8-K


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): December 7, 2015

H&R BLOCK, INC.
(Exact name of registrant as specified in charter)
MISSOURI
1-6089
44-0607856
(State or other jurisdiction of
(Commission File Number)
(I.R.S. Employer
incorporation or organization)
 
Identification No.)

One H&R Block Way, Kansas City, MO 64105
(Address of Principal Executive Offices) (Zip Code)

(816) 854-3000
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 








Item 2.02.    Results of Operations and Financial Condition.
On December 7, 2015, the Company issued a press release regarding the Company’s results of operations for the fiscal quarter ended October 31, 2015. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number    Description
99.1    Press Release Issued December 7, 2015






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
H&R BLOCK, INC.
 
 
 
 
Date:
December 7, 2015
By:
/s/ Scott W. Andreasen
 
 
 
Scott W. Andreasen
 
 
 
Vice President and Secretary







EXHIBIT INDEX

Exhibit 99.1        Press Release Issued December 7, 2015



Exhibit

Exhibit 99.1
News Release
For Immediate Release: December 7, 2015
H&R Block Announces Fiscal 2016 Second Quarter Results
KANSAS CITY, Mo. - H&R Block, Inc. (NYSE: HRB), the world's largest consumer tax services provider, today released its financial results for the fiscal 2016 second quarter ended October 31, 2015. The company typically reports a second quarter operating loss due to the seasonality of its tax business.
Second Quarter 2016 Highlights1 
H&R Block Bank divestiture transaction closed; H&R Block no longer regulated as a savings and loan holding company2 
Company completed key elements of its previously announced new capital structure, including the approval of a $3.5 billion share repurchase program effective through June 2019, the repurchase of $1.5 billion of H&R Block stock, the issuance of $1 billion in long-term debt and the completion of a new $2 billion line of credit2 
Total revenues decreased $6 million, or 4.6%, to $128 million mainly due to the impact of foreign currency exchange rates
Loss per share from continuing operations of $0.54 3due to the seasonality of the tax business
CEO Perspective
"We are excited about the upcoming tax season, with a focus on executing our Tax Plus strategy. Our tax professionals are ready to provide the expert advice expected by our clients and our DIY software offerings are the best they have ever been" said Bill Cobb, H&R Block's president and chief executive officer. "Additionally, with the divestiture of H&R Block Bank, we have completed the final step in a multi-year journey that now allows us to take positive steps towards the capital structure that is appropriate for our business. I'm also pleased that the H&R Block Bank transition to BofI has gone smoothly, positioning us to continue offering our clients the award-winning products they've come to expect."


1 
All amounts in this release are unaudited. Unless otherwise noted, all comparisons refer to the current period compared to the corresponding prior year period.
2 
Details regarding the bank divestiture and related agreements, capital structure transactions and share repurchase program can be found in previously filed press releases issued, as well as Forms 8-K filed with the Securities and Exchange Commission in September and October of 2015.
3 
All per share amounts are based on fully diluted shares at the end of the corresponding period.



Fiscal 2016 Second Quarter Results From Continuing Operations
 
 
Actual
 
Adjusted4 
(in millions, except EPS)
 
Fiscal Year 2016
 
Fiscal Year 2015
 
Fiscal Year 2016
 
Fiscal Year 2015
Revenue
 
$
128

 
$
135

 
$
128

 
$
135

EBITDA
 
$
(181
)
 
$
(148
)
 
$
(169
)
 
$
(149
)
Pretax Loss
 
$
(238
)
 
$
(201
)
 
$
(225
)
 
$
(202
)
Net Loss
 
$
(143
)
 
$
(113
)
 
$
(135
)
 
$
(114
)
Weighted-Avg. Shares - Diluted
 
266.3

 
275.1

 
266.3

 
275.1

EPS
 
$
(0.54
)
 
$
(0.41
)
 
$
(0.51
)
 
$
(0.41
)
 
 
 
 
 
 
 
 
 

CFO Perspective
"Incurring a loss in the second quarter is typical for H&R Block," said Greg Macfarlane, H&R Block's chief financial officer. "This year we saw an elevated level of expenses driven by one time transaction costs related to the bank divestiture and capital structure actions, as well as increased amortization and other expenses related to last year's higher than normal acquisitions of independent tax preparation and franchise businesses."

Business Financial Results and Highlights5 
Revenues decreased 4.6% to $128 million, due primarily to the negative impact of foreign currency exchange rates in Australia and Canada.
Total operating expenses increased $43 million, or 13.5%, the largest contributor of which was $20.8 million in transaction costs related to the bank divestiture and capital structure actions described below. Additionally, occupancy costs and amortization expense increased due to the annualization of expenses related to acquisitions of independent tax preparation and franchise businesses in the prior year.
Pretax loss increased 18.5% to $238 million.
Discontinued Operations
Sand Canyon Corporation (SCC), a separate legal entity from H&R Block, Inc., continued to engage in constructive settlement discussions with counterparties that have made a significant majority of previously denied and possible future representation and warranty claims.
SCC's accrual for contingent losses related to representation and warranty claims increased $4 million from the prior quarter to $154 million.
Balance Sheet
Upon divestiture of H&R Block Bank, certain liabilities, including all customer banking deposits were successfully transferred to BofI Federal Bank (BofI). The bank's net cash payment to BofI equaled approximately $419 million, which was approximately equal to the carrying value of the liabilities (including all deposit liabilities) assumed by BofI.
Available for sale securities, previously held to meet regulatory requirements, were liquidated for approximately $388 million.

4  
The company reports adjusted financial performance, which it believes is a better indication of the company's recurring operations. See “About Non-GAAP Financial Information” below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).
5  
Following the divestiture of H&R Block Bank, we operate as a single segment offering tax preparation and related services and products to clients in our offices or through our tax software.  Segment information for earlier periods has been consolidated into that single segment in this press release.


The Company's previous committed line of credit agreement was replaced with a new five-year, $2.0 billion Credit and Guarantee Agreement. There were no outstanding borrowings under this new line of credit at October 31, 2015.
Long-term debt increased due to the issuance of $650 million of 4.125% Senior Notes and $350 million of 5.250% Senior Notes.
Stockholder's equity was impacted by the repurchase and subsequent retirement of 40.5 million shares of common stock for $1.5 billion, or a price of $37.00 per share.
Details regarding the bank divestiture and related agreements, capital structure transactions and share repurchase program can be found in previously filed press releases issued, as well as Forms 8-K filed with the Securities and Exchange Commission in September and October of 2015.
Dividends
As previously announced, a quarterly cash dividend of 20 cents per share is payable on January 4, 2016 to shareholders of record as of December 7, 2015. The January 4 dividend payment will be H&R Block's 213th consecutive quarterly dividend since the company went public in 1962.
Investor Conference
At 8:30 a.m. EST on Tuesday, December 8, the company will hold its investor conference in New York City. H&R Block's senior leaders will outline the company's strategies and outlook, and provide a general business update including discussion of fiscal 2016 second quarter results.

The event will be broadcast live in a listen-only format for the media and public on H&R Block's investor relations website at http://investors.hrblock.com. A replay will be available on the company's website.
About H&R Block
H&R Block, Inc. (NYSE: HRB) is the world's largest consumer tax services provider. More than 680 million tax returns have been prepared worldwide by and through H&R Block since 1955. In fiscal 2015, H&R Block had annual revenues of nearly $3.1 billion with 24.2 million tax returns prepared worldwide. Tax return preparation services are provided by professional tax preparers in approximately 12,000 company-owned and franchise retail tax offices worldwide, and through H&R Block tax software products. H&R Block also offers adjacent Tax Plus products and services. For more information, visit the H&R Block Newsroom at http://newsroom.hrblock.com/.
About Non-GAAP Financial Information
This press release and the accompanying tables include non-GAAP financial information. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with generally accepted accounting principles, please see the section of the accompanying tables titled "Non-GAAP Financial Information."
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "could" or "may" or other similar expressions. Forward-looking statements provide management's current



expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. They may include estimates of revenues, income, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure or other financial items, descriptions of management’s plans or objectives for future operations, products or services, or descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect the company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data or methods, future events or other changes, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive and regulatory factors, many of which are beyond the company's control, that are described in our Annual Report on Form 10-K for the fiscal year ended April 30, 2015 in the section entitled "Risk Factors” and additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. You may get such filings for free at our website at
http://investors.hrblock.com. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
For Further Information
Investor Relations:    Colby Brown, (816) 854-4559, colby.brown@hrblock.com
Media Relations:    Gene King, (816) 854-4672, gene.king@hrblock.com
TABLES FOLLOW





CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
(unaudited, in 000s - except per share amounts)
 
 
 
Three months ended October 31,
 
Six months ended October 31,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
REVENUES:
 
 
 
 
 
 
 
 
Service revenues
 
$
113,420

 
$
115,442

 
$
231,854

 
$
230,915

Royalty, product and other revenues
 
14,995

 
19,186

 
34,279

 
37,299

 
 
128,415

 
134,628

 
266,133

 
268,214

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
Compensation and benefits
 
62,694

 
69,381

 
118,483

 
121,236

Occupancy and equipment
 
95,051

 
87,626

 
184,906

 
170,932

Provision for bad debt and loan losses
 
1,182

 
385

 
3,187

 
4,749

Depreciation and amortization
 
28,358

 
28,429

 
55,442

 
53,514

Other
 
39,116

 
35,876

 
77,891

 
68,992

 
 
226,401

 
221,697

 
439,909

 
419,423

Selling, general and administrative:
 
 
 
 
 
 
 
 
Marketing and advertising
 
12,965

 
12,513

 
21,496

 
20,658

Compensation and benefits
 
61,593

 
54,353

 
116,262

 
115,317

Depreciation and amortization
 
13,991

 
10,500

 
27,001

 
19,101

Other selling, general and administrative
 
47,298

 
20,013

 
69,280

 
39,503

 
 
135,847

 
97,379

 
234,039

 
194,579

Total operating expenses
 
362,248

 
319,076

 
673,948

 
614,002

Other income, net
 
10,505

 

 
10,938

 
523

Interest expense on borrowings
 
(14,181
)
 
(13,843
)
 
(22,756
)
 
(27,638
)
Other expenses, net
 
(210
)
 
(2,282
)
 
(5,195
)
 
(3,486
)
Loss from continuing operations before income tax benefit
 
(237,719
)
 
(200,573
)
 
(424,828
)
 
(376,389
)
Income tax benefit
 
(95,201
)
 
(87,346
)
 
(185,805
)
 
(154,311
)
Net loss from continuing operations
 
(142,518
)
 
(113,227
)
 
(239,023
)
 
(222,078
)
Net income (loss) from discontinued operations
 
(2,489
)
 
1,229

 
(5,643
)
 
(6,152
)
NET LOSS
 
$
(145,007
)
 
$
(111,998
)
 
$
(244,666
)
 
$
(228,230
)
 
 
 
 
 
 
 
 
 
BASIC AND DILUTED LOSS PER SHARE:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.54
)
 
$
(0.41
)
 
$
(0.88
)
 
$
(0.81
)
Discontinued operations
 
(0.01
)
 

 
(0.02
)
 
(0.02
)
Consolidated
 
$
(0.55
)
 
$
(0.41
)
 
$
(0.90
)
 
$
(0.83
)
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE BASIC AND DILUTED SHARES
 
266,267

 
275,106

 
271,016

 
274,841

 
 
 
 
 
 
 
 
 






CONSOLIDATED BALANCE SHEETS
 
(unaudited, in 000s - except per share data)
 
As of
 
October 31, 2015

 
October 31, 2014

 
April 30, 2015

 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
360,681

 
$
627,490

 
$
2,007,190

Cash and cash equivalents — restricted
 
42,781

 
55,543

 
91,972

Receivables, net
 
94,760

 
107,705

 
167,964

Deferred tax assets and income taxes receivable
 
145,912

 
197,193

 
174,267

Prepaid expenses and other current assets
 
80,458

 
88,270

 
70,283

Investments in available-for-sale securities
 
2,116

 
381,180

 
439,625

Total current assets
 
726,708

 
1,457,381

 
2,951,301

Mortgage loans held for investment, net
 
220,671

 
251,092

 
239,338

Property and equipment, net
 
298,602

 
318,225

 
311,387

Intangible assets, net
 
466,224

 
414,045

 
432,142

Goodwill
 
442,068

 
464,182

 
441,831

Deferred tax assets and income taxes receivable
 
11,264

 
37,937

 
13,461

Other noncurrent assets
 
124,360

 
148,428

 
125,960

Total assets
 
$
2,289,897

 
$
3,091,290

 
$
4,515,420

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
 
Customer banking deposits
 
$

 
$
454,860

 
$
744,241

Accounts payable and accrued expenses
 
141,070

 
97,105

 
231,322

Accrued salaries, wages and payroll taxes
 
37,512

 
36,215

 
144,744

Accrued income taxes
 
67,732

 
147,000

 
434,684

Current portion of long-term debt
 
808

 
772

 
790

Deferred revenue and other current liabilities
 
319,426

 
339,725

 
322,508

Total current liabilities
 
566,548

 
1,075,677

 
1,878,289

Long-term debt
 
1,501,938

 
505,588

 
505,298

Deferred tax liabilities and reserves for uncertain tax positions
 
140,539

 
151,951

 
142,586

Deferred revenue and other noncurrent liabilities
 
108,115

 
119,398

 
156,298

Total liabilities
 
2,317,140

 
1,852,614

 
2,682,471

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
Common stock, no par, stated value $.01 per share
 
2,761

 
3,166

 
3,166

Additional paid-in capital
 
757,816

 
772,662

 
783,793

Accumulated other comprehensive income (loss)
 
(16,208
)
 
6,577

 
1,740

Retained earnings
 
3,573

 
1,250,465

 
1,836,442

Less treasury shares, at cost
 
(775,185
)
 
(794,194
)
 
(792,192
)
Total stockholders’ equity (deficiency)
 
(27,243
)
 
1,238,676

 
1,832,949

Total liabilities and stockholders’ equity
 
$
2,289,897

 
$
3,091,290

 
$
4,515,420

 
 
 
 
 
 
 






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(unaudited, in 000s)
 
Six months ended October 31,
 
2015
 
2014
 
 
 
 
 
NET CASH USED IN OPERATING ACTIVITIES
 
$
(602,713
)
 
$
(627,577
)
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Sales, maturities of and payments received on available-for-sale securities
 
434,261

 
49,013

Principal payments on mortgage loans held for investment, net
 
17,006

 
13,451

Capital expenditures
 
(38,779
)
 
(70,927
)
Payments made for business acquisitions, net of cash acquired
 
(61,846
)
 
(94,230
)
Franchise loans:
 
 
 
 
Loans funded
 
(10,281
)
 
(18,251
)
Payments received
 
17,473

 
29,637

Other, net
 
7,246

 
10,585

Net cash provided by (used in) investing activities
 
365,080

 
(80,722
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Repayments of long-term debt
 

 
(400,000
)
Proceeds from issuance of long-term debt
 
996,831

 

Customer banking deposits, net
 
(326,705
)
 
(316,269
)
Transfer of HRB Bank deposits
 
(419,028
)
 

Dividends paid
 
(110,338
)
 
(109,871
)
Repurchase of common stock, including shares surrendered
 
(1,517,786
)
 
(10,247
)
Proceeds from exercise of stock options
 
16,875

 
14,477

Other, net
 
(37,820
)
 
(23,392
)
Net cash used in financing activities
 
(1,397,971
)
 
(845,302
)
 
 
 
 
 
Effects of exchange rate changes on cash
 
(10,905
)
 
(4,216
)
 
 
 
 
 
Net decrease in cash and cash equivalents
 
(1,646,509
)
 
(1,557,817
)
Cash and cash equivalents at beginning of the period
 
2,007,190

 
2,185,307

Cash and cash equivalents at end of the period
 
$
360,681

 
$
627,490

 
 
 
 
 
SUPPLEMENTARY CASH FLOW DATA:
 
 
 
 
Income taxes paid, net of refunds received
 
$
132,096

 
$
157,680

Interest paid on borrowings
 
15,606

 
27,379

Transfers of foreclosed loans to other assets
 
1,450

 
3,155

Accrued additions to property and equipment
 
4,573

 
3,243

Conversion of investment in preferred stock to available-for-sale common stock
 

 
5,000

 
 
 
 
 





FINANCIAL RESULTS
 
 
 
(unaudited, in 000s - except per share amounts)
 
 
 
Three months ended October 31,
 
Six months ended October 31,
 
 
2015
 
2014
 
2015
 
2014
Tax preparation fees:
 
 
 
 
 
 
 
 
U.S. assisted
 
$
36,403

 
$
31,926

 
$
63,688

 
$
57,415

International
 
35,340

 
42,831

 
71,058

 
84,287

U.S. digital
 
3,469

 
2,892

 
6,648

 
5,824

 
 
75,212

 
77,649

 
141,394

 
147,526

Royalties
 
9,163

 
8,582

 
18,858

 
16,224

Revenues from Refund Transfers
 
1,948

 
2,154

 
5,363

 
5,573

Revenues from Emerald Card®
 
9,808

 
11,524

 
25,497

 
25,569

Revenues from Peace of Mind® Extended Service Plan
 
19,325

 
16,563

 
47,028

 
40,816

Other
 
12,959

 
18,156

 
27,993

 
32,506

Total revenues
 
128,415

 
134,628

 
266,133

 
268,214

Compensation and benefits:
 
 
 
 
 
 
 
 
Field wages
 
53,525

 
56,904

 
99,463

 
102,901

Other wages
 
46,127

 
42,368

 
87,996

 
85,561

Benefits and other compensation
 
24,635

 
24,462

 
47,286

 
48,091

 
 
124,287

 
123,734

 
234,745

 
236,553

Occupancy and equipment
 
94,997

 
84,267

 
184,796

 
167,376

Marketing and advertising
 
12,965

 
12,513

 
21,496

 
20,658

Depreciation and amortization
 
42,349

 
38,929

 
82,443

 
72,615

Bad debt
 
1,182

 
385

 
3,187

 
4,749

Supplies
 
4,728

 
7,528

 
7,127

 
10,601

Other
 
81,740

 
51,720

 
140,154

 
101,450

Total operating expenses
 
362,248

 
319,076

 
673,948

 
614,002

Other income, net
 
10,505

 

 
10,938

 
523

Interest expense on borrowings
 
(14,181
)
 
(13,843
)
 
(22,756
)
 
(27,638
)
Other expenses, net
 
(210
)
 
(2,282
)
 
(5,195
)
 
(3,486
)
Pretax loss
 
(237,719
)
 
(200,573
)
 
(424,828
)
 
(376,389
)
Income tax benefit
 
(95,201
)
 
(87,346
)
 
(185,805
)
 
(154,311
)
Net loss from continuing operations
 
(142,518
)
 
(113,227
)
 
(239,023
)
 
(222,078
)
Net income (loss) from discontinued operations
 
(2,489
)
 
1,229

 
(5,643
)
 
(6,152
)
Net loss
 
$
(145,007
)
 
$
(111,998
)
 
$
(244,666
)
 
$
(228,230
)
 
 
 
 
 
 
 
 
 
Basic and diluted loss per share:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.54
)
 
$
(0.41
)
 
$
(0.88
)
 
$
(0.81
)
Discontinued operations
 
(0.01
)
 

 
(0.02
)
 
(0.02
)
Consolidated
 
$
(0.55
)
 
$
(0.41
)
 
$
(0.90
)
 
$
(0.83
)
 
 
 
 
 
 
 
 
 
Weighted average basic and diluted shares
 
266,267

 
275,106

 
271,016

 
274,841

 
 
 
 
 
 
 
 
 






NON-GAAP FINANCIAL MEASURES
 
 
Three months ended October 31,
 
2015
 
2014
 
 
EBITDA
 
Loss
 
EBITDA
 
Loss
 
 
 
 
 
 
 
 
 
As reported - from continuing operations
 
$
(181,145
)
 
$
(142,518
)
 
$
(147,661
)
 
$
(113,227
)
 
 
 
 
 
 
 
 
 
Adjustments (pretax):
 
 
 
 
 
 
 
 
Loss contingencies - litigation
 
71

 
71

 
44

 
44

Severance
 

 

 
238

 
238

Professional fees related to HRB Bank and recapitalization transactions
 
20,766

 
20,766

 
89

 
89

Gains on AFS securities, net
 
(8,426
)
 
(8,426
)
 
(965
)
 
(965
)
Gain on sales of tax offices/businesses
 
(26
)
 
(26
)
 
(899
)
 
(899
)
Tax effect of adjustments
 

 
(4,642
)
 

 
570

 
 
12,385

 
7,743

 
(1,493
)
 
(923
)
 
 
 
 
 
 
 
 
 
As adjusted - from continuing operations
 
$
(168,760
)
 
$
(134,775
)
 
$
(149,154
)
 
$
(114,150
)
 
 
 
 
 
 
 
Adjusted EPS
 
 
 
$
(0.51
)
 
 
 
$
(0.41
)
 
 
 
 
 
 
 
 
 
Six months ended October 31,
 
2015
 
2014
 
 
EBITDA
 
Loss
 
EBITDA
 
Loss
 
 
 
 
 
 
 
 
 
As reported - from continuing operations
 
$
(319,449
)
 
$
(239,023
)
 
$
(275,851
)
 
$
(222,078
)
 
 
 
 
 
 
 
 
 
Adjustments (pretax):
 
 
 
 
 
 
 
 
Loss contingencies - litigation
 
689

 
689

 
272

 
272

Severance
 

 

 
1,051

 
1,051

Professional fees related to HRB Bank and recapitalization transactions
 
20,818

 
20,818

 
114

 
114

Gains on AFS securities, net
 
(8,138
)
 
(8,138
)
 
(24
)
 
(24
)
Gain on sales of tax offices/businesses
 
(26
)
 
(26
)
 
(899
)
 
(899
)
Tax effect of adjustments
 

 
(5,000
)
 

 
(194
)
 
 
13,343

 
8,343

 
514

 
320

 
 
 
 
 
 
 
 
 
As adjusted - from continuing operations
 
$
(306,106
)
 
$
(230,680
)
 
$
(275,337
)
 
$
(221,758
)
 
 
 
 
 
 
 
Adjusted EPS
 
 
 
$
(0.85
)
 
 
 
$
(0.81
)
 
 
 
 
 
 
 
 
 




NON-GAAP FINANCIAL MEASURES
 
 
 
 
Three months ended October 31,
 
Six months ended October 31,
EBITDA
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net loss - as reported
$
(145,007
)
 
$
(111,998
)
 
$
(244,666
)
 
$
(228,230
)
 
 
 
 
 
 
 
 
 
Add back :
 
 
 
 
 
 
 
 
Discontinued operations
 
2,489

 
(1,229
)
 
5,643

 
6,152

Income taxes
 
(95,201
)
 
(87,346
)
 
(185,805
)
 
(154,311
)
Interest expense
 
14,225

 
13,983

 
22,936

 
27,923

Depreciation and amortization
 
42,349

 
38,929

 
82,443

 
72,615

 
 
(36,138
)
 
(35,663
)
 
(74,783
)
 
(47,621
)
 
 
 
 
 
 
 
 
 
EBITDA from continuing operations
 
$
(181,145
)
 
$
(147,661
)
 
$
(319,449
)
 
$
(275,851
)
 
 
 
 
 
 
 
 
 
 
 
Three months ended October 31,
 
Six months ended October 31,
Supplemental Information
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Stock-based compensation expense:
 
 
 
 
 
 
 
 
Pretax
 
$
7,858

 
$
7,140

 
$
13,876

 
$
14,599

After-tax
 
4,910

 
4,465

 
8,677

 
9,085

Amortization of intangible assets:
 
 
 
 
 
 
 
 
Pretax
 
$
17,865

 
$
13,219

 
$
34,479

 
$
24,463

After-tax
 
11,161

 
8,258

 
21,560

 
15,223

 
 
 
 
 
 
 
 
 




NON-GAAP FINANCIAL INFORMATION
The accompanying press release contains non-GAAP financial measures. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies.
We consider non-GAAP financial measures to be a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business on a consistent basis across reporting periods, as it eliminates the effect of items that are not indicative of our core operating performance.
The following are descriptions of adjustments we make for our non-GAAP financial measures:
We exclude losses from settlements and estimated contingent losses from litigation and favorable reserve adjustments. This does not include legal defense costs.
We exclude non-cash charges to adjust the carrying values of goodwill, intangible assets, other long-lived assets and investments to their estimated fair values.
We exclude severance and other restructuring charges in connection with the termination of personnel, closure of offices and related costs.
We exclude the gains and losses on business dispositions, including investment banking, legal and accounting fees from both business dispositions and acquisitions.
We exclude the gains and losses on extinguishment of debt.
We may consider whether other significant items that arise in the future should also be excluded from our non-GAAP financial measures.
We measure the performance of our business using a variety of metrics, including EBITDA, adjusted EBITDA and adjusted pretax income of continuing operations. Adjusted EBITDA and adjusted pretax income eliminate the impact of items that we do not consider indicative of our core operating performance and, we believe, provide meaningful information to assist in understanding our financial results, analyzing trends in our underlying business, and assessing our prospects for future performance. We also use EBITDA and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.