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hrb-20220930

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	September 30, 2022
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)


Missouri						44-0607856
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	HRB	New 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 October 31, 2022: 155,468,155 shares.

Table of Contents

Form 10-Q for the Period ended September 30, 2022

Table of Contents


	PART I
Item 1.	Consolidated Statements of Operations and Comprehensive Loss Three months ended September 3 0 , 2022 and 2021	1
	Consolidated Balance Sheets As of September 3 0 , 2022 and June 30, 20 22	2
	Consolidated Statements of Cash Flows Three months ended September 3 0 , 2022 and 2021	3
	Consolidated Statements of Stockholders' Equity Three months ended September 3 0 , 2022 and 2021	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
	PART II
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
	Signatures	23

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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 September 30,
			2022		2021
REVENUES:
Service revenues			$	167,194	$	176,977
Royalty, product and other revenues			12,791		15,647
			179,985		192,624
OPERATING EXPENSES:
Costs of revenues			260,662		241,532
Selling, general and administrative			128,434		125,864
Total operating expenses			389,096		367,396

Other income (expense), net			3,611		284
Interest expense on borrowings			(15,824)		(22,830)
Loss from continuing operations before income tax benefit			(221,324)		(197,318)
Income tax benefit			(53,957)		(47,373)
Net loss from continuing operations			(167,367)		(149,945)
Net loss from discontinued operations, net of tax benefits of $316 and $495			(1,054)		(1,656)
NET LOSS			$	(168,421)	$	(151,601)
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations			$	(1.05)	$	(0.84)
Discontinued operations			(0.01)		(0.01)
Consolidated			$	(1.06)	$	(0.85)








DIVIDENDS DECLARED PER SHARE			$	0.29	$	0.27
COMPREHENSIVE LOSS:
Net loss			$	(168,421)	$	(151,601)



Change in foreign currency translation adjustments			(32,345)		(11,177)
Other comprehensive loss			(32,345)		(11,177)
Comprehensive loss			$	(200,766)	$	(162,778)

See accompanying notes to consolidated financial statements.


H&R Block, Inc. \|Q1 FY2023 Form 10-Q			1

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CONSOLIDATED BALANCE SHEETS	(unaudited, in 000s, except share and per share amounts)
As of	September 30, 2022		June 30, 2022
ASSETS
Cash and cash equivalents	$	322,824	$	885,015
Cash and cash equivalents - restricted	108,550		165,698
Receivables, less allowance for credit losses of $65,217 and $65,351	61,035		58,447
Income taxes receivable	154,123		202,838
Prepaid expenses and other current assets	77,906		72,460
Total current assets	724,438		1,384,458
Property and equipment, at cost, less accumulated depreciation and amortization of $867,402 and $857,468	127,934		123,912
Operating lease right of use assets	412,823		427,783
Intangible assets, net	303,483		309,644
Goodwill	746,711		760,401
Deferred tax assets and income taxes receivable	193,761		208,948
Other noncurrent assets	50,082		54,012
Total assets	$	2,559,232	$	3,269,158
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses	$	168,496	$	160,929
Accrued salaries, wages and payroll taxes	56,162		154,764
Accrued income taxes and reserves for uncertain tax positions	188,118		280,115

Operating lease liabilities	197,491		206,898
Deferred revenue and other current liabilities	179,956		196,107
Total current liabilities	790,223		998,813
Long-term debt	1,487,407		1,486,876
Deferred tax liabilities and reserves for uncertain tax positions	229,340		226,362
Operating lease liabilities	222,914		228,820
Deferred revenue and other noncurrent liabilities	94,333		116,656
Total liabilities	2,824,217		3,057,527
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, stated value $0.01 per share, 800,000,000 shares authorized, shares issued of 188,644,066 and 193,571,309	1,887		1,936
Additional paid-in capital	759,629		772,182
Accumulated other comprehensive loss	(53,990)		(21,645)
Retained earnings (deficit)	(311,671)		120,405
Less treasury shares, at cost, of 33,176,727 and 33,640,988	(660,840)		(661,247)
Total stockholders' equity (deficiency)	(264,985)		211,631
Total liabilities and stockholders' equity	$	2,559,232	$	3,269,158

See accompanying notes to consolidated financial statements.


2			Q1 FY2023 Form 10-Q\| H&R Block, Inc.

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CONSOLIDATED STATEMENTS OF CASH FLOWS	(unaudited, in 000s)
Three months ended September 30,	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(168,421)	$	(151,601)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	33,624		35,715
Provision	1,077		1,850
Deferred taxes	16,918		(13,547)
Stock-based compensation	7,654		6,847

Changes in assets and liabilities, net of acquisitions:

Receivables	3,702		35,913
Prepaid expenses, other current and noncurrent assets	(2,669)		8,610

Accounts payable, accrued expenses, salaries, wages and payroll taxes	(129,908)		(134,215)

Deferred revenue, other current and noncurrent liabilities	(41,549)		(27,990)

Income tax receivables, accrued income taxes and income tax reserves	(41,659)		(72,768)
Other, net	(435)		(1,438)
Net cash used in operating activities	(321,666)		(312,624)
CASH FLOWS FROM INVESTING ACTIVITIES:



Capital expenditures	(16,161)		(15,620)
Payments made for business acquisitions, net of cash acquired	(16,507)		(4,265)



Franchise loans funded	(6,686)		(4,474)
Payments from franchisees	2,270		2,839

Other, net	(274)		2,067
Net cash used in investing activities	(37,358)		(19,453)
CASH FLOWS FROM FINANCING ACTIVITIES:






Dividends paid	(43,093)		(48,996)
Repurchase of common stock, including shares surrendered	(202,845)		(165,800)
Proceeds from exercise of stock options	—		3,385
Other, net	(955)		(5,911)
Net cash used in financing activities	(246,893)		(217,322)
Effects of exchange rate changes on cash	(13,422)		(3,959)
Net decrease in cash and cash equivalents, including restricted balances	(619,339)		(553,358)
Cash, cash equivalents and restricted cash, beginning of period	1,050,713		1,584,164
Cash, cash equivalents and restricted cash, end of period	$	431,374	$	1,030,806
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid (received), net	$	(29,811)	$	38,419
Interest paid on borrowings	19,792		12,594


Accrued purchase of common stock	32,356		4,785
Accrued additions to property and equipment	4,704		6,273
New operating right of use assets and related lease liabilities	52,265		29,371
Accrued dividends payable to common shareholders	46,100		47,940

See accompanying notes to consolidated financial statements.


H&R Block, Inc. \| Q1 FY2023 Form 10-Q			3

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY					(amounts in 000s, except per share amounts)
	Common Stock			Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)(1)		Retained Earnings (Deficit)		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount									Shares			Amount
Balances as of July 1, 2022	193,571	$	1,936		$	772,182	$	(21,645)	$	120,405	(33,641)	$	(661,247)		$	211,631
Net loss	—	—			—		—		(168,421)		—	—			(168,421)
Other comprehensive loss	—	—			—		(32,345)		—		—	—			(32,345)
Stock-based compensation	—	—			5,630		—		—		—	—			5,630
Stock-based awards exercised or vested	—	—			(15,276)		—		(742)		805	15,839			(179)
Acquisition of treasury shares(2)	—	—			—		—		—		(341)	(15,432)			(15,432)
Repurchase and retirement of common shares	(4,927)	(49)			(2,907)		—		(216,813)		—	—			(219,769)


Cash dividends declared - $0.29 per share	—	—			—		—		(46,100)		—	—			(46,100)
Balances as of September 30, 2022	188,644	$	1,887		$	759,629	$	(53,990)	$	(311,671)	(33,177)	$	(660,840)		$	(264,985)



	Common Stock			Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)(1)		Retained Earnings (Deficit)		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount									Shares			Amount
Balances as of July 1, 2021	216,656	$	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, 2021	209,854	$	2,099		$	770,683	$	(11,089)	$	(74,757)	(34,342)	$	(671,408)		$	15,528

(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			Q1 FY2023 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 PRESENTATION – The consolidated balance sheets as of September 30, 2022 and June 30, 2022, the consolidated statements of operations and comprehensive loss for the three months ended September 30, 2022 and 2021, the consolidated statements of cash flows for the three months ended September 30, 2022 and 2021, and the consolidated statements of stockholders' equity for the three months ended September 30, 2022 and 2021 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 September 30, 2022 and 2021 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 June 30, 2022 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of June 30, 2022 or for the year then ended are derived from our Annual Report on Form 10-K.

MANAGEMENT ESTIMATES – The 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.

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 loss contingencies related to our discontinued operations.


H&R Block, Inc. \|Q1 FY2023 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)
	Three months ended September 30,
		2022		2021
Revenues:
U.S. assisted tax preparation		$	36,312	$	33,607
U.S. royalties		6,228		7,358
U.S. DIY tax preparation		3,158		4,061
Refund Transfers		1,284		1,665
Peace of Mind® Extended Service Plan		24,770		24,836
Tax Identity Shield®		5,167		5,153
Emerald Card® and SpruceSM		11,612		28,258
Interest and fee income on Emerald AdvanceSM		614		479
International		58,834		58,325
Wave		22,646		19,137
Other		9,360		9,745
Total revenues		$	179,985	$	192,624

Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:


							(in 000s)
POM	Deferred Revenue				Deferred Wages
Three months ended September 30,	2022		2021		2022		2021
Balance, beginning of the period	$	173,486	$	172,759	$	19,495	$	17,867
Amounts deferred	1,360		1,492		5		7
Amounts recognized on previous deferrals	(28,703)		(28,948)		(2,988)		(2,847)
Balance, end of the period	$	146,143	$	145,303	$	16,512	$	15,027

As of September 30, 2022, deferred revenue related to POM was $146.1 million. We expect that $97.0 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following five years.

As of September 30, 2022 and 2021, Tax Identity Shield® (TIS) deferred revenue was $21.2 million and $23.5 million, respectively. Deferred revenue related to TIS was $25.8 million and $28.3 million as of June 30, 2022 and June 30, 2021, respectively. All deferred revenue related to TIS will be recognized by April 2023.

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 4.4 million shares and 5.3 million shares for the three months ended September 30, 2022 and 2021, respectively, as the effect would be antidilutive due to the net loss from continuing operations during the periods.


6			Q1 FY2023 Form 10-Q\| H&R Block, Inc.

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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 September 30,
		2022		2021
Net loss from continuing operations attributable to shareholders		$	(167,367)	$	(149,945)
Amounts allocated to participating securities		(179)		(239)
Net loss from continuing operations attributable to common shareholders		$	(167,546)	$	(150,184)
Basic weighted average common shares		159,284		178,099
Potential dilutive shares		—		—
Dilutive weighted average common shares		159,284		178,099
Loss per share from continuing operations attributable to common shareholders:
Basic		$	(1.05)	$	(0.84)
Diluted		(1.05)		(0.84)

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 three months ended September 30, 2022, we granted 0.9 million shares under our stock-based compensation plan. We granted awards of 1.4 million shares under our stock-based compensation plans during the three months ended September 30, 2021. Stock-based compensation expense of our continuing operations totaled $7.7 million for the three months ended September 30, 2022 and $6.8 million for the three months ended September 30, 2021. As of September 30, 2022, unrecognized compensation cost for stock options totaled $0.4 million, and for nonvested shares and units totaled $76.9 million.

NOTE 4: RECEIVABLES

Receivables, net of their related allowance, consist of the following:


(in 000s)
As of	September 30, 2022				June 30, 2022
	Short-term		Long-term			Short-term		Long-term
Loans to franchisees	$	9,628	$	23,054		$	6,194	$	22,036
Receivables for U.S. assisted and DIY tax preparation and related fees	14,104		2,337			18,893		2,560
H&R Block's Instant RefundSM receivables	1,412		112			3,491		198
H&R Block Emerald Advance® lines of credit	6,800		7,098			6,691		8,825
Software receivables from retailers	607		—			3,992		—
Royalties and other receivables from franchisees	6,208		55			3,682		73

Wave payment processing receivables	1,306		—			1,393		—
Other	20,970		1,679			14,111		1,172


Total	$	61,035	$	34,335		$	58,447	$	34,864

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 September 30, 2022 and June 30, 2022, loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.


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H&R BLOCK'S INSTANT REFUNDSM – H&R Block's Instant RefundSM 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. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

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 September 30, 2022 are as follows:


			(in 000s)

Tax return year of origination	Current Balance		More Than 60 Days Past Due
2021	$	2,781	$	2,261
2020 and prior	111		111

	2,892		$	2,372
Allowance	(1,368)
Net balance	$	1,524

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. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by fiscal year of origination, as of September 30, 2022 are as follows:


(in 000s)
Fiscal year of origination	Current Balance		Non-Accrual
2022	$	23,865	$	23,865
2021 and prior	429		429
Revolving loans	15,745		14,369
	40,039		$	38,663
Allowance	(26,141)
Net balance	$	13,898

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 three months ended September 30, 2022 and 2021 is as follows:


(in 000s)
	EAs		All Other		Total
Balances as of July 1, 2022	$	26,141	$	51,126	$	77,267
Provision	—		1,077		1,077

Charge-offs, recoveries and other	—		(1,281)		(1,281)

Balances as of September 30, 2022	$	26,141	$	50,922	$	77,063
Balances as of July 1, 2021	$	27,704	$	60,272	$	87,976
Provision	—		1,850		1,850
Charge-offs, recoveries and other	—		(3,583)		(3,583)
Balances as of September 30, 2021	$	27,704	$	58,539	$	86,243


8			Q1 FY2023 Form 10-Q\| H&R Block, Inc.

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NOTE 5: GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the three months ended September 30, 2022 are as follows:


(in 000s)
	Goodwill		Accumulated Impairment Losses		Net
Balances as of July 1, 2022	$	898,698	$	(138,297)	$	760,401

Acquisitions	7,879		—		7,879
Disposals and foreign currency changes, net	(21,569)		—		(21,569)
Impairments	—		—		—
Balances as of September 30, 2022	$	885,008	$	(138,297)	$	746,711

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 September 30, 2022:
Reacquired franchise rights	$	383,809	$	(200,442)	$	183,367
Customer relationships	335,766		(283,515)		52,251
Internally-developed software	138,600		(112,561)		26,039
Noncompete agreements	41,949		(38,106)		3,843
Franchise agreements	19,201		(17,708)		1,493
Purchased technology	122,700		(90,125)		32,575
Trade name	5,800		(1,885)		3,915
	$	1,047,825	$	(744,342)	$	303,483










As of June 30, 2022:
Reacquired franchise rights	$	379,114	$	(197,068)	$	182,046
Customer relationships	331,020		(278,717)		52,303
Internally-developed software	137,638		(107,111)		30,527
Noncompete agreements	41,789		(37,684)		4,105
Franchise agreements	19,201		(17,388)		1,813
Purchased technology	122,700		(87,910)		34,790
Trade name	5,800		(1,740)		4,060

	$	1,037,262	$	(727,618)	$	309,644

We made payments to acquire businesses totaling $16.5 million and $4.3 million during the three months ended September 30, 2022 and 2021, respectively. The amounts and weighted-average lives of intangible assets acquired


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during the three months ended September 30, 2022, including amounts capitalized related to internally-developed software, are as follows:


(dollars in 000s)
	Amount		Weighted-Average Life (in years)
Internally-developed software	$	1,254	2
Customer relationships	6,331		5
Reacquired franchise rights	4,897		4
Noncompete agreements	220		5
Total	$	12,702	4

Amortization of intangible assets for the three months ended September 30, 2022 was $18.4 million compared to $19.8 million for the three months ended September 30, 2021. Estimated amortization of intangible assets for fiscal years ending June 30, 2023, 2024, 2025, 2026, and 2027 is $68.8 million, $49.1 million, $27.5 million, $19.3 million and $13.8 million, respectively.

NOTE 6: LONG-TERM DEBT

The components of long-term debt are as follows:


			(in 000s)
As of	September 30, 2022		June 30, 2022


Senior Notes, 5.250%, due October 2025	$	350,000	$	350,000
Senior Notes, 2.500%, due July 2028	500,000		500,000
Senior Notes, 3.875%, due August 2030	650,000		650,000


Debt issuance costs and discounts	(12,593)		(13,124)
Total long-term debt	1,487,407		1,486,876
Less: Current portion	—		—
Long-term portion	$	1,487,407	$	1,486,876
Estimated fair value of long-term debt	$	1,312,000	$	1,377,000

Our unsecured committed line of credit (CLOC) provides for an unsecured senior revolving credit facility in the aggregate principal amount of $1.5 billion, which includes a $175.0 million sublimit for swingline loans and a $50.0 million sublimit for standby letters of credit. We may request increases in the aggregate principal amount of the revolving credit facility of up to $500.0 million, subject to obtaining commitments from lenders and meeting certain other conditions. The CLOC will mature on June 11, 2026, unless extended pursuant to the terms of the CLOC, at which time all outstanding amounts thereunder will be due and payable. Our CLOC includes an annual facility fee, which will vary depending on our then current credit ratings.

The CLOC is subject to various conditions, triggers, events or occurrences that could result in earlier termination and contains customary representations, warranties, covenants and events of default, including, without limitation: (1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio, as defined by the CLOC agreement, calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on March 31, June 30, and September 30 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on December 31 of each year; (2) a covenant requiring us to maintain an interest coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter; and (3) covenants restricting our ability to incur certain additional debt, incur liens, merge or consolidate with other companies, sell or dispose of assets (including equity interests), liquidate or dissolve, engage in certain transactions with affiliates or enter into certain restrictive agreements. The CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes. We were in compliance with these requirements as of September 30, 2022.


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We had no outstanding balance under our CLOC and amounts available to borrow were limited by the debt-to-EBITDA covenant to approximately $1.47 billion as of September 30, 2022.

NOTE 7: INCOME TAXES

We file a consolidated federal income tax return in the U.S. with the Internal Revenue Service (IRS) and file tax returns in various state, local, and foreign jurisdictions. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. Our U.S. federal income tax returns for 2015, 2016, 2019 and later years remain open for examination. Our U.S. federal income tax returns for 2018, 2017, 2014 and all years prior to 2014 are closed. On October 4, 2022, the IRS notified us that it plans to audit our 2020 tax return and related carryback claims. With respect to federal, state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.