* Q1 adj loss/shr $0.65 vs est loss/shr $0.75
* Total expenses fall 17.5 pct
* Stock falls 7 pct
(Recasts; adds conference call details, background, updates
Sept 8 Jackson Hewitt Tax Service Inc JTX.N
said it may seek an extension with its lenders to submit a plan
on funding its refund anticipation loans (RALs), sending its
shares down as much as 7 percent.
The No. 2 U.S. tax-preparer, which has been struggling to
get full funding for RALs after its lender pulled the plug in
December, is expected to provide a date by Sept. 15 to submit a
"Our amended credit agreement contains a series of RAL
milestone dates that if we fail to meet, could lead to an event
of default. The first such milestone date is coming up on Sept.
15," CFO Dan O'Brien said in a post-earnings call.
RALs, also known as tax-refund loans, typically last seven to
14 days until taxpayers receive their refunds from the U.S.
Internal Revenue Service (IRS).
RALs are generally popular among lower income group
taxpayers and carry high interest. Tax prepares use these loans
as a tool to attract more clients.
Jackson Hewitt's stock has crashed about 80 percent
year-to-date and has not been able to move beyond the
penny-stock status since Aug. 5, when IRS announced its
decision to eliminate "debt indicator" from 2011.
A debt indicator is a tool to determine how much a lender
can provide in loans, at what rate and whether a borrower can
repay the loan.
The removal of debt indicator will lead to fewer approvals,
lower loan amounts and higher costs, Jackson Hewitt said in a
Q1 LOSS NARROWS
Net loss for the first quarter was $19.2 million, or 67
cents a share, compared with a loss $21.8 million, or 76 cents
a share, a year ago, as a drop in total expenses offset revenue
Total revenue fell to $4.4 million from $5 million.
Analysts were expecting the company to report revenue of $5
million, according to Thomson Reuters I/B/E/S.
Total expenses decreased to about $31 million from $37.6
Last week, bigger rival H&R Block Inc (HRB.N) also used
cost cuts to reduce its losses in the wake of stiff competition
from TurboTax maker Intuit Inc (INTU.O). [ID:nSGE68116F]
Parsippany, New Jersey-based Jackson Hewitt's shares were
down 5 percent at 86 cents in late-morning trade Wednesday on
the New York Stock Exchange. The stock touched a low of 85
cents earlier in the day.
(Reporting by Abhinav Sharma in Bangalore; Editing by Maju