H&R Block Reports Fiscal 2014 Second Quarter Earnings; Focuses on Tax Season 2014 Readiness

H&R Block Reports Fiscal 2014 Second Quarter Earnings; Focuses on Tax Season 
2014 Readiness 
KANSAS CITY, MO -- (Marketwired) -- 12/10/13 --  H&R Block, Inc.
(NYSE: HRB) today announced financial results for its fiscal 2014
second quarter ended October 31, 2013. The company typically reports
a second quarter operating loss due to the seasonality of the tax
business. 
Fiscal 2014 Second Quarter Highlights(1) 


 
--  Revenues decreased 2 percent, or $3 million, to $134 million(2)
--  Seasonal adjusted net loss from continuing operations increased 12
    percent to $112 million, or $(0.42) per share
--  Net loss from continuing operations increased 2 percent to $103
    million, or $(0.38) per share
--  Company continues the process of divesting its Bank
--  Declares 205th consecutive quarterly dividend

  
CEO Perspective
 "I'm pleased with the initiatives we have in place for
the upcoming tax season and am confident that we are well positioned
to again deliver strong results this year," said Bill Cobb, H&R
Block's president and chief executive officer. "We've also made
progress in the process of divesting our bank, and remain committed
to continue offering best-in-class financial products," added Cobb. 
Fiscal 2014 Second Quarter Results From Continuing Operations(3) 


 
                                                                            
                                           Actual             Adjusted      
                                     ---------------------------------------
                                      Fiscal    Fiscal    Fiscal    Fiscal  
                                       Year      Year      Year      Year   
(in millions, except EPS)              2014      2013      2014      2013   
----------------------------------------------------------------------------
Revenue                              $    134  $    137  $    134  $    137 
----------------------------------------------------------------------------
EBITDA                               $   (138) $   (117) $   (142) $   (117)
----------------------------------------------------------------------------
Pretax Loss                          $   (179) $   (162) $   (183) $   (162)
-------------------------------------------------------------------
---------
Net Loss                             $   (103) $   (101) $   (112) $   (100)
----------------------------------------------------------------------------
Weighted-Avg. Shares - Diluted          273.9     271.1     273.9     271.1 
----------------------------------------------------------------------------
EPS                                  $  (0.38) $  (0.37) $  (0.42) $  (0.37)
----------------------------------------------------------------------------

 
CFO Perspective
 "Given the seasonality of our business, our offseason
results are not indicative of our performance for the full year,"
said Greg Macfarlane, H&R Block's chief financial officer. "While
expenses have increased modestly year to date, we continue to expect
EBITDA margins to be generally consistent with last year's results." 
Business Segment Results and Highlights  
Tax Services 


 
--  Revenues decreased $2 million to $128 million, primarily due to timing
    differences in our Australian operations, partially offset by
    increased Emerald Card fee revenue from increased year-round usage
--  Operating expenses increased $27 million to $287 million due to timing
    of seasonal compensation, higher legal fees, and depreciation expense
--  Pretax loss increased $29 million to $159 million

  
Corporate 


 
--  Total operating expenses declined $13 million to $26 million,
    primarily due to lower interest expense and mortgage loan loss
    provisions
--  Pretax loss decreased $12 million to $20 million

  
Discontinued Operations 


 
--  Net loss of $2 million improved by $2 million from the prior year
--  Sand Canyon Corporation (SCC), a separate legal entity of H&R
    Block, Inc., received new claims for alleged breaches of
    representations and warranties in the principal amount of less than $1
    million
--  SCC's accrual for contingent losses relating to representations and
    warranties remained unchanged at $159 million

  
Dividend 
Apreviously announced quarterly cash dividend of 20 cents per share is
payable on January 2, 2014 to shareholders of record as of December
9, 2013. The January 2 payment marks the company's 205th consecutive
quarterly dividend since the company went public in 1962. 
Investor Conference
 At 8:30 a.m. EST on Wednesday, December 11, the
company will hold its investor conference in New York City. H&R
Block's senior leaders will outline the company's growth strategies
and outlook, and provide a general business update including
discussion of fiscal 2014 second quarter results.  
The event will be broadcast live in a listen-only format for the
media and public on H&R Block's investor relations website at
http://investors.hrblock.com. A replay will be available on the
company's website two hours after the conference ends and continuing
until February 28, 2014. 
About H&R Block
 H&R Block, Inc. (NYSE: HRB) is the world's largest
consumer tax services provider. More than 625 million tax returns
have been prepared worldwide by and through H&R Block since 1955. In
fiscal 2013, H&R Block had annual revenues of $2.9 billion with 25.4
million tax returns prepared worldwide. Tax return preparation
services are provided in company-owned and franchise retail tax
offices by over 80,000 professional tax preparers and associates
worldwide, and through H&R Block digital products. H&R Block Bank
provides affordable banking products and services. For more
information, visit the H&R Block Newsroom. 
About Non-GAAP Financial Measures 
 This press release and the
accompanying tables include non-GAAP financial measures. For a
description of these non-GAAP financial measures, including the
reasons management uses each measure, and reconciliations of these
non-GAAP financial measures to the most directly comparable financial
measures prepared in accordance with generally accepted accounting
principles, please see the section of the accompanying tables titled
"About Non-GAAP Financial Measures." 
Forward-Looking Statements
 This press release may contain
forward-looking statements within the meaning of the securities laws.
Forward-looking statements can be identified by the fact that they do
not relate strictly to historical or current facts. They often
include words or variation of words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," "projects,"
"forecasts," "targets," "would," "will," "should," "could" or "may"
or other similar expressions. Forward-looking statements provide
management's current expectations or predictions of future
conditions, events or results. All statements that address operating
performance, events or developments that we expect or anticipate will
occur in the future are forward-looking statements. They may include
estimates of revenues, income, earnings per share, capital
expenditures, dividends, liquidity, capital structure or other
financial items, descriptions of management's plans or objectives for
future operations, products or services, or descriptions of
assumptions underlying any of the above. All forward-looking
statements speak only as of the date they are made and reflect the
company's good faith bel
iefs, assumptions and expectations, but they
are not guarantees of future performance or events. Furthermore, the
company disclaims any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying
assumptions, factors, or expectations, new information, data or
methods, future events or other changes, except as required by law.
By their nature, forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. Factors that
might cause such differences include, but are not limited to, a
variety of economic, competitive and regulatory factors, many of
which are beyond the company's control and which are described in our
Annual Report on Form 10-K for the fiscal year ended April 30, 2013
in the section entitled "Risk Factors," as well as additional factors
we may describe from time to time in other filings with the
Securities and Exchange Commission. In addition, there can be no
assurances regarding the ability to obtain all required regulatory
and other approvals, the ability of the parties to negotiate and
execute the additional required agreements as expected, or the terms
and conditions of the additional agreements. 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. 


 
                                                                            
(1) All per share amounts are based on fully diluted shares.                
(2) Unless otherwise noted, all comparisons, including those made to the    
    "prior year," refer to the current period compared to the prior year    
    period.                                                                 
(3) EBITDA (earnings before interest, taxes, depreciation and amortization) 
    is a non-GAAP financial measure, which the company finds relevant when  
    measuring its performance. The company also reports adjusted financial  
    performance, which it believes is a better indication of the company's  
    recurring operations. See "About Non-GAAP Financial Measures" below for 
    more information regarding financial measures not prepared in accordance
    with generally accepted accounting principles (GAAP).                   

 
TABLES FOLLOW  


 
                                                                            
                                                                            
--------------------------------------------------------------------------- 
                                   (unaudited, amounts in thousands, except 
KEY OPERATING RESULTS                                       per share data) 
--------------------------------------------------------------------------- 
                                       Three months ended October 31,       
                                 ------------------------------------------ 
                                        Revenues           Income (loss)    
  
                               --------------------- -------------------- 
                                    2013       2012       2013       2012   
                                 ---------- ---------- ---------  --------- 
                                                                            
Tax Services                     $  128,040 $  129,819 $(159,314) $(130,109)
Corporate and Eliminations            6,300      7,444   (20,048)   (32,179)
                                 ---------- ---------- ---------  --------- 
                                 $  134,340 $  137,263  (179,362)  (162,288)
                                 ---------- ----------                      
Income tax benefit                                       (76,347)   (61,089)
                                                       ---------  --------- 
Net loss from continuing                                                    
 operations                                             (103,015)  (101,199)
Net loss from discontinued                                                  
 operations                                               (1,928)    (4,044)
                                                       ---------  --------- 
Net loss                                               $(104,943) $(105,243)
                                                       ---------  --------- 
                                                                            
Basic and diluted loss per                                                  
 share:                                                                     
  Continuing operations                                $   (0.38) $   (0.37)
  Discontinued operations                                  (0.01)     (0.02)
                                                       ---------  --------- 
  Consolidated                                         $   (0.39) $   (0.39)
                                                       ---------  --------- 
                                                                            
Basic and diluted shares                                 273,907    271,145 
                                                                            
                                                                            
                                 ------------------------------------------ 
                                        Six months ended October 31,        
                                 ------------------------------------------ 
                                        Revenues           Income (loss)    
                                 --------------------- -------------------- 
                                    2013       2012       2013       2012   
                                 ---------- ---------- ---------  --------- 
                                                                            
Tax Services                     $  249,731 $  220,072 $(303,708) $(271,014)
Corporate and Eliminations           11,804     13,680   (60,148)   (60,543)
                                 ---------- ---------- ---------  --------- 
                                 $  261,535 $  233,752  (363,856)  (331,557)
                                 ---------- ----------                      
Income tax benefit                                      (147,571)  (124,708)
                                                       ---------  --------- 
Net loss from continuing                                                    
 operations                                             (216,285)  (206,849)
Net loss from discontinued                                                  
 operations                                               (3,845)    (5,835)
                                                       ---------  --------- 
Net loss                                               $(220,130) $(212,684)
                                                       ---------  --------- 
                                          
                                  
Basic and diluted loss per                                                  
 share:                                                                     
  Continuing operations                                $   (0.79) $   (0.76)
  Discontinued operations                                  (0.01)     (0.02)
                                                       ---------  --------- 
  Consolidated                                         $   (0.80) $   (0.78)
                                                       ---------  --------- 
                                                                            
Basic and diluted shares                                 273,494    274,150 
                                                                            
                                                                            
                                                                            
----------------------------------------------------
----------------------- 
                                    (amounts in thousands, except per share 
CONSOLIDATED BALANCE SHEETS                                           data) 
--------------------------------------------------------------------------- 
                                  October 31,    October 31,      April 30, 
As of                                    2013           2012           2013 
                                -------------  -------------  ------------- 
                                  (unaudited)    (unaudited)                
             ASSETS                                                         
  Cash and cash equivalents     $     790,772  $   1,260,901  $   1,747,584 
  Cash and cash equivalents --                                              
   restricted                          47,521         38,667        117,837 
  Receivables, net                    131,701        124,511        206,835 
  Prepaid expenses and other                                                
   current assets                     225,660        282,874        390,087 
                                -------------  -------------  ------------- 
    Total current assets            1,195,654      1,706,953      2,462,343 
                                                                            
  Mortgage loans held for                                                   
   investment, net                    295,907        370,850        338,789 
  Investments in available-for-                                             
   sale securities                    465,344        388,640        486,876 
  Property and equipment, net         311,157        272,438        267,880 
  Intangible assets, net              296,213        275,193        284,439 
  Goodwill                            442,812        434,492        434,782 
  Other assets                        267,426        448,164        262,670 
                                -------------  -------------  ----------
--- 
    Total assets                $   3,274,513  $   3,896,730  $   4,537,779 
                                -------------  -------------  ------------- 
        LIABILITIES AND                                                     
       STOCKHOLDERS'EQUITY                                                  
LIABILITIES:                                                                
  Customer banking deposits     $     655,129  $     790,106  $     936,464 
  Accounts payable, accrued                                                 
   expenses and other current                                               
   liabilities                        426,994        406,447        523,921 
  Accrued salaries, wages and                                               
   payroll taxes                       41,584         39,345        134,970 
  Accrued income taxes                 22,475         95,126        416,128 
  Current portion of long-term                                              
   debt                               400,503        600,678            722 
                                -------------  -------------  ------------- 
    Total current liabilities       1,546,685      1,931,702      2,012,205 
  Long-term debt                      506,078        906,125        905,958 
  Other noncurrent liabilities        266,775        365,970        356,069 
                                -------------  -------------  ------------- 
    Total liabilities               2,319,538      3,203,797      3,274,232 
                                -------------  -------------  ------------- 
COMMITMENTS AND CONTINGENCIES                                               
STOCKHOLDERS'EQUITY:                                                        
  Common stock, no par, stated                                              
   value $.01 per share                 3,166          3,166          3,166 
  Additional paid-in capital          757,828        748,298        752,483 
  Accumulated other                                                         
   comprehensive income                 1,463          8,685         10,550 
  Retained earnings                 1,003,842        795,707      1,333,445 
  Less treasury shares, at cost      (811,324)      (862,923)      (836,097)
                                -------------  -------------  ------------- 
    Total stockholders' equity        954,975        692,933      1,263,547 
                                -------------  -------------  ------------- 
      Total liabilities and                                                 
       stockholders' equity     $   3,274,513  $   3,896,730  $   4,537,779 
                                -------------  -------------  ------------- 
                                                                            
                                                                            
                                                                            
--------------------------------------------------------------------------- 
                                            (unaudited, in 000s, except per 
CONSOLIDATED STATEMENTS OF OPERATIONS                        share amounts) 
--------------------------------------------------------------------------- 
                                  Three months ended     Six months ended   
                                      October 31,           October 31,     
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
REVENUES:                                                                   
  Service revenues               $ 112,432  $ 116,438  $ 220,232  $ 196,334 
  Product and other revenues        11,282     10,966     19,480     17,686 
  Interest income                   10,626      9,859     21,823     19,732 
                                 ---------  ---------  ---------  --------- 
                                   134,340    137,263    261,535    233,752 
                                 ---------  ---------  ---------  --------- 
OPERATING EXPENSES:                                                         
  Cost of revenues:                                                         
    Compensation and benefits       60,526     54,764    106,838     94,349 
    Occupancy and equipment         82,358     82,398    161,094    162,349 
    Provision for bad debt and                                              
     loan losses                     2,849      3,725     14,340      8,370 
    Interest                        14,314     23,390     28,760     45,467 
    Depreciation of property and                                            
     equipment                      20,144     16,196     36,948     30,730 
    Other                           40,673     31,538     82,937     64,170 
                                 ---------  ---------  ---------  --------- 
                                   220,864    212,011    430,917    405,435 
  Selling, general and                                                      
   administrative                   94,092     90,327    190,789    165,805 
                                 ---------  ---------  ---------  --------- 
                                   314,956    302,338    621,706    571,240 
                                 ---------  ---------  ---------  --------- 
Operating loss                    (180,616)  (165,075)  (360,171)  (337,488)
Other income (expense), net          1,254      2,787     (3,685)     5,931 
                                 ---------  ---------  ---------  --------- 
Loss from continuing operations                                             
 before income tax benefit        (179,362)  (162,288)  (363,856)  (331,557)
Income tax benefit                 (76,347)   (61,089)  (147,571)  (124,708)
                                 ---------  ---------  ---------  --------- 
Net loss from continuing                                                    
 operations                       (103,015)  (101,199)  (216,285)  (206,849)
Net loss from discontinued                                                  
 operations                         (1,928)    (4,044)    (3,845)    (5,835)
                                 ---------  ---------  ---------  --------- 
NET LOSS                         $(104,943) $(105,243) $(220,130) $(212,684)
                                 ---------  ---------  ---------  --------- 
                                                                            
BASIC AND DILUTED LOSS PER                                                  
 SHARE:                                                                     
  Continuing operations          $   (0.38) $   (0.37) $   (0.79) $   (0.76)
  Discontinued operations            (0.01)     (0.02)     (0.01)     (0.02)
                                 ---------  ---------  ---------  --------- 
  Consolidated                   $   (0.39) $   (0.39) $   (0.80) $   (0.78)
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                                                            
--------------------------------------------------------------------------- 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (unaudited, in 000s) 
--------------------------------------------------------------------------- 
Six months ended October 31,                            2013        2012    
---------------------------------------------------- ----------  ---------- 
                                                                            
NET CASH USED IN OPERATING ACTIVITIES                $ (492,373) $ (567,036)
                                                     ----------  ---------- 
                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES:                                       
  Purchases of available-for-sale securities            (45,158)    (67,474)
  Maturities of and payments received on available-                         
   for-sale securities                                   55,615      53,098 
  Principal payments on mortgage loans held for                             
   investment, net                                       24,340      23,608 
  Purchases of property and equipment                   (86,926)    (60,720)
  Payments made for business acquisitions, net of                           
   cash acquired                                        (20,927)    (10,442)
  Franchise loans:                                                          
    Loans funded                                        (22,114)    (20,670)
    Payments received                                    15,883       8,303 
  Othe
r, net                                             15,255      10,218 
                                                     ----------  ---------- 
      Net cash used in investing activities             (64,032)    (64,079)
                                                     ----------  ---------- 
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
  Repayments of long-term debt                               --     (30,831)
  Proceeds from issuance of long-term debt                   --     497,185 
  Customer banking deposits, net                       (275,800)    (37,913)
  Dividends paid                                       (109,324)   (108,428)
  Repurchase of common stock, including shares                              
   surrendered                                           (5,329)   (339,919)
  Proceeds from exercise of stock options                24,536       1,288 
  Other, net                                            (26,619)    (33,004)
                                                     ----------  ---------- 
      Net cash used in financing activities            (392,536)    (51,622)
                                                     ----------  ---------- 
                                                                            
Effects of exchange rates on cash                        (7,871)       (696)
                                                                            
Net decrease in cash and cash equivalents              (956,812)   (683,433)
Cash and cash equivalents at beginning of the period  1,747,584   1,944,334 
                                                     ----------  ---------- 
Cash and cash equivalents at end of the period       $  790,772  $1,260,901 
                                                     ----------  ---------- 
                                                                            
SUPPLEMENTARY CASH FLOW DATA:                                               
  Income taxes paid, net of refunds received         $  116,099  $   48,201 
  Interest paid on borrowings                            27,804      42,106 
  Interest paid on deposits                               1,180       2,683 
  Transfers of foreclosed loans to other assets           3,889       5,312 
  Accrued additions to property and equipment             6,729      10,273 
  Transfer of mortgage loans held for investment to                         
   held for sale                                          7,608          -- 
                                                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
                                                        (unaudited, amounts 
TAX SERVICES - FINANCIAL RESULTS                                   in 000s) 
----------------------------------------------------------------------------
                                  Three months ended     Six months ended   
                                      October 31,           October 31,     
                                 --------------------- ---------------------
                                    2013       2012       2013       2012   
                                 ---------- ---------- ---------- ----------
Tax preparation fees:                                                       
  U.S.                           $  29,011  $  23,805  $  51,037  $  42,640 
  International                     41,568     51,525     73,662     65,583 
                                 ---------  ---------  ---------  --------- 
                                    70,579     75,330    124,699    108,223 
Royalties                            9,527      9,630     16,089     15,481 
Fees from Emerald Card               9,999    
  8,281     24,610     20,337 
Fees from Peace of Mind(R)                                                    
 guarantees                         19,151     18,572     46,977     45,555 
Other                               18,784     18,006     37,356     30,476 
                                 ---------  ---------  ---------  --------- 
    Total revenues                 128,040    129,819    249,731    220,072 
                                 ---------  ---------  ---------  --------- 
                                                                            
Compensation and benefits:                                                  
  Field wages                       49,531     45,290     89,435     77,698 
  Other wages                       35,665     34,592     70,400     68,959 
  Benefits and other                                                        
   compensation                     22,178     18,765     38,115     33,539 
                                 ---------  ---------  ---------  --------- 
                                   107,374     98,647    197,950    180,196 
Occupancy and equipment             83,634     82,267    162,184    162,118 
Marketing and advertising           12,566     11,386     19,583     18,838 
Depreciation and amortization       26,632     23,393     49,434     43,864 
Other                               57,148     44,235    124,288     86,070 
                                 ---------  ---------  ---------  --------- 
      Total expenses               287,354    259,928    553,439    491,086 
                                 ---------  ---------  ---------  --------- 
Pretax loss                      $(159,314) $(130,109) $(303,708) $(271,014)
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                                                            

 
--------------------------------------------------------------------------- 
NON-GAAP                                                                    
 FINANCIAL                     (unaudited, amounts in thousands, except per 
 MEASURES                                                    share amounts) 
--------------------------------------------------------------------------- 
                             Three months ended October 31, 2013            
                 ---------------------------------------------------------- 
                                                 Pretax      Net            
                                                 income     income          
                 Revenues Expenses    EBITDA     (loss)     (loss)     EPS  
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As reported -                                                               
 from continuing                                                            
 operations      $134,340 $314,956  $(138,380) $(179,362) $(103,015) $(0.38)
                                                                            
Adjustments:                                                                
  Loss                                                                      
   contingencies                                                            
   - litigation        --      350        350        350        214      -- 
  Severance            --    1,828      1,828      1,828      1,122      -- 
  Professional                                                              
   fees related                                                             
   to HRB Bank                                                              
   transaction         --   (5,217)    (5,217)    (5,217)    (3,198)  (0.01)
  Gain on sales                                                             
   of tax                                                                   
   offices             --     (599)      (599)      (599)      (367)     -- 
  Discrete tax                                                              
   items               --       --         --         --     (7,061)  (0.03)
                 -------- --------  ---------  ---------  ---------  ------ 
                       --   (3,638)    (3,638)    (3,638)    (9,290)  (0.04)
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As adjusted -                                                               
 from continuing                                                            
 operations      $134,340 $311,318  $(142,018) $(183,000) $(112,305) $(0.42)
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
    
                                                                        
                 ---------------------------------------------------------- 
                             Three months ended October 31, 2012            
                 ---------------------------------------------------------- 
                                                 Pretax      Net            
                                                 income     income          
                 Revenues Expenses    EBITDA     (loss)     (loss)     EPS  
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As reported -                                                               
 from continuing                                                            
 operations      $137,263 $302,338  $(116,845) $(162,288) $(101,199) $(0.37)
                                                                            
Adjustments:                                                                
  Loss                                                                      
   contingencies                                                            
   - litigation        --   (2,451)    (2,451)    (2,451)    (1,506)  (0.01)
  Impairment of                                                             
   goodwill and                                                             
   intangible                                                               
   assets              --    1,421      1,421      1,421        869      -- 
  Severance            --    1,558      1,558      1,558        951      -- 
  Professional                                                              
   fees related                                                             
   to HRB Bank                                                              
   transaction         --       47         47         47         29      -- 
  Gain on sales                                                             
   of tax                                                                   
   offices             --     (754)      (754)      (754)      (460)     -- 
  Discrete tax                                                              
   items               --       --         --         --      1,472    0.01 
                 -------- --------  ---------  ---------  ---------  ------ 
                       --     (179)      (179)      (179)     1,355      -- 
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As adjusted -                                                               
 from continuing                                                            
 operations      $137,263 $302,159  $(117,024) $(162,467) $ (99,844) $(0.37)
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
                                                                            
                 ---------------------------------------------------------- 
                              Six months ended October 31, 2013             
                 ---------------------------------------------------------- 
                                                 Pretax      Net            
                                                 income     income          
                 Revenues Expenses    EBITDA     (loss)     (loss)     EPS  
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As reported -                                                               
 from continuing                                                            
 operations      $261,535 $621,706  $(285,554) $(363,856) $(216,285) $(0.79)
                                            
                                
Adjustments:                                                                
  Loss                                                                      
   contingencies                                                            
   - litigation        --      723        723        723        443      -- 
  Severance            --    2,933      2,933      2,933      1,799    0.01 
  Professional                                                              
   fees related                                                             
   to HRB Bank                                                              
   transaction         --    1,807      1,807      1,807      1,108      -- 
  Gain on sales                                                             
   of tax                                                                   
   offices             --     (599)      (599)      (599)      (367)     -- 
  Discrete tax                                                              
   items               --       --         --         --     (6,904)  (0.03)
                 -------- --------  ---------  ---------  ---------  ------ 
                       --    4,864      4,864      4,864     (3,921)  (0.02)
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As adjusted -                                                               
 from continuing                                                            
 operations      $261,535 $626,570  $(280,690) $(358,992) $(220,206) $(0.81)
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
                                                                            
                 ---------------------------------------------------------- 
                              Six months ended October 31, 2012             
                 ---------------------------------------------------------- 
                                                 Pretax      Net            
                                                 income     income          
                 Revenues Expenses    EBITDA     (loss)     (loss)     EPS  
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As reported -                                                               
 from continuing                                                            
 operations      $233,752 $571,240  $(243,486) $(331,557) $(206,849) $(0.76)
                                                                            
Adjustments:                                                                
  Loss                                                                      
   contingencies                                                            
   - litigation        --   (4,753)    (4,753)    (4,753)    (2,906)  (0.01)
  Impairment of                                                             
   goodwill and                                                             
   intangible                                                               
   assets              --    1,421      1,421      1,421        869      -- 
  Severance            --    1,057      1,057      1,057        646      -- 
  Professional                                                              
   fees related                                                             
   to HRB Bank                                                              
   transaction         --       47         47         47         29      -- 
  Gain on sales                                                             
   of tax                                                                   
   offices             --     (524)      (524)      (524)      (320)     -- 
  Discrete tax                                                              
   items               --       --         --         --      4,173    0.02 
                 -------- --------  ---------  ---------  ---------  ------ 
                       --   (2,752)    (2,752)    (2,752)     2,491    0.01 
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
As adjusted -                                                               
 from continuing                                                            
 operations      $233,752 $568,488  $(246,238) $(334,309) $(204,358) $(0.75)
                 -------- --------  ---------  ---------  ---------  ------ 
                                                                            
                                                                            
                                 --------------------  -------------------- 
                                  Three months ended     Six months ended   
                                      October 31,           October 31,     
-------------------------------- --------------------  -------------------- 
EBITDA                              2013       2012       2013       2012   
-------------------------------- ---------  ---------  ---------  --------- 
                                                                            
Net loss from continuing                                                    
 operations - as reported        $(103,015) $(101,199) $(216,285) $(206,849)
                                 ---------  ---------  ---------  --------- 
                                                                            
Add back :                                                                  
  Income taxes                     (76,347)   (61,089)  (147,571)  (124,708)
  Interest expense                  14,314     23,390     28,760     45,467 
  Depreciation and amortization     26,668     22,053     49,542     42,604 
                                 ---------  ---------  ---------  --------- 
                                   (35,365)   (15,646)   (69,269)   (36,637)
                                 ---------  ---------  ---------  --------- 
                                                                            
                                 ---------  ---------  ---------  --------- 
EBITDA from continuing                                                      
 operations                      $(138,380) $(116,845) $(285,554) $(243,486)
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                                                            
                                                                            
                                 --------------------  -------------------- 
                                  Three months ended     Six months ended   
                                      October 31,           October 31,     
-------------------------------- --------------------  -------------------- 
Supplemental Information            2013       2012       2013       2012   
-------------------------------- ---------  ---------  ---------  --------- 
                                                                            
Stock-based compensation                                                    
 expense:                                                                   
  Pretax                         $   6,210  $   5,384  $  10,762  $   7,737 
  After-tax                          3,810      3,299      6,601      4,730 
Amortization of intangible                                                  
 assets:                                                                    
  Pretax                         $   6,523  $ 
  5,857  $  12,594  $  11,874 
  After-tax                          4,003      3,599      7,725      7,259 

 
ABOUT NON-GAAP FINANCIAL MEASURES 
The accompanying press release contains non-GAAP financial measures.
Non-GAAP financial measures should not be considered as a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP. Because these measures are not measures of
financial performance under GAAP and are susceptible to varying
calculations, they may not be comparable to similarly titled measures
in other companies.  
We consider non-GAAP financial measures to be a useful metric for
management and investors to evaluate and compare the ongoing
operating performance of our business on a consistent basis across
reporting periods, as it eliminates the effect of items that are not
indicative of our core operating performance.  
The following are descriptions of adjustments we make for our
non-GAAP financial measures:  


 
--  We exclude from our non-GAAP financial measures litigation charges we
    incur and favorable reserve adjustments. This does not include legal
    defense costs.
--  We exclude from our non-GAAP financial measures non-cash charges to
    adjust the carrying values of goodwill, intangible assets, other
    long-lived assets and investments to their estimated fair values.
--  We exclude from our non-GAAP financial measures severance and other
    restructuring charges in connection with the termination of personnel,
    closure of tax offices and related costs.
--  We exclude from our non-GAAP financial measures the gains and losses
    on business dispositions, including investment banking, legal and
    accounting fees.
--  We exclude from our non-GAAP financial measures the gains and losses
    on extinguishment of debt.
--  We exclude from our non-GAAP financial measures the effects of
    discrete income tax reserve and related adjustments recorded in a
    specific quarter.

  
We may consider whether other significant items that arise in the
future should also be excluded from our non-GAAP financial measures.  
We measure the performance of our business using a variety of
metrics, including EBITDA, adjusted EBITDA, adjusted pretax and net
income (loss) of continuing operations, adjusted EPS and adjusted
pretax results of our Tax Services segment. We also use EBITDA and
pretax income of continuing operations as performance metrics in
incentive compensation plans for our employees. These adjusted
results eliminate the impact of items that we do not consider
indicative of our core operating performance and, we believe, provide
meaningful information to assist in understanding our financial
results, analyzing trends in our underlying business, and assessing
our prospects for future performance. 
For Further Information
Investor Relations: 
Colby Brown
(816) 854-4559
colby.brown@hrblock.com 
Media Relations: 
Gene King
(816) 854-4672 
gene.king@hrblock.com 
 
 
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