Liberty Tax Service Reports Fiscal Year 2013 Results Including Restatement of Fiscal Years 2011 and 2012

VIRGINIA BEACH, VA--(Marketwired - Sep 26, 2013) - JTH Holding, Inc. (NASDAQ: TAX) (the "Company"), the parent company of Liberty Tax Service, today reported that it has completed its restatement of fiscal years 2012 and 2011 and is reporting its results for the fiscal year ended April 30, 2013.All amounts included in this press release reflect the impact of the restatement.The Company continues to expect to file its Annual Report on Form 10-K for the year ended April 30, 2013 and its Quarterly Report on Form 10-Q for the quarter ended July 31, 2013 with the Securities and Exchange Commission (SEC) by October 14, 2013, the date its plan for listing compliance is due to the NASDAQ.

"We have been working diligently and are pleased to have the restatement of our annual financial statements completed and we are reporting our fiscal 2013 results.The restatement affected the timing of when we recognized a portion of our revenues, but our underlying business and goals have not changed," said Mark Baumgartner, CFO."Now that the accounting for the restatement is behind us, we have turned our attention to completing our SEC filings, including amending our previously filed fiscal 2013 10-Qs."

RestatementAs previously announced, the Company changed certain of its accounting policies in regards to the timing of revenue recognition for area developer and franchise fees.The policy changes approved by the Audit Committee of the Company's Board of Directors that are reflected in the restatement included:

As a result of the restatement, the Company estimates that non-recurring, pre-tax costs incurred during fiscal year 2014 attributable to the restatement will be in the range of $700,000 - $850,000.Additionally, since late August, the Company has been unable to renew its franchise disclosure documents with updated financial statements and is therefore unable to sell franchises until its annual financial statements are completed and franchise disclosure documents are up-to-date, which is expected to occur in October.

At the end of fiscal year 2013, due to changes in the Company's revenue recognition policies, the Company had a balance of $39.7 million in the unrecognized revenue portion of notes receivable and $16.9 million of deferred revenue, totaling $56.6 million in unrecognized revenue.Of the $56.6 million, $38.0 million was related to area developer fees and will be recognized over a weighted-average period of 4 years, subject to the receipt of payments on the notes receivable.The remaining $18.6 million is related to franchise fees and gains on the sale of company-owned offices, and the note balances associated with that revenue will be recognized over a weighted-average period of 2 years, subject to the receipt of payments on the notes receivable.

Fiscal Year 2013 Highlights

"Even with all the challenges this year presented, we are pleased that we were able to grow our market share and increase the number of customers we served during fiscal 2013 by 4%," said John Hewitt, Chairman and CEO."At our annual franchise convention in early June, we received great feedback from our franchisees on things we did well and things we need to improve on.The morale of the franchisee base is high as we prepare for another year of working closely with them to grow the business."

RevenuesRevenues for fiscal year 2013 increased 12.5% to $147.6 million compared to $131.2 million in the prior year period.The increase in revenue was driven primarily by increases in royalties and advertising fees, tax preparation fees and financial product revenue.The increase in royalties and advertising fees was the result of a 6.2% increase in systemwide revenue versus the prior year period.Tax preparation fees increased due to the higher number of company-owned offices because of the operation of Walmart kiosks and an increase in the number of returns processed through the Company's online product, eSmart.The increase in financial product revenue was a result of processing more products in-house through the Company's subsidiary, JTH Financial.

Operating ExpensesOperating expenses for fiscal year 2013 increased 13.1% to $116.8 million compared to $103.2 million in the prior year period. The increase was primarily due to an increase in employee compensation and benefits for personnel to support anticipated growth, operating additional company-owned offices and stock compensation expense.

During the fourth quarter of fiscal year 2013, the cash settlement of certain stock option transactions caused the accounting treatment of some of the outstanding stock options to change from being classified as equity instruments to liability instruments.This caused a one-time increase in stock compensation expense of $2.6 million, pre-tax, during the fourth quarter of fiscal 2013.On June 7, 2013, the Board of Directors approved a new policy regarding the settlement of stock options.As a result, these options returned to being classified as equity instruments in the first quarter of fiscal 2014, which generated a one-time decrease in stock compensation expense during the first quarter of approximately $872,000, pre-tax.

The rest is here:
Liberty Tax Service Reports Fiscal Year 2013 Results Including Restatement of Fiscal Years 2011 and 2012