Jackson Hewitt has canceled its earnings conference call for the third quarter ended January 31 as the company and its lenders talked about restructuring its balance sheet. A document filed with the SEC said this could include a "pre-packaged bankruptcy." That statement came despite a return to profitability and a rise in revenue by the tax preparation chain. The SEC filing said the parties must execute the deal by April 29 or the lenders could declare the company in default on its loans.
Jackson Hewitt earned $5.4 million in net income for the most recently ended quarter. That compared to a year earlier loss of slightly more than $279 million, which was triggered by a $274.2 million charge for impaired goodwill taken last year. Revenue rose to $82.5 million, up 4.2 percent from $79.1 million a year ago.
Despite the uptick in company revenue, income from franchised operations dropped to $50.917 down 12.2 percent from $58 million in last year's corresponding period. However, the segment was much more profitable with before-tax income rising to $24.8 million, sharply higher than last year's $6.7 million. That came as the number of franchised stores dropped to 4,816 at the end of the quarter, down 11 percent from a year earlier. During the current fiscal year, Jackson Hewitt introduced a new franchise agreement, which it said most store operators had signed. Its terms included the elimination of fees for electronic filing.
However, the number of stores open fell only to 5,921, down from 6,376 a year ago, a decline of 7.5 percent. That drop came as the number of franchised operations open fell to 4,826, off almost 11 percent from 5,416 open a year earlier. A 15-percent increase in the number of company-owned stores held down the loss.
Like all other tax preparation organizations, Jackson Hewitt was impacted by the delay in the acceptance by Internal Revenue Service of some returns until February. The number of returns prepared fell to 875,000, off 3.2 percent from 904,000 in the third quarter of fiscal 2010.
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
