H&R Block Announces Fiscal 2015 Third Quarter Results

Mar 4, 2015

Releaseaf9345ab-a5ab-42a5-b460-9c472d457c47_2022792.pdf 109.4 KB

KANSAS CITY, MO -- (Marketwired) -- 03/04/15 -- H&R Block, Inc. (NYSE: HRB), the world's largest consumer tax services provider, today released its financial results for the fiscal 2015 third quarter ended January 31, 2015 and U.S. tax volume through February 28.

As a result of an earlier opening of the Internal Revenue Service's (IRS) e-file system this tax season, the company reported a $309 million¹ increase in revenues, to $509 million for the fiscal third quarter. This resulted in an improvement in its fiscal third quarter seasonal net loss from continuing operations to $0.13 per share.² A majority of the company's revenues and all of its fiscal 2015 earnings will occur during its fiscal fourth quarter, and thus fiscal third quarter results are not indicative of expected performance for the full year.

The company continued its focus on driving revenue growth through improved monetization and product attach rates and believes it is on pace to achieve these goals in fiscal 2015. As of February 28, 2015, total U.S. tax returns prepared by and through H&R Block declined 4.2% as compared to the prior fiscal year. Changing tax filer timing, Affordable Care Act (ACA) form delays and errors, the carryover impact of eliminating certain promotions last tax season, competitor pricing actions and continued industry-wide fraud issues have resulted in a decline in lower-value returns.

"Despite being disappointed by the decline in early season volume, we are pleased with our monetization, overall return mix, and Tax Plus product attach rates through both our assisted channel and digital do-it-yourself products," said Bill Cobb, H&R Block's president and chief executive officer. "I'm also proud of how our organization has handled the implementation of the Affordable Care Act, which is the most significant change to the tax code in decades. Though it's too early to determine the impact of the ACA on this tax season, we are well positioned to deliver exceptional value to our clients as this plays out over the next several years."

Tax Industry Fraud

As the industry leader, H&R Block remains focused on addressing the growing industry-wide issue of tax fraud. Tax fraud is not new to the tax preparation industry and recent media coverage of fraud related to do-it-yourself tax software shows how aggressive those perpetrating fraud are becoming. The problem is growing rapidly, with the IRS estimating the total impact of tax identity fraud at greater than $5 billion in 2013. Similarly, the U.S. Treasury Department has estimated that improper payments related to the Earned Income Tax Credit (EITC) amount to $16 to $19 billion annually, up from estimates of $13 to $15 billion last year.

H&R Block will continue to advocate for change that benefits consumers by strengthening anti-fraud measures. The company's efforts are having an impact, as evidenced by Congress's direction last year to the U.S. Treasury Department to implement consistent requirements across all tax preparation methods for those applying for the EITC. H&R Block continues to advocate for a clear implementation plan from the Treasury Department that puts these new standards in place in time for the 2016 tax season. The company is also continuing to advocate for minimum federal standards for all paid tax preparers. Without minimum standards, taxpayers will continue to be victimized by individuals who are insufficiently trained or worse, knowingly commit fraud.

"We have led the conversation regarding tax return fraud and the need for reform for years, while our competitors in the tax preparation industry have just recently joined the discussion," said Cobb. "We urge the Treasury Department to implement Congress's direction in time for tax season 2016. We need all players in the industry -- the IRS, Treasury, Congress, professional tax preparers, tax preparation software makers, and taxpayers -- to join together to help create solutions. These issues are taking tens of billions of dollars out of taxpayers' pockets."

Fiscal 2015 Third Quarter Highlights

Total revenues increased $309 million to $509 million primarily due to an earlier opening of the IRS's e-file system
Seasonal net loss from continuing operations improved to $35 million, or $0.13 per share
Non-GAAP adjusted loss per share³ from continuing operations is $0.13

Fiscal 2015 Third Quarter Results From Continuing Operations


	Actual						Adjusted
(in millions, except EPS)	Fiscal Year 2015			Fiscal Year 2014			Fiscal Year 2015			Fiscal Year 2014
Revenue	$	509		$	200		$	509		$	200
EBITDA	$	(38	)	$	(302	)	$	(37	)	$	(301	)
Pretax Loss	$	(91	)	$	(348	)	$	(89	)	$	(347	)
Net Loss	$	(35	)	$	(213	)	$	(34	)	$	(212	)
Weighted-Avg. Shares - Diluted		275.2			274.1			275.2			274.1
EPS	$	(0.13	)	$	(0.78	)	$	(0.13	)	$	(0.78	)

Business Segment Financial Results and Highlights

Tax Services

Revenues increased 159.3% to $503 million, driven mainly by the earlier opening of the IRS's e-file system. In fiscal 2014, the IRS opened e-file on January 30, which resulted in a significant shift of revenue from the fiscal third quarter to the fiscal fourth quarter of that year.
Total operating expenses increased 12.3% to $571 million, driven by the variable costs associated with tax return preparation and increased training costs.
Adjusted non-GAAP pretax loss decreased 77.1% to $74 million, primarily due to the timing shift in revenues mentioned above.

Corporate

Pretax loss decreased by $10 million to $15 million, primarily as a result of lower interest expense due to the repayment of a $400 million note in October 2014 and reduced legal and consulting fees.

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 and are expected to assert a significant majority of previously denied and possible future representation and warranty claims.
During the third quarter, SCC entered into a settlement agreement to resolve certain of these claims. The settlement amount was fully covered by prior accruals and was paid in the fiscal third quarter.
SCC's accrual for contingent losses related to representation and warranty claims was $144 million at January 31.

Dividends
As just announced, a quarterly cash dividend of 20 cents per share is payable on April 1, 2015 to shareholders of record as of March 16, 2015. The April 1 dividend payment will be H&R Block's 210^th consecutive quarterly dividend since the company went public in 1962.

Fiscal Third Quarter Conference Call
In conjunction with the fiscal third quarter results, the company will host a conference call at 4:30 p.m. Eastern time on March 4, 2015 for analysts, institutional investors, and shareholders to discuss the fiscal 2015 third quarter results, future outlook and a general business update. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:

U.S./Canada (866) 872-0323 or International (443) 842-7595
Conference ID: 72336180

The call will also be webcast in a listen-only format for the media and public. The link to the webcast can be accessed directly at http://investors.hrblock.com.

A replay of the call will be available beginning at 6:30 p.m. Eastern time on March 4, 2015, and continuing until April 4, 2015, by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 72336180. The webcast will be available for replay March 5, 2015 at http://investors.hrblock.com.

About H&R Block

H&R Block, Inc. (NYSE: HRB) is the world's largest consumer tax services provider. More than 650 million tax returns have been prepared worldwide by and through H&R Block since 1955. In fiscal 2014, H&R Block had annual revenues over $3.0 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 Bank provides affordable banking 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 may contain 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, capital expenditures, dividends, 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 and which are described in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014 in the section entitled "Risk Factors," as well as additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. 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.


⁽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⁾		All per share amounts are based on fully diluted shares.
⁽³⁾		The company reports adjusted financial performance, which it believes is a better indication of the company's recurring operations. The company also reports EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP financial measure, which the company finds relevant when measuring its performance. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).



KEY OPERATING RESULTS		(unaudited, in 000s - except per share data)
		Three months ended January 31,
		Revenues				Income (loss)
		2015		2014		2015			2014

Tax Services		$	503,008	$	193,996	$	(75,428	)	$	(322,099	)
Corporate and Eliminations			6,066		5,774		(15,437	)		(25,726	)
		$	509,074	$	199,770		(90,865	)		(347,825	)
Income tax benefit							(55,554	)		(135,074	)
Net loss from continuing operations							(35,311	)		(212,751	)
Net loss from discontinued operations							(1,637	)		(1,960	)
Net loss						$	(36,948	)	$	(214,711	)

Basic and diluted loss per share:
	Continuing operations					$	(0.13	)	$	(0.78	)
	Discontinued operations						-			-
	Consolidated					$	(0.13	)	$	(0.78	)

Basic and diluted shares							275,190			274,110

		Nine months ended January 31,
		Revenues				Income (loss)
		2015		2014		2015			2014

Tax Services		$	760,771	$	443,727	$	(402,630	)	$	(625,807	)
Corporate and Eliminations			16,517		17,578		(64,624	)		(85,874	)
		$	777,288	$	461,305		(467,254	)		(711,681	)
Income tax benefit							(209,865	)		(282,645	)
Net loss from continuing operations							(257,389	)		(429,036	)
Net loss from discontinued operations							(7,789	)		(5,805	)
Net loss						$	(265,178	)	$	(434,841	)

Basic and diluted loss per share:
	Continuing operations					$	(0.94	)	$	(1.57	)
	Discontinued operations						(0.03	)		(0.02	)
	Consolidated					$	(0.97	)	$	(1.59	)

Basic and diluted shares							274,957			273,699

CONSOLIDATED BALANCE SHEETS				(unaudited, in 000s - except per share data)
As of				January 31, 2015			January 31, 2014			April 30, 2014

ASSETS
Cash and cash equivalents				$	1,321,134		$	437,404		$	2,185,307
Cash and cash equivalents - restricted					51,085			44,855			115,319
Receivables, net					777,453			677,221			191,618
Prepaid expenses and other current assets					260,802			345,231			198,267
Investments in available-for-sale securities					367,845			-			423,495
	Total current assets				2,778,319			1,504,711			3,114,006
Mortgage loans held for investment, net					245,663			282,149			268,428
Investments in available-for-sale securities					7,883			443,770			4,329
Property and equipment, net					308,805			314,565			304,911
Intangible assets, net					443,329			318,719			355,622
Goodwill					442,961			437,386			436,117
Other assets					151,981			213,987			210,116
	Total assets			$	4,378,941		$	3,515,287		$	4,693,529
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
	Commercial paper borrowings			$	591,486		$	194,984		$	-
	Customer banking deposits				1,286,216			806,887			769,785
	Accounts payable, accrued expenses and other current liabilities				472,490			520,121			569,007
	Accrued salaries, wages and payroll taxes				118,512			108,583			167,032
	Accrued income taxes				1,619			23,375			406,655
	Current portion of long-term debt				781			400,570			400,637
		Total current liabilities			2,471,104			2,054,520			2,313,116
	Long-term debt				505,460			505,959			505,837
	Other noncurrent liabilities				255,992			268,049			318,027
		Total liabilities			3,232,556			2,828,528			3,136,980
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
	Common stock, no par, stated value $.01 per share				3,166			3,166			3,166
	Convertible preferred stock, no par, stated value $0.01 per share				-			-			-
	Additional paid-in capital				778,845			762,102			766,654
	Accumulated other comprehensive income (loss)				(1,263	)		(4,776	)		5,177
	Retained earnings				1,158,376			734,233			1,589,297
	Less treasury shares, at cost				(792,739	)		(807,966	)		(807,745	)
		Total stockholders' equity			1,146,385			686,759			1,556,549
			Total liabilities and stockholders' equity	$	4,378,941		$	3,515,287		$	4,693,529

CONSOLIDATED STATEMENTS OF OPERATIONS									(unaudited, in 000s - except per share amounts)
			Three months ended January 31,							Nine months ended January 31,
			2015			2014				2015			2014

REVENUES:
	Service revenues		$	406,441		$	138,613			$	637,356		$	358,845
	Royalty, product and other revenues			63,335			23,788				81,905			43,268
	Interest income			39,298			37,369				58,027			59,192
				509,074			199,770				777,288			461,305
OPERATING EXPENSES:
	Cost of revenues:
		Compensation and benefits		186,656			160,830				307,892			267,668
		Occupancy and equipment		92,303			88,387				263,235			249,481
		Provision for bad debt and loan losses		39,283			31,420				44,032			45,760
		Depreciation and amortization		29,181			25,267				82,695			65,982
		Other		47,255			43,761				116,247			124,087
				394,678			349,665				814,101			752,978
Selling, general and administrative:
	Marketing and advertising			87,569			77,943				108,227			98,667
	Compensation and benefits			60,380			60,211				175,697			168,076
	Depreciation and amortization			14,110			6,544				33,211			15,371
	Other selling, general and administrative			27,488			29,750				66,991			83,123
				189,547			174,448				384,126			365,237
		Total operating expenses		584,225			524,113				1,198,227			1,118,215
Other expense, net				6,666			9,610				9,629			13,295
Interest expense on borrowings ⁽¹⁾				9,048			13,872				36,686			41,476
Loss from continuing operations before income tax benefit				(90,865	)		(347,825	)			(467,254	)		(711,681	)
Income tax benefit				(55,554	)		(135,074	)			(209,865	)		(282,645	)
Net loss from continuing operations				(35,311	)		(212,751	)			(257,389	)		(429,036	)
Net loss from discontinued operations				(1,637	)		(1,960	)			(7,789	)		(5,805	)
NET LOSS			$	(36,948	)	$	(214,711	)		$	(265,178	)	$	(434,841	)

BASIC AND DILUTED LOSS PER SHARE:
	Continuing operations		$	(0.13	)	$	(0.78	)		$	(0.94	)	$	(1.57	)
	Discontinued operations			-			-				(0.03	)		(0.02	)
	Consolidated		$	(0.13	)	$	(0.78	)		$	(0.97	)	$	(1.59	)

(1)

The presentation of interest expense from borrowings has been restated to correct errors in presentation, whereby we reclassified such interest expense from cost of revenues to a separate caption.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS				(unaudited, in 000s)
Nine months ended January 31,				2015			2014

NET CASH USED IN OPERATING ACTIVITIES				$	(1,247,200	)	$	(1,120,322	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of available-for-sale securities				(100	)		(45,158	)
	Maturities of and payments received on available-for-sale securities				68,013			72,502
	Principal payments on mortgage loans held for investment, net				18,098			35,320
	Capital expenditures				(98,876	)		(125,654	)
	Payments made for business acquisitions, net of cash acquired				(112,163	)		(37,865	)
	Proceeds received on notes receivable				-			64,865
	Franchise loans:
		Loans funded			(48,013	)		(62,039	)
		Payments received			34,164			17,893
	Other, net				6,179			12,227
			Net cash used in investing activities		(132,698	)		(67,909	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Repayments of commercial paper				(457,576	)		(80,930	)
	Proceeds from issuance of commercial paper				1,049,062			275,914
	Repayments of long-term debt				(400,000	)		-
	Customer banking deposits, net				515,015			(124,947	)
	Dividends paid				(164,905	)		(164,134	)
	Proceeds from exercise of stock options				16,026			28,083
	Other, net				(26,348	)		(35,919	)
		Net cash provided by (used in) financing activities			531,274			(101,933	)

Effects of exchange rate changes on cash					(15,549	)		(20,016	)

Net decrease in cash and cash equivalents					(864,173	)		(1,310,180	)
Cash and cash equivalents at beginning of the period					2,185,307			1,747,584
Cash and cash equivalents at end of the period				$	1,321,134		$	437,404

SUPPLEMENTARY CASH FLOW DATA:
	Income taxes paid, net of refunds received			$	201,374		$	87,672
	Interest paid on borrowings				43,561			43,297
	Interest paid on deposits				523			1,696
	Transfers of foreclosed loans to other assets				3,240			6,389
	Accrued additions to property and equipment				1,986			4,113
	Conversion of investment in preferred stock to available-for-sale common stock				5,000			-
	Transfer of mortgage loans held for investment to held for sale				-			7,608

TAX SERVICES - FINANCIAL RESULTS									(unaudited, amounts in 000s)
			Three months ended January 31,						Nine months ended January 31,
			2015			2014			2015			2014
Tax preparation fees:
	U.S. assisted		$	283,692		$	72,108		$	341,107		$	123,145
	International			10,021			9,253			94,308			82,915
	U.S. digital			36,720			17,339			42,545			23,211
				330,433			98,700			477,960			229,271
Royalties				52,284			15,061			68,508			31,150
Revenues from Refund Transfers				50,899			15,542			56,472			21,282
Revenues from Emerald Card(R)				13,910			12,689			39,479			37,299
Revenues from Peace of Mind(R) guarantees				13,492			12,684			54,308			59,661
Interest and fee income on Emerald Advance				30,288			27,656			31,439			28,602
Other				11,702			11,664			32,605			36,462
	Total revenues			503,008			193,996			760,771			443,727
Compensation and benefits:
Field wages				161,921			136,885			264,822			226,320
	Other wages			41,157			41,629			117,598			112,029
	Benefits and other compensation			35,625			34,696			74,349			72,811
				238,703			213,210			456,769			411,160
Occupancy and equipment				92,700			88,148			260,016			250,332
Marketing and advertising				87,569			77,852			106,477			97,435
Depreciation and amortization				43,287			31,808			115,896			81,242
Bad debt				38,928			31,420			42,942			38,535
Supplies				6,963			7,387			17,534			14,355
Other				63,012			58,982			152,204			160,505
		Total operating expenses		571,162			508,807			1,151,838			1,053,564
Other expense, net				6,751			6,756			9,986			14,366
Interest expense on borrowings				523			532			1,577			1,604
Pretax loss			$	(75,428	)	$	(322,099	)	$	(402,630	)	$	(625,807	)

U.S. TAX OPERATING DATA								(in 000s)
			Nine months ended				Ten months ended
			January 31,				February 28,
			2015	2014	% Change		2015	2014	% Change
Tax Returns Prepared: ^(1,2)
	H&R Block Company-Owned Operations		1,532	1,595	(3.9	)%	4,464	4,926	(9.4	)%
	H&R Block Franchise Operations		947	958	(1.1	)%	2,679	2,894	(7.4	)%
		Total H&R Block Assisted	2,479	2,553	(2.9	)%	7,143	7,820	(8.7	)%

	H&R Block Desktop		180	137	31.4	%	875	833	5.0	%
	H&R Block Online		1,027	654	57.0	%	2,876	2,683	7.2	%
		Total H&R Block Tax Software	1,207	791	52.6	%	3,751	3,516	6.7	%

	H&R Block Free File Alliance		129	64	101.6	%	383	436	(12.2	)%
		Total H&R Block U.S. Returns	3,815	3,408	11.9	%	11,277	11,772	(4.2	)%

⁽¹⁾		Prior year numbers have been reclassified between company-owned and franchise for offices which were refranchised or repurchased by the company during either year.
⁽²⁾		Assisted returns for at January 31, 2014 include 1.8 million returns which were completed as of that date but not yet electronically filed. Revenue for these returns was recognized in the fourth quarter of fiscal year 2014.


NON-GAAP FINANCIAL MEASURES
		Three months ended January 31, 2015
		EBITDA			Pretax loss			Net loss			EPS

As reported - from continuing operations		$	(38,302	)	$	(90,865	)	$	(35,311	)	$	(0.13	)

Adjustments:
	Loss contingencies - litigation		337			337			207			-
	Professional fees related to HRB Bank transaction		6			6			3			-
	Loss on sales of tax offices/businesses		1,451			1,451			901			-
			1,794			1,794			1,111			-

As adjusted - from continuing operations		$	(36,508	)	$	(89,071	)	$	(34,200	)	$	(0.13	)

		Three months ended January 31, 2014
		EBITDA			Pretax loss			Net loss			EPS

As reported - from continuing operations		$	(301,571	)	$	(347,825	)	$	(212,751	)	$	(0.78	)

Adjustments:
	Loss contingencies - litigation		346			346			207			-
	Severance		1,092			1,092			648			-
	Professional fees related to HRB Bank transaction		171			171			95			-
	Gain on sales of tax offices/businesses		(616	)		(616	)		(372	)		-
			993			993			578			-

As adjusted - from continuing operations		$	(300,578	)	$	(346,832	)	$	(212,173	)	$	(0.78	)

		Nine months ended January 31, 2015
		EBITDA			Pretax loss			Net loss			EPS

As reported - from continuing operations		$	(314,153	)	$	(467,254	)	$	(257,389	)	$	(0.94	)

Adjustments:
	Loss contingencies - litigation		609			609			376			-
	Severance		1,051			1,051			654			-
	Professional fees related to HRB Bank transaction		120			120			74			-
	Gain on sales of AFS securities		(24	)		(24	)		(15	)		-
	Loss on sales of tax offices/businesses		552			552			342			-
			2,308			2,308			1,431			-

As adjusted - from continuing operations		$	(311,845	)	$	(464,946	)	$	(255,958	)	$	(0.94	)

		Nine months ended January 31, 2014
		EBITDA			Pretax loss			Net loss			EPS

As reported - from continuing operations		$	(587,125	)	$	(711,681	)	$	(429,036	)	$	(1.57	)

Adjustments:
	Loss contingencies - litigation		1,069			1,069			650			-
	Severance		4,025			4,025			2,447			0.01
	Professional fees related to HRB Bank transaction		1,978			1,978			1,203			-
	Gain on sales of tax offices/businesses		(1,215	)		(1,215	)		(739	)		-
			5,857			5,857			3,561			0.01

As adjusted - from continuing operations		$	(581,268	)	$	(705,824	)	$	(425,475	)	$	(1.56	)


		Three months ended January 31,						Nine months ended January 31,
EBITDA		2015			2014			2015			2014

Net loss - as reported		$	(36,948	)	$	(214,711	)	$	(265,178	)	$	(434,841	)

Add back :
	Discontinued operations		1,637			1,960			7,789			5,805
	Income taxes		(55,554	)		(135,074	)		(209,865	)		(282,645	)
	Interest expense		9,272			14,443			37,195			43,203
	Depreciation and amortization		43,291			31,811			115,906			81,353
			(1,354	)		(86,860	)		(48,975	)		(152,284	)

EBITDA from continuing operations		$	(38,302	)	$	(301,571	)	$	(314,153	)	$	(587,125	)

		Three months ended January 31,						Nine months ended January 31,
Supplemental Information		2015			2014			2015			2014

Stock-based compensation expense:
	Pretax	$	6,090		$	4,715		$	20,689		$	15,477
	After-tax		3,678			2,809			12,763			9,410
Amortization of intangible assets:
	Pretax	$	16,743		$	8,757		$	41,206		$	21,351
	After-tax		10,197			5,256			25,420			12,981

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.

For Further Information
Investor Relations:
Colby Brown
(816) 854-4559
Email contact

Media Relations:
Gene King
(816) 854-4672
Email contact

Source: H & R Block

Press Release Details

H&R Block Announces Fiscal 2015 Third Quarter Results