JACKSON HEWITT TAX SERVICE INC - JTX Securities Registration Statement (S-1/A) SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

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The following is an excerpt from a S-1/A SEC Filing, filed by JACKSON HEWITT TAX SERVICE INC on 6/18/2004.

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JACKSON HEWITT TAX SERVICE INC - S-1/A - 20040618 - FINANCIAL_DATA

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected historical consolidated financial data as of and for each of the years in the five-year period ended April 30, 2004. You should read this information in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and our historical consolidated financial statements and the related notes thereto included elsewhere in this prospectus. Our historical consolidated statement of operations data and consolidated balance sheet data as of and for each of the years in the four-year period ended April 30, 2004 have been derived from our audited consolidated financial statements. Our historical consolidated statement of operations data and consolidated balance sheet data as of and for the year ended April 30, 2000 have been derived from our unaudited financial statements. In management’s opinion, these unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. Our historical consolidated financial statements as of April 30, 2004 and 2003 and for each of the years in the three-year period ended April 30, 2004 and Deloitte & Touche LLP’s audit report on these historical consolidated financial statements have been included elsewhere in this prospectus.


	Fiscal Years Ended April 30,
	2004(1)		2003		2002(2)		2001		2000
Statement of Operations Data (in thousands, except per share data):
Revenues
Franchise operations revenues:
Royalty	$	51,646	$	43,229	$	35,640	$	30,675	$	24,760
Marketing and advertising		24,213		20,671		17,261		15,074		12,248
Financial product fees		30,384		25,037		21,635		16,618		14,338
Other financial product revenue		30,255		23,110		29,518		3,447		2,178
Other		12,527		11,080		11,685		9,691		7,040
Service revenue from company-owned operations		56,590		48,420		41,252		—		1,107

Net revenues		205,615		171,547		156,991		75,505		61,671

Expenses:
Cost of franchise operations		23,922		18,971		19,511		12,861		23,308
Marketing and advertising		29,464		25,086		18,836		13,474		10,200
Cost of company-owned office operations		41,639		34,184		17,697		—		—
Selling, general and administrative		28,499		14,997		17,882		13,955		15,283
Depreciation and amortization(3)		11,911		11,523		12,824		13,990		14,894

Total expenses		135,435		104,761		86,750		54,280		63,685

Income (loss) from operations		70,180		66,786		70,241		21,225		(2,014	)

Other income:
Interest income, net		284		791		1,449		1,842		2,898
Preferred stock dividends from TSA		—		—		1,768		1,181		304

Income before income taxes		70,464		67,577		73,458		24,248		1,188
Provision for income taxes		27,504		26,444		30,935		13,298		3,505
Minority interest		—		—		—		—		(40	)

Net income (loss)	$	42,960	$	41,133	$	42,523	$	10,950	$	(2,277	)

Earnings (loss) per share:
Basic	$	1.15	$	1.10	$	1.13	$	0.29	$	(0.06	)
Diluted	$	1.15	$	1.10	$	1.13	$	0.29	$	(0.06	)
Weighted average shares outstanding:
Basic		37,500		37,500		37,500		37,500		37,500
Diluted		37,500		37,500		37,500		37,500		37,500

Other Operating Data:
Offices:
Franchise operations		4,330		3,776		3,385		3,345		2,765
Company-owned office operations		605		523		440		—		37

Total system		4,935		4,299		3,825		3,345		2,802

Tax returns (in thousands):
Franchise operations		2,735		2,461		2,200		2,212		1,759
Company-owned office operations		400		365		325		—		13

Total system		3,135		2,826		2,525		2,212		1,772


	As of April 30,
	2004		2003		2002		2001		2000
Consolidated Balance Sheet Data (in thousands):
Cash and cash equivalents	$	5,266	$	1,543	$	2,312	$	1,017	$	2,227
Working capital		16,756		11,263		20,607		6,837		13,623
Total assets		725,942		661,901		617,799		574,838		562,778
Long-term debt		—		—		—		—		—
Stockholder’s equity		655,096		612,136		571,003		528,479		517,529

(1)	Selling, general and administrative expenses in 2004 included a $10.4 million charge associated with a litigation settlement. See Note 12 to our consolidated financial statements.

(2)	During 2002, we completed our acquisition of TSA, which affected our results of operations as discussed in Note 9 to our consolidated financial statements.

(3)

On January 1, 2002, we adopted the non-amortization provisions of SFAS No. 142. Accordingly, our results of operations before January 1, 2002 reflect the amortization of goodwill and indefinite-lived intangible assets, while our results of operations after January 1, 2002 do not reflect this amortization. See Note 2 to our consolidated financial statements for a discussion of our results of operations during the fiscal year ended 2002 after applying the non-amortization provisions of SFAS No. 142.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

You should read the pro forma consolidated financial statements presented below in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and our historical consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

The pro forma consolidated statement of operations for the year ended April 30, 2004 and the pro forma consolidated balance sheet as of April 30, 2004 are unaudited and have been derived from our historical consolidated financial statements adjusted to give effect to our new agreement with Santa Barbara Bank & Trust, the initial public offering and the related transactions described in the accompanying notes to the unaudited pro forma consolidated financial statements, as if they had occurred on May 1, 2003 with respect to the pro forma consolidated statement of operations and as of April 30, 2004 with respect to the pro forma consolidated balance sheet. The unaudited pro forma consolidated financial statements are based upon available information and assumptions that we believe are reasonable. These pro forma consolidated financial statements are not necessarily indicative of the results of future operations or the actual results that would have been achieved had the transactions occurred on the dates indicated.

Unaudited Pro Forma Consolidated Statement of Operations


	For the Year Ended April 30, 2004
	Historical		Pro Forma Adjustments			Pro Forma
	(in thousands, except per share amounts)
Revenues
Franchise operations revenues:
Royalty	$	51,646	$	—		$	51,646
Marketing and advertising		24,213		—			24,213
Financial product fees		30,384		—			30,384
Other financial product revenue		30,255		(4,395	)(1)		25,860
Other		12,527		—			12,527
Service revenue from company-owned office operations		56,590		—			56,590

Net revenues		205,615		(4,395	)		201,220

Expenses
Cost of franchise operations		23,922		—			23,922
Marketing and advertising		29,464		—			29,464
Cost of company-owned office operations		41,639		—			41,639
Selling, general and administrative		28,499		5,254	(2)		33,753
Depreciation and amortization		11,911		—			11,911

Total expenses		135,435		5,254			140,689

Income from operations		70,180		(9,649	)		60,531
Other income (expense):
Interest income (expense), net		284		(5,788	)(3)		(5,504	)

Income before income taxes		70,464		(15,437	)		55,027
Provision for income taxes		27,504		(6,020	)(4)		21,484

Net income	$	42,960	$	(9,417	)	$	33,543

Earnings per share:
Basic	$	1.15				$	0.89

Diluted	$	1.15				$	0.89

Weighted average shares outstanding(5):
Basic		37,500					37,591

Diluted		37,500					37,694

See accompanying notes to unaudited pro forma consolidated financial statements.

Unaudited Pro Forma Consolidated Balance Sheet


	As of April 30, 2004
	Historical		Pro Forma Adjustments			Pro Forma
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	5,266	$	(3,388	)(6)	$	1,878
Accounts receivable, net		31,315		—			31,315
Notes receivable, net		1,944		—			1,944
Prepaid expenses and other		4,810		—			4,810
Deferred income taxes		5,074		—			5,074

Total current assets		48,409		(3,388	)		45,021
Property and equipment, net		37,347		—			37,347
Goodwill		392,368		—			392,368
Other intangibles, net		89,902		—			89,902
Due from Cendant		143,985		(143,985	)(7)		—
Notes receivables, net		1,985		—			1,985
Other non-current assets		11,946		3,388	(6)		15,334

Total assets	$	725,942	$	(143,985	)	$	581,957

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	31,653	$	(1,021	)(8)	$	30,632

Total current liabilities		31,653		(1,021	)		30,632
Deferred income taxes		26,335		—			26,335
Other non-current liabilities		12,858		—			12,858
Long-term debt		—		175,000	(3)		175,000

Total liabilities		70,846		173,979			244,825

Stockholders’ equity:
Common stock		375		1	(8)		376
Additional paid-in capital		475,844		(141,705 2,617	)(7) (8)		336,756
Retained earnings		178,877		(177,280 (1,597	)(7) )(8)		—

Total stockholders’ equity		655,096		(317,964	)		337,132

Total liabilities and stockholders’ equity	$	725,942	$	(143,985	)	$	581,957

See accompanying notes to unaudited pro forma consolidated financial statements.

Notes to unaudited pro forma consolidated financial statements

(1)

Reflects an adjustment to give effect to our new agreement with Santa Barbara Bank & Trust (“SBBT”). To reduce the variability of other financial product revenue, we renegotiated our agreement with SBBT, the provider of approximately 80% of the refund anticipation loans that we facilitate. In lieu of sharing revenue based upon the amount of finance fees received by SBBT and uncollected loans made by SBBT, we would have received fees of $18.00 for each refund anticipation loan facilitated under the new agreement in 2004, consisting of a fixed fee of $16.00 and an additional fee of $2.00. Our historical and pro forma results in 2004 include revenue of $8.8 million with respect to collections of refund anticipation loans facilitated prior to May 1, 2003. These collection revenues will decline to zero over the next three to four years under our new SBBT agreement. Revenue of $620,000 from Household Tax Masters Inc. for refund anticipation loans facilitated during the 2003 tax season has not been affected by this adjustment.

(2)

Reflects adjustments to include incremental costs that we expect to incur as a result of becoming a public company and from our separation from Cendant. The adjustments include costs related to directors and officers and other insurance, stock-based compensation pursuant to new options granted immediately following the offering that vest over a four year period, employment agreements and other costs associated with being a separate public company.

(3)

Reflects adjustments to give effect to interest expense for our new credit facility, the issuance of $175.0 million aggregate principal amount of floating rate notes and the amortization of deferred financing costs. Assumes the average principal balances outstanding under the new credit facility and the notes would have been $20.8 million and $175.0 million, respectively, in 2004. The average annual interest rate for the new credit facility and the notes would have been 2.61% in 2004. A ¹ / 8 % change in interest rates would result in a change of approximately $245,000 in annual interest expense.

(4)	Reflects adjustments to give effect to income taxes related to the pro forma adjustments recorded at the statutory tax rate of 39%.

(5)

Basic weighted average shares outstanding gives effect to the issuance of 91,000 shares of common stock in exchange for Cendant restricted stock units held by our executive officers and employees. Diluted weighted average shares outstanding gives effect to the issuance of stock options in exchange for Cendant stock options held by our executive officers and employees. Share numbers and option amounts to be issued in exchange for Cendant restricted stock units and options are based on the midpoint of the initial public offering price range set forth on the cover page of this prospectus and the average closing price of Cendant’s stock price over a recent three trading day period. The actual amounts will change based on our stock price and Cendant’s stock price for the three trading days following the date of the final prospectus. Actual amounts outstanding may also be reduced to the extent our executive officers and employees elect to exercise their vested Cendant options prior to the completion of the exchange offer.

The pro forma consolidated statement of operations does not reflect a non-recurring pre-tax compensation charge of an estimated $4.6 million associated with the issuance of common stock and options to purchase shares of our common stock issued in exchange for Cendant restricted stock units and stock options currently held by our executive officers and employees.

(6)	Reflects an adjustment to give effect to financing costs associated with the new credit facility and the issuance of the $175.0 million aggregate principal amount of floating rate notes.

(7)

Reflects an adjustment to give effect to the special dividend paid to Cendant in the amount of $319.0 million. The $175.0 million cash portion of the special dividend will be funded entirely from the net proceeds of the notes placement. The remaining $144.0 million reflects the cancellation of a receivable due from Cendant.

(8)	Reflects an adjustment to give effect to the issuance of 91,000 shares of common stock in exchange for Cendant restricted stock units held by our executive officers and employees, including the related income tax benefit.

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