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): March 7, 2013
H&R BLOCK, INC.
(Exact name of registrant as specified in charter)
|
Missouri
(State of Incorporation)
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1-6089
(Commission File Number)
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44-0607856
(I.R.S. Employer
Identification Number)
|
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 March 7, 2013, the Company issued a press release regarding the Company’s results of operations for the fiscal quarter ended January 31, 2013. 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.
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(d)
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Exhibits
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Exhibit Number
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Description
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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.
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H&R BLOCK, INC.
|
|
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Date: March 7, 2013
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By: /s/ Scott W. Andreasen
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|
Scott W. Andreasen
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|
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Vice President and Secretary
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EXHIBIT INDEX
Exhibit 99.1
News Release
For Immediate Release: March 7, 2013
H&R Block Reports U.S. Tax Volume Through Feb. 28; Fiscal 2013 Third Quarter Earnings Ended Jan. 31
KANSAS CITY, Mo. – H&R Block, Inc. (NYSE: HRB), the world’s largest consumer tax services provider, today released U.S. tax volume through Feb. 28 and fiscal 2013 third quarter earnings ended Jan. 31. As a result of significant tax legislation being passed shortly before the traditional start of the tax season and the resulting delay in opening the Internal Revenue Service’s (IRS) e-file system, the start of the 2013 U.S. tax season has been subject to an unprecedented delay that has caused changes in the timing of taxpayer filing patterns.
In a typical year, the IRS begins accepting tax returns by mid-January. This year, the IRS opened its e-file system on Jan. 30, just before the end of H&R Block’s fiscal third quarter on Jan. 31. In addition, the IRS and other taxing jurisdictions did not accept certain tax forms until early March. As a result, the company believes industry-wide tax filings through Feb. 28 have been delayed by up to two weeks versus the comparable prior year period.
Total U.S. tax returns prepared by and through H&R Block were lower by 5.8 percent through Feb. 28. 1 The company estimates that industry-wide U.S. tax filings were down approximately 8 percent on a comparable date-to-date basis through Feb. 28. The company believes industry-wide U.S. filings will fully normalize and grow 1 to 2 percent by the end of the tax season.
CEO Perspective
“We entered this tax season with a very thoughtful plan and while we’ve had to make some adjustments due to the unprecedented delays and competitive factors, I am pleased with our execution to date,” said Bill Cobb, H&R Block’s president and chief executive officer. “Our analysis of industry data gives us confidence that we are on track with our plans for fiscal 2013.”
Third Quarter 2013 Highlights
|
§
|
Total revenues were lower by 29 percent, primarily driven by timing issues from the IRS opening its e-file system on Jan. 30 and the resulting delays to the start of the U.S. tax season
|
|
§
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GAAP net loss from continuing operations of $17 million, or 6 cents per share, compared to prior year loss of $4 million, or 1 cent per share,2 driven by the revenue shortfall from the aformentioned delays, partially offset by H&R Block’s previously announced cost reduction initiatives and a $43 million income tax benefit resulting from a settlement with the IRS
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1 Unless otherwise noted, all comparisons, including those made to the “prior year,” refer to the current period compared to the prior year period.
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§
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Adjusted net loss of $60 million, or 22 cents per share, compared to break-even in prior year, primarily driven by the aforementioned delays to the start of the U.S. tax season
|
|
§
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H&R Block remains on pace to deliver $85 to $100 million of pretax earnings from cost reduction initiatives in fiscal 2013
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Third Quarter Results From Continuing Operations
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Actual
|
Adjusted*
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|||
|
in millions, except EPS
|
Q3
FY13
|
Q3
FY12
|
Q3
FY13
|
Q3
FY12
|
|
Revenue
|
$472
|
$663
|
$472
|
$663
|
|
EBITDA*
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($52)
|
$45
|
($53)
|
$49
|
|
Pretax Income (Loss)
|
($96)
|
($1)
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($97)
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$3
|
|
Net Income (Loss)
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($17)
|
($4)
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($60)
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$0
|
|
Shares Outstanding
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271.5
|
293.0
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271.5
|
293.0
|
|
EPS
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($0.06)
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($0.01)
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($0.22)
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$0.00
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*Adjusted amounts and EBITDA (earnings before interest, taxes, depreciation and amortization) are non-GAAP financial measures. See “About Non-GAAP Financial Measures” below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).
CFO Perspective
“The delayed start to this tax season led to a material shift of business from our fiscal third quarter to our fiscal fourth quarter,” said Greg Macfarlane, H&R Block’s chief financial officer. “As a result, our third quarter results are not indicative of the results we expect to achieve this fiscal year. Our cost reduction initiatives remain on track and we continue to believe that we’ll deliver significant earnings and margin expansion in fiscal 2013,” added Macfarlane.
Business Segment Results and Highlights
Tax Services
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§
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Revenues were lower by $191 million, or 29 percent, primarily due to the delayed start of the U.S. tax season
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§
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H&R Block deferred $15 million of revenue to its fiscal fourth quarter, as the IRS did not accept returns that included certain forms prior to January 31
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§
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Pretax loss of $64 million compared to pretax income of $32 million in prior year, primarily due to the delayed start of the U.S. tax season
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Corporate
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§
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Revenues of $7 million were essentially flat to prior year
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|
§
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Pretax loss improved by $1 million to $32 million
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Third Quarter Results from Discontinued Operations
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§
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Net loss of $1 million compared to near break-even net earnings in prior year
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§
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Sand Canyon Corporation (SCC), a separate legal entity from H&R Block, Inc., received new claims during the quarter for alleged breaches of representations and warranties in the principal amount of $16 million
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§
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SCC reviewed claims in the principal amount of $9 million during the quarter, all of which were deemed invalid
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§
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SCC’s accrual for contingent losses related to representations and warranties totaled $119 million at Jan. 31
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Dividend
A previously announced quarterly cash dividend of 20 cents per share is payable on April 1, 2013 to shareholders of record as of March 18, 2013. The April 1 dividend payment will mark H&R Block’s 202nd consecutive quarterly dividend since the company went public in 1962.
About H&R Block
H&R Block, Inc. (NYSE: HRB) is the world’s largest consumer tax services provider. More than 600 million tax returns have been prepared worldwide by and through H&R Block since 1955. In fiscal 2012, H&R Block had annual revenues of $2.9 billion with 25.6 million tax returns prepared worldwide. Tax return preparation services are provided in company-owned and franchise retail tax offices by approximately 90,000 professional tax preparers, and through H&R Block At Home™ digital products. H&R Block Bank provides affordable banking products and services. For more information, visit the H&R Block Online Press Center.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures. 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 “About Non-GAAP Financial Measures.”
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, 2012 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.
For Further Information
Investor Relations: Derek Drysdale, (816) 854-4513, derek.drysdale@hrblock.com
Media Relations: Gene King, (816) 854-4672, gene.king@hrblock.com
TABLES FOLLOW
KEY OPERATING RESULTS
Unaudited, amounts in thousands, except per share data
|
Three months ended January 31,
|
||||||||
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Revenues
|
Income (loss)
|
|||||||
|
2013
|
2012
|
2013
|
2012
|
|||||
|
Tax Services
|
$ 464,634
|
$ 655,701
|
$ (64,189)
|
$ 31,716
|
||||
|
Corporate and Eliminations
|
7,345
|
7,579
|
(32,079)
|
(32,742)
|
||||
|
$ 471,979
|
$ 663,280
|
(96,268)
|
(1,026)
|
|||||
|
Income taxes (benefit)
|
(79,353)
|
2,541
|
||||||
|
Net loss from continuing operations
|
(16,915)
|
(3,567)
|
||||||
|
Net income (loss) from discontinued operations
|
(793)
|
218
|
||||||
|
Net loss
|
$ (17,708)
|
$ (3,349)
|
||||||
|
Basic and diluted loss per share:
|
||||||||
|
Net loss from continuing operations
|
$ (0.06)
|
$ (0.01)
|
||||||
|
Net income (loss) from discontinued operations
|
(0.01)
|
-
|
||||||
|
Net loss
|
$ (0.07)
|
$ (0.01)
|
||||||
|
Basic and diluted shares
|
271,542
|
292,963
|
||||||
|
Nine months ended January 31,
|
||||||||
|
Revenues
|
Income (loss)
|
|||||||
|
2013
|
2012
|
2013
|
2012
|
|||||
|
Tax Services
|
$ 684,706
|
$ 868,144
|
$ (335,203)
|
$ (311,733)
|
||||
|
Corporate and Eliminations
|
21,025
|
24,953
|
(92,622)
|
(93,823)
|
||||
|
$ 705,731
|
$ 893,097
|
(427,825)
|
(405,556)
|
|||||
|
Income tax benefit
|
(204,061)
|
(159,821)
|
||||||
|
Net loss from continuing operations
|
(223,764)
|
(245,735)
|
||||||
|
Net loss from discontinued operations
|
(6,628)
|
(74,436)
|
||||||
|
Net loss
|
$ (230,392)
|
$ (320,171)
|
||||||
|
Basic and diluted loss per share:
|
||||||||
|
Net loss from continuing operations
|
$ (0.82)
|
$ (0.82)
|
||||||
|
Net loss from discontinued operations
|
(0.02)
|
(0.25)
|
||||||
|
Net loss
|
$ (0.84)
|
$ (1.07)
|
||||||
|
Basic and diluted shares
|
273,281
|
299,450
|
||||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basic earnings per share is computed using the two-class method and is based on the weighted average number of shares outstanding. The dilutive effect of potential common shares is included in diluted earnings per share, except in those periods with a loss from continuing operations.
On October 25, 2012, we issued $500.0 million of 5.50% Senior Notes. The Senior Notes are due November 1, 2022, and are not redeemable by the bondholders prior to maturity, although we have the right to redeem some or all of these notes at any time, at specified redemption prices. On October 25, 2012, we provided notice to the trustee of our intention to redeem the entire principal amount of the $600.0 million Senior Notes due in January 2013. The redemption settled on November 26, 2012 at a price of $623.0 million, which included full payment of principal, a make-whole premium of $5.8 million and interest accrued up to the redemption date of $17.2 million. Proceeds of the $500.0 million Senior Notes and other cash balances were used to repay the $600.0 million Senior Notes. We recognized a loss on the extinguishment of this debt of $5.8 million during the three months ended January 31, 2013, which primarily represents the interest that would have been paid on these notes if they had not been redeemed prior to maturity. This loss is included in other income (expense), net on our consolidated statements of operations.
CONSOLIDATED BALANCE SHEETS
Unaudited, amounts in thousands, except per share data
|
January 31,
|
January 31,
|
April 30,
|
||||
|
2013
|
2012
|
2012
|
||||
|
ASSETS
|
||||||
|
Current assets:
|
||||||
|
Cash and cash equivalents
|
$ 418,385
|
$ 1,218,984
|
$ 1,944,334
|
|||
|
Cash and cash equivalents - restricted
|
37,958
|
34,168
|
48,100
|
|||
|
Receivables, net
|
949,160
|
1,035,902
|
193,858
|
|||
|
Prepaid expenses and other current assets
|
331,046
|
230,612
|
314,702
|
|||
|
Total current assets
|
1,736,549
|
2,519,666
|
2,500,994
|
|||
|
Mortgage loans held for investment, net
|
357,887
|
430,189
|
406,201
|
|||
|
Investments in available-for-sale securities
|
396,312
|
312,183
|
371,315
|
|||
|
Property and equipment, net
|
290,165
|
260,755
|
252,985
|
|||
|
Intangible assets, net
|
271,523
|
268,148
|
264,451
|
|||
|
Goodwill
|
435,256
|
433,595
|
427,566
|
|||
|
Other assets
|
444,804
|
628,253
|
426,055
|
|||
|
Total assets
|
$ 3,932,496
|
$ 4,852,789
|
$ 4,649,567
|
|||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||
|
Current liabilities:
|
||||||
|
Commercial paper borrowings
|
$ 424,967
|
$ 230,947
|
$ -
|
|||
|
Customer banking deposits
|
1,036,968
|
1,587,988
|
827,549
|
|||
|
Accounts payable, accrued expenses and other current liabilities
|
479,660
|
597,644
|
567,079
|
|||
|
Accrued salaries, wages and payroll taxes
|
103,538
|
130,245
|
163,992
|
|||
|
Accrued income taxes
|
17,348
|
40,596
|
336,374
|
|||
|
Current portion of long-term debt
|
713
|
630,996
|
631,434
|
|||
|
Federal Home Loan Bank borrowings
|
-
|
25,000
|
-
|
|||
|
Total current liabilities
|
2,063,194
|
3,243,416
|
2,526,428
|
|||
|
Long-term debt
|
906,012
|
409,241
|
409,115
|
|||
|
Other noncurrent liabilities
|
328,402
|
393,683
|
388,132
|
|||
|
Total liabilities
|
3,297,608
|
4,046,340
|
3,323,675
|
|||
|
Stockholders' equity:
|
||||||
|
Common stock, no par, stated value $.01 per share
|
3,166
|
3,994
|
3,979
|
|||
|
Additional paid-in capital
|
747,398
|
797,853
|
796,784
|
|||
|
Accumulated other comprehensive income
|
9,055
|
7,409
|
12,145
|
|||
|
Retained earnings
|
723,676
|
2,018,252
|
2,523,997
|
|||
|
Less treasury shares, at cost
|
(848,407)
|
(2,021,059)
|
(2,011,013)
|
|||
|
Total stockholders' equity
|
634,888
|
806,449
|
1,325,892
|
|||
|
Total liabilities and stockholders' equity
|
$ 3,932,496
|
$ 4,852,789
|
$ 4,649,567
|
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited, amounts in thousands, except per share data
|
Three months ended January 31,
|
Nine months ended January 31,
|
||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||
|
Revenues:
|
|||||||||
|
Service revenues
|
$ 362,194
|
$ 524,240
|
$ 558,528
|
$ 717,243
|
|||||
|
Product and other revenues
|
71,485
|
99,564
|
89,171
|
116,117
|
|||||
|
Interest income
|
38,300
|
39,476
|
58,032
|
59,737
|
|||||
|
471,979
|
663,280
|
705,731
|
893,097
|
||||||
|
Expenses:
|
|||||||||
|
Cost of revenues:
|
|||||||||
|
Compensation and benefits
|
160,081
|
207,480
|
254,430
|
316,139
|
|||||
|
Occupancy and equipment
|
84,710
|
93,024
|
247,059
|
263,078
|
|||||
|
Depreciation and amortization of property and equipment
|
20,067
|
17,770
|
54,299
|
50,894
|
|||||
|
Provision for bad debt and loan losses
|
43,028
|
52,932
|
51,398
|
68,423
|
|||||
|
Interest
|
19,428
|
23,543
|
64,895
|
69,352
|
|||||
|
Other
|
50,304
|
60,491
|
110,972
|
127,551
|
|||||
|
377,618
|
455,240
|
783,053
|
895,437
|
||||||
|
Impairment of goodwill
|
-
|
-
|
-
|
4,257
|
|||||
|
Selling, general and administrative expenses
|
186,997
|
211,736
|
352,802
|
408,144
|
|||||
|
564,615
|
666,976
|
1,135,855
|
1,307,838
|
||||||
|
Operating loss
|
(92,636)
|
(3,696)
|
(430,124)
|
(414,741)
|
|||||
|
Other income (expense), net
|
(3,632)
|
2,670
|
2,299
|
9,185
|
|||||
|
Loss from continuing operations before taxes (benefit)
|
(96,268)
|
(1,026)
|
(427,825)
|
(405,556)
|
|||||
|
Income taxes (benefit)
|
(79,353)
|
2,541
|
(204,061)
|
(159,821)
|
|||||
|
Net loss from continuing operations
|
(16,915)
|
(3,567)
|
(223,764)
|
(245,735)
|
|||||
|
Net income (loss) from discontinued operations
|
(793)
|
218
|
(6,628)
|
(74,436)
|
|||||
|
Net loss
|
$ (17,708)
|
$ (3,349)
|
$ (230,392)
|
$ (320,171)
|
|||||
|
Basic and diluted loss per share:
|
|||||||||
|
Net loss from continuing operations
|
$ (0.06)
|
$ (0.01)
|
$ (0.82)
|
$ (0.82)
|
|||||
|
Net income (loss) from discontinued operations
|
(0.01)
|
-
|
(0.02)
|
(0.25)
|
|||||
|
Net loss
|
$ (0.07)
|
$ (0.01)
|
$ (0.84)
|
$ (1.07)
|
|||||
|
Basic and diluted shares
|
271,542
|
292,963
|
273,281
|
299,450
|
|||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited, amounts in thousands
|
Nine months ended January 31,
|
|||||||||
|
2013
|
2012
|
||||||||
|
Net cash used in operating activities
|
$ (1,311,926)
|
$ (1,382,771)
|
|||||||
|
Cash flows from investing activities:
|
|||||||||
|
Purchases of available-for-sale securities
|
(108,351)
|
(178,014)
|
|||||||
|
Sales, maturities and payments received on available-for-sale securities
|
86,808
|
40,473
|
|||||||
|
Principal repayments on mortgage loans held for investment, net
|
31,205
|
35,460
|
|||||||
|
Purchases of property and equipment, net
|
(96,063)
|
(71,549)
|
|||||||
|
Payments made for acquisitions of businesses and intangibles, net
|
(20,662)
|
(16,022)
|
|||||||
|
Proceeds from sales of businesses, net
|
1,212
|
533,055
|
|||||||
|
Franchise loans:
|
|||||||||
|
Loans funded
|
(68,874)
|
(43,649)
|
|||||||
|
Payments received
|
9,594
|
8,455
|
|||||||
|
Other, net
|
(15,185)
|
15,321
|
|||||||
|
Net cash provided by (used in) investing activities
|
(180,316)
|
323,530
|
|||||||
|
Cash flows from financing activities:
|
|||||||||
|
Repayments of commercial paper
|
(789,271)
|
(413,221)
|
|||||||
|
Proceeds from commercial paper
|
1,214,238
|
644,168
|
|||||||
|
Repayments of long-term debt
|
(636,621)
|
-
|
|||||||
|
Proceeds from issuance of long-term debt
|
497,185
|
-
|
|||||||
|
Customer banking deposits, net
|
208,753
|
735,252
|
|||||||
|
Dividends paid
|
(162,692)
|
(150,058)
|
|||||||
|
Repurchase of common stock, including shares surrendered
|
(340,298)
|
(180,566)
|
|||||||
|
Proceeds from exercise of stock options, net
|
11,529
|
(324)
|
|||||||
|
Other, net
|
(36,113)
|
(31,424)
|
|||||||
|
Net cash provided by (used in) financing activities
|
(33,290)
|
603,827
|
|||||||
|
Effects of exchange rates on cash
|
(417)
|
(3,446)
|
|||||||
|
Net decrease in cash and cash equivalents
|
(1,525,949)
|
(458,860)
|
|||||||
|
Cash and cash equivalents at beginning of the period
|
1,944,334
|
1,677,844
|
|||||||
|
Cash and cash equivalents at end of the period
|
$ 418,385
|
$ 1,218,984
|
|||||||
|
Supplementary cash flow data:
|
|||||||||
|
Income taxes paid, net
|
$ 104,986
|
$ 163,471
|
|||||||
|
Interest paid on borrowings
|
62,160
|
55,266
|
|||||||
|
Interest paid on deposits
|
4,377
|
5,170
|
|||||||
|
Transfers of foreclosed loans to other assets
|
7,208
|
6,521
|
|||||||
U.S. TAX OPERATING DATA
(in thousands)
|
1/31/13
FYTD
2013
|
1/31/12
FYTD
2012
|
Percent
change
|
2/28/13
FYTD
2013
|
2/28/12
FYTD
2012
|
Percent change
|
||||||||
|
Total returns prepared: (1)
|
|||||||||||||
|
H&R Block Company-owned operations
|
1,695
|
2,352
|
|
-27.9%
|
|
5,194
|
5,672
|
|
-8.4%
|
||||
|
H&R Block Franchise operations
|
1,143
|
1,579
|
-27.6%
|
3,406
|
3,658
|
-6.9%
|
|||||||
|
Total H&R Block retail operations
|
2,838
|
3,931
|
|
-27.8%
|
|
8,600
|
9,330
|
|
-7.8%
|
||||
|
H&R Block At Home Desktop
|
538
|
664
|
-19.0%
|
1,218
|
1,372
|
-11.2%
|
|||||||
|
H&R Block At Home Online
|
1,057
|
1,330
|
-20.5%
|
3,041
|
|
2,892
|
5.2%
|
||||||
|
Sub-total
|
1,595
|
1,994
|
-20.0%
|
4,259
|
4,264
|
-0.1%
|
|||||||
|
H&R Block Free File Alliance
|
86
|
209
|
-58.9%
|
426
|
508
|
-16.1%
|
|||||||
|
Total H&R Block At Home
|
1,681
|
2,203
|
-23.7%
|
4,685
|
4,772
|
-1.8%
|
|||||||
|
Total H&R Block Returns
|
4,519
|
6,134
|
|
-26.3%
|
|
13,285
|
14,102
|
|
-5.8%
|
||||
1) Prior year numbers have been reclassified between company-owned and franchise operations for offices which were refranchised during either year.
NON-GAAP FINANCIAL MEASURES
Unaudited, amounts in thousands, except per share amounts
|
Three months ended January 31,
|
Nine months ended January 31,
|
||||||||
|
EBITDA and Adjusted EBITDA (1)
|
2013
|
2012
|
2013
|
2012
|
|||||
|
Net loss from continuing operations - as reported
|
$ (16,915)
|
$ (3,567)
|
$ (223,764)
|
$ (245,735)
|
|||||
|
Add back :
|
|||||||||
|
Income taxes
|
(79,353)
|
2,541
|
(204,061)
|
(159,821)
|
|||||
|
Interest expense
|
19,428
|
23,543
|
64,895
|
69,352
|
|||||
|
Depreciation and amortization
|
24,638
|
22,506
|
67,242
|
66,127
|
|||||
|
(35,287)
|
48,590
|
(71,924)
|
(24,342)
|
||||||
|
EBITDA from continuing operations
|
(52,202)
|
45,023
|
(295,688)
|
(270,077)
|
|||||
|
Adjustments:
|
|||||||||
|
Loss contingencies - litigation charges
|
(190)
|
4,171
|
(4,943)
|
27,528
|
|||||
|
Impairment of goodwill and intangible assets
|
-
|
-
|
1,421
|
8,237
|
|||||
|
Severance
|
(582)
|
(190)
|
475
|
1,920
|
|||||
|
Loss (gain) on sales of tax offices
|
(352)
|
229
|
(876)
|
1,141
|
|||||
|
(1,124)
|
4,210
|
(3,923)
|
38,826
|
||||||
|
Adjusted EBITDA from continuing operations
|
$ (53,326)
|
$ 49,233
|
$ (299,611)
|
$ (231,251)
|
|||||
|
Non-GAAP Pretax Results
|
|||||||||
|
Pretax loss from continuing operations - as reported
|
$ (96,268)
|
$ (1,026)
|
$ (427,825)
|
$ (405,556)
|
|||||
|
Add back :
|
|||||||||
|
Loss contingencies - litigation charges
|
(190)
|
4,171
|
(4,943)
|
27,528
|
|||||
|
Impairment of goodwill and intangible assets
|
-
|
-
|
1,421
|
8,237
|
|||||
|
Severance
|
(582)
|
(190)
|
475
|
1,920
|
|||||
|
Loss (gain) on sales of tax offices
|
(352)
|
229
|
(876)
|
1,141
|
|||||
|
(1,124)
|
4,210
|
(3,923)
|
38,826
|
||||||
|
Pretax income (loss) from continuing operations - as adjusted
|
$ (97,392)
|
$ 3,184
|
$ (431,748)
|
$ (366,730)
|
|||||
|
Non-GAAP After-Tax Results
|
|||||||||
|
Net loss from continuing operations - as reported
|
$ (16,915)
|
$ (3,567)
|
$ (223,764)
|
$ (245,735)
|
|||||
|
Add back (net of tax) :
|
|||||||||
|
Loss contingencies - litigation charges
|
(126)
|
2,643
|
(3,032)
|
16,767
|
|||||
|
Impairment of goodwill and intangible assets
|
3
|
36
|
872
|
5,017
|
|||||
|
Severance
|
(355)
|
(107)
|
291
|
1,169
|
|||||
|
Loss (gain) on sales of tax offices
|
(217)
|
144
|
(537)
|
695
|
|||||
|
Discrete tax items
|
(42,852)
|
1,162
|
(38,679)
|
(1,289)
|
|||||
|
(43,547)
|
3,878
|
(41,085)
|
22,359
|
||||||
|
Net income (loss) from continuing operations - as adjusted
|
$ (60,462)
|
$ 311
|
$ (264,849)
|
$ (223,376)
|
|||||
(1) Earnings before interest, taxes, depreciation and amortization.
NON-GAAP FINANCIAL MEASURES
Unaudited, amounts in thousands, except per share amounts
|
Three months ended January 31,
|
Nine months ended January 31,
|
||||||||
|
Non-GAAP EPS
|
2013
|
2012
|
2013
|
2012
|
|||||
|
EPS from continuing operations - as reported
|
$ (0.06)
|
$ (0.01)
|
$ (0.82)
|
$ (0.82)
|
|||||
|
Add back :
|
|||||||||
|
Loss contingencies - litigation charges
|
-
|
0.01
|
(0.01)
|
0.05
|
|||||
|
Impairment of goodwill and intangible assets
|
-
|
-
|
-
|
0.02
|
|||||
|
Severance
|
-
|
-
|
-
|
-
|
|||||
|
Loss (gain) on sales of tax offices
|
-
|
-
|
-
|
-
|
|||||
|
Discrete tax items
|
(0.16)
|
-
|
(0.14)
|
-
|
|||||
|
(0.16)
|
0.01
|
(0.15)
|
0.07
|
||||||
|
EPS from continuing operations - as adjusted
|
$ (0.22)
|
$ -
|
$ (0.97)
|
$ (0.75)
|
|||||
|
Non-GAAP Pretax Results - Tax Services segment
|
|||||||||
|
Pretax income (loss) - as reported
|
$ (64,189)
|
$ 31,716
|
$ (335,203)
|
$ (311,733)
|
|||||
|
Add back :
|
|||||||||
|
Loss contingencies - litigation charges
|
(440)
|
4,171
|
(5,193)
|
27,527
|
|||||
|
Impairment of goodwill and intangible assets
|
-
|
-
|
1,421
|
8,237
|
|||||
|
Severance
|
(612)
|
(350)
|
480
|
1,760
|
|||||
|
Loss (gain) on sales of tax offices
|
(352)
|
229
|
(876)
|
1,141
|
|||||
|
(1,404)
|
4,050
|
(4,168)
|
38,665
|
||||||
|
Pretax income (loss) - as adjusted
|
$ (65,593)
|
$ 35,766
|
$ (339,371)
|
$ (273,068)
|
|||||
|
Supplemental Information
|
|||||||||
|
Stock-based compensation expense:
|
|||||||||
|
Pretax
|
$ 3,677
|
$ 3,223
|
$ 11,414
|
$ 11,047
|
|||||
|
After-tax
|
2,271
|
1,998
|
7,001
|
6,729
|
|||||
|
Amortization of intangible assets:
|
|||||||||
|
Pretax
|
$ 4,570
|
$ 4,736
|
$ 12,942
|
$ 15,233
|
|||||
|
After-tax
|
2,821
|
2,930
|
7,939
|
9,278
|
|||||
About Non-GAAP Financial Measures
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 accounting principles generally accepted in the United States (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 in 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 the our core operating performance.
The following are descriptions of adjustments we make for our non-GAAP financial measures:
|
§
|
We exclude from our non-GAAP financial measures litigation charges we incur and favorable reserve adjustments. This does not include normal legal defense costs.
|
|
§
|
We exclude from our non-GAAP financial measures 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 from our non-GAAP financial measures severance and other restructuring charges in connection with the termination of personnel, closure of facilities and related costs.
|
|
§
|
We exclude from our non-GAAP financial measures the gains and losses on business dispositions, including investment banking, legal and accounting fees.
|
|
§
|
We exclude from our non-GAAP financial measures the effects of discrete income tax reserve and related adjustments recorded in a specific quarter.
|
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, adjusted pretax and net income of continuing operations, adjusted EPS and adjusted pretax results of our Tax Services segment. We also use EBITDA and pretax income of continuing operations as factors in incentive compensation calculations for our employees. These adjusted results 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.