Lenders let Jackson Hewitt Tax Service off the hook from a requirement that the tax preparation company have coverage for all expected refund loan demand for the upcoming tax season. And Jackson Hewitt now believes it can meet 90 percent of the expected demand Refund Anticipation Loans at roughly 4,200 locations. However, the banks tightened their oversight of the chain's operations, imposing spending limits and controls over the company's bonus programs, along with requiring more frequent and wide-ranging reports about its financial status.
Jackson Hewitt had to pay a $482,000 waiver fee and while it kept access $105 million of revolving loan commitments with $77 million available for borrowing, the new lending agreement eliminate the company's ability to make swingline loans. Also, from April through July 15, a supermajority of lenders can request the repayment of $25 million in term loans on demand by the administrative agent representing the bank.
The lenders set levels of net expenditures that Jackson Hewitt can make at $17.5 million for December 2010 and up to an additional $16.7 million through January 31. Jackson Hewitt also has cannot add bonus or retention plans other than its annual bonus plans and what were termed certain other programs without lender approval.
In addition to reporting requirements under prior terms of the lending agreements, Jackson Hewitt must now provide monthly internally-prepared financial statements that have an EBITDA calculation, along with variance analysis, any periodic reporting provided by the CFO, thirteen-week cash flow projections after each month; budget-to-actual reports analyzing the business plan, monthly accounts receivable agings that include franchisee receivables and reports regarding refund anticipation loan program funding progress, financial data, operating data, status updates regarding the negotiations with franchisees and status updates regarding any negotiations with Wal-Mart, where the chain has an exclusive right to operate tax preparation locations.
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
