|
(Mark One)
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended October 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 and six months ended October 31, 2017 and 2016
|
1
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
As of October 31, 2017, October 31, 2016 and April 30, 2017
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Six months ended October 31, 2017 and 2016
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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Legal Proceedings
|
||
|
|
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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
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
1
|
2
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(unaudited, in 000s)
|
|
|||||
Six months ended October 31,
|
|
2017
|
|
|
2016
|
|
||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(284,133
|
)
|
|
$
|
(269,893
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
88,390
|
|
|
87,032
|
|
||
Provision for bad debt
|
|
4,238
|
|
|
1,286
|
|
||
Deferred taxes
|
|
58,634
|
|
|
6,489
|
|
||
Stock-based compensation
|
|
11,627
|
|
|
12,472
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
||||
Receivables
|
|
77,958
|
|
|
48,653
|
|
||
Prepaid expenses and other current assets
|
|
(19,283
|
)
|
|
(7,386
|
)
|
||
Other noncurrent assets
|
|
8,984
|
|
|
7,713
|
|
||
Accounts payable and accrued expenses
|
|
(85,846
|
)
|
|
(99,378
|
)
|
||
Accrued salaries, wages and payroll taxes
|
|
(141,491
|
)
|
|
(120,672
|
)
|
||
Deferred revenue and other current liabilities
|
|
3,775
|
|
|
(46,531
|
)
|
||
Deferred revenue and other noncurrent liabilities
|
|
(60,857
|
)
|
|
(52,548
|
)
|
||
Income tax receivables, accrued income taxes and income tax reserves
|
|
(296,023
|
)
|
|
(282,234
|
)
|
||
Other, net
|
|
(14,430
|
)
|
|
(5,379
|
)
|
||
Net cash used in operating activities
|
|
(648,457
|
)
|
|
(720,376
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Principal payments and sales of mortgage loans and real estate owned, net
|
|
—
|
|
|
19,009
|
|
||
Capital expenditures
|
|
(56,750
|
)
|
|
(44,918
|
)
|
||
Payments made for business acquisitions, net of cash acquired
|
|
(27,522
|
)
|
|
(36,151
|
)
|
||
Franchise loans funded
|
|
(10,939
|
)
|
|
(10,171
|
)
|
||
Payments received on franchise loans
|
|
10,322
|
|
|
14,263
|
|
||
Other, net
|
|
5,474
|
|
|
2,177
|
|
||
Net cash used in investing activities
|
|
(79,415
|
)
|
|
(55,791
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Repayments of line of credit borrowings
|
|
—
|
|
|
(50,000
|
)
|
||
Proceeds from line of credit borrowings
|
|
—
|
|
|
525,000
|
|
||
Dividends paid
|
|
(100,082
|
)
|
|
(95,971
|
)
|
||
Repurchase of common stock, including shares surrendered
|
|
(7,581
|
)
|
|
(215,511
|
)
|
||
Proceeds from exercise of stock options
|
|
27,522
|
|
|
1,630
|
|
||
Other, net
|
|
(26,717
|
)
|
|
(43,734
|
)
|
||
Net cash provided by (used in) financ
ing activities
|
|
(106,858
|
)
|
|
121,414
|
|
||
|
|
|
|
|
||||
Effects of exchange rate changes on cash
|
|
(1,147
|
)
|
|
(4,110
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
|
(835,877
|
)
|
|
(658,863
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
1,117,539
|
|
|
1,000,911
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
281,662
|
|
|
$
|
342,048
|
|
|
|
|
|
|
||||
SUPPLEMENTARY CASH FLOW DATA:
|
|
|
|
|
||||
Income taxes paid, net of refunds received
|
|
$
|
76,451
|
|
|
$
|
112,339
|
|
Interest paid on borrowings
|
|
39,902
|
|
|
40,670
|
|
||
Accrued additions to property and equipment
|
|
3,874
|
|
|
12,920
|
|
||
Accrued purchase of common stock
|
|
—
|
|
|
7,143
|
|
||
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
3
|
4
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
5
|
(in 000s)
|
|
|||||||||||||||||||||||
As of
|
|
October 31, 2017
|
|
October 31, 2016
|
|
April 30, 2017
|
||||||||||||||||||
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
||||||||||||
Loans to franchisees
|
|
$
|
37,953
|
|
|
$
|
42,443
|
|
|
$
|
48,772
|
|
|
$
|
46,998
|
|
|
$
|
39,911
|
|
|
$
|
36,614
|
|
Receivables for U.S assisted tax preparation and related fees
|
|
36,926
|
|
|
6,316
|
|
|
37,303
|
|
|
5,528
|
|
|
54,506
|
|
|
6,316
|
|
||||||
Instant Cash Back® receivables
|
|
2,256
|
|
|
—
|
|
|
2,630
|
|
|
—
|
|
|
37,150
|
|
|
—
|
|
||||||
H&R Block Emerald Advance®
lines of credit
|
|
21,218
|
|
|
9,209
|
|
|
23,495
|
|
|
—
|
|
|
26,325
|
|
|
5,069
|
|
||||||
Software receivables from retailers
|
|
484
|
|
|
—
|
|
|
5,596
|
|
|
—
|
|
|
16,715
|
|
|
—
|
|
||||||
Royalties and other receivables from franchisees
|
|
10,198
|
|
|
790
|
|
|
15,348
|
|
|
—
|
|
|
13,275
|
|
|
1,585
|
|
||||||
Other
|
|
23,980
|
|
|
3,791
|
|
|
27,682
|
|
|
3,712
|
|
|
30,189
|
|
|
3,314
|
|
||||||
|
|
133,015
|
|
|
62,549
|
|
|
160,826
|
|
|
56,238
|
|
|
218,071
|
|
|
52,898
|
|
||||||
Allowance for doubtful accounts
|
|
(55,265
|
)
|
|
—
|
|
|
(56,062
|
)
|
|
—
|
|
|
(55,296
|
)
|
|
—
|
|
||||||
|
|
$
|
77,750
|
|
|
$
|
62,549
|
|
|
$
|
104,764
|
|
|
$
|
56,238
|
|
|
$
|
162,775
|
|
|
$
|
52,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
(in 000s)
|
|
|||
Credit Quality Indicator – Year of origination:
|
|
|
||
2017
|
|
$
|
8,641
|
|
2016 and prior
|
|
6,717
|
|
|
Revolving loans
|
|
15,069
|
|
|
|
|
$
|
30,427
|
|
|
|
|
(in 000s)
|
|
|||||||||||
|
|
Goodwill
|
|
|
Accumulated Impairment Losses
|
|
|
Net
|
|
|||
Balances as of April 30, 2017
|
|
$
|
523,504
|
|
|
$
|
(32,297
|
)
|
|
$
|
491,207
|
|
Acquisitions
|
|
961
|
|
|
—
|
|
|
961
|
|
|||
Disposals and foreign currency changes, net
|
|
891
|
|
|
—
|
|
|
891
|
|
|||
Impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances as of October 31, 2017
|
|
$
|
525,356
|
|
|
$
|
(32,297
|
)
|
|
$
|
493,059
|
|
|
|
|
|
|
|
|
||||||
Balances as of April 30, 2016
|
|
$
|
503,054
|
|
|
$
|
(32,297
|
)
|
|
$
|
470,757
|
|
Acquisitions
|
|
7,435
|
|
|
—
|
|
|
7,435
|
|
|||
Disposals and foreign currency changes, net
|
|
(832
|
)
|
|
—
|
|
|
(832
|
)
|
|||
Impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances as of October 31, 2016
|
|
$
|
509,657
|
|
|
$
|
(32,297
|
)
|
|
$
|
477,360
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
7
|
(in 000s)
|
|
|||||||||||
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
|||
As of October 31, 2017:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
331,290
|
|
|
$
|
(101,987
|
)
|
|
$
|
229,303
|
|
Customer relationships
|
|
234,909
|
|
|
(147,881
|
)
|
|
87,028
|
|
|||
Internally-developed software
|
|
146,985
|
|
|
(117,162
|
)
|
|
29,823
|
|
|||
Noncompete agreements
|
|
32,471
|
|
|
(28,644
|
)
|
|
3,827
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(11,414
|
)
|
|
7,787
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(34,889
|
)
|
|
19,811
|
|
|||
Acquired assets pending final allocation
(1)
|
|
28,861
|
|
|
—
|
|
|
28,861
|
|
|||
|
|
$
|
848,417
|
|
|
$
|
(441,977
|
)
|
|
$
|
406,440
|
|
As of October 31, 2016:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
322,916
|
|
|
$
|
(79,484
|
)
|
|
$
|
243,432
|
|
Customer relationships
|
|
211,106
|
|
|
(117,539
|
)
|
|
93,567
|
|
|||
Internally-developed software
|
|
137,533
|
|
|
(104,022
|
)
|
|
33,511
|
|
|||
Noncompete agreements
|
|
31,625
|
|
|
(26,520
|
)
|
|
5,105
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(10,134
|
)
|
|
9,067
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(28,941
|
)
|
|
25,759
|
|
|||
Acquired assets pending final allocation
(1)
|
|
22,694
|
|
|
—
|
|
|
22,694
|
|
|||
|
|
$
|
799,775
|
|
|
$
|
(366,640
|
)
|
|
$
|
433,135
|
|
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
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
|
|
|
|
|
|
(in 000s)
|
|
|||||
As of
|
|
October 31, 2017
|
|
|
October 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
|
|
|||
Committed line of credit borrowings
|
|
—
|
|
|
475,000
|
|
|
—
|
|
|||
Capital lease obligation
|
|
6,125
|
|
|
7,024
|
|
|
6,610
|
|
|||
Debt issuance costs and discounts
|
|
(11,293
|
)
|
|
(13,915
|
)
|
|
(12,612
|
)
|
|||
|
|
1,494,832
|
|
|
1,968,109
|
|
|
1,493,998
|
|
|||
Less: Current portion
|
|
(1,004
|
)
|
|
(903
|
)
|
|
(981
|
)
|
|||
|
|
$
|
1,493,828
|
|
|
$
|
1,967,206
|
|
|
$
|
1,493,017
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
9
|
(in 000s)
|
|
|||||||||||||||||||||||
As of
|
|
October 31, 2017
|
|
October 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
|
|
$
|
180,997
|
|
|
$
|
180,997
|
|
|
$
|
232,510
|
|
|
$
|
232,510
|
|
|
$
|
1,011,331
|
|
|
$
|
1,011,331
|
|
Cash and cash equivalents - restricted
|
|
100,665
|
|
|
100,665
|
|
|
109,538
|
|
|
109,538
|
|
|
106,208
|
|
|
106,208
|
|
||||||
Receivables, net - short-term
|
|
77,750
|
|
|
77,750
|
|
|
104,764
|
|
|
104,764
|
|
|
162,775
|
|
|
162,775
|
|
||||||
Receivables, net - long-term
|
|
62,549
|
|
|
62,549
|
|
|
56,238
|
|
|
56,238
|
|
|
52,898
|
|
|
52,898
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt (excluding debt issuance costs)
|
|
1,502,654
|
|
|
1,606,583
|
|
|
1,968,109
|
|
|
2,067,234
|
|
|
1,502,735
|
|
|
1,569,033
|
|
||||||
Contingent consideration
|
|
10,145
|
|
|
10,145
|
|
|
7,817
|
|
|
7,817
|
|
|
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 financial institutions (Level 2).
|
▪
|
Contingent consideration - Fair value approximates the carrying amount (Level 3).
|
10
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
(in 000s)
|
|
|||||||||||||||
|
|
Three months ended October 31,
|
|
Six months ended October 31,
|
||||||||||||
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
||||
Mortgage loans and real estate owned, net
|
|
$
|
—
|
|
|
$
|
1,508
|
|
|
$
|
—
|
|
|
$
|
3,045
|
|
Interest income
|
|
1,311
|
|
|
693
|
|
|
2,755
|
|
|
1,790
|
|
||||
Foreign currency gains (losses), net
|
|
(117
|
)
|
|
(6
|
)
|
|
14
|
|
|
(27
|
)
|
||||
Other, net
|
|
(183
|
)
|
|
(22
|
)
|
|
(538
|
)
|
|
6
|
|
||||
|
|
$
|
1,011
|
|
|
$
|
2,173
|
|
|
$
|
2,231
|
|
|
$
|
4,814
|
|
|
|
|
|
|
|
|
|
|
(in 000s)
|
|
|||||||
Six months ended October 31,
|
|
2017
|
|
|
2016
|
|
||
Balance, beginning of the period
|
|
$
|
211,223
|
|
|
$
|
204,342
|
|
Amounts deferred for new extended service plans issued
|
|
2,913
|
|
|
2,561
|
|
||
Revenue recognized on previous deferrals
|
|
(63,332
|
)
|
|
(58,921
|
)
|
||
Balance, end of the period
|
|
$
|
150,804
|
|
|
$
|
147,982
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
11
|
12
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
13
|
14
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
15
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended October 31, 2017
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
11,705
|
|
|
$
|
132,060
|
|
|
$
|
(2,911
|
)
|
|
$
|
140,854
|
|
Cost of revenues
|
|
—
|
|
|
5,104
|
|
|
234,943
|
|
|
(28
|
)
|
|
240,019
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
3,585
|
|
|
116,144
|
|
|
(2,883
|
)
|
|
116,846
|
|
|||||
Total operating expenses
|
|
—
|
|
|
8,689
|
|
|
351,087
|
|
|
(2,911
|
)
|
|
356,865
|
|
|||||
Other income (expense), net
|
|
(155,999
|
)
|
|
6,992
|
|
|
(11,221
|
)
|
|
161,239
|
|
|
1,011
|
|
|||||
Interest expense on external borrowings
|
|
—
|
|
|
(21,178
|
)
|
|
(87
|
)
|
|
—
|
|
|
(21,265
|
)
|
|||||
Loss from continuing operations before tax ben
efit
|
|
(155,999
|
)
|
|
(11,170
|
)
|
|
(230,335
|
)
|
|
161,239
|
|
|
(236,265
|
)
|
|||||
Income tax b
enefit
|
|
(2,433
|
)
|
|
(990
|
)
|
|
(84,530
|
)
|
|
—
|
|
|
(87,953
|
)
|
|||||
Net loss from continuing operations
|
|
(153,566
|
)
|
|
(10,180
|
)
|
|
(145,805
|
)
|
|
161,239
|
|
|
(148,312
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(5,253
|
)
|
|
(1
|
)
|
|
—
|
|
|
(5,254
|
)
|
|||||
Net loss
|
|
(153,566
|
)
|
|
(15,433
|
)
|
|
(145,806
|
)
|
|
161,239
|
|
|
(153,566
|
)
|
|||||
Other comprehensive loss
|
|
(1,385
|
)
|
|
—
|
|
|
(1,385
|
)
|
|
1,385
|
|
|
(1,385
|
)
|
|||||
Comprehensive loss
|
|
$
|
(154,951
|
)
|
|
$
|
(15,433
|
)
|
|
$
|
(147,191
|
)
|
|
$
|
162,624
|
|
|
$
|
(154,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
16
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended October 31, 2016
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
10,934
|
|
|
$
|
120,423
|
|
|
$
|
(25
|
)
|
|
$
|
131,332
|
|
Cost of revenues
|
|
—
|
|
|
5,666
|
|
|
220,061
|
|
|
(25
|
)
|
|
225,702
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
1,732
|
|
|
111,920
|
|
|
—
|
|
|
113,652
|
|
|||||
Total operating expenses
|
|
—
|
|
|
7,398
|
|
|
331,981
|
|
|
(25
|
)
|
|
339,354
|
|
|||||
Other income (expense), net
|
|
(148,773
|
)
|
|
1,207
|
|
|
(13,194
|
)
|
|
162,933
|
|
|
2,173
|
|
|||||
Interest expense on external borrowings
|
|
—
|
|
|
(22,248
|
)
|
|
(372
|
)
|
|
—
|
|
|
(22,620
|
)
|
|||||
Loss from continuing operations before tax benefit
|
|
(148,773
|
)
|
|
(17,505
|
)
|
|
(225,124
|
)
|
|
162,933
|
|
|
(228,469
|
)
|
|||||
Income tax benefit
|
|
(2,553
|
)
|
|
(5,962
|
)
|
|
(76,539
|
)
|
|
—
|
|
|
(85,054
|
)
|
|||||
Net loss from continuing operations
|
|
(146,220
|
)
|
|
(11,543
|
)
|
|
(148,585
|
)
|
|
162,933
|
|
|
(143,415
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(2,805
|
)
|
|
—
|
|
|
—
|
|
|
(2,805
|
)
|
|||||
Net loss
|
|
(146,220
|
)
|
|
(14,348
|
)
|
|
(148,585
|
)
|
|
162,933
|
|
|
(146,220
|
)
|
|||||
Other comprehensive loss
|
|
(2,318
|
)
|
|
—
|
|
|
(2,318
|
)
|
|
2,318
|
|
|
(2,318
|
)
|
|||||
Comprehensive loss
|
|
$
|
(148,538
|
)
|
|
$
|
(14,348
|
)
|
|
$
|
(150,903
|
)
|
|
$
|
165,251
|
|
|
$
|
(148,538
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Six months ended October 31, 2017
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
29,261
|
|
|
$
|
255,154
|
|
|
$
|
(5,759
|
)
|
|
$
|
278,656
|
|
Cost of revenues
|
|
—
|
|
|
12,964
|
|
|
454,913
|
|
|
(143
|
)
|
|
467,734
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
6,791
|
|
|
210,920
|
|
|
(5,616
|
)
|
|
212,095
|
|
|||||
Total operating expenses
|
|
—
|
|
|
19,755
|
|
|
665,833
|
|
|
(5,759
|
)
|
|
679,829
|
|
|||||
Other income (expense), net
|
|
(288,263
|
)
|
|
13,065
|
|
|
(13,639
|
)
|
|
291,068
|
|
|
2,231
|
|
|||||
Interest expense on external borrowings
|
|
—
|
|
|
(42,382
|
)
|
|
(160
|
)
|
|
—
|
|
|
(42,542
|
)
|
|||||
Loss from continuing operations before tax ben
efit
|
|
(288,263
|
)
|
|
(19,811
|
)
|
|
(424,478
|
)
|
|
291,068
|
|
|
(441,484
|
)
|
|||||
Income tax b
enefit
|
|
(4,130
|
)
|
|
(5,613
|
)
|
|
(155,611
|
)
|
|
—
|
|
|
(165,354
|
)
|
|||||
Net loss from continuing operations
|
|
(284,133
|
)
|
|
(14,198
|
)
|
|
(268,867
|
)
|
|
291,068
|
|
|
(276,130
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(8,001
|
)
|
|
(2
|
)
|
|
—
|
|
|
(8,003
|
)
|
|||||
Net loss
|
|
(284,133
|
)
|
|
(22,199
|
)
|
|
(268,869
|
)
|
|
291,068
|
|
|
(284,133
|
)
|
|||||
Other comprehensive income
|
|
1,077
|
|
|
—
|
|
|
1,077
|
|
|
(1,077
|
)
|
|
1,077
|
|
|||||
Comprehensive loss
|
|
$
|
(283,056
|
)
|
|
$
|
(22,199
|
)
|
|
$
|
(267,792
|
)
|
|
$
|
289,991
|
|
|
$
|
(283,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
17
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Six months ended October 31, 2016
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
26,438
|
|
|
$
|
230,223
|
|
|
$
|
(144
|
)
|
|
$
|
256,517
|
|
Cost of revenues
|
|
—
|
|
|
14,272
|
|
|
422,660
|
|
|
(144
|
)
|
|
436,788
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
4,212
|
|
|
208,263
|
|
|
—
|
|
|
212,475
|
|
|||||
Total operating expenses
|
|
—
|
|
|
18,484
|
|
|
630,923
|
|
|
(144
|
)
|
|
649,263
|
|
|||||
Other income (expense), net
|
|
(273,435
|
)
|
|
2,033
|
|
|
(22,824
|
)
|
|
299,040
|
|
|
4,814
|
|
|||||
Interest expense on external borrowings
|
|
—
|
|
|
(43,562
|
)
|
|
(524
|
)
|
|
—
|
|
|
(44,086
|
)
|
|||||
Loss from continuing operations before tax benefit
|
|
(273,435
|
)
|
|
(33,575
|
)
|
|
(424,048
|
)
|
|
299,040
|
|
|
(432,018
|
)
|
|||||
Income tax benefit
|
|
(3,542
|
)
|
|
(11,756
|
)
|
|
(152,279
|
)
|
|
—
|
|
|
(167,577
|
)
|
|||||
Net loss from continuing operations
|
|
(269,893
|
)
|
|
(21,819
|
)
|
|
(271,769
|
)
|
|
299,040
|
|
|
(264,441
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(5,451
|
)
|
|
(1
|
)
|
|
—
|
|
|
(5,452
|
)
|
|||||
Net loss
|
|
(269,893
|
)
|
|
(27,270
|
)
|
|
(271,770
|
)
|
|
299,040
|
|
|
(269,893
|
)
|
|||||
Other comprehensive loss
|
|
(5,889
|
)
|
|
—
|
|
|
(5,889
|
)
|
|
5,889
|
|
|
(5,889
|
)
|
|||||
Comprehensive loss
|
|
$
|
(275,782
|
)
|
|
$
|
(27,270
|
)
|
|
$
|
(277,659
|
)
|
|
$
|
304,929
|
|
|
$
|
(275,782
|
)
|
|
|
|
|
|
|
|
|
|
|
|
18
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of October 31, 2017
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
4,321
|
|
|
$
|
176,676
|
|
|
$
|
—
|
|
|
$
|
180,997
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
8,083
|
|
|
92,582
|
|
|
—
|
|
|
100,665
|
|
|||||
Receivables, net
|
|
—
|
|
|
54,006
|
|
|
23,744
|
|
|
—
|
|
|
77,750
|
|
|||||
Prepaid expenses and other current assets
|
|
—
|
|
|
4,205
|
|
|
80,999
|
|
|
—
|
|
|
85,204
|
|
|||||
Total current assets
|
|
—
|
|
|
70,615
|
|
|
374,001
|
|
|
—
|
|
|
444,616
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
56
|
|
|
262,170
|
|
|
—
|
|
|
262,226
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
406,440
|
|
|
—
|
|
|
406,440
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
493,059
|
|
|
—
|
|
|
493,059
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
7,463
|
|
|
25,453
|
|
|
—
|
|
|
(23,711
|
)
|
|
9,205
|
|
|||||
Investments in subsidiaries
|
|
1,890,500
|
|
|
—
|
|
|
91,515
|
|
|
(1,982,015
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,467,742
|
|
|
2,290,036
|
|
|
(3,757,778
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
62,046
|
|
|
38,969
|
|
|
—
|
|
|
101,015
|
|
|||||
Total assets
|
|
$
|
1,897,963
|
|
|
$
|
1,625,912
|
|
|
$
|
3,956,190
|
|
|
$
|
(5,763,504
|
)
|
|
$
|
1,716,561
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
2,407
|
|
|
$
|
9,334
|
|
|
$
|
103,134
|
|
|
$
|
—
|
|
|
$
|
114,875
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
1,432
|
|
|
41,465
|
|
|
—
|
|
|
42,897
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
—
|
|
|
43,879
|
|
|
—
|
|
|
43,879
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
1,004
|
|
|
—
|
|
|
1,004
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
25,977
|
|
|
164,545
|
|
|
—
|
|
|
190,522
|
|
|||||
Total current liabilities
|
|
2,407
|
|
|
36,743
|
|
|
354,027
|
|
|
—
|
|
|
393,177
|
|
|||||
Long-term debt
|
|
—
|
|
|
1,488,707
|
|
|
5,121
|
|
|
—
|
|
|
1,493,828
|
|
|||||
Reserves for uncertain tax positions
|
|
18,293
|
|
|
8,037
|
|
|
135,405
|
|
|
(23,711
|
)
|
|
138,024
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
910
|
|
|
103,395
|
|
|
—
|
|
|
104,305
|
|
|||||
Amounts due to affiliates
|
|
2,290,036
|
|
|
—
|
|
|
1,467,742
|
|
|
(3,757,778
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,310,736
|
|
|
1,534,397
|
|
|
2,065,690
|
|
|
(3,781,489
|
)
|
|
2,129,334
|
|
|||||
Stockholders' equity (deficiency)
|
|
(412,773
|
)
|
|
91,515
|
|
|
1,890,500
|
|
|
(1,982,015
|
)
|
|
(412,773
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
1,897,963
|
|
|
$
|
1,625,912
|
|
|
$
|
3,956,190
|
|
|
$
|
(5,763,504
|
)
|
|
$
|
1,716,561
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
19
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of October 31, 2016
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
1,965
|
|
|
$
|
230,545
|
|
|
$
|
—
|
|
|
$
|
232,510
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
29,014
|
|
|
80,524
|
|
|
—
|
|
|
109,538
|
|
|||||
Receivables, net
|
|
—
|
|
|
73,675
|
|
|
31,089
|
|
|
—
|
|
|
104,764
|
|
|||||
Prepaid expenses and other current assets
|
|
—
|
|
|
8,237
|
|
|
65,318
|
|
|
—
|
|
|
73,555
|
|
|||||
Mortgage loans held for sale
|
|
—
|
|
|
183,107
|
|
|
—
|
|
|
—
|
|
|
183,107
|
|
|||||
Total current assets
|
|
—
|
|
|
295,998
|
|
|
407,476
|
|
|
—
|
|
|
703,474
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
92
|
|
|
292,968
|
|
|
—
|
|
|
293,060
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
433,135
|
|
|
—
|
|
|
433,135
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
477,360
|
|
|
—
|
|
|
477,360
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
1,947
|
|
|
62,722
|
|
|
17,086
|
|
|
—
|
|
|
81,755
|
|
|||||
Investments in subsidiaries
|
|
1,460,925
|
|
|
—
|
|
|
81,868
|
|
|
(1,542,793
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,696,151
|
|
|
2,005,485
|
|
|
(3,701,636
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
58,636
|
|
|
34,758
|
|
|
—
|
|
|
93,394
|
|
|||||
Total assets
|
|
$
|
1,462,872
|
|
|
$
|
2,113,599
|
|
|
$
|
3,750,136
|
|
|
$
|
(5,244,429
|
)
|
|
$
|
2,082,178
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
8,941
|
|
|
$
|
8,434
|
|
|
$
|
122,433
|
|
|
$
|
—
|
|
|
$
|
139,808
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
2,143
|
|
|
38,611
|
|
|
—
|
|
|
40,754
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
—
|
|
|
68,832
|
|
|
—
|
|
|
68,832
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
903
|
|
|
—
|
|
|
903
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
48,176
|
|
|
136,384
|
|
|
—
|
|
|
184,560
|
|
|||||
Total current liabilities
|
|
8,941
|
|
|
58,753
|
|
|
367,163
|
|
|
—
|
|
|
434,857
|
|
|||||
Long-term debt and line of credit borrowings
|
|
—
|
|
|
1,961,085
|
|
|
6,121
|
|
|
—
|
|
|
1,967,206
|
|
|||||
Reserves for uncertain tax positions
|
|
5,917
|
|
|
10,786
|
|
|
100,850
|
|
|
—
|
|
|
117,553
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
1,107
|
|
|
118,926
|
|
|
—
|
|
|
120,033
|
|
|||||
Amounts due to affiliates
|
|
2,005,485
|
|
|
—
|
|
|
1,696,151
|
|
|
(3,701,636
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,020,343
|
|
|
2,031,731
|
|
|
2,289,211
|
|
|
(3,701,636
|
)
|
|
2,639,649
|
|
|||||
Stockholders' equity (deficiency)
|
|
(557,471
|
)
|
|
81,868
|
|
|
1,460,925
|
|
|
(1,542,793
|
)
|
|
(557,471
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
1,462,872
|
|
|
$
|
2,113,599
|
|
|
$
|
3,750,136
|
|
|
$
|
(5,244,429
|
)
|
|
$
|
2,082,178
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
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
|
|
—
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
21
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|
(in 000s)
|
|
|||||||||||||||||
Six months ended October 31, 2017
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Net cash used in operating activities
|
|
$
|
—
|
|
|
$
|
(17,827
|
)
|
|
$
|
(630,630
|
)
|
|
$
|
—
|
|
|
$
|
(648,457
|
)
|
Cash flows from investing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
—
|
|
|
(10
|
)
|
|
(56,740
|
)
|
|
—
|
|
|
(56,750
|
)
|
|||||
Payments made for business acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(27,522
|
)
|
|
—
|
|
|
(27,522
|
)
|
|||||
Franchise loans funded
|
|
—
|
|
|
(10,885
|
)
|
|
(54
|
)
|
|
—
|
|
|
(10,939
|
)
|
|||||
Payments received on franchise loans
|
|
—
|
|
|
10,077
|
|
|
245
|
|
|
—
|
|
|
10,322
|
|
|||||
Intercompany borrowings (payments)
|
|
—
|
|
|
20,163
|
|
|
(80,141
|
)
|
|
59,978
|
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(998
|
)
|
|
6,472
|
|
|
—
|
|
|
5,474
|
|
|||||
Net cash provided by (used in) investing activities
|
|
—
|
|
|
18,347
|
|
|
(157,740
|
)
|
|
59,978
|
|
|
(79,415
|
)
|
|||||
Cash flows from financing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid
|
|
(100,082
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,082
|
)
|
|||||
Repurchase of common stock, including shares surrendered
|
|
(7,581
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,581
|
)
|
|||||
Proceeds from exercise of stock options
|
|
27,522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,522
|
|
|||||
Intercompany borrowings (payments)
|
|
80,141
|
|
|
—
|
|
|
(20,163
|
)
|
|
(59,978
|
)
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(662
|
)
|
|
(26,055
|
)
|
|
—
|
|
|
(26,717
|
)
|
|||||
Net cash used in financing activities
|
|
—
|
|
|
(662
|
)
|
|
(46,218
|
)
|
|
(59,978
|
)
|
|
(106,858
|
)
|
|||||
Effects of exchange rates on cash
|
|
—
|
|
|
—
|
|
|
(1,147
|
)
|
|
—
|
|
|
(1,147
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
|
—
|
|
|
(142
|
)
|
|
(835,735
|
)
|
|
—
|
|
|
(835,877
|
)
|
|||||
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
|
|
$
|
—
|
|
|
$
|
12,404
|
|
|
$
|
269,258
|
|
|
$
|
—
|
|
|
$
|
281,662
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|
(in 000s)
|
|
|||||||||||||||||
Six months ended October 31, 2016
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Net cash used in operating activities
|
|
$
|
—
|
|
|
$
|
(77,906
|
)
|
|
$
|
(642,470
|
)
|
|
$
|
—
|
|
|
$
|
(720,376
|
)
|
Cash flows from investing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Principal payments on mortgage loans and sale of real estate owned, net
|
|
—
|
|
|
19,009
|
|
|
—
|
|
|
—
|
|
|
19,009
|
|
|||||
Capital expenditures
|
|
—
|
|
|
(5
|
)
|
|
(44,913
|
)
|
|
—
|
|
|
(44,918
|
)
|
|||||
Payments made for business acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(36,151
|
)
|
|
—
|
|
|
(36,151
|
)
|
|||||
Franchise loans funded
|
|
—
|
|
|
(10,064
|
)
|
|
(107
|
)
|
|
—
|
|
|
(10,171
|
)
|
|||||
Payments received on franchise loans
|
|
—
|
|
|
14,052
|
|
|
211
|
|
|
—
|
|
|
14,263
|
|
|||||
Intercompany borrowings (payments)
|
|
—
|
|
|
(426,824
|
)
|
|
(309,852
|
)
|
|
736,676
|
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(312
|
)
|
|
2,489
|
|
|
—
|
|
|
2,177
|
|
|||||
Net cash used in investing activities
|
|
—
|
|
|
(404,144
|
)
|
|
(388,323
|
)
|
|
736,676
|
|
|
(55,791
|
)
|
|||||
Cash flows from financing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of line of credit borrowings
|
|
—
|
|
|
(50,000
|
)
|
|
—
|
|
|
—
|
|
|
(50,000
|
)
|
|||||
Proceeds from line of credit borrowings
|
|
—
|
|
|
525,000
|
|
|
—
|
|
|
—
|
|
|
525,000
|
|
|||||
Dividends paid
|
|
(95,971
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95,971
|
)
|
|||||
Repurchase of common stock, including shares surrendered
|
|
(215,511
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(215,511
|
)
|
|||||
Proceeds from exercise of stock options
|
|
1,630
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,630
|
|
|||||
Intercompany borrowings (payments)
|
|
309,852
|
|
|
—
|
|
|
426,824
|
|
|
(736,676
|
)
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
—
|
|
|
(43,734
|
)
|
|
—
|
|
|
(43,734
|
)
|
|||||
Net cash provided by financing activi
ties
|
|
—
|
|
|
475,000
|
|
|
383,090
|
|
|
(736,676
|
)
|
|
121,414
|
|
|||||
Effects of exchange rates on cash
|
|
—
|
|
|
—
|
|
|
(4,110
|
)
|
|
—
|
|
|
(4,110
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
|
—
|
|
|
(7,050
|
)
|
|
(651,813
|
)
|
|
—
|
|
|
(658,863
|
)
|
|||||
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
|
|
$
|
—
|
|
|
$
|
30,979
|
|
|
$
|
311,069
|
|
|
$
|
—
|
|
|
$
|
342,048
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
23
|
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 October 31,
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
U.S. assisted tax preparation fees
|
|
$
|
36,665
|
|
|
$
|
35,339
|
|
|
$
|
1,326
|
|
|
3.8
|
%
|
U.S. royalties
|
|
7,008
|
|
|
6,828
|
|
|
180
|
|
|
2.6
|
%
|
|||
U.S. DIY tax preparation fees
|
|
4,263
|
|
|
3,089
|
|
|
1,174
|
|
|
38.0
|
%
|
|||
International revenues
|
|
47,934
|
|
|
43,539
|
|
|
4,395
|
|
|
10.1
|
%
|
|||
Revenues from Refund Transfers
|
|
1,135
|
|
|
757
|
|
|
378
|
|
|
49.9
|
%
|
|||
Revenues from Emerald Card®
|
|
9,180
|
|
|
8,644
|
|
|
536
|
|
|
6.2
|
%
|
|||
Revenues from Peace of Mind® Extended Service Plan
|
|
24,585
|
|
|
22,689
|
|
|
1,896
|
|
|
8.4
|
%
|
|||
Interest and fee income on Emerald Advance
|
|
594
|
|
|
655
|
|
|
(61
|
)
|
|
(9.3
|
)%
|
|||
Other
|
|
9,490
|
|
|
9,792
|
|
|
(302
|
)
|
|
(3.1
|
)%
|
|||
Total revenues
|
|
140,854
|
|
|
131,332
|
|
|
9,522
|
|
|
7.3
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits:
|
|
|
|
|
|
|
|
|
|||||||
Field wages
|
|
57,716
|
|
|
50,096
|
|
|
7,620
|
|
|
15.2
|
%
|
|||
Other wages
|
|
46,723
|
|
|
42,207
|
|
|
4,516
|
|
|
10.7
|
%
|
|||
Benefits and other compensation
|
|
23,583
|
|
|
23,718
|
|
|
(135
|
)
|
|
(0.6
|
)%
|
|||
|
|
128,022
|
|
|
116,021
|
|
|
12,001
|
|
|
10.3
|
%
|
|||
Occupancy and equipment
|
|
105,405
|
|
|
99,037
|
|
|
6,368
|
|
|
6.4
|
%
|
|||
Marketing and advertising
|
|
11,562
|
|
|
12,001
|
|
|
(439
|
)
|
|
(3.7
|
)%
|
|||
Depreciation and amortization
|
|
44,792
|
|
|
45,750
|
|
|
(958
|
)
|
|
(2.1
|
)%
|
|||
Provision for bad debt
|
|
1,779
|
|
|
(131
|
)
|
|
1,910
|
|
|
**
|
|
|||
Supplies
|
|
4,368
|
|
|
4,937
|
|
|
(569
|
)
|
|
(11.5
|
)%
|
|||
Other
|
|
60,937
|
|
|
61,739
|
|
|
(802
|
)
|
|
(1.3
|
)%
|
|||
Total operating expenses
|
|
356,865
|
|
|
339,354
|
|
|
17,511
|
|
|
5.2
|
%
|
|||
Other income (expense), net
|
|
1,011
|
|
|
2,173
|
|
|
(1,162
|
)
|
|
(53.5
|
)%
|
|||
Interest expense on borrowings
|
|
(21,265
|
)
|
|
(22,620
|
)
|
|
1,355
|
|
|
6.0
|
%
|
|||
Pretax loss
|
|
(236,265
|
)
|
|
(228,469
|
)
|
|
(7,796
|
)
|
|
(3.4
|
)%
|
|||
Income tax benefit
|
|
(87,953
|
)
|
|
(85,054
|
)
|
|
2,899
|
|
|
3.4
|
%
|
|||
Net loss from continuing operations
|
|
(148,312
|
)
|
|
(143,415
|
)
|
|
(4,897
|
)
|
|
(3.4
|
)%
|
|||
Net loss from discontinued operations
|
|
(5,254
|
)
|
|
(2,805
|
)
|
|
(2,449
|
)
|
|
(87.3
|
)%
|
|||
Net loss
|
|
$
|
(153,566
|
)
|
|
$
|
(146,220
|
)
|
|
$
|
(7,346
|
)
|
|
(5.0
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
|
$
|
(0.71
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
(0.04
|
)
|
|
(6.0
|
)%
|
Discontinued operations
|
|
(0.03
|
)
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(200.0
|
)%
|
|||
Consolidated
|
|
$
|
(0.74
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(0.06
|
)
|
|
(8.8
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA from continuing operations
(1)
|
|
$
|
(170,208
|
)
|
|
$
|
(160,099
|
)
|
|
$
|
(10,109
|
)
|
|
(6.3
|
)%
|
|
|
|
|
|
|
|
|
|
(1)
|
See "Non-GAAP Financial Information" at the end of this item for a reconciliation of non-GAAP measures.
|
24
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
Three months ended October 31,
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Consulting and outsourced services
|
|
$
|
19,587
|
|
|
$
|
20,775
|
|
|
$
|
(1,188
|
)
|
|
(5.7
|
)%
|
Bank partner fees
|
|
1,363
|
|
|
1,373
|
|
|
(10
|
)
|
|
(0.7
|
)%
|
|||
Client claims and refunds
|
|
11,200
|
|
|
12,692
|
|
|
(1,492
|
)
|
|
(11.8
|
)%
|
|||
Employee travel and related expenses
|
|
10,358
|
|
|
14,209
|
|
|
(3,851
|
)
|
|
(27.1
|
)%
|
|||
Credit card/bank charges
|
|
2,640
|
|
|
2,547
|
|
|
93
|
|
|
3.7
|
%
|
|||
Insurance
|
|
3,824
|
|
|
3,250
|
|
|
574
|
|
|
17.7
|
%
|
|||
Legal fees and settlements
|
|
5,750
|
|
|
2,025
|
|
|
3,725
|
|
|
184.0
|
%
|
|||
Other
|
|
6,215
|
|
|
4,868
|
|
|
1,347
|
|
|
27.7
|
%
|
|||
|
|
$
|
60,937
|
|
|
$
|
61,739
|
|
|
$
|
(802
|
)
|
|
(1.3
|
)%
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
25
|
Consolidated – Financial Results
|
|
|
|
(in 000s, except per share amounts)
|
|
||||||||||
Six months ended October 31,
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
U.S. assisted tax preparation fees
|
|
$
|
66,628
|
|
|
$
|
60,768
|
|
|
$
|
5,860
|
|
|
9.6
|
%
|
U.S. royalties
|
|
13,975
|
|
|
13,353
|
|
|
622
|
|
|
4.7
|
%
|
|||
U.S. DIY tax preparation fees
|
|
7,489
|
|
|
6,003
|
|
|
1,486
|
|
|
24.8
|
%
|
|||
International revenues
|
|
88,351
|
|
|
82,414
|
|
|
5,937
|
|
|
7.2
|
%
|
|||
Revenues from Refund Transfers
|
|
3,951
|
|
|
3,991
|
|
|
(40
|
)
|
|
(1.0
|
)%
|
|||
Revenues from Emerald Card®
|
|
24,167
|
|
|
21,709
|
|
|
2,458
|
|
|
11.3
|
%
|
|||
Revenues from Peace of Mind® Extended Service Plan
|
|
56,528
|
|
|
49,720
|
|
|
6,808
|
|
|
13.7
|
%
|
|||
Interest and fee income on Emerald Advance
|
|
1,258
|
|
|
1,459
|
|
|
(201
|
)
|
|
(13.8
|
)%
|
|||
Other
|
|
16,309
|
|
|
17,100
|
|
|
(791
|
)
|
|
(4.6
|
)%
|
|||
Total revenues
|
|
278,656
|
|
|
256,517
|
|
|
22,139
|
|
|
8.6
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits:
|
|
|
|
|
|
|
|
|
|||||||
Field wages
|
|
105,839
|
|
|
95,139
|
|
|
10,700
|
|
|
11.2
|
%
|
|||
Other wages
|
|
89,920
|
|
|
84,307
|
|
|
5,613
|
|
|
6.7
|
%
|
|||
Benefits and other compensation
|
|
44,228
|
|
|
46,452
|
|
|
(2,224
|
)
|
|
(4.8
|
)%
|
|||
|
|
239,987
|
|
|
225,898
|
|
|
14,089
|
|
|
6.2
|
%
|
|||
Occupancy and equipment
|
|
203,604
|
|
|
193,408
|
|
|
10,196
|
|
|
5.3
|
%
|
|||
Marketing and advertising
|
|
18,666
|
|
|
19,562
|
|
|
(896
|
)
|
|
(4.6
|
)%
|
|||
Depreciation and amortization
|
|
88,390
|
|
|
87,032
|
|
|
1,358
|
|
|
1.6
|
%
|
|||
Provision for bad debt
|
|
4,238
|
|
|
1,286
|
|
|
2,952
|
|
|
229.5
|
%
|
|||
Supplies
|
|
7,102
|
|
|
7,014
|
|
|
88
|
|
|
1.3
|
%
|
|||
Other
|
|
117,842
|
|
|
115,063
|
|
|
2,779
|
|
|
2.4
|
%
|
|||
Total operating expenses
|
|
679,829
|
|
|
649,263
|
|
|
30,566
|
|
|
4.7
|
%
|
|||
Other income (expense), net
|
|
2,231
|
|
|
4,814
|
|
|
(2,583
|
)
|
|
(53.7
|
)%
|
|||
Interest expense on borrowings
|
|
(42,542
|
)
|
|
(44,086
|
)
|
|
1,544
|
|
|
3.5
|
%
|
|||
Pretax loss
|
|
(441,484
|
)
|
|
(432,018
|
)
|
|
(9,466
|
)
|
|
(2.2
|
)%
|
|||
Income tax benefit
|
|
(165,354
|
)
|
|
(167,577
|
)
|
|
(2,223
|
)
|
|
(1.3
|
)%
|
|||
Net loss from continuing operations
|
|
(276,130
|
)
|
|
(264,441
|
)
|
|
(11,689
|
)
|
|
(4.4
|
)%
|
|||
Net loss from discontinued operations
|
|
(8,003
|
)
|
|
(5,452
|
)
|
|
(2,551
|
)
|
|
(46.8
|
)%
|
|||
Net loss
|
|
$
|
(284,133
|
)
|
|
$
|
(269,893
|
)
|
|
$
|
(14,240
|
)
|
|
(5.3
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
|
$
|
(1.33
|
)
|
|
$
|
(1.21
|
)
|
|
$
|
(0.12
|
)
|
|
(9.9
|
)%
|
Discontinued operations
|
|
(0.03
|
)
|
|
(0.03
|
)
|
|
—
|
|
|
—
|
%
|
|||
Consolidated
|
|
$
|
(1.36
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(0.12
|
)
|
|
(9.7
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA from continuing operations
(1)
|
|
$
|
(310,552
|
)
|
|
$
|
(300,900
|
)
|
|
$
|
(9,652
|
)
|
|
(3.2
|
)%
|
|
|
|
|
|
|
|
|
|
(1)
|
See "Non-GAAP Financial Information" at the end of this item for a reconciliation of non-GAAP measures.
|
26
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
Six months ended October 31,
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Consulting and outsourced services
|
|
$
|
38,092
|
|
|
$
|
39,289
|
|
|
$
|
(1,197
|
)
|
|
(3.0
|
)%
|
Bank partner fees
|
|
2,996
|
|
|
3,143
|
|
|
(147
|
)
|
|
(4.7
|
)%
|
|||
Client claims and refunds
|
|
26,365
|
|
|
26,378
|
|
|
(13
|
)
|
|
—
|
%
|
|||
Employee travel and related expenses
|
|
16,435
|
|
|
18,006
|
|
|
(1,571
|
)
|
|
(8.7
|
)%
|
|||
Credit card/bank charges
|
|
7,222
|
|
|
4,925
|
|
|
2,297
|
|
|
46.6
|
%
|
|||
Insurance
|
|
7,113
|
|
|
7,689
|
|
|
(576
|
)
|
|
(7.5
|
)%
|
|||
Legal fees and settlements
|
|
7,897
|
|
|
4,727
|
|
|
3,170
|
|
|
67.1
|
%
|
|||
Other
|
|
11,722
|
|
|
10,906
|
|
|
816
|
|
|
7.5
|
%
|
|||
|
|
$
|
117,842
|
|
|
$
|
115,063
|
|
|
$
|
2,779
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
27
|
|
|
(in 000s)
|
|
|||||
Six months ended October 31,
|
|
2017
|
|
|
2016
|
|
||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(648,457
|
)
|
|
$
|
(720,376
|
)
|
Investing activities
|
|
(79,415
|
)
|
|
(55,791
|
)
|
||
Financing activities
|
|
(106,858
|
)
|
|
121,414
|
|
||
Effects of exchange rates on cash
|
|
(1,147
|
)
|
|
(4,110
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
|
$
|
(835,877
|
)
|
|
$
|
(658,863
|
)
|
|
|
|
|
|
As of
|
|
October 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
|
28
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
29
|
|
|
|
|
|
|
|
|
(in 000s)
|
|
|||||||
|
|
Three months ended October 31,
|
|
Six months ended October 31,
|
||||||||||||
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
||||
Net loss - as reported
|
|
$
|
(153,566
|
)
|
|
$
|
(146,220
|
)
|
|
$
|
(284,133
|
)
|
|
$
|
(269,893
|
)
|
Discontinued operations, net
|
|
5,254
|
|
|
2,805
|
|
|
8,003
|
|
|
5,452
|
|
||||
Net loss from continuing operations - as reported
|
|
(148,312
|
)
|
|
(143,415
|
)
|
|
(276,130
|
)
|
|
(264,441
|
)
|
||||
Add back:
|
|
|
|
|
|
|
|
|
||||||||
Income taxes of continuing operations
|
|
(87,953
|
)
|
|
(85,054
|
)
|
|
(165,354
|
)
|
|
(167,577
|
)
|
||||
Interest expense of continuing operations
|
|
21,265
|
|
|
22,620
|
|
|
42,542
|
|
|
44,086
|
|
||||
Depreciation and amortization of continuing operations
|
|
44,792
|
|
|
45,750
|
|
|
88,390
|
|
|
87,032
|
|
||||
|
|
(21,896
|
)
|
|
(16,684
|
)
|
|
(34,422
|
)
|
|
(36,459
|
)
|
||||
EBITDA from continuing operations
|
|
$
|
(170,208
|
)
|
|
$
|
(160,099
|
)
|
|
$
|
(310,552
|
)
|
|
$
|
(300,900
|
)
|
|
|
|
|
|
|
|
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
30
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
(1)
|
We purchased approximately
2 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.
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
31
|
10.1
|
10.2
|
10.3
|
10.4
|
10.5
|
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
|
32
|
Q2 FY2018 Form 10-Q |
H&R Block, Inc.
|
H&R BLOCK, INC.
|
|
/s/ Jeffrey J. Jones II
|
Jeffrey J. Jones II
|
President and Chief Executive Officer
|
December 7, 2017
|
|
/s/ Tony G. Bowen
|
Tony G. Bowen
|
Chief Financial Officer
|
December 7, 2017
|
|
/s/ Kellie J. Logerwell
|
Kellie J. Logerwell
|
Chief Accounting Officer
|
December 7, 2017
|
H&R Block, Inc.
| Q2 FY2018 Form 10-Q
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 12.1
|
|
|||||||||||||||
H&R BLOCK, INC.
|
||||||||||||||||||||||||||||
Computation of Ratio of Earnings to Fixed Charges
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Six months ended October 31,
|
|
Twelve months ended April 30,
|
||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pretax earnings (loss) from continuing operations
|
|
$
|
(441,484
|
)
|
|
$
|
(432,018
|
)
|
|
$
|
629,287
|
|
|
$
|
569,479
|
|
|
$
|
742,805
|
|
|
$
|
767,116
|
|
|
$
|
702,011
|
|
Add: Fixed charges
|
|
82,728
|
|
|
82,265
|
|
|
171,698
|
|
|
145,311
|
|
|
116,977
|
|
|
125,162
|
|
|
146,954
|
|
|||||||
Total earnings (loss) before income taxes and fixed charges
|
|
$
|
(358,756
|
)
|
|
$
|
(349,753
|
)
|
|
$
|
800,985
|
|
|
$
|
714,790
|
|
|
$
|
859,782
|
|
|
$
|
892,278
|
|
|
$
|
848,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
|
$
|
42,542
|
|
|
$
|
44,086
|
|
|
$
|
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)
|
|
40,186
|
|
|
38,179
|
|
|
78,747
|
|
|
76,170
|
|
|
71,049
|
|
|
67,774
|
|
|
66,997
|
|
|||||||
Total fixed charges
|
|
$
|
82,728
|
|
|
$
|
82,265
|
|
|
$
|
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
|
|
$
|
(441,484
|
)
|
|
$
|
(432,018
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 12.2
|
|
|||||||||||||||
BLOCK FINANCIAL LLC
|
||||||||||||||||||||||||||||
Computation of Ratio of Earnings to Fixed Charges
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Six months ended October 31,
|
|
Twelve months ended April 30,
|
||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pretax earnings (loss) from continuing operations
|
|
$
|
(19,811
|
)
|
|
$
|
(33,575
|
)
|
|
$
|
23,895
|
|
|
$
|
12,153
|
|
|
$
|
67,628
|
|
|
$
|
40,828
|
|
|
$
|
(6,112
|
)
|
Add: Fixed charges
|
|
42,382
|
|
|
43,562
|
|
|
92,263
|
|
|
68,713
|
|
|
45,575
|
|
|
57,010
|
|
|
79,500
|
|
|||||||
Total earnings before income taxes and fixed charges
|
|
$
|
22,571
|
|
|
$
|
9,987
|
|
|
$
|
116,158
|
|
|
$
|
80,866
|
|
|
$
|
113,203
|
|
|
$
|
97,838
|
|
|
$
|
73,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
|
$
|
42,382
|
|
|
$
|
43,562
|
|
|
$
|
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
|
|
$
|
42,382
|
|
|
$
|
43,562
|
|
|
$
|
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
|
|
$
|
(19,811
|
)
|
|
$
|
(33,575
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
December 7, 2017
|
|
/s/ Jeffrey J. Jones II
|
|
|
|
Jeffrey J. Jones II
|
|
|
|
Chief Executive Officer
H&R Block, Inc.
|
Date:
|
December 7, 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/ Jeffrey J. Jones II
|
Jeffrey J. Jones II
Chief Executive Officer
H&R Block, Inc.
|
December 7, 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.
|
December 7, 2017
|