H&R Block (NYSE: HRB) is a tax preparation company in the United States, claiming more than 22 million customers worldwide, with offices in Canada, Australia and the United Kingdom. The Kansas City-based company also offers banking, personal finance and business consulting services.
Founded in 1955 by brothers Henry W. Bloch and Richard Bloch, Block today operates 12,500 retail tax offices in the United States, plus another 1,400 abroad. Block offers its own consumer tax software called H&R Block at Home (formerly TaxCut), as well as online tax preparation and electronic filing from their website.
H&R Block, Inc. (H&R Block) has subsidiaries that provide tax, banking, and business and consulting services. The Company’s Tax Services segment provides income tax return preparation, electronic filing and other services and products related to income tax return preparation to the general public primarily in the United States, and also in Canada and Australia. This segment also offers the H&R Block Prepaid Emerald MasterCard and Emerald Advance lines of credit through H&R Block Bank (HRB Bank), along with other retail banking services. Its Business Services segment consists of RSM McGladrey, Inc. (RSM), a national tax and consulting firm primarily serving mid-sized businesses. Corporate operations include interest income from United States passive investments, interest expense on borrowings, net interest margin and gains or losses relating to mortgage loans held for investment, real estate owned, residual interests in securitizations and other corporate expenses, principally related to finance, legal and other support departments.
Tax Services
H&R Block’s Tax Services segment is primarily engaged in providing tax return preparation and related services and products in the United States and its territories, Canada and Australia. Major revenue sources include fees earned for tax preparation services performed at Company-owned retail tax offices, royalties from franchise retail tax offices, sales of tax-related services, sales of tax preparation and other software, online tax preparation fees, participation in refund anticipation loans (RALs), refund anticipation checks (RACs), fees from activities related to H&R Block Prepaid Emerald MasterCard, and interest and fees from Emerald Advance lines of credit. HRB Bank also offers traditional banking services including checking and savings accounts, individual retirement accounts and certificates of deposit.
The Company offers a number of digital tax preparation alternatives. It also develops and markets H&R Block At Home income tax preparation software. H&R Block At Home offers a simple step-by-step tax preparation interview, data imports from money management software and tax preparation software, calculations, completion of the appropriate tax forms, error checking and electronic filing. The Company offers a range of online tax services, from tax advice to complete professional and do-it-yourself tax return preparation and electronic filing, through its Website at www.hrblock.com.
The H&R Block Prepaid Emerald MasterCard allows a client to receive a tax refund from the IRS directly on a prepaid debit card, or to direct RAL or RAC proceeds to the card to avoid high-cost check-cashing fees. The card can be used for everyday purchases, bill payments and automated teller machine (ATM) withdrawals anywhere MasterCard is accepted. Additional funds can be added to the card account year-round through direct deposit or at participating retail locations. The H&R Block Prepaid Emerald MasterCard is issued by HRB Bank. It also offers income tax return preparation courses to the public, which teach students how to prepare income tax returns and provide it with a source of trained tax professionals.
Business Services
The Company’s Business Services segment offers tax and consulting services, wealth management and capital markets services to middle-market companies. Segment revenues constituted 22% of its consolidated revenues from continuing operations during the fiscal year ended April 30, 2010, (fiscal 2010). This segment consists primarily of RSM, which provides accounting, tax and business consulting services in 88 cities and 26 states and offers services in 20 of the 25 top United States markets.
In June 1996 Frank Salizzoni, formerly president and chief operating officer of USAir Group, Inc., was named CEO and president of H & R Block. Salizzoni's plan was to transform the company into an integrated financial services business offering not only tax preparation help, but also such services as mortgage loans, financial planning, and investment advisory services. Over the next two and one-half years Block acquired two of its franchises and 251 independent tax preparation firms as well as mortgage businesses and a string of accounting firms. As a result of acquisitions, the company's total assets increased from $1.7 billion in 1997 to $2.9 billion in 1998.
In June 1997 H & R Block acquired the California-based firm Option One Mortgage Corporation, which controlled more than 5,000 mortgage brokers in 46 states. During 1997 H & R Block launched its mortgage service, H & R Block Mortgage Company, on a trial basis in 31 offices in four states. The mortgage service began by selling only second mortgage loans, then it introduced new mortgage products at offices in 15 states. As a result, H & R Block Mortgage Company accounted for $135.8 million of the company's 1998 revenues of $1.307 billion, or slightly more than ten percent. In February 1999 the company acquired Assurance Mortgage Corp. of America to further enhance its mortgage-related product offerings.
During the 1997--98 tax season H & R Block experimented with offering a wider range of financial services, including auto insurance, mortgages, and investment advice. It had 14 "premium" offices that featured enclosed offices rather than cubicles and sold mutual funds, annuities, stocks, and bonds. Some 30 offices also sold mortgages. Throughout 1998 and early 1999 the company opened prototype financial planning centers on a trial basis. These centers included investment advisors and mortgage representatives in addition to tax preparers. The company also tested a telemarketing approach to sell other financial products to its tax service customers though telemarketing call centers located in Florida and California.
In January 1998 the company divested CompuServe, selling its 80 percent interest to Internet access provider WorldCom Inc. in a stock-for-stock transaction valued at about $1.3 billion. Following the transaction, WorldCom sold CompuServe's online service and 2.6 million subscriber base to America Online (AOL) in exchange for AOL's ANS Communication division, which provided Internet access mainly for large businesses. AOL also committed to make WorldCom its largest network access provider.
As part of its strategy to provide a fuller range of financial services, H & R Block launched HRB Business Services, a national accounting and consulting business, in 1998. It had acquired several CPA firms during the year, including the Kansas City-based Donnelly Meiners Jordan Kline, Chicago-based Friedman Eisenstein Raemer & Schwartz and three of its affiliates, and Katz Sapper & Miller of Indianapolis. A fourth firm, Sigman Page & Curry, merged with Donnelly Meiners in September 1998, and two more firms were acquired by the end of the year. HRB Business Services was headed by Terrence E. Putney, the former president of Donnelly Meiners.
Block's strategy was to acquire CPA firms to strengthen its position in the tax preparation market. The addition of CPA firms was intended to attract more high-income individuals who would normally seek out their own CPA firm. One analyst estimated in 1998 that CPA firms controlled about one-fourth of the tax preparation market. H & R Block's share of the tax preparation market at the end of 1998 was 13 percent, and it could increase its share by acquiring CPA firms. By mid-1999, H & R Block was in the process of acquiring Olde Discount.
Without a doubt, the business odyssey of the Bloch brothers has been an astoundingly successful one. Richard Bloch once compared his company to Sears, and a journalist once called it "the McDonald's of tax preparation"; the fact that neither analogy seems absurd is a testament to H & R Block's standing in its part of the service economy. All three of these companies have dominated their respective markets so thoroughly that they have not only become synonymous in the public mind with what they sell, but their names have entered the annals of American popular culture.
It is also impressive that the company has managed to maintain a steep earnings curve. A $10,000 investment in H & R Block stock when the company went public in 1962 would have been worth $12.3 million in 1992. In 30 years the stock had split 120:1, dividends and revenues had increased every year, and earnings rose every year except one. With the company focused on becoming a provider of diversified financial services for an expanding market, the odyssey of H & R Block should continue to be successful.
Principal Subsidiaries: H & R Block Tax Services, Inc.; Block Financial Corp.; Option One Mortgage Corp.; HRB Investments, Inc.; HRB Business Services, Inc.; Franchise Partner, Inc.; H & R Block Canada Ltd.; H & R Block Ltd. (Australia); H & R Block Tax and Financial Services Ltd. (United Kingdom).
OVERALL
Beta: 0.57
Market Cap (Mil.): $5,262.51
Shares Outstanding (Mil.): 305.25
Annual Dividend: 0.60
Yield (%): 3.48
FINANCIALS
HRB Industry Sector
P/E (TTM): 12.78 15.18 20.41
EPS (TTM): -9.01 -- --
ROI: 19.02 2.80 7.83
ROE: 51.25 4.65 12.71
Statistics:
Public Company
Incorporated: 1955
Employees: 2,600
Sales: $1.3 billion (1998)
Stock Exchanges: New York
Ticker Symbol: HRB
NAIC: 541213 Tax Preparation Services; 51121 Software Publishers; 522292 Real Estate Credit
Name Age Since Current Position
Gerard, Robert 65 2011 Chairman of the Board
Bennett, Alan 60 2010 President, Chief Executive Officer, Director
Brown, Jeffrey 51 2010 Chief Financial Officer, Senior Vice President
Andrews, Charles 59 2009 President, Chief Operating Officer of RSM McGladrey Inc.
Turtledove, Robert 50 2009 Senior Vice President, Chief Marketing Officer
Brown, Colby 37 2010 Corporate Controller and Vice President of H&R Block Management, LLC
Seip, Tom 60 2001 Director
Lewis, David 65 2004 Director
Lauer, Len 53 2005 Director
Shaw, L. Edward 66 2007 Director
Wood, Christianna 50 2008 Director
Rohde, Bruce 61 2010 Director
Cobb, William 54 2010 Director
Address:
4410 Main Street
Kansas City, Missouri 64111
U.S.A.
Founded in 1955 by brothers Henry W. Bloch and Richard Bloch, Block today operates 12,500 retail tax offices in the United States, plus another 1,400 abroad. Block offers its own consumer tax software called H&R Block at Home (formerly TaxCut), as well as online tax preparation and electronic filing from their website.
H&R Block, Inc. (H&R Block) has subsidiaries that provide tax, banking, and business and consulting services. The Company’s Tax Services segment provides income tax return preparation, electronic filing and other services and products related to income tax return preparation to the general public primarily in the United States, and also in Canada and Australia. This segment also offers the H&R Block Prepaid Emerald MasterCard and Emerald Advance lines of credit through H&R Block Bank (HRB Bank), along with other retail banking services. Its Business Services segment consists of RSM McGladrey, Inc. (RSM), a national tax and consulting firm primarily serving mid-sized businesses. Corporate operations include interest income from United States passive investments, interest expense on borrowings, net interest margin and gains or losses relating to mortgage loans held for investment, real estate owned, residual interests in securitizations and other corporate expenses, principally related to finance, legal and other support departments.
Tax Services
H&R Block’s Tax Services segment is primarily engaged in providing tax return preparation and related services and products in the United States and its territories, Canada and Australia. Major revenue sources include fees earned for tax preparation services performed at Company-owned retail tax offices, royalties from franchise retail tax offices, sales of tax-related services, sales of tax preparation and other software, online tax preparation fees, participation in refund anticipation loans (RALs), refund anticipation checks (RACs), fees from activities related to H&R Block Prepaid Emerald MasterCard, and interest and fees from Emerald Advance lines of credit. HRB Bank also offers traditional banking services including checking and savings accounts, individual retirement accounts and certificates of deposit.
The Company offers a number of digital tax preparation alternatives. It also develops and markets H&R Block At Home income tax preparation software. H&R Block At Home offers a simple step-by-step tax preparation interview, data imports from money management software and tax preparation software, calculations, completion of the appropriate tax forms, error checking and electronic filing. The Company offers a range of online tax services, from tax advice to complete professional and do-it-yourself tax return preparation and electronic filing, through its Website at www.hrblock.com.
The H&R Block Prepaid Emerald MasterCard allows a client to receive a tax refund from the IRS directly on a prepaid debit card, or to direct RAL or RAC proceeds to the card to avoid high-cost check-cashing fees. The card can be used for everyday purchases, bill payments and automated teller machine (ATM) withdrawals anywhere MasterCard is accepted. Additional funds can be added to the card account year-round through direct deposit or at participating retail locations. The H&R Block Prepaid Emerald MasterCard is issued by HRB Bank. It also offers income tax return preparation courses to the public, which teach students how to prepare income tax returns and provide it with a source of trained tax professionals.
Business Services
The Company’s Business Services segment offers tax and consulting services, wealth management and capital markets services to middle-market companies. Segment revenues constituted 22% of its consolidated revenues from continuing operations during the fiscal year ended April 30, 2010, (fiscal 2010). This segment consists primarily of RSM, which provides accounting, tax and business consulting services in 88 cities and 26 states and offers services in 20 of the 25 top United States markets.
In June 1996 Frank Salizzoni, formerly president and chief operating officer of USAir Group, Inc., was named CEO and president of H & R Block. Salizzoni's plan was to transform the company into an integrated financial services business offering not only tax preparation help, but also such services as mortgage loans, financial planning, and investment advisory services. Over the next two and one-half years Block acquired two of its franchises and 251 independent tax preparation firms as well as mortgage businesses and a string of accounting firms. As a result of acquisitions, the company's total assets increased from $1.7 billion in 1997 to $2.9 billion in 1998.
In June 1997 H & R Block acquired the California-based firm Option One Mortgage Corporation, which controlled more than 5,000 mortgage brokers in 46 states. During 1997 H & R Block launched its mortgage service, H & R Block Mortgage Company, on a trial basis in 31 offices in four states. The mortgage service began by selling only second mortgage loans, then it introduced new mortgage products at offices in 15 states. As a result, H & R Block Mortgage Company accounted for $135.8 million of the company's 1998 revenues of $1.307 billion, or slightly more than ten percent. In February 1999 the company acquired Assurance Mortgage Corp. of America to further enhance its mortgage-related product offerings.
During the 1997--98 tax season H & R Block experimented with offering a wider range of financial services, including auto insurance, mortgages, and investment advice. It had 14 "premium" offices that featured enclosed offices rather than cubicles and sold mutual funds, annuities, stocks, and bonds. Some 30 offices also sold mortgages. Throughout 1998 and early 1999 the company opened prototype financial planning centers on a trial basis. These centers included investment advisors and mortgage representatives in addition to tax preparers. The company also tested a telemarketing approach to sell other financial products to its tax service customers though telemarketing call centers located in Florida and California.
In January 1998 the company divested CompuServe, selling its 80 percent interest to Internet access provider WorldCom Inc. in a stock-for-stock transaction valued at about $1.3 billion. Following the transaction, WorldCom sold CompuServe's online service and 2.6 million subscriber base to America Online (AOL) in exchange for AOL's ANS Communication division, which provided Internet access mainly for large businesses. AOL also committed to make WorldCom its largest network access provider.
As part of its strategy to provide a fuller range of financial services, H & R Block launched HRB Business Services, a national accounting and consulting business, in 1998. It had acquired several CPA firms during the year, including the Kansas City-based Donnelly Meiners Jordan Kline, Chicago-based Friedman Eisenstein Raemer & Schwartz and three of its affiliates, and Katz Sapper & Miller of Indianapolis. A fourth firm, Sigman Page & Curry, merged with Donnelly Meiners in September 1998, and two more firms were acquired by the end of the year. HRB Business Services was headed by Terrence E. Putney, the former president of Donnelly Meiners.
Block's strategy was to acquire CPA firms to strengthen its position in the tax preparation market. The addition of CPA firms was intended to attract more high-income individuals who would normally seek out their own CPA firm. One analyst estimated in 1998 that CPA firms controlled about one-fourth of the tax preparation market. H & R Block's share of the tax preparation market at the end of 1998 was 13 percent, and it could increase its share by acquiring CPA firms. By mid-1999, H & R Block was in the process of acquiring Olde Discount.
Without a doubt, the business odyssey of the Bloch brothers has been an astoundingly successful one. Richard Bloch once compared his company to Sears, and a journalist once called it "the McDonald's of tax preparation"; the fact that neither analogy seems absurd is a testament to H & R Block's standing in its part of the service economy. All three of these companies have dominated their respective markets so thoroughly that they have not only become synonymous in the public mind with what they sell, but their names have entered the annals of American popular culture.
It is also impressive that the company has managed to maintain a steep earnings curve. A $10,000 investment in H & R Block stock when the company went public in 1962 would have been worth $12.3 million in 1992. In 30 years the stock had split 120:1, dividends and revenues had increased every year, and earnings rose every year except one. With the company focused on becoming a provider of diversified financial services for an expanding market, the odyssey of H & R Block should continue to be successful.
Principal Subsidiaries: H & R Block Tax Services, Inc.; Block Financial Corp.; Option One Mortgage Corp.; HRB Investments, Inc.; HRB Business Services, Inc.; Franchise Partner, Inc.; H & R Block Canada Ltd.; H & R Block Ltd. (Australia); H & R Block Tax and Financial Services Ltd. (United Kingdom).
OVERALL
Beta: 0.57
Market Cap (Mil.): $5,262.51
Shares Outstanding (Mil.): 305.25
Annual Dividend: 0.60
Yield (%): 3.48
FINANCIALS
HRB Industry Sector
P/E (TTM): 12.78 15.18 20.41
EPS (TTM): -9.01 -- --
ROI: 19.02 2.80 7.83
ROE: 51.25 4.65 12.71
Statistics:
Public Company
Incorporated: 1955
Employees: 2,600
Sales: $1.3 billion (1998)
Stock Exchanges: New York
Ticker Symbol: HRB
NAIC: 541213 Tax Preparation Services; 51121 Software Publishers; 522292 Real Estate Credit
Name Age Since Current Position
Gerard, Robert 65 2011 Chairman of the Board
Bennett, Alan 60 2010 President, Chief Executive Officer, Director
Brown, Jeffrey 51 2010 Chief Financial Officer, Senior Vice President
Andrews, Charles 59 2009 President, Chief Operating Officer of RSM McGladrey Inc.
Turtledove, Robert 50 2009 Senior Vice President, Chief Marketing Officer
Brown, Colby 37 2010 Corporate Controller and Vice President of H&R Block Management, LLC
Seip, Tom 60 2001 Director
Lewis, David 65 2004 Director
Lauer, Len 53 2005 Director
Shaw, L. Edward 66 2007 Director
Wood, Christianna 50 2008 Director
Rohde, Bruce 61 2010 Director
Cobb, William 54 2010 Director
Address:
4410 Main Street
Kansas City, Missouri 64111
U.S.A.