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| 8-K - 8-K - H&R BLOCK INC | form8-k12x11x13.htm |
Exhibit 99.1
News Release
For Immediate Release: December 10, 2013
H&R Block Reports Fiscal 2014 Second Quarter Earnings; Focuses on Tax Season 2014 Readiness
KANSAS CITY, Mo. - 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 Highlights1
▪ | Revenues decreased 2 percent, or $3 million, to $134 million2 |
▪ | 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 Operations3
Actual | Adjusted | |||||||||||||||
(in millions, except EPS) | Fiscal Year 2014 | Fiscal Year 2013 | Fiscal Year 2014 | Fiscal Year 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 | ) | ||||
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). |
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
A previously 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 beliefs, 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.
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
TABLES FOLLOW
KEY OPERATING RESULTS | (unaudited, amounts in thousands, except 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 | ||||||||||||||
CONSOLIDATED BALANCE SHEETS | (amounts in thousands, except per share data) | |||||||||||
As of | October 31, 2013 | October 31, 2012 | April 30, 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 | ||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | (unaudited, in 000s, except per 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 | ||||||
Other, 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 | — | ||||||
TAX SERVICES – FINANCIAL RESULTS | (unaudited, amounts 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® 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 MEASURES | (unaudited, amounts in thousands, except per share amounts) | |||||||||||||||||||||||
Three months ended October 31, 2013 | ||||||||||||||||||||||||
Revenues | Expenses | EBITDA | Pretax income (loss) | Net income (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 | ||||||||||||||||||||||||
Revenues | Expenses | EBITDA | Pretax income (loss) | Net income (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 | ) | ||||||||
NON-GAAP FINANCIAL MEASURES | (unaudited, amounts in thousands, except per share amounts) | |||||||||||||||||||||||
Six months ended October 31, 2013 | ||||||||||||||||||||||||
Revenues | Expenses | EBITDA | Pretax income (loss) | Net income (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 | ||||||||||||||||||||||||
Revenues | Expenses | EBITDA | Pretax income (loss) | Net income (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 | ) | ||||||||
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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 | ) | ||||||||||||
NON-GAAP FINANCIAL MEASURES | (unaudited, amounts in thousands, except per share amounts) | |||||||||||||||||||||||
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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.