|
(Mark One)
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended July 31, 2017
|
|
|
OR
|
¨
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the transition period from to
|
MISSOURI
|
|
44-0607856
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
|
|
|
|
|
|
|
Consolidated Statements of Operations and Comprehensive Loss
|
|
|
|
Three months ended July 31, 2017 and 2016
|
1
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
As of July 31, 2017, July 31, 2016 and April 30, 2017
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Three months ended July 31, 2017 and 2016
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal Proceedings
|
||
|
|
|
Risk Factors
|
||
|
|
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
||
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
|
|
|
|
Item 4.
|
Mine Safety Disclosures
|
|
|
|
|
|
|
|
Exhibits
|
||
|
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
|
(unaudited, in 000s, except
per share amounts)
|
|
||||||
Three months ended July 31,
|
|
2017
|
|
|
2016
|
|
||
|
|
|
|
|
||||
REVENUES:
|
|
|
|
|
||||
Service revenues
|
|
$
|
124,695
|
|
|
$
|
112,384
|
|
Royalty, product and other revenues
|
|
13,107
|
|
|
12,801
|
|
||
|
|
137,802
|
|
|
125,185
|
|
||
OPERATING EXPENSES:
|
|
|
|
|
||||
Cost of revenues:
|
|
|
|
|
||||
Compensation and benefits
|
|
55,592
|
|
|
52,355
|
|
||
Occupancy and equipment
|
|
98,467
|
|
|
94,425
|
|
||
Provision for bad debt
|
|
2,459
|
|
|
1,417
|
|
||
Depreciation and amortization
|
|
28,616
|
|
|
27,467
|
|
||
Other
|
|
42,581
|
|
|
35,422
|
|
||
|
|
227,715
|
|
|
211,086
|
|
||
Selling, general and administrative:
|
|
|
|
|
||||
Marketing and advertising
|
|
7,104
|
|
|
7,561
|
|
||
Compensation and benefits
|
|
56,373
|
|
|
57,522
|
|
||
Depreciation and amortization
|
|
14,982
|
|
|
13,815
|
|
||
Other selling, general and administrative
|
|
16,790
|
|
|
19,925
|
|
||
|
|
95,249
|
|
|
98,823
|
|
||
Total operating expenses
|
|
322,964
|
|
|
309,909
|
|
||
|
|
|
|
|
||||
Other income (expense), net
|
|
1,220
|
|
|
2,641
|
|
||
Interest expense on borrowings
|
|
(21,277
|
)
|
|
(21,466
|
)
|
||
Loss from continuing operations before income tax benefit
|
|
(205,219
|
)
|
|
(203,549
|
)
|
||
Income tax benefit
|
|
(77,401
|
)
|
|
(82,523
|
)
|
||
Net loss from continuing operations
|
|
(127,818
|
)
|
|
(121,026
|
)
|
||
Net loss from discontinued operations, net of tax benefits of $1,605 and $1,557
|
|
(2,749
|
)
|
|
(2,647
|
)
|
||
NET LOSS
|
|
$
|
(130,567
|
)
|
|
$
|
(123,673
|
)
|
|
|
|
|
|
||||
BASIC AND DILUTED LOSS PER SHARE:
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.62
|
)
|
|
$
|
(0.55
|
)
|
Discontinued operations
|
|
(0.01
|
)
|
|
(0.01
|
)
|
||
Consolidated
|
|
$
|
(0.63
|
)
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
||||
DIVIDENDS DECLARED PER SHARE
|
|
$
|
0.24
|
|
|
$
|
0.22
|
|
|
|
|
|
|
||||
COMPREHENSIVE LOSS:
|
|
|
|
|
||||
Net loss
|
|
$
|
(130,567
|
)
|
|
$
|
(123,673
|
)
|
Unrealized gains (losses) on securities, net of taxes:
|
|
|
|
|
||||
Unrealized holding gains (losses) arising during the
period, net of tax benefits of $ - and $5 |
|
2
|
|
|
(11
|
)
|
||
Change in foreign currency translation adjustments
|
|
2,460
|
|
|
(3,560
|
)
|
||
Other comprehensive income (loss)
|
|
2,462
|
|
|
(3,571
|
)
|
||
Comprehensive loss
|
|
$
|
(128,105
|
)
|
|
$
|
(127,244
|
)
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
1
|
2
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(unaudited, in 000s)
|
|
|||||
Three months ended July 31,
|
|
2017
|
|
|
2016
|
|
||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(130,567
|
)
|
|
$
|
(123,673
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
43,598
|
|
|
41,282
|
|
||
Provision for bad debt
|
|
2,459
|
|
|
1,417
|
|
||
Deferred taxes
|
|
20,796
|
|
|
6,274
|
|
||
Stock-based compensation
|
|
4,816
|
|
|
5,541
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
||||
Receivables
|
|
64,985
|
|
|
49,220
|
|
||
Prepaid expenses and other current assets
|
|
(8,695
|
)
|
|
(9,173
|
)
|
||
Other noncurrent assets
|
|
5,499
|
|
|
4,059
|
|
||
Accounts payable and accrued expenses
|
|
(66,729
|
)
|
|
(98,785
|
)
|
||
Accrued salaries, wages and payroll taxes
|
|
(149,441
|
)
|
|
(118,040
|
)
|
||
Deferred revenue and other current liabilities
|
|
464
|
|
|
(38,022
|
)
|
||
Deferred revenue and other noncurrent liabilities
|
|
(32,510
|
)
|
|
(28,080
|
)
|
||
Income tax receivables, accrued income taxes and income tax reserves
|
|
(149,542
|
)
|
|
(144,249
|
)
|
||
Other, net
|
|
(14,248
|
)
|
|
(5,735
|
)
|
||
Net cash used in operating activities
|
|
(409,115
|
)
|
|
(457,964
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Principal payments and sales of mortgage loans and real estate owned, net
|
|
—
|
|
|
9,573
|
|
||
Capital expenditures
|
|
(13,094
|
)
|
|
(6,246
|
)
|
||
Payments made for business acquisitions, net of cash acquired
|
|
(1,440
|
)
|
|
(1,635
|
)
|
||
Franchise loans funded
|
|
(4,527
|
)
|
|
(2,219
|
)
|
||
Payments received on franchise loans
|
|
4,727
|
|
|
6,473
|
|
||
Other, net
|
|
1,371
|
|
|
(868
|
)
|
||
Net cash provided by (used in) investing activities
|
|
(12,963
|
)
|
|
5,078
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Dividends paid
|
|
(49,905
|
)
|
|
(48,514
|
)
|
||
Repurchase of common stock, including shares surrendered
|
|
(7,508
|
)
|
|
(45,312
|
)
|
||
Proceeds from exercise of stock options
|
|
27,418
|
|
|
1,639
|
|
||
Other, net
|
|
2,545
|
|
|
(24,779
|
)
|
||
Net cash used in financing activities
|
|
(27,450
|
)
|
|
(116,966
|
)
|
||
|
|
|
|
|
||||
Effects of exchange rate changes on cash
|
|
149
|
|
|
(2,163
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
|
(449,379
|
)
|
|
(572,015
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
1,117,539
|
|
|
1,000,911
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
668,160
|
|
|
$
|
428,896
|
|
|
|
|
|
|
||||
SUPPLEMENTARY CASH FLOW DATA:
|
|
|
|
|
||||
Income taxes paid, net of refunds received
|
|
$
|
57,901
|
|
|
$
|
61,289
|
|
Interest paid on borrowings
|
|
15,519
|
|
|
15,519
|
|
||
Accrued additions to property and equipment
|
|
4,757
|
|
|
10,147
|
|
||
Accrued purchase of common stock
|
|
—
|
|
|
8,895
|
|
||
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
3
|
4
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
5
|
(in 000s)
|
|
|||||||||||||||||||||||
As of
|
|
July 31, 2017
|
|
July 31, 2016
|
|
April 30, 2017
|
||||||||||||||||||
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
||||||||||||
Loans to franchisees
|
|
$
|
37,838
|
|
|
$
|
40,111
|
|
|
$
|
47,905
|
|
|
$
|
46,461
|
|
|
$
|
39,911
|
|
|
$
|
36,614
|
|
Receivables for tax preparation and related fees
|
|
39,031
|
|
|
6,316
|
|
|
39,115
|
|
|
5,528
|
|
|
54,506
|
|
|
6,316
|
|
||||||
Instant Cash Back® receivables
|
|
4,338
|
|
|
—
|
|
|
4,515
|
|
|
—
|
|
|
37,150
|
|
|
—
|
|
||||||
H&R Block Emerald Advance®
lines of credit
|
|
21,755
|
|
|
9,711
|
|
|
24,857
|
|
|
111
|
|
|
26,325
|
|
|
5,069
|
|
||||||
Software receivables from retailers
|
|
8,178
|
|
|
—
|
|
|
4,696
|
|
|
—
|
|
|
16,715
|
|
|
—
|
|
||||||
Royalties and other receivables from franchisees
|
|
6,776
|
|
|
796
|
|
|
6,885
|
|
|
—
|
|
|
13,275
|
|
|
1,585
|
|
||||||
Other
|
|
28,012
|
|
|
4,011
|
|
|
31,833
|
|
|
4,414
|
|
|
30,189
|
|
|
3,314
|
|
||||||
|
|
145,928
|
|
|
60,945
|
|
|
159,806
|
|
|
56,514
|
|
|
218,071
|
|
|
52,898
|
|
||||||
Allowance for doubtful accounts
|
|
(54,924
|
)
|
|
—
|
|
|
(56,381
|
)
|
|
—
|
|
|
(55,296
|
)
|
|
—
|
|
||||||
|
|
$
|
91,004
|
|
|
$
|
60,945
|
|
|
$
|
103,425
|
|
|
$
|
56,514
|
|
|
$
|
162,775
|
|
|
$
|
52,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
(in 000s)
|
|
|||||||||||
|
|
Goodwill
|
|
|
Accumulated Impairment Losses
|
|
|
Net
|
|
|||
Balances as of April 30, 2017
|
|
$
|
523,504
|
|
|
$
|
(32,297
|
)
|
|
$
|
491,207
|
|
Acquisitions
|
|
252
|
|
|
—
|
|
|
252
|
|
|||
Disposals and foreign currency changes, net
|
|
2,532
|
|
|
—
|
|
|
2,532
|
|
|||
Impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances as of July 31, 2017
|
|
$
|
526,288
|
|
|
$
|
(32,297
|
)
|
|
$
|
493,991
|
|
|
|
|
|
|
|
|
||||||
Balances as of April 30, 2016
|
|
$
|
503,054
|
|
|
$
|
(32,297
|
)
|
|
$
|
470,757
|
|
Acquisitions
|
|
23
|
|
|
—
|
|
|
23
|
|
|||
Disposals and foreign currency changes, net
|
|
162
|
|
|
—
|
|
|
162
|
|
|||
Impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances as of July 31, 2016
|
|
$
|
503,239
|
|
|
$
|
(32,297
|
)
|
|
$
|
470,942
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
7
|
(in 000s)
|
|
|||||||||||
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
|||
As of July 31, 2017:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
331,371
|
|
|
$
|
(96,600
|
)
|
|
$
|
234,771
|
|
Customer relationships
|
|
235,413
|
|
|
(140,881
|
)
|
|
94,532
|
|
|||
Internally-developed software
|
|
143,206
|
|
|
(112,894
|
)
|
|
30,312
|
|
|||
Noncompete agreements
|
|
32,498
|
|
|
(28,143
|
)
|
|
4,355
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(11,094
|
)
|
|
8,107
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(33,444
|
)
|
|
21,256
|
|
|||
Acquired assets pending final allocation
(1)
|
|
639
|
|
|
—
|
|
|
639
|
|
|||
|
|
$
|
817,028
|
|
|
$
|
(423,056
|
)
|
|
$
|
393,972
|
|
As of July 31, 2016:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
319,545
|
|
|
$
|
(72,977
|
)
|
|
$
|
246,568
|
|
Customer relationships
|
|
206,606
|
|
|
(110,696
|
)
|
|
95,910
|
|
|||
Internally-developed software
|
|
132,897
|
|
|
(99,873
|
)
|
|
33,024
|
|
|||
Noncompete agreements
|
|
31,492
|
|
|
(26,045
|
)
|
|
5,447
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(9,814
|
)
|
|
9,387
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(27,425
|
)
|
|
27,275
|
|
|||
Acquired assets pending final allocation
(1)
|
|
2,298
|
|
|
—
|
|
|
2,298
|
|
|||
|
|
$
|
766,739
|
|
|
$
|
(346,830
|
)
|
|
$
|
419,909
|
|
As of April 30, 2017:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
331,150
|
|
|
$
|
(90,877
|
)
|
|
$
|
240,273
|
|
Customer relationships
|
|
234,603
|
|
|
(133,207
|
)
|
|
101,396
|
|
|||
Internally-developed software
|
|
139,709
|
|
|
(108,379
|
)
|
|
31,330
|
|
|||
Noncompete agreements
|
|
32,408
|
|
|
(27,559
|
)
|
|
4,849
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(10,774
|
)
|
|
8,427
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(31,973
|
)
|
|
22,727
|
|
|||
Acquired assets pending final allocation
(1)
|
|
362
|
|
|
—
|
|
|
362
|
|
|||
|
|
$
|
812,133
|
|
|
$
|
(402,769
|
)
|
|
$
|
409,364
|
|
|
|
|
|
|
|
|
8
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
|
|
|
|
|
|
(in 000s)
|
|
|||||
As of
|
|
July 31, 2017
|
|
|
July 31, 2016
|
|
|
April 30, 2017
|
|
|||
Senior Notes, 4.125%, due October 2020
|
|
$
|
650,000
|
|
|
$
|
650,000
|
|
|
$
|
650,000
|
|
Senior Notes, 5.500%, due November 2022
|
|
500,000
|
|
|
500,000
|
|
|
500,000
|
|
|||
Senior Notes, 5.250%, due October 2025
|
|
350,000
|
|
|
350,000
|
|
|
350,000
|
|
|||
Capital lease obligation
|
|
6,368
|
|
|
7,229
|
|
|
6,610
|
|
|||
Debt issuance costs and discounts
|
|
(11,954
|
)
|
|
(14,575
|
)
|
|
(12,612
|
)
|
|||
|
|
1,494,414
|
|
|
1,492,654
|
|
|
1,493,998
|
|
|||
Less: Current portion
|
|
(992
|
)
|
|
(864
|
)
|
|
(981
|
)
|
|||
|
|
$
|
1,493,422
|
|
|
$
|
1,491,790
|
|
|
$
|
1,493,017
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
9
|
(in 000s)
|
|
|||||||||||||||||||||||
As of
|
|
July 31, 2017
|
|
July 31, 2016
|
|
April 30, 2017
|
||||||||||||||||||
|
|
Carrying
Amount |
|
|
Estimated
Fair Value |
|
|
Carrying
Amount |
|
|
Estimated
Fair Value |
|
|
Carrying
Amount |
|
|
Estimated
Fair Value |
|
||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
551,566
|
|
|
$
|
551,566
|
|
|
$
|
306,871
|
|
|
$
|
306,871
|
|
|
$
|
1,011,331
|
|
|
$
|
1,011,331
|
|
Cash and cash equivalents - restricted
|
|
116,594
|
|
|
116,594
|
|
|
122,025
|
|
|
122,025
|
|
|
106,208
|
|
|
106,208
|
|
||||||
Receivables, net - short-term
|
|
91,004
|
|
|
91,004
|
|
|
103,425
|
|
|
103,425
|
|
|
162,775
|
|
|
162,775
|
|
||||||
Receivables, net - long-term
|
|
60,945
|
|
|
60,945
|
|
|
56,514
|
|
|
56,514
|
|
|
52,898
|
|
|
52,898
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt (excluding debt issuance costs)
|
|
1,502,694
|
|
|
1,595,945
|
|
|
1,502,747
|
|
|
1,606,364
|
|
|
1,502,735
|
|
|
1,569,033
|
|
||||||
Contingent consideration
|
|
9,125
|
|
|
9,125
|
|
|
8,347
|
|
|
8,347
|
|
|
10,428
|
|
|
10,428
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
▪
|
Cash and cash equivalents, including restricted - Fair value approximates the carrying amount (Level 1).
|
▪
|
Receivables, net - short-term - For short-term balances the carrying values reported in the balance sheet approximate fair market value due to the relative short-term nature of the respective instruments (Level 1).
|
▪
|
Receivables, net - long-term - The carrying values for the long-term portion of loans to franchisees approximate fair market value due to variable interest rates, low historical delinquency rates and franchise territories serving as collateral (Level 1). Long-term EA receivables and tax preparation receivables are carried at net realizable value which approximates fair value (Level 3). Net realizable value is determined based on historical collection rates.
|
▪
|
Long-term debt - The fair value of our Senior Notes is based on quotes from multiple banks (Level 2).
|
▪
|
Contingent consideration - Fair value approximates the carrying amount (Level 3).
|
10
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
(in 000s)
|
|
|||||||
Three months ended July 31,
|
|
2017
|
|
|
2016
|
|
||
Mortgage loans and real estate owned, net
|
|
$
|
—
|
|
|
$
|
1,537
|
|
Interest income
|
|
1,362
|
|
|
1,066
|
|
||
Interest and gains on available-for-sale (AFS) securities
|
|
82
|
|
|
31
|
|
||
Foreign currency gains (losses), net
|
|
131
|
|
|
(21
|
)
|
||
Other, net
|
|
(355
|
)
|
|
28
|
|
||
|
|
$
|
1,220
|
|
|
$
|
2,641
|
|
|
|
|
|
|
(in 000s)
|
|
|||||||
Three months ended July 31,
|
|
2017
|
|
|
2016
|
|
||
Balance, beginning of the period
|
|
$
|
211,223
|
|
|
$
|
204,342
|
|
Amounts deferred for new extended service plans issued
|
|
1,403
|
|
|
978
|
|
||
Revenue recognized on previous deferrals
|
|
(35,534
|
)
|
|
(31,650
|
)
|
||
Balance, end of the period
|
|
$
|
177,092
|
|
|
$
|
173,670
|
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
11
|
12
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
13
|
14
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
15
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended July 31, 2017
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
17,556
|
|
|
$
|
123,094
|
|
|
$
|
(2,848
|
)
|
|
$
|
137,802
|
|
Cost of revenues
|
|
—
|
|
|
7,860
|
|
|
219,970
|
|
|
(115
|
)
|
|
227,715
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
3,206
|
|
|
94,776
|
|
|
(2,733
|
)
|
|
95,249
|
|
|||||
Total operating expenses
|
|
—
|
|
|
11,066
|
|
|
314,746
|
|
|
(2,848
|
)
|
|
322,964
|
|
|||||
Other income (expense), net
|
|
(132,264
|
)
|
|
6,073
|
|
|
(2,418
|
)
|
|
129,829
|
|
|
1,220
|
|
|||||
Interest expense on external borrowings
|
|
—
|
|
|
(21,204
|
)
|
|
(73
|
)
|
|
—
|
|
|
(21,277
|
)
|
|||||
Loss from continuing operations before tax benefit
|
|
(132,264
|
)
|
|
(8,641
|
)
|
|
(194,143
|
)
|
|
129,829
|
|
|
(205,219
|
)
|
|||||
Income tax benefit
|
|
(1,697
|
)
|
|
(4,623
|
)
|
|
(71,081
|
)
|
|
—
|
|
|
(77,401
|
)
|
|||||
Net loss from continuing operations
|
|
(130,567
|
)
|
|
(4,018
|
)
|
|
(123,062
|
)
|
|
129,829
|
|
|
(127,818
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(2,748
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2,749
|
)
|
|||||
Net loss
|
|
(130,567
|
)
|
|
(6,766
|
)
|
|
(123,063
|
)
|
|
129,829
|
|
|
(130,567
|
)
|
|||||
Other comprehensive income
|
|
2,462
|
|
|
—
|
|
|
2,462
|
|
|
(2,462
|
)
|
|
2,462
|
|
|||||
Comprehensive loss
|
|
$
|
(128,105
|
)
|
|
$
|
(6,766
|
)
|
|
$
|
(120,601
|
)
|
|
$
|
127,367
|
|
|
$
|
(128,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
16
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended July 31, 2016
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
15,504
|
|
|
$
|
109,800
|
|
|
$
|
(119
|
)
|
|
$
|
125,185
|
|
Cost of revenues
|
|
—
|
|
|
8,606
|
|
|
202,599
|
|
|
(119
|
)
|
|
211,086
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
2,480
|
|
|
96,343
|
|
|
—
|
|
|
98,823
|
|
|||||
Total operating expenses
|
|
—
|
|
|
11,086
|
|
|
298,942
|
|
|
(119
|
)
|
|
309,909
|
|
|||||
Other income (expense), net
|
|
(124,662
|
)
|
|
826
|
|
|
(9,630
|
)
|
|
136,107
|
|
|
2,641
|
|
|||||
Interest expense on external borrowings
|
|
—
|
|
|
(21,314
|
)
|
|
(152
|
)
|
|
—
|
|
|
(21,466
|
)
|
|||||
Loss from continuing operations before tax benefit
|
|
(124,662
|
)
|
|
(16,070
|
)
|
|
(198,924
|
)
|
|
136,107
|
|
|
(203,549
|
)
|
|||||
Income tax benefit
|
|
(989
|
)
|
|
(5,794
|
)
|
|
(75,740
|
)
|
|
—
|
|
|
(82,523
|
)
|
|||||
Net loss from continuing operations
|
|
(123,673
|
)
|
|
(10,276
|
)
|
|
(123,184
|
)
|
|
136,107
|
|
|
(121,026
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(2,646
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2,647
|
)
|
|||||
Net loss
|
|
(123,673
|
)
|
|
(12,922
|
)
|
|
(123,185
|
)
|
|
136,107
|
|
|
(123,673
|
)
|
|||||
Other comprehensive loss
|
|
(3,571
|
)
|
|
—
|
|
|
(3,571
|
)
|
|
3,571
|
|
|
(3,571
|
)
|
|||||
Comprehensive loss
|
|
$
|
(127,244
|
)
|
|
$
|
(12,922
|
)
|
|
$
|
(126,756
|
)
|
|
$
|
139,678
|
|
|
$
|
(127,244
|
)
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
17
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of July 31, 2017
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
7,480
|
|
|
$
|
544,086
|
|
|
$
|
—
|
|
|
$
|
551,566
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
8,069
|
|
|
108,525
|
|
|
—
|
|
|
116,594
|
|
|||||
Receivables, net
|
|
16
|
|
|
54,187
|
|
|
36,801
|
|
|
—
|
|
|
91,004
|
|
|||||
Prepaid expenses and other current assets
|
|
—
|
|
|
2,280
|
|
|
72,496
|
|
|
—
|
|
|
74,776
|
|
|||||
Total current assets
|
|
16
|
|
|
72,016
|
|
|
761,908
|
|
|
—
|
|
|
833,940
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
66
|
|
|
253,189
|
|
|
—
|
|
|
253,255
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
393,972
|
|
|
—
|
|
|
393,972
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
493,991
|
|
|
—
|
|
|
493,991
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
5,587
|
|
|
32,047
|
|
|
16,714
|
|
|
—
|
|
|
54,348
|
|
|||||
Investments in subsidiaries
|
|
2,037,691
|
|
|
—
|
|
|
106,948
|
|
|
(2,144,639
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,477,940
|
|
|
2,227,052
|
|
|
(3,704,992
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
60,242
|
|
|
42,500
|
|
|
—
|
|
|
102,742
|
|
|||||
Total assets
|
|
$
|
2,043,294
|
|
|
$
|
1,642,311
|
|
|
$
|
4,296,274
|
|
|
$
|
(5,849,631
|
)
|
|
$
|
2,132,248
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
2,246
|
|
|
$
|
6,870
|
|
|
$
|
152,635
|
|
|
$
|
—
|
|
|
$
|
161,751
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
1,070
|
|
|
33,993
|
|
|
—
|
|
|
35,063
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
—
|
|
|
176,909
|
|
|
—
|
|
|
176,909
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
992
|
|
|
—
|
|
|
992
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
30,412
|
|
|
157,379
|
|
|
—
|
|
|
187,791
|
|
|||||
Total current liabilities
|
|
2,246
|
|
|
38,352
|
|
|
521,908
|
|
|
—
|
|
|
562,506
|
|
|||||
Long-term debt and line of credit borrowings
|
|
—
|
|
|
1,488,046
|
|
|
5,376
|
|
|
—
|
|
|
1,493,422
|
|
|||||
Reserves for uncertain tax positions
|
|
28,324
|
|
|
8,037
|
|
|
122,872
|
|
|
—
|
|
|
159,233
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
928
|
|
|
130,487
|
|
|
—
|
|
|
131,415
|
|
|||||
Amounts due to affiliates
|
|
2,227,052
|
|
|
—
|
|
|
1,477,940
|
|
|
(3,704,992
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,257,622
|
|
|
1,535,363
|
|
|
2,258,583
|
|
|
(3,704,992
|
)
|
|
2,346,576
|
|
|||||
Stockholders' equity (deficiency)
|
|
(214,328
|
)
|
|
106,948
|
|
|
2,037,691
|
|
|
(2,144,639
|
)
|
|
(214,328
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
2,043,294
|
|
|
$
|
1,642,311
|
|
|
$
|
4,296,274
|
|
|
$
|
(5,849,631
|
)
|
|
$
|
2,132,248
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of July 31, 2016
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
3,902
|
|
|
$
|
302,969
|
|
|
$
|
—
|
|
|
$
|
306,871
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
29,000
|
|
|
93,025
|
|
|
—
|
|
|
122,025
|
|
|||||
Receivables, net
|
|
—
|
|
|
72,865
|
|
|
30,560
|
|
|
—
|
|
|
103,425
|
|
|||||
Prepaid expenses and other current assets
|
|
—
|
|
|
7,114
|
|
|
68,938
|
|
|
—
|
|
|
76,052
|
|
|||||
Total current assets
|
|
—
|
|
|
112,881
|
|
|
495,492
|
|
|
—
|
|
|
608,373
|
|
|||||
Mortgage loans held for investment, net
|
|
—
|
|
|
192,375
|
|
|
—
|
|
|
—
|
|
|
192,375
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
116
|
|
|
283,998
|
|
|
—
|
|
|
284,114
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
419,909
|
|
|
—
|
|
|
419,909
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
470,942
|
|
|
—
|
|
|
470,942
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
—
|
|
|
60,312
|
|
|
30,186
|
|
|
—
|
|
|
90,498
|
|
|||||
Investments in subsidiaries
|
|
1,611,887
|
|
|
—
|
|
|
96,216
|
|
|
(1,708,103
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,282,286
|
|
|
1,794,655
|
|
|
(3,076,941
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
58,311
|
|
|
39,020
|
|
|
—
|
|
|
97,331
|
|
|||||
Total assets
|
|
$
|
1,611,887
|
|
|
$
|
1,706,281
|
|
|
$
|
3,630,418
|
|
|
$
|
(4,785,044
|
)
|
|
$
|
2,163,542
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
10,551
|
|
|
$
|
7,671
|
|
|
$
|
138,863
|
|
|
$
|
—
|
|
|
$
|
157,085
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
1,889
|
|
|
41,627
|
|
|
—
|
|
|
43,516
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
52,976
|
|
|
163,414
|
|
|
—
|
|
|
216,390
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
864
|
|
|
—
|
|
|
864
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
52,420
|
|
|
138,884
|
|
|
—
|
|
|
191,304
|
|
|||||
Total current liabilities
|
|
10,551
|
|
|
114,956
|
|
|
483,652
|
|
|
—
|
|
|
609,159
|
|
|||||
Long-term debt and line of credit borrowings
|
|
—
|
|
|
1,485,426
|
|
|
6,364
|
|
|
—
|
|
|
1,491,790
|
|
|||||
Reserves for uncertain tax positions
|
|
6,488
|
|
|
8,577
|
|
|
101,644
|
|
|
—
|
|
|
116,709
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
1,106
|
|
|
144,585
|
|
|
—
|
|
|
145,691
|
|
|||||
Amounts due to affiliates
|
|
1,794,655
|
|
|
—
|
|
|
1,282,286
|
|
|
(3,076,941
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
1,811,694
|
|
|
1,610,065
|
|
|
2,018,531
|
|
|
(3,076,941
|
)
|
|
2,363,349
|
|
|||||
Stockholders' equity (deficiency)
|
|
(199,807
|
)
|
|
96,216
|
|
|
1,611,887
|
|
|
(1,708,103
|
)
|
|
(199,807
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
1,611,887
|
|
|
$
|
1,706,281
|
|
|
$
|
3,630,418
|
|
|
$
|
(4,785,044
|
)
|
|
$
|
2,163,542
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
19
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of April 30, 2017
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
4,486
|
|
|
$
|
1,006,845
|
|
|
$
|
—
|
|
|
$
|
1,011,331
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
8,060
|
|
|
98,148
|
|
|
—
|
|
|
106,208
|
|
|||||
Receivables, net
|
|
—
|
|
|
61,250
|
|
|
101,525
|
|
|
—
|
|
|
162,775
|
|
|||||
Prepaid expenses and other current assets
|
|
—
|
|
|
2,280
|
|
|
63,445
|
|
|
—
|
|
|
65,725
|
|
|||||
Total current assets
|
|
—
|
|
|
76,076
|
|
|
1,269,963
|
|
|
—
|
|
|
1,346,039
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
78
|
|
|
263,749
|
|
|
—
|
|
|
263,827
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
409,364
|
|
|
—
|
|
|
409,364
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
491,207
|
|
|
—
|
|
|
491,207
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
5,587
|
|
|
30,743
|
|
|
47,398
|
|
|
—
|
|
|
83,728
|
|
|||||
Investments in subsidiaries
|
|
2,158,234
|
|
|
—
|
|
|
113,714
|
|
|
(2,271,948
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,493,195
|
|
|
2,194,294
|
|
|
(3,687,489
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
51,829
|
|
|
48,114
|
|
|
—
|
|
|
99,943
|
|
|||||
Total assets
|
|
$
|
2,163,821
|
|
|
$
|
1,651,921
|
|
|
$
|
4,837,803
|
|
|
$
|
(5,959,437
|
)
|
|
$
|
2,694,108
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
2,086
|
|
|
$
|
14,218
|
|
|
$
|
200,724
|
|
|
$
|
—
|
|
|
$
|
217,028
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
851
|
|
|
183,005
|
|
|
—
|
|
|
183,856
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
—
|
|
|
348,199
|
|
|
—
|
|
|
348,199
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
981
|
|
|
—
|
|
|
981
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
26,759
|
|
|
162,457
|
|
|
—
|
|
|
189,216
|
|
|||||
Total current liabilities
|
|
2,086
|
|
|
41,828
|
|
|
895,366
|
|
|
—
|
|
|
939,280
|
|
|||||
Long-term debt and line of credit borrowings
|
|
—
|
|
|
1,487,389
|
|
|
5,628
|
|
|
—
|
|
|
1,493,017
|
|
|||||
Reserves for uncertain tax positions
|
|
28,324
|
|
|
8,037
|
|
|
122,724
|
|
|
—
|
|
|
159,085
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
953
|
|
|
162,656
|
|
|
—
|
|
|
163,609
|
|
|||||
Amounts due to affiliates
|
|
2,194,294
|
|
|
—
|
|
|
1,493,195
|
|
|
(3,687,489
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,224,704
|
|
|
1,538,207
|
|
|
2,679,569
|
|
|
(3,687,489
|
)
|
|
2,754,991
|
|
|||||
Stockholders' equity (deficiency)
|
|
(60,883
|
)
|
|
113,714
|
|
|
2,158,234
|
|
|
(2,271,948
|
)
|
|
(60,883
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
2,163,821
|
|
|
$
|
1,651,921
|
|
|
$
|
4,837,803
|
|
|
$
|
(5,959,437
|
)
|
|
$
|
2,694,108
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended July 31, 2017
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Net cash used in operating activities:
|
|
$
|
—
|
|
|
$
|
(9,721
|
)
|
|
$
|
(399,394
|
)
|
|
$
|
—
|
|
|
$
|
(409,115
|
)
|
Cash flows from investing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
—
|
|
|
(2
|
)
|
|
(13,092
|
)
|
|
—
|
|
|
(13,094
|
)
|
|||||
Payments made for business acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(1,440
|
)
|
|
—
|
|
|
(1,440
|
)
|
|||||
Loans made to franchisees
|
|
—
|
|
|
(4,527
|
)
|
|
—
|
|
|
—
|
|
|
(4,527
|
)
|
|||||
Repayments from franchisees
|
|
—
|
|
|
4,524
|
|
|
203
|
|
|
—
|
|
|
4,727
|
|
|||||
Intercompany borrowings (payments)
|
|
—
|
|
|
13,952
|
|
|
(29,995
|
)
|
|
16,043
|
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(1,223
|
)
|
|
2,594
|
|
|
—
|
|
|
1,371
|
|
|||||
Net cash provided by (used in) investing activities
|
|
—
|
|
|
12,724
|
|
|
(41,730
|
)
|
|
16,043
|
|
|
(12,963
|
)
|
|||||
Cash flows from financing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid
|
|
(49,905
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,905
|
)
|
|||||
Repurchase of common stock, including shares surrendered
|
|
(7,508
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,508
|
)
|
|||||
Proceeds from exercise of stock options
|
|
27,418
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,418
|
|
|||||
Intercompany borrowings (payments)
|
|
29,995
|
|
|
—
|
|
|
(13,952
|
)
|
|
(16,043
|
)
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
—
|
|
|
2,545
|
|
|
—
|
|
|
2,545
|
|
|||||
Net cash provided by financing activities
|
|
—
|
|
|
—
|
|
|
(11,407
|
)
|
|
(16,043
|
)
|
|
(27,450
|
)
|
|||||
Effects of exchange rates on cash
|
|
—
|
|
|
—
|
|
|
149
|
|
|
—
|
|
|
149
|
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
|
—
|
|
|
3,003
|
|
|
(452,382
|
)
|
|
—
|
|
|
(449,379
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
—
|
|
|
12,546
|
|
|
1,104,993
|
|
|
—
|
|
|
1,117,539
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
—
|
|
|
$
|
15,549
|
|
|
$
|
652,611
|
|
|
$
|
—
|
|
|
$
|
668,160
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
21
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended July 31, 2016
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Net cash used in operating activities:
|
|
$
|
—
|
|
|
$
|
(57,943
|
)
|
|
$
|
(400,021
|
)
|
|
$
|
—
|
|
|
$
|
(457,964
|
)
|
Cash flows from investing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Principal payments on mortgage loans and sale of real estate owned, net
|
|
—
|
|
|
9,573
|
|
|
—
|
|
|
—
|
|
|
9,573
|
|
|||||
Capital expenditures
|
|
—
|
|
|
(5
|
)
|
|
(6,241
|
)
|
|
—
|
|
|
(6,246
|
)
|
|||||
Payments made for business acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(1,635
|
)
|
|
—
|
|
|
(1,635
|
)
|
|||||
Loans made to franchisees
|
|
—
|
|
|
(2,202
|
)
|
|
(17
|
)
|
|
—
|
|
|
(2,219
|
)
|
|||||
Repayments from franchisees
|
|
—
|
|
|
6,305
|
|
|
168
|
|
|
—
|
|
|
6,473
|
|
|||||
Intercompany borrowings (payments)
|
|
—
|
|
|
40,217
|
|
|
(92,187
|
)
|
|
51,970
|
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(1,072
|
)
|
|
204
|
|
|
—
|
|
|
(868
|
)
|
|||||
Net cash provided by (used in) investing activities
|
|
—
|
|
|
52,816
|
|
|
(99,708
|
)
|
|
51,970
|
|
|
5,078
|
|
|||||
Cash flows from financing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid
|
|
(48,514
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,514
|
)
|
|||||
Repurchase of common stock, including shares surrendered
|
|
(45,312
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,312
|
)
|
|||||
Proceeds from exercise of stock options
|
|
1,639
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,639
|
|
|||||
Intercompany borrowings (payments)
|
|
92,187
|
|
|
—
|
|
|
(40,217
|
)
|
|
(51,970
|
)
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
—
|
|
|
(24,779
|
)
|
|
—
|
|
|
(24,779
|
)
|
|||||
Net cash used in financing activities
|
|
—
|
|
|
—
|
|
|
(64,996
|
)
|
|
(51,970
|
)
|
|
(116,966
|
)
|
|||||
Effects of exchange rates on cash
|
|
—
|
|
|
—
|
|
|
(2,163
|
)
|
|
—
|
|
|
(2,163
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
|
—
|
|
|
(5,127
|
)
|
|
(566,888
|
)
|
|
—
|
|
|
(572,015
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
—
|
|
|
38,029
|
|
|
962,882
|
|
|
—
|
|
|
1,000,911
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
—
|
|
|
$
|
32,902
|
|
|
$
|
395,994
|
|
|
$
|
—
|
|
|
$
|
428,896
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Consolidated – Financial Results
|
|
|
|
(in 000s, except per share amounts)
|
|
||||||||||
Three months ended July 31,
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
U.S. assisted tax preparation fees
|
|
$
|
29,963
|
|
|
$
|
25,429
|
|
|
$
|
4,534
|
|
|
17.8
|
%
|
U.S. royalties
|
|
6,967
|
|
|
6,525
|
|
|
442
|
|
|
6.8
|
%
|
|||
U.S. DIY tax preparation fees
|
|
3,226
|
|
|
2,914
|
|
|
312
|
|
|
10.7
|
%
|
|||
International revenues
|
|
40,417
|
|
|
38,875
|
|
|
1,542
|
|
|
4.0
|
%
|
|||
Revenues from Refund Transfers
|
|
2,816
|
|
|
3,234
|
|
|
(418
|
)
|
|
(12.9
|
)%
|
|||
Revenues from Emerald Card®
|
|
14,987
|
|
|
13,065
|
|
|
1,922
|
|
|
14.7
|
%
|
|||
Revenues from Peace of Mind® Extended Service Plan
|
|
31,943
|
|
|
27,031
|
|
|
4,912
|
|
|
18.2
|
%
|
|||
Interest and fee income on Emerald Advance
|
|
664
|
|
|
804
|
|
|
(140
|
)
|
|
(17.4
|
)%
|
|||
Other
|
|
6,819
|
|
|
7,308
|
|
|
(489
|
)
|
|
(6.7
|
)%
|
|||
Total revenues
|
|
137,802
|
|
|
125,185
|
|
|
12,617
|
|
|
10.1
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits:
|
|
|
|
|
|
|
|
|
|||||||
Field wages
|
|
48,123
|
|
|
45,043
|
|
|
3,080
|
|
|
6.8
|
%
|
|||
Other wages
|
|
43,197
|
|
|
42,100
|
|
|
1,097
|
|
|
2.6
|
%
|
|||
Benefits and other compensation
|
|
20,645
|
|
|
22,734
|
|
|
(2,089
|
)
|
|
(9.2
|
)%
|
|||
|
|
111,965
|
|
|
109,877
|
|
|
2,088
|
|
|
1.9
|
%
|
|||
Occupancy and equipment
|
|
98,199
|
|
|
94,371
|
|
|
3,828
|
|
|
4.1
|
%
|
|||
Marketing and advertising
|
|
7,104
|
|
|
7,561
|
|
|
(457
|
)
|
|
(6.0
|
)%
|
|||
Depreciation and amortization
|
|
43,598
|
|
|
41,282
|
|
|
2,316
|
|
|
5.6
|
%
|
|||
Bad debt
|
|
2,459
|
|
|
1,417
|
|
|
1,042
|
|
|
73.5
|
%
|
|||
Supplies
|
|
2,734
|
|
|
2,077
|
|
|
657
|
|
|
31.6
|
%
|
|||
Other
|
|
56,905
|
|
|
53,324
|
|
|
3,581
|
|
|
6.7
|
%
|
|||
Total operating expenses
|
|
322,964
|
|
|
309,909
|
|
|
13,055
|
|
|
4.2
|
%
|
|||
Other income (expense), net
|
|
1,220
|
|
|
2,641
|
|
|
(1,421
|
)
|
|
(53.8
|
)%
|
|||
Interest expense on borrowings
|
|
(21,277
|
)
|
|
(21,466
|
)
|
|
189
|
|
|
0.9
|
%
|
|||
Pretax loss
|
|
(205,219
|
)
|
|
(203,549
|
)
|
|
(1,670
|
)
|
|
(0.8
|
)%
|
|||
Income tax benefit
|
|
(77,401
|
)
|
|
(82,523
|
)
|
|
(5,122
|
)
|
|
(6.2
|
)%
|
|||
Net loss from continuing operations
|
|
(127,818
|
)
|
|
(121,026
|
)
|
|
(6,792
|
)
|
|
(5.6
|
)%
|
|||
Net loss from discontinued operations
|
|
(2,749
|
)
|
|
(2,647
|
)
|
|
(102
|
)
|
|
(3.9
|
)%
|
|||
Net loss
|
|
$
|
(130,567
|
)
|
|
$
|
(123,673
|
)
|
|
$
|
(6,894
|
)
|
|
(5.6
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
|
$
|
(0.62
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
(0.07
|
)
|
|
(12.7
|
)%
|
Discontinued operations
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
%
|
|||
Consolidated
|
|
$
|
(0.63
|
)
|
|
$
|
(0.56
|
)
|
|
$
|
(0.07
|
)
|
|
(12.5
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA from continuing operations
(1)
|
|
$
|
(140,344
|
)
|
|
$
|
(140,801
|
)
|
|
$
|
457
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
See "Non-GAAP Financial Information" at the end of this item for a reconciliation of non-GAAP measures.
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
23
|
Three months ended July 31,
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Consulting and outsourced services
|
|
$
|
18,505
|
|
|
$
|
18,514
|
|
|
$
|
(9
|
)
|
|
—
|
%
|
Bank partner fees
|
|
1,633
|
|
|
1,770
|
|
|
(137
|
)
|
|
(7.7
|
)%
|
|||
Client claims and refunds
|
|
15,165
|
|
|
13,686
|
|
|
1,479
|
|
|
10.8
|
%
|
|||
Employee travel and related expenses
|
|
6,077
|
|
|
3,797
|
|
|
2,280
|
|
|
60.0
|
%
|
|||
Credit card/bank charges
|
|
4,582
|
|
|
2,378
|
|
|
2,204
|
|
|
92.7
|
%
|
|||
Insurance
|
|
3,289
|
|
|
4,439
|
|
|
(1,150
|
)
|
|
(25.9
|
)%
|
|||
Legal fees and settlements
|
|
2,147
|
|
|
2,702
|
|
|
(555
|
)
|
|
(20.5
|
)%
|
|||
Other
|
|
5,507
|
|
|
6,038
|
|
|
(531
|
)
|
|
(8.8
|
)%
|
|||
|
|
$
|
56,905
|
|
|
$
|
53,324
|
|
|
$
|
3,581
|
|
|
6.7
|
%
|
|
|
|
|
|
|
|
|
|
24
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
|
|
(in 000s)
|
|
|||||
Three months ended July 31,
|
|
2017
|
|
|
2016
|
|
||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(409,115
|
)
|
|
$
|
(457,964
|
)
|
Investing activities
|
|
(12,963
|
)
|
|
5,078
|
|
||
Financing activities
|
|
(27,450
|
)
|
|
(116,966
|
)
|
||
Effects of exchange rates on cash
|
|
149
|
|
|
(2,163
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
|
$
|
(449,379
|
)
|
|
$
|
(572,015
|
)
|
|
|
|
|
|
As of
|
|
July 31, 2017
|
|
April 30, 2017
|
||||||||
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
Moody's
|
|
P-3
|
|
Baa3
|
|
Stable
|
|
P-3
|
|
Baa3
|
|
Stable
|
S&P
|
|
A-2
|
|
BBB
|
|
Stable
|
|
A-2
|
|
BBB
|
|
Negative
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
25
|
26
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
|
|
|
|
(in 000s)
|
|
|||
Three months ended July 31,
|
|
2017
|
|
|
2016
|
|
||
Net loss - as reported
|
|
$
|
(130,567
|
)
|
|
$
|
(123,673
|
)
|
Discontinued operations, net
|
|
2,749
|
|
|
2,647
|
|
||
Net loss from continuing operations - as reported
|
|
(127,818
|
)
|
|
(121,026
|
)
|
||
Add back:
|
|
|
|
|
||||
Income taxes of continuing operations
|
|
(77,401
|
)
|
|
(82,523
|
)
|
||
Interest expense of continuing operations
|
|
21,277
|
|
|
21,466
|
|
||
Depreciation and amortization of continuing operations
|
|
43,598
|
|
|
41,282
|
|
||
|
|
(12,526
|
)
|
|
(19,775
|
)
|
||
EBITDA from continuing operations
|
|
$
|
(140,344
|
)
|
|
$
|
(140,801
|
)
|
|
|
|
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
27
|
(1)
|
We purchased approximately
244 thousand
shares in connection with funding employee income tax withholding obligations arising upon the lapse of restrictions on restricted shares and restricted share units.
|
(2)
|
In September 2015, we announced that our Board of Directors approved a $3.5 billion share repurchase program, effective through June 2019.
|
10.1
|
10.2
|
10.3
|
28
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
10.4
|
10.5
|
10.6
|
10.7
|
10.8
|
10.9
|
10.10
|
10.11
|
10.12
|
12.1
|
12.2
|
31.1
|
31.2
|
32.1
|
32.2
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Extension Calculation Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
H&R Block, Inc.
| Q1 FY2018 Form 10-Q
|
29
|
H&R BLOCK, INC.
|
|
/s/ Thomas A. Gerke
|
Thomas A. Gerke
|
President and Chief Executive Officer
|
September 1, 2017
|
|
/s/ Tony G. Bowen
|
Tony G. Bowen
|
Chief Financial Officer
|
September 1, 2017
|
|
/s/ Kellie J. Logerwell
|
Kellie J. Logerwell
|
Chief Accounting Officer
|
September 1, 2017
|
30
|
Q1 FY2018 Form 10-Q |
H&R Block, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 12.1
|
|
|||||||||||||||
H&R BLOCK, INC.
|
||||||||||||||||||||||||||||
Computation of Ratio of Earnings to Fixed Charges
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Three months ended July 31,
|
|
Twelve months ended April 30,
|
||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pretax earnings (loss) from continuing operations
|
|
$
|
(205,219
|
)
|
|
$
|
(203,549
|
)
|
|
$
|
629,287
|
|
|
$
|
569,479
|
|
|
$
|
742,805
|
|
|
$
|
767,116
|
|
|
$
|
702,011
|
|
Add: Fixed charges
|
|
40,992
|
|
|
40,216
|
|
|
171,698
|
|
|
145,311
|
|
|
116,977
|
|
|
125,162
|
|
|
146,954
|
|
|||||||
Total earnings (loss) before income taxes and fixed charges
|
|
$
|
(164,227
|
)
|
|
$
|
(163,333
|
)
|
|
$
|
800,985
|
|
|
$
|
714,790
|
|
|
$
|
859,782
|
|
|
$
|
892,278
|
|
|
$
|
848,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
|
$
|
21,277
|
|
|
$
|
21,466
|
|
|
$
|
92,951
|
|
|
$
|
68,962
|
|
|
$
|
45,246
|
|
|
$
|
55,279
|
|
|
$
|
74,297
|
|
Interest on deposits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|
682
|
|
|
2,109
|
|
|
5,660
|
|
|||||||
Interest portion of net rent expense (a)
|
|
19,715
|
|
|
18,750
|
|
|
78,747
|
|
|
76,170
|
|
|
71,049
|
|
|
67,774
|
|
|
66,997
|
|
|||||||
Total fixed charges
|
|
$
|
40,992
|
|
|
$
|
40,216
|
|
|
$
|
171,698
|
|
|
$
|
145,311
|
|
|
$
|
116,977
|
|
|
$
|
125,162
|
|
|
$
|
146,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ratio of earnings to fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Including interest on deposits
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|
4.9
|
|
|
7.4
|
|
|
7.1
|
|
|
5.8
|
|
|||||||
Excluding interest on deposits
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|
4.9
|
|
|
7.4
|
|
|
7.2
|
|
|
6.0
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Deficiency in the coverage of fixed charges by earnings (loss) before income taxes and fixed charges
|
|
$
|
(205,219
|
)
|
|
$
|
(203,549
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 12.2
|
|
|||||||||||||||
BLOCK FINANCIAL LLC
|
||||||||||||||||||||||||||||
Computation of Ratio of Earnings to Fixed Charges
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Three months ended July 31,
|
|
Twelve months ended April 30,
|
||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pretax earnings (loss) from continuing operations
|
|
$
|
(8,641
|
)
|
|
$
|
(16,070
|
)
|
|
$
|
23,895
|
|
|
$
|
12,153
|
|
|
$
|
67,628
|
|
|
$
|
40,828
|
|
|
$
|
(6,112
|
)
|
Add: Fixed charges
|
|
21,204
|
|
|
21,314
|
|
|
92,263
|
|
|
68,713
|
|
|
45,575
|
|
|
57,010
|
|
|
79,500
|
|
|||||||
Total earnings before income taxes and fixed charges
|
|
$
|
12,563
|
|
|
$
|
5,244
|
|
|
$
|
116,158
|
|
|
$
|
80,866
|
|
|
$
|
113,203
|
|
|
$
|
97,838
|
|
|
$
|
73,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
|
$
|
21,204
|
|
|
$
|
21,314
|
|
|
$
|
92,263
|
|
|
$
|
68,531
|
|
|
$
|
44,884
|
|
|
$
|
54,892
|
|
|
$
|
73,831
|
|
Interest on deposits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|
682
|
|
|
2,109
|
|
|
5,660
|
|
|||||||
Interest portion of net rent expense (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|||||||
Total fixed charges
|
|
$
|
21,204
|
|
|
$
|
21,314
|
|
|
$
|
92,263
|
|
|
$
|
68,713
|
|
|
$
|
45,575
|
|
|
$
|
57,010
|
|
|
$
|
79,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ratio of earnings to fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Including interest on deposits
|
|
-
|
|
|
-
|
|
|
1.3
|
|
|
1.2
|
|
|
2.5
|
|
|
1.7
|
|
|
-
|
|
|||||||
Excluding interest on deposits
|
|
-
|
|
|
-
|
|
|
1.3
|
|
|
1.2
|
|
|
2.5
|
|
|
1.7
|
|
|
-
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Deficiency in the coverage of fixed charges by earnings (loss) before income taxes and fixed charges
|
|
$
|
(8,641
|
)
|
|
$
|
(16,070
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
September 1, 2017
|
|
/s/ Thomas A. Gerke
|
|
|
|
Thomas A. Gerke
|
|
|
|
Chief Executive Officer
H&R Block, Inc.
|
Date:
|
September 1, 2017
|
|
/s/ Tony G. Bowen
|
|
|
|
Tony G. Bowen
|
|
|
|
Chief Financial Officer
H&R Block, Inc.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Thomas A. Gerke
|
Thomas A. Gerke
Chief Executive Officer
H&R Block, Inc.
|
September 1, 2017
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Tony G. Bowen
|
Tony G. Bowen
Chief Financial Officer
H&R Block, Inc.
|
September 1, 2017
|