Attached files
| file | filename |
|---|---|
| 8-K - 8-K - H&R BLOCK INC | d33474d8k.htm |
| EX-10.1 - EX-10.1 - H&R BLOCK INC | d33474dex101.htm |
| EX-99.1 - EX-99.1 - H&R BLOCK INC | d33474dex991.htm |
| EX-10.2 - EX-10.2 - H&R BLOCK INC | d33474dex102.htm |
| EX-10.3 - EX-10.3 - H&R BLOCK INC | d33474dex103.htm |
| EX-99.2 - EX-99.2 - H&R BLOCK INC | d33474dex992.htm |
Exhibit 99.3
H&R BLOCK, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
Summary Unaudited Pro Forma Consolidated Financial Data. The following unaudited pro forma consolidated financial information of H&R Block, Inc. (the “Company”) gives effect to the sale by the Company of certain assets and liabilities, including all of the deposit liabilities, of its subsidiary, H&R Block Bank, a federal savings bank (“H&R Bank”), to BofI Federal Bank, a federal savings bank, and the economic impact of the Program Management Agreement (the “PMA”) and Receivables Participation Agreement (the “RPA”) entered into among the parties thereto in connection therewith (collectively, the “P&A Transaction”). The unaudited pro forma consolidated statement of income for the year ended April 30, 2015 gives effect to the P&A Transaction as if they had occurred on May 1, 2014, and the unaudited pro forma consolidated balance sheet as of April 30, 2015 gives effect to the P&A Transaction as if they had occurred on such date. The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States.
The Company’s historical consolidated financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that management believes are directly attributable to the P&A Transaction, are factually supportable and are expected to have a continuing impact on the statement of income. The unaudited pro forma consolidated financial statements should be read in conjunction with the accompanying notes thereto and the Company’s financial statements and related notes contained in the Company’s 2015 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on June 17, 2015.
The unaudited pro forma consolidated financial statements have been presented for informational purposes only and are not necessarily indicative of what the Company’s financial position or results of operations actually would have been had the P&A Transaction occurred as of the dates indicated. In addition, the unaudited pro forma consolidated financial information does not purport to project the future financial position or operating results of the Company. Our future results are subject to prevailing economic and industry specific conditions and financial, business and other known and unknown risks and uncertainties, certain of which are beyond our control. These factors include, without limitation, those described in our filings with the SEC, including under the heading “Risk Factors.” The unaudited pro forma consolidated financial information is based on information available as of the date hereof.
PRO FORMA CONSOLIDATED INCOME STATEMENT
Unaudited, amounts in thousands, except per share data
| For the year ended April 30, 2015 | ||||||||||||||||
| As Reported | Adjustments for P&A Transaction |
Reclassifications | Pro Forma | |||||||||||||
| Revenues: |
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| Service revenues |
$ | 2,651,057 | $ | (8,046 | ) (a) | $ | — | $ | 2,643,011 | |||||||
| Royalty, interest and other revenues |
427,601 | (7,041 | ) (a) | (25,986 | ) (e) | 394,574 | ||||||||||
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| 3,078,658 | (15,087 | ) | (25,986 | ) | 3,037,585 | |||||||||||
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| Operating expenses: |
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| Cost of revenues: |
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| Compensation and benefits |
852,480 | — | — | 852,480 | ||||||||||||
| Occupancy and equipment |
378,624 | — | — | 378,624 | ||||||||||||
| Provision for bad debt and loan losses |
74,993 | (2,408 | ) (a) | — | 72,585 | |||||||||||
| Depreciation and amortization |
111,861 | — | — | 111,861 | ||||||||||||
| Other |
212,532 | 11,959 | (a) | (2,971 | ) (e) | 229,020 | ||||||||||
| 7,500 | (b) | — | ||||||||||||||
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| 1,630,490 | 17,051 | (2,971 | ) | 1,644,570 | ||||||||||||
| Selling, general and administrative: |
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| Marketing and advertising |
273,682 | — | — | 273,682 | ||||||||||||
| Compensation and benefits |
238,527 | — | — | 238,527 | ||||||||||||
| Amortization of intangibles |
47,943 | — | — | 47,943 | ||||||||||||
| Other selling, general and administrative |
93,350 | (1,718 | ) (c) | — | 91,632 | |||||||||||
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| 653,502 | (1,718 | ) | — | 651,784 | ||||||||||||
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| 2,283,992 | 15,333 | (2,971 | ) | 2,296,354 | ||||||||||||
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| Other income |
1,314 | — | 25,986 | (e) | 27,300 | |||||||||||
| Interest expense on borrowings |
(45,246 | ) | — | — | (45,246 | ) | ||||||||||
| Other expense |
(7,929 | ) | — | (2,971 | ) (e) | (10,900 | ) | |||||||||
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| Income from continuing operations before taxes |
742,805 | (30,420 | ) | — | 712,385 | |||||||||||
| Income tax |
256,061 | (11,844 | ) (d) | — | 244,217 | |||||||||||
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| Net income from continuing operations |
486,744 | (18,576 | ) | — | 468,168 | |||||||||||
| Net loss from discontinued operations |
(13,081 | ) | — | — | (13,081 | ) | ||||||||||
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| Net income |
$ | 473,663 | $ | (18,576 | ) | $ | — | $ | 455,087 | |||||||
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| Basic earnings per share: |
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| Continuing operations |
$ | 1.77 | $ | (0.07 | ) | $ | — | $ | 1.70 | |||||||
| Discontinued operations |
(0.05 | ) | — | — | (0.05 | ) | ||||||||||
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| Consolidated |
$ | 1.72 | $ | (0.07 | ) | $ | — | $ | 1.65 | |||||||
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| Diluted earnings per share: |
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| Continuing operations |
$ | 1.75 | $ | (0.07 | ) | $ | — | $ | 1.68 | |||||||
| Discontinued operations |
(0.04 | ) | — | — | (0.04 | ) | ||||||||||
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| Consolidated |
$ | 1.71 | $ | (0.07 | ) | $ | — | $ | 1.64 | |||||||
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| (a) | Reflects reductions and/or increases in revenues and certain expenses from Emerald Cards, Emerald Advances and Refund Transfers pursuant to the terms of the PMA and the RPA. |
| (b) | Reflects the annual program fee required to be paid pursuant to the PMA. |
| (c) | Reflects certain expenses that will not recur subsequent to the P&A Transaction as a result of the Company no longer having a federal savings bank. |
| (d) | Assumes a pro forma tax rate of 38.94%. |
| (e) | Reclassifications represent revenues and expenses related to mortgage loans held for investment and available for sale securities that were central to the operating activities of, and satisfied a regulatory requirement of, HRB Bank, which will no longer be central to the operating activities of the Company after the closing of the P&A Transaction. As a result, these items will be presented as non-operating income and expenses in the Company’s future reporting. |
PRO FORMA CONSOLIDATED BALANCE SHEET
Unaudited, amounts in thousands
| As of April 30, 2015 | ||||||||||||
| As Reported | Adjustments for P&A Transaction |
Pro Forma | ||||||||||
| ASSETS |
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| Cash and cash equivalents |
$ | 2,007,190 | $ | (744,699 | ) (a) | $ | 1,262,491 | |||||
| Cash and cash equivalents - restricted |
91,972 | — | 91,972 | |||||||||
| Receivables, net |
167,964 | — | 167,964 | |||||||||
| Deferred tax assets and income taxes receivable |
174,267 | — | 174,267 | |||||||||
| Prepaid expenses and other current assets |
70,283 | — | 70,283 | |||||||||
| Investments in available-for-sale securities |
439,625 | — | 439,625 | |||||||||
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| Total current assets |
2,951,301 | (744,699 | ) | 2,206,602 | ||||||||
| Mortgage loans held for investment, net |
239,338 | — | 239,338 | |||||||||
| Property and equipment, net |
311,387 | — | 311,387 | |||||||||
| Intangible assets, net |
432,142 | — | 432,142 | |||||||||
| Goodwill |
441,831 | — | 441,831 | |||||||||
| Deferred tax assets and income taxes receivable |
13,461 | — | 13,461 | |||||||||
| Other noncurrent assets |
125,960 | — | 125,960 | |||||||||
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| Total assets |
$ | 4,515,420 | $ | (744,699 | ) | $ | 3,770,721 | |||||
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| LIABILITIES: |
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| Customer banking deposits |
$ | 744,241 | $ | (744,241 | ) (a) | $ | — | |||||
| Accounts payable and accrued expenses |
231,322 | — | 231,322 | |||||||||
| Accrued salaries, wages and payroll taxes |
144,744 | — | 144,744 | |||||||||
| Accrued income taxes |
434,684 | — | 434,684 | |||||||||
| Current portion of long-term debt |
790 | — | 790 | |||||||||
| Deferred revenue and other current liabilities |
322,508 | — | 322,508 | |||||||||
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| Total current liabilities |
1,878,289 | (744,241 | ) | 1,134,048 | ||||||||
| Long-term debt |
505,298 | — | 505,298 | |||||||||
| Deferred tax liabilities and reserves for uncertain tax positions |
142,586 | — | 142,586 | |||||||||
| Deferred revenue and other noncurrent liabilities |
156,298 | (458 | ) (a) | 155,840 | ||||||||
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| Total liabilities |
2,682,471 | (744,699 | ) | 1,937,772 | ||||||||
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| STOCKHOLDERS’ EQUITY: |
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| Common stock |
3,166 | — | 3,166 | |||||||||
| Additional paid-in capital |
783,793 | — | 783,793 | |||||||||
| Accumulated other comprehensive income |
1,740 | — | 1,740 | |||||||||
| Retained earnings |
1,836,442 | — | 1,836,442 | |||||||||
| Less treasury shares, at cost |
(792,192 | ) | — | (792,192 | ) | |||||||
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| Total stockholders’ equity |
1,832,949 | — | 1,832,949 | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 4,515,420 | $ | (744,699 | ) | $ | 3,770,721 | |||||
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| (a) | Reflects the transfer of customer banking deposits to BofI in accordance with the P&A Transaction. |