H&R Block Sees Option One Charge

The impairment will be in its fourth-quarter results.
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H&R Block

(HRB) - Get Report

plans to take a big charge for the impending sale of its subprime mortgage business, Option One.

The Kansas City, Mo., tax services provider said late Thursday in a

Securities and Exchange

filing that it will record a noncash charge in its fiscal fourth quarter to impair its investment in Option One. H&R Block's fourth quarter ends on April 30.

"If the sale under negotiation proceeds, the company expects that the impairment charge will be materially greater than

Option One's goodwill which is $152.5 million," according to the filing.

H&R Block put the Option One unit up for sale in November, saying it hoped to get $1.3 billion for the unit. Since then, the business of lending to homebuyers with poor credit histories has tanked, but H&R has maintained that it hopes to sell the business for book value.

The company had hoped to reach a decision on the sale by the end of March, but it remains in negotiations to sell the business.

The company also confirmed in late March that it was discontinuing parts of its retail lending business, H&R Block Mortgage.

The company anticipates a net loss for fiscal 2007 as a result of the impairment charge. H&R Block reiterated that excluding its mortgage business -- which includes Option One and its retail mortgage division -- earnings should be $1.15 to $1.25 a share.

Shares were up 24 cents, or 1.1%, in after-market trading to $22.07.