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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from May 1, 2021 to June 30, 2021
Commission file number 1-06089

H&R Block, Inc.
(Exact name of registrant as specified in its charter)
Missouri44-0607856
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
One H&R Block Way, Kansas City, Missouri 64105
(Address of principal executive offices, including zip code)
(816) 854-3000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, without par valueHRBNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer            Accelerated filer         Non-accelerated filer           Smaller reporting company  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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No  
The number of shares outstanding of the registrant's Common Stock, without par value, at the close of business on July 30, 2021: 178,055,084 shares.



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Form 10-Q for the Transition period ended June 30, 2021
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PART I    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(unaudited, in 000s, except 
per share amounts)
Two months ended June 30,
20212020
REVENUES:
Service revenues$427,575 $266,154 
Royalty, product and other revenues38,531 25,293 
466,106 291,447 
OPERATING EXPENSES:
Costs of revenues232,763 197,432 
Selling, general and administrative98,988 81,671 
Total operating expenses331,751 279,103 
Other income (expense), net672 1,662 
Interest expense on borrowings(14,032)(21,409)
Income (loss) from continuing operations before income taxes120,995 (7,403)
Income taxes29,876 1,726 
Net income (loss) from continuing operations91,119 (9,129)
Net loss from discontinued operations, net of tax benefits of $451 and $424
(1,509)(1,421)
NET INCOME (LOSS)$89,610 $(10,550)
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations$0.50 $(0.05)
Discontinued operations(0.01)(0.01)
Consolidated$0.49 $(0.06)
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations$0.49 $(0.05)
Discontinued operations(0.01)(0.01)
Consolidated$0.48 $(0.06)
DIVIDENDS DECLARED PER SHARE$0.27 $0.26 
COMPREHENSIVE INCOME:
Net income (loss)$89,610 $(10,550)
Change in foreign currency translation adjustments(4,698)11,795 
Other comprehensive income (loss)(4,698)11,795 
Comprehensive income$84,912 $1,245 
See accompanying notes to consolidated financial statements.










H&R Block, Inc. | Transition period from May 1, 2021 to June 30, 2021 Form 10-Q
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CONSOLIDATED BALANCE SHEETS(unaudited, in 000s, except 
share and per share amounts)
As ofJune 30, 2021April 30, 2021
ASSETS
Cash and cash equivalents$1,434,381 $934,251 
Cash and cash equivalents - restricted149,783 128,669 
Receivables, less allowance for credit losses of $77,518 and $70,689
88,932 197,876 
Income taxes receivable330,872 333,366 
Prepaid expenses and other current assets76,414 105,562 
Total current assets2,080,382 1,699,724 
Property and equipment, at cost, less accumulated depreciation and amortization of $842,861 and $832,885
139,276 148,490 
Operating lease right of use assets445,847 437,246 
Intangible assets, net351,093 360,148 
Goodwill754,521 757,659 
Deferred tax assets and income taxes receivable181,996 182,848 
Other noncurrent assets61,273 67,531 
Total assets$4,014,388 $3,653,646 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses$164,269 $198,084 
Accrued salaries, wages and payroll taxes168,989 270,982 
Accrued income taxes and reserves for uncertain tax positions238,863 287,404 
Operating lease liabilities214,190 206,393 
Deferred revenue and other current liabilities196,175 200,216 
Total current liabilities982,486 1,163,079 
Long-term debt1,983,719 1,490,039 
Deferred tax liabilities and reserves for uncertain tax positions301,658 279,351 
Operating lease liabilities244,932 242,626 
Deferred revenue and other noncurrent liabilities113,535 126,150 
Total liabilities3,626,330 3,301,245 
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, stated value $0.01 per share, 800,000,000 shares authorized, shares issued of 216,655,616 and 216,655,616
2,167 2,167 
Additional paid-in capital779,465 783,292 
Accumulated other comprehensive income88 4,786 
Retained earnings286,694 248,506 
Less treasury shares, at cost, of 34,842,125 and 35,189,707
(680,356)(686,350)
Total stockholders' equity388,058 352,401 
Total liabilities and stockholders' equity$4,014,388 $3,653,646 
See accompanying notes to consolidated financial statements.
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Transition period from May 1, 2021 to June 30, 2021 Form 10-Q | H&R Block, Inc.

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CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in 000s)
Two months ended June 30,20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$89,610 $(10,550)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization24,586 26,621 
Provision4,617 1,718 
Deferred taxes22,926 2,004 
Stock-based compensation4,700 5,162 
Changes in assets and liabilities, net of acquisitions:
Receivables108,470 23,396 
Prepaid expenses, other current and noncurrent assets26,753 (12,372)
Accounts payable, accrued expenses, salaries, wages and payroll taxes(186,754)(118,368)
Deferred revenue, other current and noncurrent liabilities(15,809)(15,106)
Income tax receivables, accrued income taxes and income tax reserves(43,476)(2,185)
Other, net(797)(51)
Net cash provided by (used in) operating activities34,826 (99,731)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(5,188)(5,526)
Payments made for business acquisitions, net of cash acquired(846) 
Franchise loans funded(135)(128)
Payments from franchisees8,634 6,191 
Other, net1,227 (1,185)
Net cash provided by (used in) investing activities3,692 (648)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt494,435  
Repurchase of common stock, including shares surrendered(4,633)(2,376)
Proceeds from exercise of stock options308  
Other, net(5,584)(4,183)
Net cash provided by (used in) financing activities484,526 (6,559)
Effects of exchange rate changes on cash(1,800)3,865 
Net increase (decrease) in cash and cash equivalents, including restricted balances521,244 (103,073)
Cash, cash equivalents and restricted cash, beginning of period1,062,920 2,873,020 
Cash, cash equivalents and restricted cash, end of period$1,584,164 $2,769,947 
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid, net of refunds received$52,149 $2,568 
Interest paid on borrowings14,317 26,457 
Accrued additions to property and equipment2,085 1,022 
New operating right of use assets and related lease liabilities48,307 37,461 
Accrued dividends payable to common shareholders48,998 50,044 
See accompanying notes to consolidated financial statements.
H&R Block, Inc. | Transition period from May 1, 2021 to June 30, 2021 Form 10-Q
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(amounts in 000s, except
per share amounts)
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of May 1, 2021216,656 $2,167 $783,292 $4,786 $248,506 (35,190)$(686,350)$352,401 
Net income    89,610   89,610 
Other comprehensive loss   (4,698)   (4,698)
Stock-based compensation  4,285     4,285 
Stock-based awards exercised or vested  (8,112) (2,424)545 10,627 91 
Acquisition of treasury shares(2)
     (197)(4,633)(4,633)
Cash dividends declared - $0.27 per share
    (48,998)  (48,998)
Balances as of June 30, 2021216,656 $2,167 $779,465 $88 $286,694 (34,842)$(680,356)$388,058 


Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of May 1, 2020228,207 $2,282 $775,387 $(51,576)$42,965 (35,731)$(698,017)$71,041 
Net loss— — — — (10,550)— — (10,550)
Other comprehensive income— — — 11,795 — — — 11,795 
Stock-based compensation— — 5,110 — — — — 5,110 
Stock-based awards exercised or vested— — (7,554)— (826)419 8,206 (174)
Acquisition of treasury shares(2)
— — — — — (166)(2,376)(2,376)
Cash dividends declared - $0.26 per share
— — — — (50,044)— — (50,044)
Balances as of June 30, 2020228,207 $2,282 $772,943 $(39,781)$(18,455)(35,478)$(692,187)$24,802 
(1)    The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.
(2) Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.
See accompanying notes to consolidated financial statements.

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Transition period from May 1, 2021 to June 30, 2021 Form 10-Q | H&R Block, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             (unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe consolidated balance sheets as of June 30, 2021 and April 30, 2021, the consolidated statements of operations and comprehensive income for the two months ended June 30, 2021 and 2020, the consolidated statements of cash flows for the two months ended June 30, 2021 and 2020, and the consolidated statements of stockholders' equity for the two months ended June 30, 2021 and 2020 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of June 30, 2021 and 2020 and for all periods presented, have been made.
"H&R Block," "the Company," "we," "our," and "us" are used interchangeably to refer to H&R Block, Inc., to H&R Block, Inc. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our April 30, 2021 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of April 30, 2021 or for the year then ended are derived from our Annual Report on Form 10-K.
On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30. This is our transition report for the period from May 1, 2021 to June 30, 2021. The Company's 2022 fiscal year began on July 1, 2021 and will end on June 30, 2022.
MANAGEMENT ESTIMATESThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses arising from our discontinued mortgage business, contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, fair value of reporting units, and related matters. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
SEASONALITY OF BUSINESS – Our operating revenues are seasonal in nature with peak revenues typically occurring in the months of February through April. Therefore, results for interim periods are not indicative of results to be expected for the full year.
On March 17, 2021, the IRS extended the federal tax filing deadline in the United States (U.S.) for individual 2020 tax returns from April 15, 2021 to May 17, 2021. Consequently, a portion of revenues and expenses that would have normally been recognized in the period ending April 30, 2021 shifted to May and June 2021.
On March 21, 2020, the federal tax filing deadline in the U.S. for individual 2019 tax returns was extended from April 15, 2020 to July 15, 2020. In Canada, the deadline for individuals to file was extended to June 1, 2020. Consequently, a portion of revenues and expenses that would have normally been recognized in the period ending April 30, 2020 shifted into May through October 2020.
These extensions impacted the typical seasonality of our business and the comparability of our financial results.
DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation (including its subsidiaries, collectively, SCC), which exited its mortgage business in fiscal year 2008. See note 9 for additional information on litigation, claims, and other loss contingencies related to our discontinued operations.
H&R Block, Inc. |Transition period from May 1, 2021 to June 30, 2021 Form 10-Q
5

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NOTE 2: REVENUE RECOGNITION
The majority of our revenues are from our U.S. tax services business. The following table disaggregates our U.S. tax services revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Two months ended June 30,
20212020
Revenues:
U.S. assisted tax preparation$259,527 $154,224 
U.S. royalties29,659 17,283 
U.S. DIY tax preparation76,106 21,872 
International22,071 42,533 
Refund Transfers14,269 5,242 
Emerald Card®19,193 11,814 
Peace of Mind® Extended Service Plan20,231 21,261 
Tax Identity Shield®3,928 3,554 
Interest and fee income on Emerald AdvanceSM
299 488 
Wave12,481 7,624 
Other8,342 5,552 
Total revenues$466,106 $291,447 
Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Two months ended June 30,2021202020212020
Balances as of May 1,$183,871 $183,685 $20,169 $21,618 
Amounts deferred12,464 8,743 8 117 
Amounts recognized on previous deferrals(23,576)(24,601)(2,310)(3,028)
Balances as of June 30,$172,759 $167,827 $17,867 $18,707 
As of June 30, 2021, deferred revenue related to POM was $172.8 million. We expect that $101.6 million will be recognized over the next twelve months, while the remaining balance will be recognized within the next five years.
As of June 30, 2021 and 2020, Tax Identity Shield® (TIS) deferred revenue was $28.3 million and $28.8 million, respectively. Deferred revenue related to TIS was $28.9 million and $30.8 million as of April 30, 2021 and April 30, 2020, respectively. All deferred revenue related to TIS will be recognized within the next ten months.
NOTE 3: EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
EARNINGS PER SHARE – Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 0.3 million shares for the two months ended June 30, 2021 as the effect would be antidilutive, and 5.0 million shares for the two months ended June 30, 2020, as the effect would be antidilutive due to the net loss from continuing operations during the period.
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The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Two months ended June 30,
20212020
Net income (loss) from continuing operations attributable to shareholders$91,119 $(9,129)
Amounts allocated to participating securities(402)(174)
Net income (loss) from continuing operations attributable to common shareholders$90,717 $(9,303)
Basic weighted average common shares181,473 192,480 
Potential dilutive shares3,389  
Dilutive weighted average common shares184,862 192,480 
Earnings (loss) per share from continuing operations attributable to common shareholders:
Basic$0.50 $(0.05)
Diluted0.49 (0.05)
The decrease in the weighted average shares outstanding is due to share repurchases completed in prior fiscal years.
STOCK-BASED COMPENSATION – During the two months ended June 30, 2021, we granted 14.6 thousand shares under our stock-based compensation plan. We granted awards of 1.8 million shares under our stock-based compensation plans during the two months ended June 30, 2020. The change in shares granted compared to the prior year is due to the change in timing of grants due to the change in our fiscal year. Stock-based compensation expense of our continuing operations totaled $4.7 million for the two months ended June 30, 2021 and $5.2 million for the two months ended June 30, 2020. As of June 30, 2021, unrecognized compensation cost for stock options totaled $0.7 million, and for nonvested shares and units totaled $33.2 million.
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofJune 30, 2021April 30, 2021
Short-termLong-termShort-termLong-term
Loans to franchisees$9,497 $28,026 $16,666 $28,909 
Receivables for U.S. assisted and DIY tax preparation and related fees41,900 3,793 92,531 3,793 
H&R Block Instant RefundTM receivables
2,357 159 35,665 1,463 
H&R Block Emerald Advance® lines of credit
8,248 8,089 9,210 17,095 
Software receivables from retailers2,910  4,823  
Royalties and other receivables from franchisees6,167 178 16,136 196 
Wave payment processing receivables2,187  1,569  
Other15,666 1,350 21,276 1,233 
Total$88,932 $41,595 $197,876 $52,689 
Balances presented above as short-term are included in receivables, while the long-term portions are included in other noncurrent assets in the consolidated balance sheets.
LOANS TO FRANCHISEES Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and revolving lines of credit primarily for the purpose of funding working capital needs. As of June 30, 2021 and April 30, 2021 loans with a principal balance of $0.2 million and $0.1 million, respectively, were more than 90 days past due. We had no loans to franchisees on non-accrual status.
H&R Block, Inc. | Transition period from May 1, 2021 to June 30, 2021 Form 10-Q
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H&R BLOCK INSTANT REFUNDTM PROGRAM H&R Block Instant RefundTM amounts are generally received from the Canada Revenue Agency within 60 days of filing the client's return, with the remaining balance collectible from the client.
We review the credit quality of our Instant Refund receivables based on pools, which are segregated by the tax return year of origination, with older years being deemed more unlikely to be repaid. Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by tax return year of origination, as of June 30, 2021 are as follows:
(in 000s)
Tax return year of origination:BalanceNon-Accrual
2020$3,599 $1,551 
2019 and prior500 500 
4,099 $2,051 
Allowance(1,583)
Net balance$2,516 
H&R BLOCK EMERALD ADVANCE® LINES OF CREDIT We review the credit quality of our purchased participation interests in Emerald AdvanceSM (EA) receivables based on pools, which are segregated by the fiscal year of origination, with older years being deemed more unlikely to be repaid. Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, as of June 30, 2021, by fiscal year of origination, are as follows:
(in 000s)
Fiscal year of origination:BalanceNon-Accrual
2021$28,192 $28,192 
2020 and prior2,017 2,017 
Revolving loans13,832 12,182 
44,041 $42,391 
Allowance(27,704)
Net balance$16,337 
ALLOWANCE FOR CREDIT LOSSES Activity in the allowance for credit losses for our EA and all other short-term and long-term receivables for the two months ended June 30, 2021 and 2020 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of May 1, 2021$27,704 $55,804 $83,508 
Provision 4,617 4,617 
Charge-offs, recoveries and other (149)(149)
Balances as of June 30, 2021$27,704 $60,272 $87,976 
Balances as of May 1, 2020$32,034 $50,446 $82,480 
Provision 1,718 1,718 
Charge-offs, recoveries and other 2 2 
Balances as of June 30, 2020$32,034 $52,166 $84,200 
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NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the two months ended June 30, 2021 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of May 1, 2021$895,956 $(138,297)$757,659 
Acquisitions166  166 
Disposals and foreign currency changes, net(3,304) (3,304)
Impairments   
Balances as of June 30, 2021$892,818 $(138,297)$754,521 
We test goodwill for impairment annually as of February 1, or more frequently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
Components of intangible assets are as follows:
(in 000s)
Gross
Carrying
Amount
Accumulated
Amortization
Net
As of June 30, 2021:
Reacquired franchise rights$370,405 $(182,366)$188,039 
Customer relationships316,547 (255,294)61,253 
Internally-developed software160,315 (119,460)40,855 
Noncompete agreements41,228 (35,802)5,426 
Franchise agreements19,201 (16,108)3,093 
Purchased technology122,700 (74,913)47,787 
Trade name5,800 (1,160)4,640 
$1,036,196 $(685,103)$351,093 
As of April 30, 2021:
Reacquired franchise rights$370,112 $(179,356)$190,756 
Customer relationships316,508 (251,160)65,348 
Internally-developed software156,308 (116,126)40,182 
Noncompete agreements41,212 (35,484)5,728 
Franchise agreements19,201 (15,894)3,307 
Purchased technology122,700 (72,609)50,091 
Trade name5,800 (1,064)4,736 
$1,031,841 $(671,693)$360,148