H&R Block restates 2005, 2004 earnings, lowers 3Q numbers
KANSAS CITY, Mo. – H&R Block Inc. on Friday said that it was restating earnings for 2005 and 2004 to reflect previously reported mistakes on its own income taxes and that it was lowering third-quarter earnings because of added legal expenses.In a series of filings with the Securities and Exchange Commission, the Kansas City-based tax preparer said it underreported its state income tax liability by $30.5 million through April 30, 2005, requiring the company to lower per share earnings for that year by 3 cents, 2004 earnings by 4 cents and earnings prior to May 1, 2003, by 1 cent.In February, the company said it had missed its tax liability by $32 million and planned to reduce 2005 earnings by 7 cents and 2004 earnings by 2 cents.The company also said Friday that correcting the tax mistakes actually reduced its first and second quarter 2006 losses. H&R Block now has a first-quarter loss of 8 cents per share, compared with the previously reported 9 cents, and a second-quarter loss of 25 cents per share, compared with 26 cents.In another filing, the company adjusted its earnings for its fiscal third quarter, ended Jan. 31, to $12.1 million, or 4 cents per share, from $28.8 million, or 9 cents per share, as initially reported last month.H&R Block also it was increasing its legal reserves by $19.5 million, or $11.9 million after taxes, in connection with a possible settlement of a federal racketeering case set to go to trial in May in Chicago. The case centers on the company’s sale of refund anticipation loans, short-term cash payments to customers who don’t want to wait a few additional weeks for their tax refunds.U.S. District Judge Elaine Bucklo has struck down two previous settlement offers.The company also recorded a $3.4 million charge to reflect the tax mistakes made before May 1, 2003.H&R Block shares, which have traded in a 52-week range of $19.80 to $30, were down 32 cents to $21.75 in midday trading on the New York Stock Exchange.
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