THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, June 27, 1996 TAG: 9606270362
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 43 lines
Helped by stronger demand for tax-preparation services, Jackson Hewitt Inc. reported a rebound in its net income for the fiscal year ended April 30.
Virginia Beach-based Jackson Hewitt said Wednesday it earned $2.4 million for the 12 months through April, or three times the $840,000 earned in fiscal 1995. Earnings per share rose to 40 cents from 11 cents.
Jackson Hewitt's shares, which trade on the Nasdaq National Market System, closed at 5 3/4 Wednesday, up 1/4 for the day.
The company, which concentrates on electronic filing of individual tax returns, said in May that its offices processed 16 percent more returns in the recent tax season than they handled during the 1995 tax season.
In that season, to curb fraudulent use of the earned income credit, the Internal Revenue Service slowed its payment of tax refunds to verify dependents' names and Social Security numbers.
That reduced the demand for commercial tax-preparation services and refund-anticipation loans. However, the pace of tax refunds returned to normal during the 1996 tax season.
Jackson Hewitt, the nation's second-largest chain of tax-preparation offices, said its sales for the latest fiscal year jumped 48 percent to $25 million from $16.9 million in 1995.
The biggest contributors to sales in fiscal 1996 were royalties and advertising fees, which climbed 43 percent to $9.9 million. Fees from bank loans made to customers expecting tax refunds jumped to $6.9 million from $2 million.
However, its net franchise fees slumped 23 percent to $2.7 million, and tax-preparation fees from its own stores rose only 6 percent to $3.6 million, Jackson Hewitt said.
The company also said Wednesday that it received an expanded line of credit from its lender, NationsBank, that will extend through July 1997. In addition, it has repurchased most of the warrants for common stock that were issued to NationsBank last October, Jackson Hewitt said. The company, which had defaulted on certain debts in 1995, issued warrants for almost one million shares as part of a restructuring of its debt. Since then, Jackson Hewitt has repurchased warrants for all but 10,000 shares. by CNB