|
(Mark One)
|
|
|
☑
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended January 31, 2020
|
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.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, without par value
|
HRB
|
New York Stock Exchange
|
|
|
|
|
|
|
|
Consolidated Statements of Operations and Comprehensive Loss
|
|
|
|
Three and nine months ended January 31, 2020 and 2019
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
As of January 31, 2020, January 31, 2019 and April 30, 2019
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Nine months ended January 31, 2020 and 2019
|
|
|
|
|
|
Consolidated Statements of Stockholders' Equity
|
|
|
Three and nine months ended January 31, 2020 and the fiscal year ended April 30, 2019
|
|
|
|
|
|
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
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
1
|
2
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(unaudited, in 000s)
|
|
|||||
Nine months ended January 31,
|
|
2020
|
|
|
2019
|
|
||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(467,929
|
)
|
|
$
|
(455,400
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
125,409
|
|
|
126,013
|
|
||
Provision for bad debt
|
|
37,517
|
|
|
35,009
|
|
||
Deferred taxes
|
|
10,795
|
|
|
20,557
|
|
||
Stock-based compensation
|
|
22,699
|
|
|
18,009
|
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
||||
Receivables
|
|
(684,323
|
)
|
|
(641,157
|
)
|
||
Prepaid expenses, other current and noncurrent assets
|
|
(1,990
|
)
|
|
(56,160
|
)
|
||
Accounts payable, accrued expenses, salaries, wages and payroll taxes
|
|
(166,204
|
)
|
|
(47,975
|
)
|
||
Deferred revenue, other current and noncurrent liabilities
|
|
(55,064
|
)
|
|
(66,804
|
)
|
||
Income tax receivables, accrued income taxes and income tax reserves
|
|
(282,488
|
)
|
|
(277,240
|
)
|
||
Other, net
|
|
(6,213
|
)
|
|
(2,308
|
)
|
||
Net cash used in operating activities
|
|
(1,467,791
|
)
|
|
(1,347,456
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Capital expenditures
|
|
(66,510
|
)
|
|
(79,982
|
)
|
||
Payments made for business acquisitions, net of cash acquired
|
|
(450,282
|
)
|
|
(42,428
|
)
|
||
Franchise loans funded
|
|
(32,890
|
)
|
|
(16,875
|
)
|
||
Payments from franchisees
|
|
14,604
|
|
|
15,149
|
|
||
Other, net
|
|
45,376
|
|
|
4,877
|
|
||
Net cash used in investing activities
|
|
(489,702
|
)
|
|
(119,259
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Repayments of line of credit borrowings
|
|
(285,000
|
)
|
|
(230,000
|
)
|
||
Proceeds from line of credit borrowings
|
|
1,320,000
|
|
|
615,000
|
|
||
Dividends paid
|
|
(154,827
|
)
|
|
(154,866
|
)
|
||
Repurchase of common stock, including shares surrendered
|
|
(256,199
|
)
|
|
(102,152
|
)
|
||
Proceeds from exercise of stock options
|
|
2,074
|
|
|
2,527
|
|
||
Other, net
|
|
(14,136
|
)
|
|
(20,126
|
)
|
||
Net cash provided by financing activities
|
|
611,912
|
|
|
110,383
|
|
||
|
|
|
|
|
||||
Effects of exchange rate changes on cash
|
|
(359
|
)
|
|
(2,217
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents, including restricted balances
|
|
(1,345,940
|
)
|
|
(1,358,549
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
1,707,727
|
|
|
1,663,678
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
361,787
|
|
|
$
|
305,129
|
|
|
|
|
|
|
||||
SUPPLEMENTARY CASH FLOW DATA:
|
|
|
|
|
||||
Income taxes paid, net of refunds received
|
|
$
|
84,872
|
|
|
$
|
103,789
|
|
Interest paid on borrowings
|
|
65,972
|
|
|
55,581
|
|
||
Accrued additions to property and equipment
|
|
1,662
|
|
|
2,241
|
|
||
Accrued purchase of common stock
|
|
—
|
|
|
12,301
|
|
||
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
3
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
(amounts in 000s, except per share amounts)
|
|
|||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
|
Accumulated Other
Comprehensive Income (Loss) |
|
|
Retained
Earnings (Deficit) |
|
|
Treasury Stock
|
|
Total
Stockholders’ Equity (Deficiency) |
|
||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
||||||||||||||
Balances as of May 1, 2019
|
|
238,337
|
|
|
$
|
2,383
|
|
|
$
|
767,636
|
|
|
$
|
(20,416
|
)
|
|
$
|
499,386
|
|
|
(36,377
|
)
|
|
$
|
(707,462
|
)
|
|
$
|
541,527
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(150,247
|
)
|
|
—
|
|
|
—
|
|
|
(150,247
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,320
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,320
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
6,557
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,557
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(13,789
|
)
|
|
—
|
|
|
(2,786
|
)
|
|
906
|
|
|
17,631
|
|
|
1,056
|
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(314
|
)
|
|
(9,185
|
)
|
|
(9,185
|
)
|
||||||
Repurchase and retirement of common shares
|
|
(1,593
|
)
|
|
(16
|
)
|
|
(955
|
)
|
|
—
|
|
|
(43,101
|
)
|
|
—
|
|
|
—
|
|
|
(44,072
|
)
|
||||||
Cash dividends declared - $0.26 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,512
|
)
|
|
—
|
|
|
—
|
|
|
(52,512
|
)
|
||||||
Balances as of July 31, 2019
|
|
236,744
|
|
|
$
|
2,367
|
|
|
$
|
759,449
|
|
|
$
|
(22,736
|
)
|
|
$
|
250,740
|
|
|
(35,785
|
)
|
|
$
|
(699,016
|
)
|
|
$
|
290,804
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(187,999
|
)
|
|
—
|
|
|
—
|
|
|
(187,999
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
919
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
919
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
9,331
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,331
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(127
|
)
|
|
—
|
|
|
(276
|
)
|
|
13
|
|
|
264
|
|
|
(139
|
)
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(173
|
)
|
|
(173
|
)
|
||||||
Repurchase and retirement of common shares
|
|
(5,720
|
)
|
|
(57
|
)
|
|
(3,433
|
)
|
|
—
|
|
|
(133,449
|
)
|
|
—
|
|
|
—
|
|
|
(136,939
|
)
|
||||||
Cash dividends declared - $0.26 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,551
|
)
|
|
—
|
|
|
—
|
|
|
(51,551
|
)
|
||||||
Balances as of October 31, 2019
|
|
231,024
|
|
|
$
|
2,310
|
|
|
$
|
765,220
|
|
|
$
|
(21,817
|
)
|
|
$
|
(122,535
|
)
|
|
(35,778
|
)
|
|
$
|
(698,925
|
)
|
|
$
|
(75,747
|
)
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(129,683
|
)
|
|
—
|
|
|
—
|
|
|
(129,683
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,574
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,574
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
6,529
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,529
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
(180
|
)
|
|
47
|
|
|
939
|
|
|
690
|
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(56
|
)
|
|
(56
|
)
|
||||||
Repurchase and retirement of common shares
|
|
(2,817
|
)
|
|
(28
|
)
|
|
(1,690
|
)
|
|
—
|
|
|
(64,056
|
)
|
|
—
|
|
|
—
|
|
|
(65,774
|
)
|
||||||
Cash dividends declared - $0.26 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,764
|
)
|
|
—
|
|
|
—
|
|
|
(50,764
|
)
|
||||||
Balances as of January 31, 2020
|
|
228,207
|
|
|
$
|
2,282
|
|
|
$
|
769,990
|
|
|
$
|
(25,391
|
)
|
|
$
|
(367,218
|
)
|
|
(35,733
|
)
|
|
$
|
(698,042
|
)
|
|
$
|
(318,379
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
(amounts in 000s, except per share amounts)
|
|
|||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
|
Retained
Earnings (Deficit) |
|
|
Treasury Stock
|
|
Total
Stockholders’ Equity (Deficiency) |
|
||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
||||||||||||||
Balances as of May 1, 2018
|
|
246,199
|
|
|
$
|
2,462
|
|
|
$
|
760,250
|
|
|
$
|
(14,303
|
)
|
|
$
|
362,980
|
|
|
(36,945
|
)
|
|
$
|
(717,678
|
)
|
|
$
|
393,711
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(152,670
|
)
|
|
—
|
|
|
—
|
|
|
(152,670
|
)
|
||||||
Cumulative effect of ASU 2016-16 (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,950
|
|
|
—
|
|
|
—
|
|
|
100,950
|
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,731
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,731
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
4,307
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,307
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(9,945
|
)
|
|
—
|
|
|
(1,029
|
)
|
|
627
|
|
|
12,185
|
|
|
1,211
|
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(200
|
)
|
|
(4,560
|
)
|
|
(4,560
|
)
|
||||||
Repurchase and retirement of common shares
|
|
(4,173
|
)
|
|
(42
|
)
|
|
(2,503
|
)
|
|
—
|
|
|
(94,560
|
)
|
|
—
|
|
|
—
|
|
|
(97,105
|
)
|
||||||
Cash dividends declared - $0.25 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,104
|
)
|
|
—
|
|
|
—
|
|
|
(52,104
|
)
|
||||||
Balances as of July 31, 2018
|
|
242,026
|
|
|
$
|
2,420
|
|
|
$
|
752,109
|
|
|
$
|
(16,034
|
)
|
|
$
|
163,567
|
|
|
(36,518
|
)
|
|
$
|
(710,053
|
)
|
|
$
|
192,009
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(176,276
|
)
|
|
—
|
|
|
—
|
|
|
(176,276
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,846
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,846
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
7,352
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,352
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(226
|
)
|
|
—
|
|
|
(202
|
)
|
|
35
|
|
|
675
|
|
|
247
|
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(431
|
)
|
|
(431
|
)
|
||||||
Cash dividends declared - $0.25 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,380
|
)
|
|
—
|
|
|
—
|
|
|
(51,380
|
)
|
||||||
Balances as of October 31, 2018
|
|
242,026
|
|
|
$
|
2,420
|
|
|
$
|
759,235
|
|
|
$
|
(18,880
|
)
|
|
$
|
(64,291
|
)
|
|
(36,499
|
)
|
|
$
|
(709,809
|
)
|
|
$
|
(31,325
|
)
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(126,454
|
)
|
|
—
|
|
|
—
|
|
|
(126,454
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,238
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,238
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
6,067
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,067
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(169
|
)
|
|
41
|
|
|
796
|
|
|
622
|
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(56
|
)
|
|
(56
|
)
|
||||||
Repurchase and retirement of common shares
|
|
(525
|
)
|
|
(5
|
)
|
|
(315
|
)
|
|
—
|
|
|
(11,981
|
)
|
|
—
|
|
|
—
|
|
|
(12,301
|
)
|
||||||
Cash dividends declared - $0.25 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,382
|
)
|
|
—
|
|
|
—
|
|
|
(51,382
|
)
|
||||||
Balances as of January 31, 2019
|
|
241,501
|
|
|
$
|
2,415
|
|
|
$
|
764,982
|
|
|
$
|
(17,642
|
)
|
|
$
|
(254,277
|
)
|
|
(36,460
|
)
|
|
$
|
(709,069
|
)
|
|
$
|
(213,591
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
877,909
|
|
|
—
|
|
|
—
|
|
|
877,909
|
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,774
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,774
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
5,784
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,784
|
|
||||||
Stock-based awards exercised or vested
|
|
—
|
|
|
—
|
|
|
(1,231
|
)
|
|
—
|
|
|
(150
|
)
|
|
84
|
|
|
1,634
|
|
|
253
|
|
||||||
Acquisition of treasury shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(27
|
)
|
|
(27
|
)
|
||||||
Repurchase and retirement of common shares
|
|
(3,164
|
)
|
|
(32
|
)
|
|
(1,899
|
)
|
|
—
|
|
|
(73,501
|
)
|
|
—
|
|
|
—
|
|
|
(75,432
|
)
|
||||||
Cash dividends declared - $0.25 per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,595
|
)
|
|
—
|
|
|
—
|
|
|
(50,595
|
)
|
||||||
Balances as of April 30, 2019
|
|
238,337
|
|
|
$
|
2,383
|
|
|
$
|
767,636
|
|
|
$
|
(20,416
|
)
|
|
$
|
499,386
|
|
|
(36,377
|
)
|
|
$
|
(707,462
|
)
|
|
$
|
541,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
ASU 2016-16 was effective on May 1, 2018 and we adopted using the modified retrospective transition method. We recognized a $101.0 million cumulative effect adjustment to increase the opening balance of retained earnings and increase deferred tax assets resulting from intra-entity transfers of intellectual property in fiscal year 2018.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
5
|
6
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
($ in 000s)
|
||||||
|
|
Amount Acquired
|
|
|
Weighted-Average Life (in years)
|
|
Assets acquired and liabilities assumed, net
|
|
$
|
3,928
|
|
|
|
Deferred tax liability
|
|
(8,126
|
)
|
|
|
|
Purchased technology
|
|
68,000
|
|
|
10
|
|
Customer relationships
|
|
23,000
|
|
|
5
|
|
Noncompete agreements
|
|
7,070
|
|
|
5
|
|
Trade name
|
|
5,800
|
|
|
10
|
|
Total identifiable net assets
|
|
99,672
|
|
|
|
|
Goodwill
|
|
300,560
|
|
|
|
|
Total identifiable assets and goodwill
|
|
$
|
400,232
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
7
|
|
|
|
|
|
|
|
|
(in 000s)
|
|
|||||||
|
|
Three months ended January 31,
|
|
Nine months ended January 31,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
U.S. assisted tax preparation
|
|
$
|
283,956
|
|
|
$
|
256,813
|
|
|
$
|
358,174
|
|
|
$
|
329,569
|
|
U.S. royalties
|
|
44,965
|
|
|
42,265
|
|
|
59,644
|
|
|
57,898
|
|
||||
U.S. DIY tax preparation
|
|
34,089
|
|
|
31,996
|
|
|
42,040
|
|
|
37,771
|
|
||||
International
|
|
11,804
|
|
|
12,304
|
|
|
97,311
|
|
|
96,980
|
|
||||
Refund Transfers
|
|
50,494
|
|
|
47,482
|
|
|
52,794
|
|
|
49,466
|
|
||||
Emerald Card®
|
|
16,657
|
|
|
14,980
|
|
|
39,128
|
|
|
38,704
|
|
||||
Peace of Mind® Extended Service Plan
|
|
16,954
|
|
|
16,596
|
|
|
75,451
|
|
|
77,491
|
|
||||
Tax Identity Shield®
|
|
8,138
|
|
|
7,655
|
|
|
17,308
|
|
|
17,639
|
|
||||
Interest and fee income on Emerald AdvanceTM
|
|
32,741
|
|
|
30,924
|
|
|
33,780
|
|
|
31,768
|
|
||||
Wave
|
|
11,213
|
|
|
—
|
|
|
25,740
|
|
|
—
|
|
||||
Other
|
|
8,194
|
|
|
7,369
|
|
|
28,998
|
|
|
25,152
|
|
||||
Total revenues
|
|
$
|
519,205
|
|
|
$
|
468,384
|
|
|
$
|
830,368
|
|
|
$
|
762,438
|
|
|
|
|
|
|
|
|
|
|
8
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
9
|
(in 000s)
|
|
|||||||||||||||||||||||
As of
|
|
January 31, 2020
|
|
January 31, 2019
|
|
April 30, 2019
|
||||||||||||||||||
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
||||||||||||
Loans to franchisees
|
|
$
|
36,372
|
|
|
$
|
42,079
|
|
|
$
|
28,941
|
|
|
$
|
41,669
|
|
|
$
|
22,427
|
|
|
$
|
35,325
|
|
Receivables for U.S. assisted and DIY tax preparation and related fees
|
|
316,987
|
|
|
3,716
|
|
|
281,266
|
|
|
5,503
|
|
|
34,284
|
|
|
3,716
|
|
||||||
H&R Block Instant RefundTM receivables
|
|
6,733
|
|
|
563
|
|
|
5,822
|
|
|
247
|
|
|
37,319
|
|
|
1,701
|
|
||||||
H&R Block Emerald AdvanceTM lines of credit
|
|
373,271
|
|
|
6,179
|
|
|
362,400
|
|
|
7,667
|
|
|
8,546
|
|
|
12,418
|
|
||||||
Software receivables from retailers
|
|
8,101
|
|
|
—
|
|
|
8,396
|
|
|
—
|
|
|
9,354
|
|
|
—
|
|
||||||
Royalties and other receivables from franchisees
|
|
55,645
|
|
|
67
|
|
|
54,907
|
|
|
733
|
|
|
11,888
|
|
|
97
|
|
||||||
Wave payment processing receivables
|
|
3,363
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
|
19,474
|
|
|
1,444
|
|
|
16,485
|
|
|
2,698
|
|
|
15,147
|
|
|
2,382
|
|
||||||
Total
|
|
$
|
819,946
|
|
|
$
|
54,048
|
|
|
$
|
758,217
|
|
|
$
|
58,517
|
|
|
$
|
138,965
|
|
|
$
|
55,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in 000s)
|
|
|||
Year of Origination
|
|
Current Balance
|
|
Non-Accrual
|
||||
|
|
|
|
|
||||
2020
|
|
$
|
6,321
|
|
|
$
|
—
|
|
2019 and prior
|
|
1,006
|
|
|
1,006
|
|
||
|
|
7,327
|
|
|
$
|
1,006
|
|
|
Allowance
|
|
(31
|
)
|
|
|
|||
Net balance
|
|
$
|
7,296
|
|
|
|
||
|
|
|
|
|
10
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
(in 000s)
|
|
|||||||
Year of origination:
|
|
Balance
|
|
|
Non-Accrual
|
|
||
2020
|
|
$
|
370,879
|
|
|
$
|
—
|
|
2019 and prior
|
|
12,729
|
|
|
12,729
|
|
||
Revolving loans
|
|
23,966
|
|
|
12,628
|
|
||
|
|
407,574
|
|
|
$
|
25,357
|
|
|
Allowance
|
|
(28,124
|
)
|
|
|
|||
Net balance
|
|
$
|
379,450
|
|
|
|
||
|
|
|
|
|
(in 000s)
|
|
|||||||||||
|
|
Goodwill
|
|
|
Accumulated Impairment Losses
|
|
|
Net
|
|
|||
Balances as of April 30, 2019
|
|
$
|
552,234
|
|
|
$
|
(32,297
|
)
|
|
$
|
519,937
|
|
Acquisition of Wave
|
|
300,560
|
|
|
—
|
|
|
300,560
|
|
|||
Other Acquisitions
|
|
23,421
|
|
|
—
|
|
|
23,421
|
|
|||
Disposals and foreign currency changes, net
|
|
(5,088
|
)
|
|
—
|
|
|
(5,088
|
)
|
|||
Impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances as of January 31, 2020
|
|
$
|
871,127
|
|
|
$
|
(32,297
|
)
|
|
$
|
838,830
|
|
|
|
|
|
|
|
|
||||||
Balances as of April 30, 2018
|
|
$
|
540,168
|
|
|
$
|
(32,297
|
)
|
|
$
|
507,871
|
|
Acquisitions
|
|
13,076
|
|
|
—
|
|
|
13,076
|
|
|||
Disposals and foreign currency changes, net
|
|
(942
|
)
|
|
—
|
|
|
(942
|
)
|
|||
Impairments
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balances as of January 31, 2019
|
|
$
|
552,302
|
|
|
$
|
(32,297
|
)
|
|
$
|
520,005
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
11
|
(in 000s)
|
|
|||||||||||
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
|||
As of January 31, 2020:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
364,376
|
|
|
$
|
(153,392
|
)
|
|
$
|
210,984
|
|
Customer relationships
|
|
313,521
|
|
|
(219,664
|
)
|
|
93,857
|
|
|||
Internally-developed software
|
|
154,962
|
|
|
(116,383
|
)
|
|
38,579
|
|
|||
Noncompete agreements
|
|
41,386
|
|
|
(33,151
|
)
|
|
8,235
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(14,294
|
)
|
|
4,907
|
|
|||
Purchased technology
|
|
122,801
|
|
|
(53,525
|
)
|
|
69,276
|
|
|||
Trade name
|
|
5,800
|
|
|
(338
|
)
|
|
5,462
|
|
|||
Acquired assets pending final allocation (1)
|
|
1,774
|
|
|
—
|
|
|
1,774
|
|
|||
|
|
$
|
1,023,821
|
|
|
$
|
(590,747
|
)
|
|
$
|
433,074
|
|
As of January 31, 2019:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
350,459
|
|
|
$
|
(130,618
|
)
|
|
$
|
219,841
|
|
Customer relationships
|
|
274,293
|
|
|
(187,080
|
)
|
|
87,213
|
|
|||
Internally-developed software
|
|
147,465
|
|
|
(119,664
|
)
|
|
27,801
|
|
|||
Noncompete agreements
|
|
33,369
|
|
|
(31,040
|
)
|
|
2,329
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(13,014
|
)
|
|
6,187
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(42,082
|
)
|
|
12,618
|
|
|||
Acquired assets pending final allocation (1)
|
|
963
|
|
|
—
|
|
|
963
|
|
|||
|
|
$
|
880,450
|
|
|
$
|
(523,498
|
)
|
|
$
|
356,952
|
|
As of April 30, 2019:
|
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
|
$
|
350,410
|
|
|
$
|
(136,345
|
)
|
|
$
|
214,065
|
|
Customer relationships
|
|
274,838
|
|
|
(195,174
|
)
|
|
79,664
|
|
|||
Internally-developed software
|
|
139,239
|
|
|
(109,885
|
)
|
|
29,354
|
|
|||
Noncompete agreements
|
|
33,376
|
|
|
(31,446
|
)
|
|
1,930
|
|
|||
Franchise agreements
|
|
19,201
|
|
|
(13,334
|
)
|
|
5,867
|
|
|||
Purchased technology
|
|
54,700
|
|
|
(43,518
|
)
|
|
11,182
|
|
|||
Acquired assets pending final allocation (1)
|
|
431
|
|
|
—
|
|
|
431
|
|
|||
|
|
$
|
872,195
|
|
|
$
|
(529,702
|
)
|
|
$
|
342,493
|
|
|
|
|
|
|
|
|
12
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
|
|
|
|
|
|
(in 000s)
|
|
|||||
As of
|
|
January 31, 2020
|
|
|
January 31, 2019
|
|
|
April 30, 2019
|
|
|||
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
|
|
1,035,000
|
|
|
385,000
|
|
|
—
|
|
|||
Debt issuance costs and discounts
|
|
(5,389
|
)
|
|
(8,011
|
)
|
|
(7,371
|
)
|
|||
|
|
2,529,611
|
|
|
1,876,989
|
|
|
1,492,629
|
|
|||
Less: Current portion
|
|
(649,022
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
1,880,589
|
|
|
$
|
1,876,989
|
|
|
$
|
1,492,629
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
13
|
(in 000s)
|
|
|||||||||||||||
|
|
Three months ended January 31,
|
|
Nine months ended January 31,
|
||||||||||||
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
||||
Interest income
|
|
$
|
2,397
|
|
|
$
|
2,258
|
|
|
$
|
12,648
|
|
|
$
|
11,260
|
|
Foreign currency gains (losses), net
|
|
(139
|
)
|
|
33
|
|
|
(25
|
)
|
|
(94
|
)
|
||||
Other, net
|
|
(379
|
)
|
|
(22
|
)
|
|
1,118
|
|
|
109
|
|
||||
|
|
$
|
1,879
|
|
|
$
|
2,269
|
|
|
$
|
13,741
|
|
|
$
|
11,275
|
|
|
|
|
|
|
|
|
|
|
14
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
15
|
16
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
17
|
18
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
19
|
20
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
21
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended January 31, 2020
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
58,231
|
|
|
$
|
478,704
|
|
|
$
|
(17,730
|
)
|
|
$
|
519,205
|
|
Cost of revenues
|
|
—
|
|
|
35,598
|
|
|
439,061
|
|
|
(12,138
|
)
|
|
462,521
|
|
|||||
Selling, general and administrative
|
|
128
|
|
|
7,132
|
|
|
207,620
|
|
|
(5,592
|
)
|
|
209,288
|
|
|||||
Total operating expenses
|
|
128
|
|
|
42,730
|
|
|
646,681
|
|
|
(17,730
|
)
|
|
671,809
|
|
|||||
Other income (expense), net
|
|
(137,783
|
)
|
|
11,086
|
|
|
8,519
|
|
|
120,057
|
|
|
1,879
|
|
|||||
Interest expense on borrowings
|
|
—
|
|
|
(26,300
|
)
|
|
(5
|
)
|
|
—
|
|
|
(26,305
|
)
|
|||||
Income (loss) from continuing operations before income tax benefit
|
|
(137,911
|
)
|
|
287
|
|
|
(159,463
|
)
|
|
120,057
|
|
|
(177,030
|
)
|
|||||
Income tax benefit
|
|
(8,228
|
)
|
|
(37
|
)
|
|
(40,739
|
)
|
|
—
|
|
|
(49,004
|
)
|
|||||
Net income (loss) from continuing operations
|
|
(129,683
|
)
|
|
324
|
|
|
(118,724
|
)
|
|
120,057
|
|
|
(128,026
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(1,037
|
)
|
|
(620
|
)
|
|
—
|
|
|
(1,657
|
)
|
|||||
Net loss
|
|
(129,683
|
)
|
|
(713
|
)
|
|
(119,344
|
)
|
|
120,057
|
|
|
(129,683
|
)
|
|||||
Other comprehensive loss
|
|
(3,574
|
)
|
|
—
|
|
|
(3,574
|
)
|
|
3,574
|
|
|
(3,574
|
)
|
|||||
Comprehensive loss
|
|
$
|
(133,257
|
)
|
|
$
|
(713
|
)
|
|
$
|
(122,918
|
)
|
|
$
|
123,631
|
|
|
$
|
(133,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in 000s)
|
|
|||||||||||||||||
Three months ended January 31, 2019
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
53,461
|
|
|
$
|
433,144
|
|
|
$
|
(18,221
|
)
|
|
$
|
468,384
|
|
Cost of revenues
|
|
—
|
|
|
34,533
|
|
|
396,672
|
|
|
(10,179
|
)
|
|
421,026
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
10,347
|
|
|
183,153
|
|
|
(8,042
|
)
|
|
185,458
|
|
|||||
Total operating expenses
|
|
—
|
|
|
44,880
|
|
|
579,825
|
|
|
(18,221
|
)
|
|
606,484
|
|
|||||
Other income (expense), net
|
|
(134,984
|
)
|
|
8,903
|
|
|
348
|
|
|
128,002
|
|
|
2,269
|
|
|||||
Interest expense on borrowings
|
|
—
|
|
|
(22,833
|
)
|
|
—
|
|
|
—
|
|
|
(22,833
|
)
|
|||||
Loss from continuing operations before income taxes (benefit)
|
|
(134,984
|
)
|
|
(5,349
|
)
|
|
(146,333
|
)
|
|
128,002
|
|
|
(158,664
|
)
|
|||||
Income taxes (benefit)
|
|
(8,530
|
)
|
|
75
|
|
|
(30,430
|
)
|
|
—
|
|
|
(38,885
|
)
|
|||||
Net loss from continuing operations
|
|
(126,454
|
)
|
|
(5,424
|
)
|
|
(115,903
|
)
|
|
128,002
|
|
|
(119,779
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(6,675
|
)
|
|
—
|
|
|
—
|
|
|
(6,675
|
)
|
|||||
Net loss
|
|
(126,454
|
)
|
|
(12,099
|
)
|
|
(115,903
|
)
|
|
128,002
|
|
|
(126,454
|
)
|
|||||
Other comprehensive income
|
|
1,238
|
|
|
—
|
|
|
1,238
|
|
|
(1,238
|
)
|
|
1,238
|
|
|||||
Comprehensive loss
|
|
$
|
(125,216
|
)
|
|
$
|
(12,099
|
)
|
|
$
|
(114,665
|
)
|
|
$
|
126,764
|
|
|
$
|
(125,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
22
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
(in 000s)
|
|
|||||||||||||||||
Nine months ended January 31, 2020
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
86,515
|
|
|
$
|
768,544
|
|
|
$
|
(24,691
|
)
|
|
$
|
830,368
|
|
Cost of revenues
|
|
—
|
|
|
45,680
|
|
|
912,272
|
|
|
(12,833
|
)
|
|
945,119
|
|
|||||
Selling, general and administrative
|
|
1,666
|
|
|
15,319
|
|
|
470,631
|
|
|
(11,858
|
)
|
|
475,758
|
|
|||||
Total operating expenses
|
|
1,666
|
|
|
60,999
|
|
|
1,382,903
|
|
|
(24,691
|
)
|
|
1,420,877
|
|
|||||
Other income (expense), net
|
|
(477,932
|
)
|
|
31,578
|
|
|
23,596
|
|
|
436,499
|
|
|
13,741
|
|
|||||
Interest expense on borrowings
|
|
—
|
|
|
(68,656
|
)
|
|
(26
|
)
|
|
—
|
|
|
(68,682
|
)
|
|||||
Loss from continuing operations before income tax benefit
|
|
(479,598
|
)
|
|
(11,562
|
)
|
|
(590,789
|
)
|
|
436,499
|
|
|
(645,450
|
)
|
|||||
Income tax benefit
|
|
(11,669
|
)
|
|
(3,047
|
)
|
|
(173,430
|
)
|
|
—
|
|
|
(188,146
|
)
|
|||||
Net loss from continuing operations
|
|
(467,929
|
)
|
|
(8,515
|
)
|
|
(417,359
|
)
|
|
436,499
|
|
|
(457,304
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(10,005
|
)
|
|
(620
|
)
|
|
—
|
|
|
(10,625
|
)
|
|||||
Net loss
|
|
(467,929
|
)
|
|
(18,520
|
)
|
|
(417,979
|
)
|
|
436,499
|
|
|
(467,929
|
)
|
|||||
Other comprehensive loss
|
|
(4,975
|
)
|
|
—
|
|
|
(4,975
|
)
|
|
4,975
|
|
|
(4,975
|
)
|
|||||
Comprehensive loss
|
|
$
|
(472,904
|
)
|
|
$
|
(18,520
|
)
|
|
$
|
(422,954
|
)
|
|
$
|
441,474
|
|
|
$
|
(472,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in 000s)
|
|
|||||||||||||||||
Nine months ended January 31, 2019
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Total revenues
|
|
$
|
—
|
|
|
$
|
81,751
|
|
|
$
|
706,775
|
|
|
$
|
(26,088
|
)
|
|
$
|
762,438
|
|
Cost of revenues
|
|
—
|
|
|
46,580
|
|
|
859,759
|
|
|
(12,938
|
)
|
|
893,401
|
|
|||||
Selling, general and administrative
|
|
1,476
|
|
|
16,444
|
|
|
399,747
|
|
|
(13,150
|
)
|
|
404,517
|
|
|||||
Total operating expenses
|
|
1,476
|
|
|
63,024
|
|
|
1,259,506
|
|
|
(26,088
|
)
|
|
1,297,918
|
|
|||||
Other income (expense), net
|
|
(465,085
|
)
|
|
27,748
|
|
|
6,498
|
|
|
442,114
|
|
|
11,275
|
|
|||||
Interest expense on borrowings
|
|
—
|
|
|
(65,082
|
)
|
|
(132
|
)
|
|
—
|
|
|
(65,214
|
)
|
|||||
Loss from continuing operations before income tax benefit
|
|
(466,561
|
)
|
|
(18,607
|
)
|
|
(546,365
|
)
|
|
442,114
|
|
|
(589,419
|
)
|
|||||
Income tax benefit
|
|
(11,161
|
)
|
|
(5,942
|
)
|
|
(132,803
|
)
|
|
—
|
|
|
(149,906
|
)
|
|||||
Net loss from continuing operations
|
|
(455,400
|
)
|
|
(12,665
|
)
|
|
(413,562
|
)
|
|
442,114
|
|
|
(439,513
|
)
|
|||||
Net loss from discontinued operations
|
|
—
|
|
|
(15,887
|
)
|
|
—
|
|
|
—
|
|
|
(15,887
|
)
|
|||||
Net loss
|
|
(455,400
|
)
|
|
(28,552
|
)
|
|
(413,562
|
)
|
|
442,114
|
|
|
(455,400
|
)
|
|||||
Other comprehensive loss
|
|
(3,339
|
)
|
|
—
|
|
|
(3,339
|
)
|
|
3,339
|
|
|
(3,339
|
)
|
|||||
Comprehensive loss
|
|
$
|
(458,739
|
)
|
|
$
|
(28,552
|
)
|
|
$
|
(416,901
|
)
|
|
$
|
445,453
|
|
|
$
|
(458,739
|
)
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
23
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of January 31, 2020
|
|
H&R Block, Inc.
(Guarantor) |
|
|
Block Financial
(Issuer) |
|
|
Other
Subsidiaries |
|
|
Eliminations
|
|
|
Consolidated
H&R Block |
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
6,306
|
|
|
$
|
186,034
|
|
|
$
|
—
|
|
|
$
|
192,340
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
—
|
|
|
169,447
|
|
|
—
|
|
|
169,447
|
|
|||||
Receivables, net
|
|
—
|
|
|
410,920
|
|
|
409,026
|
|
|
—
|
|
|
819,946
|
|
|||||
Prepaid expenses and other current assets
|
|
2,811
|
|
|
2,628
|
|
|
114,790
|
|
|
—
|
|
|
120,229
|
|
|||||
Total current assets
|
|
2,811
|
|
|
419,854
|
|
|
879,297
|
|
|
—
|
|
|
1,301,962
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
316
|
|
|
197,253
|
|
|
—
|
|
|
197,569
|
|
|||||
Operating lease right of use asset
|
|
—
|
|
|
257
|
|
|
463,520
|
|
|
—
|
|
|
463,777
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
433,074
|
|
|
—
|
|
|
433,074
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
838,830
|
|
|
—
|
|
|
838,830
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
3,261
|
|
|
15,953
|
|
|
115,687
|
|
|
—
|
|
|
134,901
|
|
|||||
Investments in subsidiaries
|
|
2,955,158
|
|
|
—
|
|
|
119,213
|
|
|
(3,074,371
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
2,212,575
|
|
|
3,253,034
|
|
|
(5,465,609
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
53,975
|
|
|
28,342
|
|
|
—
|
|
|
82,317
|
|
|||||
Total assets
|
|
$
|
2,961,230
|
|
|
$
|
2,702,930
|
|
|
$
|
6,328,250
|
|
|
$
|
(8,539,980
|
)
|
|
$
|
3,452,430
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
1,952
|
|
|
14,407
|
|
|
140,407
|
|
|
—
|
|
|
156,766
|
|
|||||
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
1,676
|
|
|
115,783
|
|
|
—
|
|
|
117,459
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
1,060
|
|
|
35,182
|
|
|
—
|
|
|
36,242
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
649,022
|
|
|
—
|
|
|
—
|
|
|
649,022
|
|
|||||
Operating lease liabilities
|
|
—
|
|
|
153
|
|
|
187,737
|
|
|
—
|
|
|
187,890
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
30,695
|
|
|
159,547
|
|
|
—
|
|
|
190,242
|
|
|||||
Total current liabilities
|
|
1,952
|
|
|
697,013
|
|
|
638,656
|
|
|
—
|
|
|
1,337,621
|
|
|||||
Long-term debt and line of credit borrowings
|
|
—
|
|
|
1,880,589
|
|
|
—
|
|
|
—
|
|
|
1,880,589
|
|
|||||
Deferred tax liabilities and reserves for uncertain tax positions
|
|
24,623
|
|
|
1,486
|
|
|
146,845
|
|
|
—
|
|
|
172,954
|
|
|||||
Operating lease liabilities
|
|
—
|
|
|
108
|
|
|
289,191
|
|
|
—
|
|
|
289,299
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
4,521
|
|
|
85,825
|
|
|
—
|
|
|
90,346
|
|
|||||
Amounts due to affiliates
|
|
3,253,034
|
|
|
—
|
|
|
2,212,575
|
|
|
(5,465,609
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
3,279,609
|
|
|
2,583,717
|
|
|
3,373,092
|
|
|
(5,465,609
|
)
|
|
3,770,809
|
|
|||||
Stockholders' equity (deficiency)
|
|
(318,379
|
)
|
|
119,213
|
|
|
2,955,158
|
|
|
(3,074,371
|
)
|
|
(318,379
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
2,961,230
|
|
|
$
|
2,702,930
|
|
|
$
|
6,328,250
|
|
|
$
|
(8,539,980
|
)
|
|
$
|
3,452,430
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of January 31, 2019
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
4,722
|
|
|
$
|
198,504
|
|
|
$
|
—
|
|
|
$
|
203,226
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
—
|
|
|
101,903
|
|
|
—
|
|
|
101,903
|
|
|||||
Receivables, net
|
|
—
|
|
|
392,257
|
|
|
365,960
|
|
|
—
|
|
|
758,217
|
|
|||||
Prepaid expenses and other current assets
|
|
2,811
|
|
|
2,637
|
|
|
165,858
|
|
|
—
|
|
|
171,306
|
|
|||||
Total current assets
|
|
2,811
|
|
|
399,616
|
|
|
832,225
|
|
|
—
|
|
|
1,234,652
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
466
|
|
|
220,039
|
|
|
—
|
|
|
220,505
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
356,952
|
|
|
—
|
|
|
356,952
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
520,005
|
|
|
—
|
|
|
520,005
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
1,794
|
|
|
17,941
|
|
|
121,631
|
|
|
—
|
|
|
141,366
|
|
|||||
Investments in subsidiaries
|
|
2,485,857
|
|
|
—
|
|
|
102,763
|
|
|
(2,588,620
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,559,416
|
|
|
2,679,945
|
|
|
(4,239,361
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
57,230
|
|
|
38,096
|
|
|
—
|
|
|
95,326
|
|
|||||
Total assets
|
|
$
|
2,490,462
|
|
|
$
|
2,034,669
|
|
|
$
|
4,871,656
|
|
|
$
|
(6,827,981
|
)
|
|
$
|
2,568,806
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
14,823
|
|
|
$
|
18,475
|
|
|
$
|
168,803
|
|
|
$
|
—
|
|
|
$
|
202,101
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
1,333
|
|
|
139,569
|
|
|
—
|
|
|
140,902
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
1,060
|
|
|
47,949
|
|
|
—
|
|
|
49,009
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
28,441
|
|
|
167,193
|
|
|
—
|
|
|
195,634
|
|
|||||
Total current liabilities
|
|
14,823
|
|
|
49,309
|
|
|
523,514
|
|
|
—
|
|
|
587,646
|
|
|||||
Long-term debt and line of credit borrowings
|
|
—
|
|
|
1,876,989
|
|
|
—
|
|
|
—
|
|
|
1,876,989
|
|
|||||
Deferred tax liabilities and reserves for uncertain tax positions
|
|
9,285
|
|
|
3,989
|
|
|
200,943
|
|
|
—
|
|
|
214,217
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
1,619
|
|
|
101,926
|
|
|
—
|
|
|
103,545
|
|
|||||
Amounts due to affiliates
|
|
2,679,945
|
|
|
—
|
|
|
1,559,416
|
|
|
(4,239,361
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,704,053
|
|
|
1,931,906
|
|
|
2,385,799
|
|
|
(4,239,361
|
)
|
|
2,782,397
|
|
|||||
Stockholders' equity (deficiency)
|
|
(213,591
|
)
|
|
102,763
|
|
|
2,485,857
|
|
|
(2,588,620
|
)
|
|
(213,591
|
)
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
2,490,462
|
|
|
$
|
2,034,669
|
|
|
$
|
4,871,656
|
|
|
$
|
(6,827,981
|
)
|
|
$
|
2,568,806
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
25
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
|
(in 000s)
|
|
|||||||||||||||||
As of April 30, 2019
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Cash & cash equivalents
|
|
$
|
—
|
|
|
$
|
4,109
|
|
|
$
|
1,568,041
|
|
|
$
|
—
|
|
|
$
|
1,572,150
|
|
Cash & cash equivalents - restricted
|
|
—
|
|
|
—
|
|
|
135,577
|
|
|
—
|
|
|
135,577
|
|
|||||
Receivables, net
|
|
—
|
|
|
35,901
|
|
|
103,064
|
|
|
—
|
|
|
138,965
|
|
|||||
Prepaid expenses and other current assets
|
|
2,812
|
|
|
1,695
|
|
|
142,160
|
|
|
—
|
|
|
146,667
|
|
|||||
Total current assets
|
|
2,812
|
|
|
41,705
|
|
|
1,948,842
|
|
|
—
|
|
|
1,993,359
|
|
|||||
Property and equipment, net
|
|
—
|
|
|
552
|
|
|
211,540
|
|
|
—
|
|
|
212,092
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
342,493
|
|
|
—
|
|
|
342,493
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
519,937
|
|
|
—
|
|
|
519,937
|
|
|||||
Deferred tax assets and income taxes receivable
|
|
3,218
|
|
|
15,953
|
|
|
122,808
|
|
|
—
|
|
|
141,979
|
|
|||||
Investments in subsidiaries
|
|
3,378,009
|
|
|
—
|
|
|
137,733
|
|
|
(3,515,742
|
)
|
|
—
|
|
|||||
Amounts due from affiliates
|
|
—
|
|
|
1,562,958
|
|
|
2,815,617
|
|
|
(4,378,575
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
|
—
|
|
|
54,976
|
|
|
35,109
|
|
|
—
|
|
|
90,085
|
|
|||||
Total assets
|
|
$
|
3,384,039
|
|
|
$
|
1,676,144
|
|
|
$
|
6,134,079
|
|
|
$
|
(7,894,317
|
)
|
|
$
|
3,299,945
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued expenses
|
|
$
|
2,272
|
|
|
$
|
19,735
|
|
|
$
|
227,518
|
|
|
$
|
—
|
|
|
$
|
249,525
|
|
Accrued salaries, wages and payroll taxes
|
|
—
|
|
|
1,564
|
|
|
194,963
|
|
|
—
|
|
|
196,527
|
|
|||||
Accrued income taxes and reserves for uncertain tax positions
|
|
—
|
|
|
1,060
|
|
|
270,913
|
|
|
—
|
|
|
271,973
|
|
|||||
Deferred revenue and other current liabilities
|
|
—
|
|
|
21,144
|
|
|
183,832
|
|
|
—
|
|
|
204,976
|
|
|||||
Total current liabilities
|
|
2,272
|
|
|
43,503
|
|
|
877,226
|
|
|
—
|
|
|
923,001
|
|
|||||
Long-term debt
|
|
—
|
|
|
1,492,629
|
|
|
—
|
|
|
—
|
|
|
1,492,629
|
|
|||||
Deferred tax liabilities and reserves for uncertain tax positions
|
|
24,623
|
|
|
1,486
|
|
|
171,797
|
|
|
—
|
|
|
197,906
|
|
|||||
Deferred revenue and other noncurrent liabilities
|
|
—
|
|
|
793
|
|
|
144,089
|
|
|
—
|
|
|
144,882
|
|
|||||
Amounts due to affiliates
|
|
2,815,617
|
|
|
—
|
|
|
1,562,958
|
|
|
(4,378,575
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,842,512
|
|
|
1,538,411
|
|
|
2,756,070
|
|
|
(4,378,575
|
)
|
|
2,758,418
|
|
|||||
Stockholders' equity
|
|
541,527
|
|
|
137,733
|
|
|
3,378,009
|
|
|
(3,515,742
|
)
|
|
541,527
|
|
|||||
Total liabilities and stockholders' equity
|
|
$
|
3,384,039
|
|
|
$
|
1,676,144
|
|
|
$
|
6,134,079
|
|
|
$
|
(7,894,317
|
)
|
|
$
|
3,299,945
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|
(in 000s)
|
|
|||||||||||||||||
Nine months ended January 31, 2020
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Net cash used in operating activities
|
|
$
|
—
|
|
|
$
|
(354,155
|
)
|
|
$
|
(1,113,636
|
)
|
|
$
|
—
|
|
|
$
|
(1,467,791
|
)
|
Cash flows from investing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
—
|
|
|
(12
|
)
|
|
(66,498
|
)
|
|
—
|
|
|
(66,510
|
)
|
|||||
Payments made for business acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(450,282
|
)
|
|
—
|
|
|
(450,282
|
)
|
|||||
Franchise loans funded
|
|
—
|
|
|
(32,676
|
)
|
|
(214
|
)
|
|
—
|
|
|
(32,890
|
)
|
|||||
Payments from franchisees
|
|
—
|
|
|
14,135
|
|
|
469
|
|
|
—
|
|
|
14,604
|
|
|||||
Intercompany borrowings (payments)
|
|
—
|
|
|
(649,617
|
)
|
|
(408,952
|
)
|
|
1,058,569
|
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(10,478
|
)
|
|
55,854
|
|
|
—
|
|
|
45,376
|
|
|||||
Net cash used in investing activities
|
|
—
|
|
|
(678,648
|
)
|
|
(869,623
|
)
|
|
1,058,569
|
|
|
(489,702
|
)
|
|||||
Cash flows from financing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of line of credit borrowings
|
|
—
|
|
|
(285,000
|
)
|
|
—
|
|
|
—
|
|
|
(285,000
|
)
|
|||||
Proceeds from line of credit borrowings
|
|
—
|
|
|
1,320,000
|
|
|
—
|
|
|
—
|
|
|
1,320,000
|
|
|||||
Dividends paid
|
|
(154,827
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154,827
|
)
|
|||||
Repurchase of common stock, including shares surrendered
|
|
(256,199
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(256,199
|
)
|
|||||
Proceeds from exercise of stock options
|
|
2,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,074
|
|
|||||
Intercompany borrowings (payments)
|
|
408,952
|
|
|
—
|
|
|
649,617
|
|
|
(1,058,569
|
)
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
—
|
|
|
(14,136
|
)
|
|
—
|
|
|
(14,136
|
)
|
|||||
Net cash provided by financing activities
|
|
—
|
|
|
1,035,000
|
|
|
635,481
|
|
|
(1,058,569
|
)
|
|
611,912
|
|
|||||
Effects of exchange rates on cash
|
|
—
|
|
|
—
|
|
|
(359
|
)
|
|
—
|
|
|
(359
|
)
|
|||||
Net increase (decrease) in cash, including restricted balances
|
|
—
|
|
|
2,197
|
|
|
(1,348,137
|
)
|
|
—
|
|
|
(1,345,940
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
—
|
|
|
4,109
|
|
|
1,703,618
|
|
|
—
|
|
|
1,707,727
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
—
|
|
|
$
|
6,306
|
|
|
$
|
355,481
|
|
|
$
|
—
|
|
|
$
|
361,787
|
|
|
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
27
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|
(in 000s)
|
|
|||||||||||||||||
Nine months ended January 31, 2019
|
|
H&R Block, Inc.
(Guarantor)
|
|
|
Block Financial
(Issuer)
|
|
|
Other
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
H&R Block
|
|
|||||
Net cash used in operating activities
|
|
$
|
—
|
|
|
$
|
(359,101
|
)
|
|
$
|
(988,355
|
)
|
|
$
|
—
|
|
|
$
|
(1,347,456
|
)
|
Cash flows from investing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
—
|
|
|
(166
|
)
|
|
(79,816
|
)
|
|
—
|
|
|
(79,982
|
)
|
|||||
Payments made for business acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(42,428
|
)
|
|
—
|
|
|
(42,428
|
)
|
|||||
Franchise loans funded
|
|
—
|
|
|
(16,198
|
)
|
|
(677
|
)
|
|
—
|
|
|
(16,875
|
)
|
|||||
Payments from franchisees
|
|
—
|
|
|
14,834
|
|
|
315
|
|
|
—
|
|
|
15,149
|
|
|||||
Intercompany borrowings (payments)
|
|
—
|
|
|
(18,579
|
)
|
|
(254,491
|
)
|
|
273,070
|
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(4,746
|
)
|
|
9,623
|
|
|
—
|
|
|
4,877
|
|
|||||
Net cash used in investing activities
|
|
—
|
|
|
(24,855
|
)
|
|
(367,474
|
)
|
|
273,070
|
|
|
(119,259
|
)
|
|||||
Cash flows from financing:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of line of credit borrowings
|
|
—
|
|
|
(230,000
|
)
|
|
—
|
|
|
—
|
|
|
(230,000
|
)
|
|||||
Proceeds from line of credit borrowings
|
|
—
|
|
|
615,000
|
|
|
—
|
|
|
—
|
|
|
615,000
|
|
|||||
Dividends paid
|
|
(154,866
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154,866
|
)
|
|||||
Repurchase of common stock, including shares surrendered
|
|
(102,152
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102,152
|
)
|
|||||
Proceeds from exercise of stock options
|
|
2,527
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,527
|
|
|||||
Intercompany borrowings (payments)
|
|
254,491
|
|
|
—
|
|
|
18,579
|
|
|
(273,070
|
)
|
|
—
|
|
|||||
Other, net
|
|
—
|
|
|
(668
|
)
|
|
(19,458
|
)
|
|
—
|
|
|
(20,126
|
)
|
|||||
Net cash provided by (used in) financing activities
|
|
—
|
|
|
384,332
|
|
|
(879
|
)
|
|
(273,070
|
)
|
|
110,383
|
|
|||||
Effects of exchange rates on cash
|
|
—
|
|
|
—
|
|
|
(2,217
|
)
|
|
—
|
|
|
(2,217
|
)
|
|||||
Net increase (decrease) in cash, including restricted balances
|
|
—
|
|
|
376
|
|
|
(1,358,925
|
)
|
|
—
|
|
|
(1,358,549
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
—
|
|
|
4,346
|
|
|
1,659,332
|
|
|
—
|
|
|
1,663,678
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
—
|
|
|
$
|
4,722
|
|
|
$
|
300,407
|
|
|
$
|
—
|
|
|
$
|
305,129
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Operating Statistics (U.S. only)
|
|
|
|
|
|
|
|||||||||
Nine months ended January 31,
|
2020
|
|
|
2019
|
|
|
Change
|
|
|
% Change
|
|
||||
Tax returns prepared: (in 000s) (1)
|
|
|
|
|
|
|
|
|
|||||||
Company-owned operations
|
|
1,476
|
|
|
1,310
|
|
|
166
|
|
|
12.7
|
%
|
|||
Franchise operations
|
|
676
|
|
|
657
|
|
|
19
|
|
|
2.9
|
%
|
|||
Total assisted
|
|
2,152
|
|
|
1,967
|
|
|
185
|
|
|
9.4
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Desktop
|
|
133
|
|
|
128
|
|
|
5
|
|
|
3.9
|
%
|
|||
Online
|
|
1,308
|
|
|
1,164
|
|
|
144
|
|
|
12.4
|
%
|
|||
Total DIY
|
|
1,441
|
|
|
1,292
|
|
|
149
|
|
|
11.5
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
IRS Free File
|
|
142
|
|
|
101
|
|
|
41
|
|
|
40.6
|
%
|
|||
Total U.S. Returns
|
|
3,735
|
|
|
3,360
|
|
|
375
|
|
|
11.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Net Average Charge: (2)
|
|
|
|
|
|
|
|
|
|||||||
Company-owned operations
|
|
$
|
244.87
|
|
|
$
|
252.60
|
|
|
$
|
(7.73
|
)
|
|
(3.1
|
)%
|
Franchise operations (3)
|
|
242.76
|
|
|
244.08
|
|
|
(1.32
|
)
|
|
(0.5
|
)%
|
|||
DIY
|
|
29.17
|
|
|
29.15
|
|
|
0.02
|
|
|
0.1
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
As of January 31,
|
|
2020
|
|
|
2019
|
|
|
Change
|
|
|
% Change
|
|
|||
Tax offices:
|
|
|
|
|
|
|
|
|
|||||||
Company-owned offices
|
|
6,552
|
|
|
6,356
|
|
|
196
|
|
|
3.1
|
%
|
|||
Franchise offices
|
|
2,909
|
|
|
3,148
|
|
|
(239
|
)
|
|
(7.6
|
)%
|
|||
Total U.S. offices
|
|
9,461
|
|
|
9,504
|
|
|
(43
|
)
|
|
(0.5
|
)%
|
|||
|
|
|
|
|
|
|
|
|
(1)
|
An assisted tax return is defined as a current or prior year individual tax return that has been accepted and paid for by the client. Also included are Tax Pro GoSM, Tax Pro ReviewSM, and business returns. A DIY return is defined as a return that has been electronically filed and accepted by the IRS. Also included are online returns paid and printed.
|
(2)
|
Net average charge is calculated as tax preparation fees divided by tax returns prepared. For DIY, net average charge excludes IRS Free File.
|
(3)
|
Net average charge related to H&R Block Franchise operations represents tax preparation fees collected by H&R Block franchisees divided by returns prepared in franchise offices. H&R Block will recognize a portion of franchise revenues as franchise royalties based on the terms of franchise agreements.
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
29
|
Consolidated – Financial Results
|
|
|
|
(in 000s, except per share amounts)
|
|
||||||||||
Three months ended January 31,
|
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
U.S. assisted tax preparation
|
|
$
|
283,956
|
|
|
$
|
256,813
|
|
|
$
|
27,143
|
|
|
10.6
|
%
|
U.S. royalties
|
|
44,965
|
|
|
42,265
|
|
|
2,700
|
|
|
6.4
|
%
|
|||
U.S. DIY tax preparation
|
|
34,089
|
|
|
31,996
|
|
|
2,093
|
|
|
6.5
|
%
|
|||
International
|
|
11,804
|
|
|
12,304
|
|
|
(500
|
)
|
|
(4.1
|
)%
|
|||
Refund Transfers
|
|
50,494
|
|
|
47,482
|
|
|
3,012
|
|
|
6.3
|
%
|
|||
Emerald Card®
|
|
16,657
|
|
|
14,980
|
|
|
1,677
|
|
|
11.2
|
%
|
|||
Peace of Mind® Extended Service Plan
|
|
16,954
|
|
|
16,596
|
|
|
358
|
|
|
2.2
|
%
|
|||
Tax Identity Shield®
|
|
8,138
|
|
|
7,655
|
|
|
483
|
|
|
6.3
|
%
|
|||
Interest and fee income on Emerald AdvanceTM
|
|
32,741
|
|
|
30,924
|
|
|
1,817
|
|
|
5.9
|
%
|
|||
Wave
|
|
11,213
|
|
|
—
|
|
|
11,213
|
|
|
**
|
|
|||
Other
|
|
8,194
|
|
|
7,369
|
|
|
825
|
|
|
11.2
|
%
|
|||
Total revenues
|
|
519,205
|
|
|
468,384
|
|
|
50,821
|
|
|
10.9
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits:
|
|
|
|
|
|
|
|
|
|||||||
Field wages
|
|
165,435
|
|
|
153,764
|
|
|
11,671
|
|
|
7.6
|
%
|
|||
Other wages
|
|
63,808
|
|
|
54,243
|
|
|
9,565
|
|
|
17.6
|
%
|
|||
Benefits and other compensation
|
|
45,397
|
|
|
42,778
|
|
|
2,619
|
|
|
6.1
|
%
|
|||
|
|
274,640
|
|
|
250,785
|
|
|
23,855
|
|
|
9.5
|
%
|
|||
Occupancy
|
|
102,788
|
|
|
94,407
|
|
|
8,381
|
|
|
8.9
|
%
|
|||
Marketing and advertising
|
|
84,760
|
|
|
72,876
|
|
|
11,884
|
|
|
16.3
|
%
|
|||
Depreciation and amortization
|
|
44,147
|
|
|
44,088
|
|
|
59
|
|
|
0.1
|
%
|
|||
Bad debt
|
|
36,527
|
|
|
33,861
|
|
|
2,666
|
|
|
7.9
|
%
|
|||
Other (1)
|
|
128,947
|
|
|
110,467
|
|
|
18,480
|
|
|
16.7
|
%
|
|||
Total operating expenses
|
|
671,809
|
|
|
606,484
|
|
|
65,325
|
|
|
10.8
|
%
|
|||
Other income (expense), net
|
|
1,879
|
|
|
2,269
|
|
|
(390
|
)
|
|
(17.2
|
)%
|
|||
Interest expense on borrowings
|
|
(26,305
|
)
|
|
(22,833
|
)
|
|
(3,472
|
)
|
|
(15.2
|
)%
|
|||
Pretax loss
|
|
(177,030
|
)
|
|
(158,664
|
)
|
|
(18,366
|
)
|
|
(11.6
|
)%
|
|||
Income tax benefit
|
|
(49,004
|
)
|
|
(38,885
|
)
|
|
10,119
|
|
|
26.0
|
%
|
|||
Net loss from continuing operations
|
|
(128,026
|
)
|
|
(119,779
|
)
|
|
(8,247
|
)
|
|
(6.9
|
)%
|
|||
Net loss from discontinued operations
|
|
(1,657
|
)
|
|
(6,675
|
)
|
|
5,018
|
|
|
75.2
|
%
|
|||
Net loss
|
|
$
|
(129,683
|
)
|
|
$
|
(126,454
|
)
|
|
$
|
(3,229
|
)
|
|
(2.6
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
BASIC AND DILUTED LOSS PER SHARE:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
|
$
|
(0.66
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.08
|
)
|
|
(13.8
|
)%
|
Discontinued operations
|
|
(0.01
|
)
|
|
(0.04
|
)
|
|
0.03
|
|
|
75.0
|
%
|
|||
Consolidated
|
|
$
|
(0.67
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.05
|
)
|
|
(8.1
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA from continuing operations (2)
|
|
$
|
(106,578
|
)
|
|
$
|
(91,743
|
)
|
|
$
|
(14,835
|
)
|
|
(16.2
|
)%
|
|
|
|
|
|
|
|
|
|
(1)
|
We reclassified $10.0 million of supplies expense from its own financial statement line to other expenses for fiscal year 2019 to conform to the current year presentation.
|
(2)
|
See "Non-GAAP Financial Information" at the end of this item for a reconciliation of non-GAAP measures.
|
30
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
Three months ended January 31,
|
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
Consulting and outsourced services
|
|
$
|
32,124
|
|
|
$
|
24,812
|
|
|
$
|
7,312
|
|
|
29.5
|
%
|
Bank partner fees
|
|
29,448
|
|
|
23,461
|
|
|
5,987
|
|
|
25.5
|
%
|
|||
Client claims and refunds
|
|
6,604
|
|
|
6,063
|
|
|
541
|
|
|
8.9
|
%
|
|||
Employee travel and related expenses
|
|
10,921
|
|
|
9,309
|
|
|
1,612
|
|
|
17.3
|
%
|
|||
Technology-related expenses
|
|
19,199
|
|
|
14,255
|
|
|
4,944
|
|
|
34.7
|
%
|
|||
Credit card/bank charges
|
|
10,627
|
|
|
3,274
|
|
|
7,353
|
|
|
224.6
|
%
|
|||
Insurance
|
|
3,309
|
|
|
4,680
|
|
|
(1,371
|
)
|
|
(29.3
|
)%
|
|||
Legal fees and settlements
|
|
4,838
|
|
|
4,842
|
|
|
(4
|
)
|
|
(0.1
|
)%
|
|||
Supplies
|
|
6,412
|
|
|
9,950
|
|
|
(3,538
|
)
|
|
(35.6
|
)%
|
|||
Other
|
|
5,465
|
|
|
9,821
|
|
|
(4,356
|
)
|
|
(44.4
|
)%
|
|||
|
|
$
|
128,947
|
|
|
$
|
110,467
|
|
|
$
|
18,480
|
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
31
|
Consolidated - Financial Results
|
|
|
|
(in 000s, except per share amounts)
|
|
||||||||||
Nine months ended January 31,
|
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
U.S. assisted tax preparation
|
|
$
|
358,174
|
|
|
$
|
329,569
|
|
|
$
|
28,605
|
|
|
8.7
|
%
|
U.S. royalties
|
|
59,644
|
|
|
57,898
|
|
|
1,746
|
|
|
3.0
|
%
|
|||
U.S. DIY tax preparation
|
|
42,040
|
|
|
37,771
|
|
|
4,269
|
|
|
11.3
|
%
|
|||
International
|
|
97,311
|
|
|
96,980
|
|
|
331
|
|
|
0.3
|
%
|
|||
Refund Transfers
|
|
52,794
|
|
|
49,466
|
|
|
3,328
|
|
|
6.7
|
%
|
|||
Emerald Card®
|
|
39,128
|
|
|
38,704
|
|
|
424
|
|
|
1.1
|
%
|
|||
Peace of Mind® Extended Service Plan
|
|
75,451
|
|
|
77,491
|
|
|
(2,040
|
)
|
|
(2.6
|
)%
|
|||
Tax Identity Shield®
|
|
17,308
|
|
|
17,639
|
|
|
(331
|
)
|
|
(1.9
|
)%
|
|||
Interest and fee income on Emerald AdvanceTM
|
|
33,780
|
|
|
31,768
|
|
|
2,012
|
|
|
6.3
|
%
|
|||
Wave
|
|
25,740
|
|
|
—
|
|
|
25,740
|
|
|
**
|
|
|||
Other
|
|
28,998
|
|
|
25,152
|
|
|
3,846
|
|
|
15.3
|
%
|
|||
Total revenues
|
|
830,368
|
|
|
762,438
|
|
|
67,930
|
|
|
8.9
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Compensation and benefits:
|
|
|
|
|
|
|
|
|
|||||||
Field wages
|
|
280,231
|
|
|
262,792
|
|
|
17,439
|
|
|
6.6
|
%
|
|||
Other wages
|
|
178,389
|
|
|
152,111
|
|
|
26,278
|
|
|
17.3
|
%
|
|||
Benefits and other compensation
|
|
100,579
|
|
|
89,887
|
|
|
10,692
|
|
|
11.9
|
%
|
|||
|
|
559,199
|
|
|
504,790
|
|
|
54,409
|
|
|
10.8
|
%
|
|||
Occupancy
|
|
292,470
|
|
|
290,013
|
|
|
2,457
|
|
|
0.8
|
%
|
|||
Marketing and advertising
|
|
101,190
|
|
|
88,356
|
|
|
12,834
|
|
|
14.5
|
%
|
|||
Depreciation and amortization
|
|
125,409
|
|
|
126,013
|
|
|
(604
|
)
|
|
(0.5
|
)%
|
|||
Bad debt
|
|
37,594
|
|
|
33,191
|
|
|
4,403
|
|
|
13.3
|
%
|
|||
Other (1)
|
|
305,015
|
|
|
255,555
|
|
|
49,460
|
|
|
19.4
|
%
|
|||
Total operating expenses
|
|
1,420,877
|
|
|
1,297,918
|
|
|
122,959
|
|
|
9.5
|
%
|
|||
Other income (expense), net
|
|
13,741
|
|
|
11,275
|
|
|
2,466
|
|
|
21.9
|
%
|
|||
Interest expense on borrowings
|
|
(68,682
|
)
|
|
(65,214
|
)
|
|
(3,468
|
)
|
|
(5.3
|
)%
|
|||
Pretax loss
|
|
(645,450
|
)
|
|
(589,419
|
)
|
|
(56,031
|
)
|
|
(9.5
|
)%
|
|||
Income tax benefit
|
|
(188,146
|
)
|
|
(149,906
|
)
|
|
38,240
|
|
|
25.5
|
%
|
|||
Net loss from continuing operations
|
|
(457,304
|
)
|
|
(439,513
|
)
|
|
(17,791
|
)
|
|
(4.0
|
)%
|
|||
Net loss from discontinued operations
|
|
(10,625
|
)
|
|
(15,887
|
)
|
|
5,262
|
|
|
33.1
|
%
|
|||
Net loss
|
|
$
|
(467,929
|
)
|
|
$
|
(455,400
|
)
|
|
$
|
(12,529
|
)
|
|
(2.8
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
BASIC AND DILUTED LOSS PER SHARE:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
|
$
|
(2.31
|
)
|
|
$
|
(2.13
|
)
|
|
$
|
(0.18
|
)
|
|
(8.5
|
)%
|
Discontinued operations
|
|
(0.05
|
)
|
|
(0.08
|
)
|
|
0.03
|
|
|
37.5
|
%
|
|||
Consolidated
|
|
$
|
(2.36
|
)
|
|
$
|
(2.21
|
)
|
|
$
|
(0.15
|
)
|
|
(6.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
||||||
EBITDA from continuing operations (2)
|
|
$
|
(451,359
|
)
|
|
$
|
(398,192
|
)
|
|
$
|
(53,167
|
)
|
|
(13.4
|
)%
|
|
|
|
|
|
|
|
|
|
(1)
|
We reclassified $15.3 million of supplies expense from its own financial statement line to other expenses for fiscal year 2019 to conform to the current year presentation.
|
32
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
Nine months ended January 31,
|
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
Consulting and outsourced services
|
|
$
|
74,597
|
|
|
$
|
63,444
|
|
|
$
|
11,153
|
|
|
17.6
|
%
|
Bank partner fees
|
|
32,303
|
|
|
26,294
|
|
|
6,009
|
|
|
22.9
|
%
|
|||
Client claims and refunds
|
|
25,305
|
|
|
28,783
|
|
|
(3,478
|
)
|
|
(12.1
|
)%
|
|||
Employee travel and related expenses
|
|
33,159
|
|
|
29,515
|
|
|
3,644
|
|
|
12.3
|
%
|
|||
Technology-related expenses
|
|
50,178
|
|
|
44,932
|
|
|
5,246
|
|
|
11.7
|
%
|
|||
Credit card/bank charges
|
|
24,455
|
|
|
8,420
|
|
|
16,035
|
|
|
190.4
|
%
|
|||
Insurance
|
|
11,548
|
|
|
10,979
|
|
|
569
|
|
|
5.2
|
%
|
|||
Legal fees and settlements
|
|
21,139
|
|
|
8,331
|
|
|
12,808
|
|
|
153.7
|
%
|
|||
Supplies
|
|
14,958
|
|
|
15,343
|
|
|
(385
|
)
|
|
(2.5
|
)%
|
|||
Other
|
|
17,373
|
|
|
19,514
|
|
|
(2,141
|
)
|
|
(11.0
|
)%
|
|||
|
|
$
|
305,015
|
|
|
$
|
255,555
|
|
|
$
|
49,460
|
|
|
19.4
|
%
|
|
|
|
|
|
|
|
|
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
33
|
|
|
(in 000s)
|
|
|||||
Nine months ended January 31,
|
|
2020
|
|
|
2019
|
|
||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(1,467,791
|
)
|
|
$
|
(1,347,456
|
)
|
Investing activities
|
|
(489,702
|
)
|
|
(119,259
|
)
|
||
Financing activities
|
|
611,912
|
|
|
110,383
|
|
||
Effects of exchange rates on cash
|
|
(359
|
)
|
|
(2,217
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
|
$
|
(1,345,940
|
)
|
|
$
|
(1,358,549
|
)
|
|
|
|
|
|
34
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
As of
|
|
January 31, 2020
|
|
April 30, 2019
|
||||||||
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
|
Short-term
|
|
Long-term
|
|
Outlook
|
Moody's
|
|
P-3
|
|
Baa3
|
|
Negative
|
|
P-3
|
|
Baa3
|
|
Negative
|
S&P
|
|
A-2
|
|
BBB
|
|
Stable
|
|
A-2
|
|
BBB
|
|
Stable
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
35
|
36
|
Q3 FY2020 Form 10-Q | H&R Block, Inc.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
37
|
(in 000s, except per share amounts)
|
|
|||||||||||||
|
|
Total Number of
Shares Purchased (1) |
|
|
Average
Price Paid per Share |
|
|
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs (2) |
|
|
Maximum Dollar Value of
Shares that May Yet Be Purchased Under the Plans or Programs (2) |
|
||
November 1 - November 30
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
817,568
|
|
December 1 - December 31
|
|
1,945
|
|
|
$
|
23.29
|
|
|
1,945
|
|
|
$
|
772,278
|
|
January 1 - January 31
|
|
874
|
|
|
$
|
23.43
|
|
|
872
|
|
|
$
|
751,837
|
|
|
|
2,819
|
|
|
$
|
23.33
|
|
|
2,817
|
|
|
|
||
|
|
|
|
|
|
|
|
|
(1)
|
We purchased approximately 2 thousand shares in connection with funding employee income tax withholding obligations arising upon the lapse of restrictions on 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. In June 2019, our Board of Directors extended the share repurchase program through June 2022.
|
10.1
|
31.1
|
31.2
|
32.1
|
32.2
|
101.INS
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema
|
101.CAL
|
Inline XBRL Extension Calculation Linkbase
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
38
|
Q3 FY2020 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
|
March 9, 2020
|
|
/s/ Tony G. Bowen
|
Tony G. Bowen
|
Chief Financial Officer
|
March 9, 2020
|
|
/s/ Kellie J. Logerwell
|
Kellie J. Logerwell
|
Chief Accounting Officer
|
March 9, 2020
|
H&R Block, Inc. | Q3 FY2020 Form 10-Q
|
39
|
(ii)
|
make and amend all rules, regulations, guidelines, procedures and policies for administering the Plan;
|
(iii)
|
decide all questions and settle all disputes that may arise in connection with the Plan;
|
(iv)
|
appoint persons and entities to act as designated representatives on its behalf in administering the Plan pursuant to its provisions (in which case the term "Administrator" as used herein shall include such persons or entities to the extent of such appointment);
|
(v)
|
establish accounts with a person or entity appointed pursuant to (iv) above ("Custodian") to hold Common Stock purchased under the Plan ("Stock Account");
|
(vi)
|
cause Block to enter into a written agreement with the Custodian setting forth the terms and conditions upon which Stock Accounts shall be governed ("Custodial Agreement"); and
|
(vii)
|
require Participants to hold shares of Common Stock under the Plan in Stock Accounts (in which case each Participant's decision to participate in the Plan shall constitute the appointment of such Custodian as custodial agent for the purpose of holding such shares) until such time as shall be specified in the Custodial Agreement.
|
(i)
|
increase the number of shares reserved for purchase under the Plan, unless such increase is by reason of any change in the capital structure of the Company referred to in Section 3 hereof;
|
(ii)
|
change the designation of corporations or other entities whose employees may be offered Options under the Plan, except as permitted under Treasury Regulations ss.1.423-2(c)(4);
|
(iii)
|
materially modify the requirements as to eligibility for participation in the Plan; or
|
Date:
|
March 9, 2020
|
|
/s/ Jeffrey J. Jones II
|
|
|
|
Jeffrey J. Jones II
|
|
|
|
Chief Executive Officer
H&R Block, Inc.
|
Date:
|
March 9, 2020
|
|
/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.
|
March 9, 2020
|
(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.
|
March 9, 2020
|