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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
December 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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 January 31, 2022: 164,538,187 shares.



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Form 10-Q for the Period ended December 31, 2021
Table of Contents



Table of Contents
PART I    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(unaudited, in 000s, except 
per share amounts)
Three months ended December 31,Six months ended December 31,
2021202020212020
REVENUES:
Service revenues$133,725 $116,613 $310,702 $498,970 
Royalty, product and other revenues25,091 25,352 40,738 60,341 
158,816 141,965 351,440 559,311 
OPERATING EXPENSES:
Costs of revenues289,323 277,129 530,855 555,236 
Selling, general and administrative146,793 144,384 272,657 284,376 
Total operating expenses436,116 421,513 803,512 839,612 
Other income (expense), net1,467 538 1,751 3,042 
Interest expense on borrowings(23,085)(21,489)(45,915)(56,186)
Loss from continuing operations before income tax benefit(298,918)(300,499)(496,236)(333,445)
Income tax benefit(109,845)(46,510)(157,218)(18,546)
Net loss from continuing operations(189,073)(253,989)(339,018)(314,899)
Net loss from discontinued operations, net of tax benefits of $461, $1,132, $956 and $2,524
(1,532)(1,762)(3,188)(3,108)
NET LOSS$(190,605)$(255,751)$(342,206)$(318,007)
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations$(1.09)$(1.38)$(1.93)$(1.68)
Discontinued operations(0.01)(0.01)(0.02)(0.01)
Consolidated$(1.10)$(1.39)$(1.95)$(1.69)
DIVIDENDS DECLARED PER SHARE$0.27 $0.26 $0.54 $0.52 
COMPREHENSIVE LOSS:
Net loss$(190,605)$(255,751)$(342,206)$(318,007)
Change in foreign currency translation adjustments1,656 21,982 (9,521)30,798 
Other comprehensive income (loss)1,656 21,982 (9,521)30,798 
Comprehensive loss$(188,949)$(233,769)$(351,727)$(287,209)
See accompanying notes to consolidated financial statements.










H&R Block, Inc. |Q2 FY2022 Form 10-Q
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CONSOLIDATED BALANCE SHEETS(unaudited, in 000s, except 
share and per share amounts)
As ofDecember 31, 2021June 30, 2021
ASSETS
Cash and cash equivalents$336,250 $1,434,381 
Cash and cash equivalents - restricted123,686 149,783 
Receivables, less allowance for credit losses of $25,377 and $77,518
301,055 88,932 
Income taxes receivable351,829 330,872 
Prepaid expenses and other current assets126,784 76,414 
Total current assets1,239,604 2,080,382 
Property and equipment, at cost, less accumulated depreciation and amortization of $865,593 and $842,861
140,459 139,276 
Operating lease right of use assets396,522 445,847 
Intangible assets, net334,557 351,093 
Goodwill759,183 754,521 
Deferred tax assets and income taxes receivable179,626 181,996 
Other noncurrent assets50,104 61,273 
Total assets$3,100,055 $4,014,388 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses$155,841 $164,269 
Accrued salaries, wages and payroll taxes62,524 168,989 
Accrued income taxes and reserves for uncertain tax positions78,921 238,863 
Current portion of long-term debt499,395 — 
Operating lease liabilities189,984 214,190 
Deferred revenue and other current liabilities184,775 196,175 
Total current liabilities1,171,440 982,486 
Long-term debt1,760,830 1,983,719 
Deferred tax liabilities and reserves for uncertain tax positions249,751 301,658 
Operating lease liabilities215,826 244,932 
Deferred revenue and other noncurrent liabilities74,863 113,535 
Total liabilities3,472,710 3,626,330 
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, stated value $0.01 per share, 800,000,000 shares authorized, shares issued of 203,265,054 and 216,655,616
2,033 2,167 
Additional paid-in capital770,661 779,465 
Accumulated other comprehensive income (loss)(9,433)88 
Retained earnings (deficit)(466,856)286,694 
Less treasury shares, at cost, of 34,221,633 and 34,842,125
(669,060)(680,356)
Total stockholders' equity (deficiency)(372,655)388,058 
Total liabilities and stockholders' equity$3,100,055 $4,014,388 
See accompanying notes to consolidated financial statements.
2
Q2 FY2022 Form 10-Q| H&R Block, Inc.

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CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in 000s)
Six months ended December 31,20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(342,206)$(318,007)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization71,346 77,937 
Provision14,639 15,977 
Deferred taxes16,685 29,015 
Stock-based compensation13,233 13,359 
Changes in assets and liabilities, net of acquisitions:
Receivables(216,071)(248,184)
Prepaid expenses, other current and noncurrent assets(46,928)(61,070)
Accounts payable, accrued expenses, salaries, wages and payroll taxes(121,926)(14,798)
Deferred revenue, other current and noncurrent liabilities(50,882)(48,117)
Income tax receivables, accrued income taxes and income tax reserves(247,088)(146,215)
Other, net(4,373)(2,737)
Net cash used in operating activities(913,571)(702,840)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(39,371)(34,751)
Payments made for business acquisitions, net of cash acquired(19,333)(12,155)
Franchise loans funded(14,480)(20,064)
Payments from franchisees6,213 13,633 
Other, net9,527 (5,383)
Net cash used in investing activities(57,444)(58,720)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit borrowings(210,000)(2,050,000)
Proceeds from line of credit borrowings485,000 1,040,000 
Repayments of long-term debt (650,000)
Proceeds from issuance of long-term debt 647,965 
Dividends paid(96,938)(100,198)
Repurchase of common stock, including shares surrendered(324,589)(150,782)
Proceeds from exercise of stock options4,067 1,133 
Other, net(7,423)(19,705)
Net cash used in financing activities(149,883)(1,281,587)
Effects of exchange rate changes on cash(3,330)11,030 
Net decrease in cash and cash equivalents, including restricted balances(1,124,228)(2,032,117)
Cash, cash equivalents and restricted cash, beginning of period1,584,164 2,769,947 
Cash, cash equivalents and restricted cash, end of period$459,936 $737,830 
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid, net of refunds received$72,169 $95,789 
Interest paid on borrowings36,539 50,472 
Accrued purchase of common stock4,845  
Accrued additions to property and equipment1,393 1,285 
New operating right of use assets and related lease liabilities73,710 46,954 
Accrued dividends payable to common shareholders46,497 47,689 
See accompanying notes to consolidated financial statements.
H&R Block, Inc. | Q2 FY2022 Form 10-Q
3

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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
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2021216,656 $2,167 $779,465 $88 $286,694 (34,842)$(680,356)$388,058 
Net loss    (151,601)  (151,601)
Other comprehensive loss   (11,177)   (11,177)
Stock-based compensation  5,627     5,627 
Stock-based awards exercised or vested  (10,328) (291)705 13,765 3,146 
Acquisition of treasury shares(2)
     (205)(4,817)(4,817)
Repurchase and retirement of common shares(6,802)(68)(4,081) (161,619)  (165,768)
Cash dividends declared - $0.27 per share
    (47,940)  (47,940)
Balances as of September 30, 2021209,854 $2,099 $770,683 $(11,089)$(74,757)(34,342)$(671,408)$15,528 
Net loss    (190,605)  (190,605)
Other comprehensive income   1,656    1,656 
Stock-based compensation  5,640     5,640 
Stock-based awards exercised or vested  (1,709) (219)122 2,400 472 
Acquisition of treasury shares(2)
     (2)(52)(52)
Repurchase and retirement of common shares(6,589)(66)(3,953) (154,778)  (158,797)
Cash dividends declared - $0.27 per share
    (46,497)  (46,497)
Balances as of December 31, 2021203,265 $2,033 $770,661 $(9,433)$(466,856)(34,222)$(669,060)$(372,655)
(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.
4
Q2 FY2022 Form 10-Q| H&R Block, Inc.

Table of Contents
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2020228,207 $2,282 $772,943 $(39,781)$(18,455)(35,478)$(692,187)$24,802 
Net loss— — — — (62,256)— — (62,256)
Other comprehensive income— — — 8,816 — — — 8,816 
Stock-based compensation— — 7,259 — — — — 7,259 
Stock-based awards exercised or vested— — (2,613)— (636)215 4,176 927 
Acquisition of treasury shares(2)
— — — — — (42)(596)(596)
Repurchase and retirement of common shares(5,957)(60)(3,514)— (84,884)— — (88,458)
Cash dividends declared - $0.26 per share
— — — — (50,154)— — (50,154)
Balances as of September 30, 2020222,250 $2,222 $774,075 $(30,965)$(216,385)(35,305)$(688,607)$(159,660)
Net loss— — — — (255,751)— — (255,751)
Other comprehensive income— — — 21,982 — — — 21,982 
Stock-based compensation— — 5,181 — — — — 5,181 
Stock-based awards exercised or vested— — (134)— (220)8 144 (210)
Acquisition of treasury shares(2)
— — — — — (3)(44)(44)
Repurchase and retirement of common shares(3,531)(35)(2,083)— (59,566)— — (61,684)
Cash dividends declared - $0.26 per share
— — — — (47,689)— — (47,689)
Balances as of December 31, 2020218,719 $2,187 $777,039 $(8,983)$(579,611)(35,300)$(688,507)$(497,875)
(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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             (unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe consolidated balance sheets as of December 31, 2021 and June 30, 2021, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2021 and 2020, the consolidated statements of cash flows for the six months ended December 31, 2021 and 2020, and the consolidated statements of stockholders' equity for the three and six months ended December 31, 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 December 31, 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.
On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30. The Company's 2022 fiscal year began on July 1, 2021 and will end on June 30, 2022. As a result of this change, the Company filed a Transition Report on Form 10-Q that included the financial information for the transition period from May 1, 2021 to June 30, 2021 (Transition Period). 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 and our June 30, 2021 Transition Report filed on Form 10-Q.
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 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, shifting a portion of revenues and expenses from that tax season into the six months ended December 31, 2020. This extension 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.
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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)
Three months ended December 31,Six months ended December 31,
2021202020212020
Revenues:
U.S. assisted tax preparation$30,845 $34,020 $64,452 $241,187 
U.S. royalties3,404 5,357 10,762 28,009 
U.S. DIY tax preparation9,210 6,114 13,271 53,577 
International27,907 26,637 86,232 85,413 
Refund Transfers777 397 2,442 6,510 
Emerald Card®24,830 9,962 53,088 22,398 
Peace of Mind® Extended Service Plan17,315 18,570 42,151 45,762 
Tax Identity Shield®5,200 4,809 10,353 13,803 
Interest and fee income on Emerald AdvanceSM
12,424 14,039 12,903 14,565 
Wave19,497 14,837 38,634 28,574 
Other7,407 7,223 17,152 19,513 
Total revenues$158,816 $141,965 $351,440 $559,311 
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
Six months ended December 31,2021202020212020
Balances as of July 1,$172,759 $167,827 $17,867 $18,707 
Amounts deferred2,961 12,421 10 46 
Amounts recognized on previous deferrals(49,034)(52,974)(4,805)(5,834)
Balances as of December 31,
$126,686 $127,274 $13,072 $12,919 
As of December 31, 2021, deferred revenue related to POM was $126.7 million. We expect that $93.1 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following five years.
As of December 31, 2021 and 2020, Tax Identity Shield® (TIS) deferred revenue was $18.5 million and $17.1 million, respectively. Deferred revenue related to TIS was $28.3 million and $28.8 million as of June 30, 2021 and June 30, 2020, respectively. All deferred revenue related to TIS will be recognized by April 30, 2022.
NOTE 3: EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
EARNINGS PER SHARE – Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 5.1 million shares for the three and six months ended December 31, 2021 and 5.3 million shares for the three and six months ended December 31, 2020, as the effect would be antidilutive due to the net loss from continuing operations during the periods.
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The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2021202020212020
Net loss from continuing operations attributable to shareholders$(189,073)$(253,989)$(339,018)$(314,899)
Amounts allocated to participating securities(210)(210)(449)(417)
Net loss from continuing operations attributable to common shareholders$(189,283)$(254,199)$(339,467)$(315,316)
Basic weighted average common shares173,378 183,883 175,739 188,099 
Potential dilutive shares    
Dilutive weighted average common shares173,378 183,883 175,739 188,099 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.09)$(1.38)$(1.93)$(1.68)
Diluted(1.09)(1.38)(1.93)(1.68)
The decrease in the weighted average shares outstanding is due to share repurchases completed in the current and prior fiscal years.
STOCK-BASED COMPENSATION – During the six months ended December 31, 2021, we granted 1.5 million shares under our stock-based compensation plan. We granted awards of 0.6 million shares under our stock-based compensation plans during the six months ended December 31, 2020. The increase in shares granted compared to the prior year is a result of the change in timing of grants due to the change in our fiscal year. Stock-based compensation expense of our continuing operations totaled $6.4 million and $13.2 million for the three and six months ended December 31, 2021, respectively, and $5.6 million and $13.4 million for the three and six months ended December 31, 2020, respectively. As of December 31, 2021, unrecognized compensation cost for stock options totaled $0.6 million, and for nonvested shares and units totaled $51.8 million.
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2021June 30, 2021
Short-termLong-termShort-termLong-term
Loans to franchisees$19,030 $28,654 $9,497 $28,026 
Receivables for U.S. assisted and DIY tax preparation and related fees6,326 3,681 41,900 3,793 
H&R Block Instant RefundTM receivables
324 16 2,357 159 
H&R Block Emerald Advance® lines of credit
246,970 1,791 8,248 8,089 
Software receivables from retailers1,886  2,910  
Royalties and other receivables from franchisees3,377 133 6,167 178 
Wave payment processing receivables3,062  2,187  
Other20,080 1,279 15,666 1,350 
Total$301,055 $35,554 $88,932 $41,595 
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Q2 FY2022 Form 10-Q|