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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 6, 2018

H&R BLOCK, INC.
(Exact name of registrant as specified in charter)
MISSOURI
1-06089
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 







Item 2.02.    Results of Operations and Financial Condition.
On March 6, 2018, the Company issued a press release regarding the Company’s results of operations for the fiscal quarter ended January 31, 2018. 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 March 6, 2018





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:
March 6, 2018
By:
/s/ Scott W. Andreasen
 
 
 
Scott W. Andreasen
 
 
 
Vice President and Secretary



Exhibit

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Exhibit 99.1
News Release
For Immediate Release: March 6, 2018
H&R Block Announces Strong Start to the Tax Season and Fiscal 2018 Third Quarter Results
KANSAS CITY, Mo. - H&R Block, Inc. (NYSE: HRB) today released U.S. tax return volume through February 28 and its financial results for the fiscal 2018 third quarter ended January 31, 2018. The company normally reports a fiscal third quarter loss due to the seasonality of its tax business.
Tax Season and Fiscal Third Quarter Highlights1 
▪
H&R Block grows total U.S. returns through February 28.
▪
Company reiterates financial outlook for full year.
▪
Fiscal third quarter revenues increased $37 million, or 8%, to $488 million primarily due to increased return volumes in both Assisted and DIY tax preparation businesses.
▪
Loss per share from continuing operations increased $0.67, from $0.49 to $1.16, solely due to changes in the company's effective tax rate resulting from the recently enacted federal corporate tax legislation. The negative impact from these corporate tax rate changes is unique to the company's fiscal third quarter, as the impact will be favorable on a full fiscal year basis.
Tax Season Results2 
H&R Block total U.S. return volume increased 3.4% through February 28, with Assisted returns increasing 0.7% and DIY returns increasing 8.2%. Positive results in the Assisted business were due to the success of early-season promotions including the company's Refund Advance no-interest loan and Free Federal 1040EZ offer. In DIY, continued product improvements, enhanced partnerships, and the H&R Block More Zero® promotion led to the strong performance.
CEO Perspective
"I'm proud of what we have accomplished so far this tax season, with strong results in both the Assisted and DIY tax preparation categories," said Jeff Jones, H&R Block's president and chief executive officer. "As we look to the second half of the tax season, we'll continue to focus on execution as we leverage our products, partnerships and marketing to deliver on our financial outlook."

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 Volume changes to prior year noted in this paragraph and in the table attached to this release are based on a date-to-date basis.







Fiscal 2018 Third Quarter Results From Continuing Operations
(in millions, except EPS)
 
Fiscal Year 2018
 
Fiscal Year 2017
Revenue
 
$
488

 
$
452

Pretax Loss
 
$
(121
)
 
$
(151
)
Net Loss
 
$
(243
)
 
$
(101
)
Weighted-Avg. Shares - Diluted
 
209.1

 
207.9

EPS3
 
$
(1.16
)
 
$
(0.49
)
EBITDA4
 
$
(48
)
 
$
(79
)
 
 
 
 
 
Key Financial Metrics
▪
Total revenues increased $37 million, or 8%, to $488 million primarily due to increased return volumes.
▪
Total operating expenses increased $9 million, or 2%, to $586 million primarily due to increases in compensation costs, partially offset by lower marketing and advertising expenses.
▪
Pretax loss decreased $30 million to $121 million.
▪
Loss per share from continuing operations increased $0.67, from $0.49 to $1.16, solely due to changes in the company's effective tax rate resulting from the recently enacted federal corporate tax legislation. The negative impact from these corporate tax rate changes is unique to the company's fiscal third quarter, as the impact will be favorable on a full fiscal year basis. The company expects its fiscal year effective tax rate to be 6%-9%, which is an update to the anticipated annual effective tax rate for fiscal 2018 disclosed in the company's Form 8-K filed with the Securities and Exchange Commission (SEC) on January 22, 2018.
CFO Perspective
"We are pleased with our performance during the first half of the tax season, which was in line with our expectations," said Tony Bowen, H&R Block's chief financial officer. "Our expectations for revenue growth and margin are unchanged from the outlook we provided in December."
Dividends
As previously announced, a quarterly cash dividend of $0.24 per share is payable on April 2, 2018 to shareholders of record as of March 13, 2018. H&R Block has paid quarterly dividends consecutively since the company went public in 1962.
Discontinued Operations
During the fiscal quarter, Sand Canyon Corporation made payments of $4.5 million pursuant to a settlement agreement entered into in fiscal 2016. The full amount of the payments had been previously accrued by the company. For additional information on Sand Canyon, please refer to disclosures in the company’s reports on Forms 10-K, 10-Q, and other filings with the SEC.
Conference Call
Discussion of the fiscal 2018 third quarter results, future outlook, and a general business update will occur during the company’s previously announced fiscal third quarter earnings conference call for analysts, institutional investors, and shareholders. The call is scheduled for 4:30 p.m. Eastern time on March 6,

3 All per share amounts are based on fully diluted shares at the end of the corresponding period.
4 The company reports non-GAAP financial measures of performance, including earnings before interest, tax, depreciation, and amortization (EBITDA), which it considers to be useful metrics for management and investors to evaluate and compare the ongoing operating performance of the company. See "About Non-GAAP Financial Information" below for more information regarding financial measures not prepared in accordance with generally accepted accounting principles (GAAP).


2018. To access the call, please dial the number below approximately 10 minutes prior to the scheduled starting time:
U.S./Canada (855) 702-5257 or International (213) 358-0868
Conference ID: 3876229
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 7:30 p.m. Eastern time on March 6, 2018, and continuing until April 6, 2018, by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International). The conference ID is 3876229. The webcast will be available for replay beginning on March 7, 2018 at http://investors.hrblock.com.
About H&R Block
H&R Block, Inc. (NYSE: HRB) is a global consumer tax services provider. 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 for the DIY consumer. H&R Block also offers adjacent Tax Plus products and services. In fiscal 2017, H&R Block had annual revenues of over $3 billion with 23 million tax returns prepared worldwide. For more information, visit the H&R Block Newsroom.
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," "goal," "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, client trajectory, income, effective tax rate, 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, 2017 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. In addition, factors that may cause the company’s actual estimated effective tax rate to differ from estimates include the company’s actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the company has made, guidance from the Internal Revenue Service, SEC, or the Financial Accounting Standards Board about the Tax Legislation, and future actions of the company. 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:    Susan Waldron, (816) 854-5522, susan.waldron@hrblock.com


TABLES FOLLOW




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CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
(unaudited, in 000s - except per share amounts)
 
 
 
Three months ended January 31,
 
Nine months ended January 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
REVENUES:
 
 
 
 
 
 
 
 
Service revenues
 
$
388,771

 
$
361,397

 
$
641,389

 
$
592,721

Royalty, product and other revenues
 
99,655

 
90,485

 
125,693

 
115,678

 
 
488,426

 
451,882

 
767,082

 
708,399

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
Compensation and benefits
 
181,958

 
165,015

 
303,434

 
275,098

Occupancy and equipment
 
107,981

 
104,094

 
311,752

 
297,586

Provision for bad debt
 
29,191

 
28,348

 
33,429

 
29,634

Depreciation and amortization
 
32,046

 
29,828

 
90,391

 
87,206

Other
 
65,425

 
61,492

 
145,329

 
136,041

 
 
416,601

 
388,777

 
884,335

 
825,565

Selling, general and administrative:
 
 
 
 
 
 
 
 
Marketing and advertising
 
64,209

 
84,101

 
82,875

 
103,663

Compensation and benefits
 
66,942

 
58,408

 
185,453

 
174,223

Depreciation and amortization
 
16,442

 
15,332

 
46,487

 
44,986

Other selling, general and administrative
 
21,505

 
30,056

 
66,378

 
77,500

 
 
169,098

 
187,897

 
381,193

 
400,372

Total operating expenses
 
585,699

 
576,674

 
1,265,528

 
1,225,937

 
 
 
 
 
 
 
 
 
Other income (expense), net
 
1,028

 
134

 
3,259

 
4,948

Interest expense on borrowings
 
(24,560
)
 
(25,940
)
 
(67,102
)
 
(70,026
)
Loss from continuing operations before income taxes (benefit)
 
(120,805
)
 
(150,598
)
 
(562,289
)
 
(582,616
)
Income taxes (benefit)
 
122,120

 
(49,386
)
 
(43,234
)
 
(216,963
)
Net loss from continuing operations
 
(242,925
)
 
(101,212
)
 
(519,055
)
 
(365,653
)
Net loss from discontinued operations
 
(2,720
)
 
(3,302
)
 
(10,723
)
 
(8,754
)
NET LOSS
 
$
(245,645
)
 
$
(104,514
)
 
$
(529,778
)
 
$
(374,407
)
 
 
 
 
 
 
 
 
 
BASIC AND DILUTED LOSS PER SHARE:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(1.16
)
 
$
(0.49
)
 
$
(2.49
)
 
$
(1.71
)
Discontinued operations
 
(0.02
)
 
(0.01
)
 
(0.05
)
 
(0.04
)
Consolidated
 
$
(1.18
)
 
$
(0.50
)
 
$
(2.54
)
 
$
(1.75
)
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE BASIC AND DILUTED SHARES
 
209,080

 
207,862

 
208,693

 
214,627

 
 
 
 
 
 
 
 
 





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CONSOLIDATED BALANCE SHEETS
 
(unaudited, in 000s - except per share data)
 
As of
 
January 31, 2018
 
January 31, 2017
 
April 30, 2017
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
187,366

 
$
221,172

 
$
1,011,331

Cash and cash equivalents - restricted
 
83,033

 
70,166

 
106,208

Receivables, net
 
791,618

 
787,865

 
162,775

Income taxes receivable
 
72,775

 
38,032

 
—

Prepaid expenses and other current assets
 
149,349

 
85,599

 
65,725

Total current assets
 
1,284,141

 
1,202,834

 
1,346,039

Property and equipment, net
 
249,911

 
282,358

 
263,827

Intangible assets, net
 
390,993

 
434,720

 
409,364

Goodwill
 
504,789

 
483,320

 
491,207

Deferred tax assets and income taxes receivable
 
25,305

 
71,639

 
83,728

Other noncurrent assets
 
106,161

 
102,760

 
99,943

Total assets
 
$
2,561,300

 
$
2,577,631

 
$
2,694,108

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
163,653

 
$
239,085

 
$
217,028

Accrued salaries, wages and payroll taxes
 
135,626

 
123,457

 
183,856

Accrued income taxes and reserves for uncertain tax positions
 
164,246

 
7,537

 
348,199

Current portion of long-term debt
 
1,015

 
942

 
981

Deferred revenue and other current liabilities
 
201,988

 
183,616

 
189,216

Total current liabilities
 
666,528

 
554,637

 
939,280

Long-term debt and line of credit borrowings
 
2,284,231

 
2,592,622

 
1,493,017

Deferred tax liabilities and reserves for uncertain tax positions
 
201,384

 
109,557

 
159,085

Deferred revenue and other noncurrent liabilities
 
107,226

 
121,631

 
163,609

Total liabilities
 
3,259,369

 
3,378,447

 
2,754,991

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
Common stock, no par, stated value $.01 per share
 
2,462

 
2,462

 
2,462

Additional paid-in capital
 
758,361

 
752,748

 
754,912

Accumulated other comprehensive loss
 
(9,374
)
 
(15,363
)
 
(15,299
)
Retained deficit
 
(729,578
)
 
(785,823
)
 
(48,206
)
Less treasury shares, at cost
 
(719,940
)
 
(754,840
)
 
(754,752
)
Total stockholders' equity (deficiency)
 
(698,069
)
 
(800,816
)
 
(60,883
)
Total liabilities and stockholders' equity
 
$
2,561,300

 
$
2,577,631

 
$
2,694,108

 
 
 
 
 
 
 





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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(unaudited, in 000s)
 
Nine months ended January 31,
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net loss
 
$
(529,778
)
 
$
(374,407
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
136,878

 
132,192

Provision for bad debt
 
33,429

 
29,634

Deferred taxes
 
113,345

 
6,128

Stock-based compensation
 
17,065

 
16,945

Changes in assets and liabilities, net of acquisitions:
 
 
 
 
Receivables
 
(651,200
)
 
(646,290
)
Prepaid expenses and other current assets
 
(83,201
)
 
(23,208
)
Other noncurrent assets
 
8,310

 
7,575

Accounts payable and accrued expenses
 
(36,608
)
 
(33,560
)
Accrued salaries, wages and payroll taxes
 
(49,255
)
 
(37,978
)
Deferred revenue and other current liabilities
 
10,113

 
(44,243
)
Deferred revenue and other noncurrent liabilities
 
(58,695
)
 
(57,216
)
Income tax receivables, accrued income taxes and income tax reserves
 
(255,650
)
 
(378,987
)
Other, net
 
(12,454
)
 
(6,444
)
Net cash used in operating activities
 
(1,357,701
)
 
(1,409,859
)
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Principal payments and sales of mortgage loans and real estate owned, net
 
—

 
207,174

Capital expenditures
 
(77,865
)
 
(73,924
)
Payments made for business acquisitions, net of cash acquired
 
(39,397
)
 
(52,825
)
Franchise loans funded
 
(20,226
)
 
(31,788
)
Payments received on franchise loans
 
13,391

 
20,816

Other, net
 
1,524

 
(4,711
)
Net cash provided by (used in) investing activities
 
(122,573
)
 
64,742

 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Repayments of line of credit borrowings
 
(40,000
)
 
(445,000
)
Proceeds from line of credit borrowings
 
830,000

 
1,545,000

Dividends paid
 
(150,258
)
 
(141,537
)
Repurchase of common stock, including shares surrendered
 
(7,746
)
 
(322,782
)
Proceeds from exercise of stock options
 
28,268

 
2,403

Other, net
 
(28,922
)
 
373

Net cash provided by financing activities
 
631,342

 
638,457

 
 
 
 
 
Effects of exchange rate changes on cash
 
1,792

 
(2,913
)
 
 
 
 
 
Net decrease in cash, cash equivalents and restricted cash
 
(847,140
)
 
(709,573
)
Cash, cash equivalents and restricted cash, beginning of period
 
1,117,539

 
1,000,911

Cash, cash equivalents and restricted cash, end of period
 
$
270,399

 
$
291,338

 
 
 
 
 
SUPPLEMENTARY CASH FLOW DATA:
 
 
 
 
Income taxes paid, net of refunds received
 
$
102,755

 
$
158,656

Interest paid on borrowings
 
57,834

 
59,809

Accrued additions to property and equipment
 
1,078

 
5,959

 
 
 
 
 
Note: Effective May 1, 2017, we adopted the provisions of Accounting Standards Update No. 2016-18, "Restricted Cash (a consensus of the FASB Emerging Issues Task Force)," (ASU 2016-18) on a retrospective basis. Accordingly, the statements of cash flows explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents per ASU 2016-18. Amounts for prior periods have been retrospectively adjusted to conform to the current period presentation.




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FINANCIAL RESULTS
 
(unaudited, in 000s - except per share amounts)
 
 
 
Three months ended January 31,
 
Nine months ended January 31,
 
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
 
U.S. assisted tax preparation fees
 
$
267,328

 
$
245,262

 
$
333,956

 
$
306,030

U.S. royalties
 
45,420

 
43,254

 
59,395

 
56,607

U.S. DIY tax preparation fees
 
31,322

 
30,745

 
38,811

 
36,748

International revenues
 
12,308

 
10,914

 
100,659

 
93,328

Revenues from Refund Transfers
 
50,770

 
47,323

 
54,721

 
51,314

Revenues from Emerald Card®
 
16,125

 
14,100

 
40,292

 
35,809

Revenues from Peace of Mind® Extended Service Plan
 
19,967

 
18,135

 
76,495

 
67,855

Interest and fee income on Emerald Advance
 
31,075

 
30,060

 
32,333

 
31,519

Other
 
14,111

 
12,089

 
30,420

 
29,189

 
 
488,426

 
451,882

 
767,082

 
708,399

Compensation and benefits:
 
 
 
 
 
 
 
 
Field wages
 
156,027

 
142,084

 
261,866

 
237,223

Other wages
 
50,717

 
45,172

 
140,637

 
129,479

Benefits and other compensation
 
42,156

 
36,167

 
86,384

 
82,619

 
 
248,900

 
223,423

 
488,887

 
449,321

Occupancy and equipment
 
107,731

 
103,867

 
311,335

 
297,275

Marketing and advertising
 
64,209

 
84,101

 
82,875

 
103,663

Depreciation and amortization
 
48,488

 
45,160

 
136,878

 
132,192

Provision for bad debt
 
29,191

 
28,348

 
33,429

 
29,634

Supplies
 
4,950

 
4,453

 
12,052

 
11,467

Other
 
82,230

 
87,322

 
200,072

 
202,385

Total operating expenses
 
585,699

 
576,674

 
1,265,528

 
1,225,937

 
 
 
 
 
 
 
 
 
Other income (expense), net
 
1,028

 
134

 
3,259

 
4,948

Interest expense on borrowings
 
(24,560
)
 
(25,940
)
 
(67,102
)
 
(70,026
)
Pretax loss
 
(120,805
)
 
(150,598
)
 
(562,289
)
 
(582,616
)
Income taxes (benefit)
 
122,120

 
(49,386
)
 
(43,234
)
 
(216,963
)
Net loss from continuing operations
 
(242,925
)
 
(101,212
)
 
(519,055
)
 
(365,653
)
Net loss from discontinued operations
 
(2,720
)
 
(3,302
)
 
(10,723
)
 
(8,754
)
NET LOSS
 
$
(245,645
)
 
$
(104,514
)
 
$
(529,778
)
 
$
(374,407
)
 
 
 
 
 
 
 
 
 
BASIC AND DILUTED LOSS PER SHARE:
 
 
 
 
 
 
 
 
Continuing operations
 
$
(1.16
)
 
$
(0.49
)
 
$
(2.49
)
 
$
(1.71
)
Discontinued operations
 
(0.02
)
 
(0.01
)
 
(0.05
)
 
(0.04
)
Consolidated
 
$
(1.18
)
 
$
(0.50
)
 
$
(2.54
)
 
$
(1.75
)
 
 
 
 
 
 
 
 
 
Weighted average basic and diluted shares
 
209,080

 
207,862

 
208,693

 
214,627

 
 
 
 
 
 
 
 
 
EBITDA from continuing operations (1)
 
$
(47,757
)
 
$
(79,498
)
 
$
(358,309
)
 
$
(380,398
)
 
 
 
 
 
 
 
 
 
(1) 
See "Non-GAAP Financial Information" for a reconciliation of non-GAAP measures.





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U.S. TAX OPERATING DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal Year-to-Date
 
 
 
Fiscal Year-to-Date
 
 
 
 
January 31,
 
 
 
February 28,
 
 
 
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax Returns Prepared: (in 000s) (1) (2)
 
 
 
 
 
 
 
 
 
 
 
 
Company-Owned Operations
 
1,424

 
1,375

 
3.6
 %
 
4,352

 
4,322

 
0.7
%
Franchise Operations
 
736

 
705

 
4.4
 %
 
2,105

 
2,088

 
0.8
%
   Total H&R Block Assisted
 
2,160

 
2,080

 
3.8
 %
 
6,457

 
6,410

 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Desktop
 
151

 
155

 
(2.6
)%
 
764

 
750

 
1.9
%
Online
 
1,126

 
1,056

 
6.6
 %
 
3,170

 
2,887

 
9.8
%
Total H&R Block DIY Tax Software
 
1,277

 
1,211

 
5.5
 %
 
3,934

 
3,637

 
8.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
IRS Free File
 
94

 
96

 
(2.1
)%
 
306

 
298

 
2.7
%
Total H&R Block U.S. Returns
 
3,531

 
3,387

 
4.3
 %
 
10,697

 
10,345

 
3.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Average Charge: (3)
 
 
 
 
 
 
 
 
 
 
 
 
Company-Owned Operations
 
$
235.57

 
$
226.89

 
3.8
 %
 
$
222.59

 
$
217.50

 
2.3
%
Franchise Operations (4)
 
226.07

 
219.06

 
3.2
 %
 
206.77

 
202.18

 
2.3
%
DIY Tax Software
 
30.39

 
30.35

 
0.1
 %
 
27.71

 
26.79

 
3.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 business returns, which account for less than 1% of assisted tax returns. A DIY tax software 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)  
Amounts have been reclassified between company-owned and franchise for offices which were refranchised or repurchased by the company during the year.
(3)  
Net average charge is calculated as tax preparation fees divided by tax returns prepared. For DIY Tax Software, net average charge excludes IRS Free File.
(4) 
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.




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Three months ended January 31,
 
Nine months ended January 31,
NON-GAAP FINANCIAL MEASURE - EBITDA
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Net loss - as reported
 
$
(245,645
)
 
$
(104,514
)
 
$
(529,778
)
 
$
(374,407
)
Discontinued operations, net
 
2,720

 
3,302

 
10,723

 
8,754

Net loss from continuing operations - as reported
 
(242,925
)
 
(101,212
)
 
(519,055
)
 
(365,653
)
Add back:
 
 
 
 
 
 
 
 
Income taxes of continuing operations
 
122,120

 
(49,386
)
 
(43,234
)
 
(216,963
)
Interest expense of continuing operations
 
24,560

 
25,940

 
67,102

 
70,026

Depreciation and amortization of continuing operations
 
48,488

 
45,160

 
136,878

 
132,192

 
 
195,168

 
21,714

 
160,746

 
(14,745
)
 
 
 
 
 
 
 
 
 
EBITDA from continuing operations
 
$
(47,757
)
 
$
(79,498
)
 
$
(358,309
)
 
$
(380,398
)
 
 
 
 
 
 
 
 
 
 
 
Three months ended January 31,
 
Nine months ended January 31,
Supplemental Information
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Stock-based compensation expense:
 
 
 
 
 
 
 
 
Pretax
 
$
5,438

 
$
4,473

 
$
17,065

 
$
16,945

After-tax
 
8,228

 
2,948

 
15,753

 
10,894

Amortization of intangible assets:
 
 
 
 
 
 
 
 
Pretax
 
$
20,792

 
$
19,287

 
$
59,465

 
$
57,324

After-tax
 
29,863

 
12,621

 
54,892

 
36,854

 
 
 
 
 
 
 
 
 
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 our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business.
We may consider whether significant items that arise in the future should be excluded from our non-GAAP financial measures.
We measure the performance of our business using a variety of metrics, including EBITDA from continuing operations. We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.