sales and office growth, that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward looking statements involve risks and uncertainties, actual results may differ materially from those expressed or implied in the forward-looking statements due to a number of factors, including but not limited to: the Companys ability to achieve the same level of growth in revenues and profits that it has in the past; the Companys ability to maintain its quarterly dividend at the current level; government initiatives that simplify tax return preparation, improvements in the timing and efficiency of processing tax returns or a decrease in the number of tax returns filed or the size of tax refunds; government legislation and regulation of the industry and products and services, including refund anticipation loans; the success of the Companys franchise operations; changes in the Companys relationship with financial product providers and retailers; the Companys compliance with revolving credit facility covenants; the Companys exposure to litigation; the seasonality of the Companys business and its effect on the stock price; and the effect of market conditions within the tax return preparation industry.
Additional information concerning these and other risks that could impact the Companys business can be found in the Companys Annual Report on Form 10-K for the fiscal year ended April 30, 2006 and other public filings with the Securities and
Exchange Commission (SEC). Copies are available from the SEC or the Companys website. The Company assumes no obligation, and the Company expressly disclaims any obligation, to update or alter any forward-looking statements.
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