Company Quick10K Filing
H&R Block
Price23.64 EPS2
Shares200 P/E11
MCap4,729 P/FCF4
Net Debt1,278 EBIT362
TEV6,008 TEV/EBIT17
TTM 2019-10-31, in MM, except price, ratios
10-Q 2020-07-31 Filed 2020-09-03
10-K 2020-04-30 Filed 2020-06-17
10-Q 2020-01-31 Filed 2020-03-09
10-Q 2019-10-31 Filed 2019-12-06
10-Q 2019-07-31 Filed 2019-09-06
10-K 2019-04-30 Filed 2019-06-14
10-Q 2019-01-31 Filed 2019-03-08
10-Q 2018-10-31 Filed 2018-12-07
10-Q 2018-07-31 Filed 2018-09-07
10-K 2018-04-30 Filed 2018-06-15
10-Q 2018-01-31 Filed 2018-03-08
10-Q 2017-10-31 Filed 2017-12-07
10-Q 2017-07-31 Filed 2017-09-01
10-K 2017-04-30 Filed 2017-06-16
10-Q 2017-01-31 Filed 2017-03-08
10-Q 2016-10-31 Filed 2016-12-08
10-Q 2016-07-31 Filed 2016-09-01
10-K 2016-04-30 Filed 2016-06-17
10-Q 2016-01-31 Filed 2016-03-11
10-Q 2015-10-31 Filed 2015-12-09
10-Q 2015-07-31 Filed 2015-09-04
10-K 2015-04-30 Filed 2015-06-17
10-Q 2015-01-31 Filed 2015-03-05
10-Q 2014-10-31 Filed 2014-12-09
10-Q 2014-07-31 Filed 2014-09-04
10-K 2014-04-30 Filed 2014-06-19
10-Q 2014-01-31 Filed 2014-03-06
10-Q 2013-10-31 Filed 2013-12-10
10-Q 2013-07-31 Filed 2013-09-05
10-K 2013-04-30 Filed 2013-06-26
10-Q 2013-01-31 Filed 2013-03-07
10-Q 2012-10-31 Filed 2012-12-06
10-Q 2012-07-31 Filed 2012-09-05
10-K 2012-04-30 Filed 2012-06-26
10-Q 2012-01-31 Filed 2012-03-07
10-Q 2011-10-31 Filed 2011-12-05
10-Q 2011-07-31 Filed 2011-09-01
10-K 2011-04-30 Filed 2011-06-23
10-Q 2011-01-31 Filed 2011-03-09
10-Q 2010-10-31 Filed 2010-12-08
10-Q 2010-07-31 Filed 2010-09-03
10-K 2010-04-30 Filed 2010-06-29
10-Q 2010-01-31 Filed 2010-03-08
8-K 2020-09-01 Earnings, Exhibits
8-K 2020-08-05 Enter Agreement
8-K 2020-08-04 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-07-28 Regulation FD, Exhibits
8-K 2020-07-15 Officers
8-K 2020-07-01 Leave Agreement
8-K 2020-06-16
8-K 2020-05-15
8-K 2020-03-26
8-K 2020-03-17
8-K 2020-03-05
8-K 2019-12-04
8-K 2019-11-07
8-K 2019-09-12
8-K 2019-08-28
8-K 2019-06-28
8-K 2019-06-20
8-K 2019-06-11
8-K 2019-06-10
8-K 2019-04-24
8-K 2019-03-07
8-K 2018-12-06
8-K 2018-11-15
8-K 2018-09-21
8-K 2018-09-13
8-K 2018-08-28
8-K 2018-08-20
8-K 2018-07-09
8-K 2018-06-25
8-K 2018-06-12
8-K 2018-04-24
8-K 2018-03-06
8-K 2018-01-22
8-K 2018-01-03

HRB 10Q Quarterly Report

Part I Financial Information
Item 1. Financial Statements
Note 1: Summary of Significant Accounting Policies
Note 2: Revenue Recognition
Note 3: Earnings (Loss) per Share and Stockholders' Equity
Note 4: Receivables
Note 5: Goodwill and Intangible Assets
Note 6: Long - Term Debt
Note 7: Income Taxes
Note 8: Other Income and Other Expenses
Note 9: Commitments and Contingencies
Note 10: Litigation and Other Related Contingencies
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 hrb20200731exhibit101.htm
EX-31.1 hrb20200731exhibit311.htm
EX-31.2 hrb20200731exhibit312.htm
EX-32.1 hrb20200731exhibit321.htm
EX-32.2 hrb20200731exhibit322.htm

H&R Block Earnings 2020-07-31

Balance SheetIncome StatementCash Flow
10.07.95.93.81.8-0.32012201420172020
Assets, Equity
2.62.01.50.90.4-0.22012201420172020
Rev, G Profit, Net Income
2.31.60.90.1-0.6-1.32012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the quarterly period ended
July 31, 2020
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 August 31, 2020: 192,898,471 shares.
 




Form 10-Q for the Period Ended July 31, 2020
Table of Contents
 
 
 
 
 
Consolidated Statements of Operations and Comprehensive Income(Loss)
 
 
Three months ended July 31, 2020 and 2019
 
 
 
 
Consolidated Balance Sheets
 
 
As of July 31, 2020, July 31, 2019 and April 30, 2020
 
 
 
 
Consolidated Statements of Cash Flows
 
 
Three months ended July 31, 2020 and 2019
 
 
 
 
Consolidated Statements of Stockholders' Equity
 
 
Three months ended July 31, 2020 and 2019
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legal Proceedings
 
 
 
Risk Factors
 
 
 
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
 
 
 
Exhibits
 
 
 
 





PART I    FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in 000s, except 
per share amounts)
 
 
 
Three months ended July 31,
 
 
2020

 
2019

 
 
 
 
 
REVENUES:
 
 
 
 
Service revenues
 
$
550,951

 
$
132,159

Royalty, product and other revenues
 
50,079

 
18,203

 
 
601,030

 
150,362

OPERATING EXPENSES:
 
 
 
 
Costs of revenues
 
315,036

 
229,392

Selling, general and administrative
 
133,038

 
116,136

Total operating expenses
 
448,074

 
345,528

 
 
 
 
 
Other income (expense), net
 
3,211

 
9,123

Interest expense on borrowings
 
(32,125
)
 
(21,071
)
Income (loss) from continuing operations before income taxes (benefit)
 
124,042

 
(207,114
)
Income taxes (benefit)
 
30,486

 
(61,390
)
Net income (loss) from continuing operations
 
93,556

 
(145,724
)
Net loss from discontinued operations, net of tax benefits of $685 and $1,358
 
(2,297
)
 
(4,523
)
NET INCOME (LOSS)
 
$
91,259

 
$
(150,247
)
 
 
 
 
 
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
 
 
 
 
Continuing operations
 
$
0.48

 
$
(0.72
)
Discontinued operations
 
(0.01
)
 
(0.02
)
Consolidated
 
$
0.47

 
$
(0.74
)
 
 
 
 
 
DIVIDENDS DECLARED PER SHARE
 
$
0.26

 
$
0.26

 
 
 
 
 
COMPREHENSIVE INCOME (LOSS):
 
 
 
 
Net income (loss)
 
$
91,259

 
$
(150,247
)
Change in foreign currency translation adjustments
 
17,539

 
(2,320
)
Other comprehensive income (loss)
 
17,539

 
(2,320
)
Comprehensive income (loss)
 
$
108,798

 
$
(152,567
)
 
 
 
 
 
See accompanying notes to consolidated financial statements.

H&R Block, Inc. | Q1 FY2021 Form 10-Q
1


CONSOLIDATED BALANCE SHEETS
 
(unaudited, in 000s, except 
share and per share amounts)
 
As of
 
July 31, 2020

 
July 31, 2019

 
April 30, 2020

 
 


 


 
 
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,598,570

 
$
607,668

 
$
2,661,914

Cash and cash equivalents - restricted
 
208,015

 
157,786

 
211,106

Receivables, less allowance for credit losses of $67,636, $66,652 and $64,648
 
97,222

 
76,128

 
133,197

Prepaid expenses and other current assets
 
93,538

 
105,123

 
80,519

Total current assets
 
2,997,345

 
946,705

 
3,086,736

Property and equipment, at cost, less accumulated depreciation and amortization of $817,280, $764,891 and $796,192
 
168,830

 
199,679

 
184,367

Operating lease right of use asset
 
492,195

 
486,147

 
494,788

Intangible assets, net
 
400,025

 
419,391

 
414,976

Goodwill
 
724,288

 
821,278

 
712,138

Deferred tax assets and income taxes receivable
 
153,274

 
142,416

 
151,195

Other noncurrent assets
 
61,479

 
94,384

 
67,847

Total assets
 
$
4,997,436

 
$
3,110,000

 
$
5,112,047

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
128,690

 
$
122,156

 
$
203,103

Accrued salaries, wages and payroll taxes
 
69,346

 
48,166

 
116,375

Accrued income taxes and reserves for uncertain tax positions
 
156,557

 
182,928

 
209,816

Current portion of long-term debt
 

 

 
649,384

Operating lease liabilities
 
209,556

 
186,355

 
195,537

Deferred revenue and other current liabilities
 
201,809

 
193,364

 
201,401

Total current liabilities
 
765,958

 
732,969

 
1,575,616

Long-term debt and line of credit borrowings
 
3,495,918

 
1,493,289

 
2,845,873

Deferred tax liabilities and reserves for uncertain tax positions
 
185,687

 
199,714

 
182,441

Operating lease liabilities
 
297,518

 
292,818

 
312,566

Deferred revenue and other noncurrent liabilities
 
117,078

 
100,406

 
124,510

Total liabilities
 
4,862,159

 
2,819,196

 
5,041,006

COMMITMENTS AND CONTINGENCIES
 


 


 


STOCKHOLDERS' EQUITY:
 
 
 
 
 
 
Common stock, no par, stated value $.01 per share, 800,000,000 shares authorized, shares issued of 228,206,684, 236,744,360 and 228,206,684
 
2,282

 
2,367

 
2,282

Additional paid-in capital
 
772,782

 
759,449

 
775,387

Accumulated other comprehensive loss
 
(34,037
)
 
(22,736
)
 
(51,576
)
Retained earnings
 
82,933

 
250,740

 
42,965

Less treasury shares, at cost, of 35,308,213, 35,785,391 and 35,731,376
 
(688,683
)
 
(699,016
)
 
(698,017
)
Total stockholders' equity
 
135,277

 
290,804

 
71,041

Total liabilities and stockholders' equity
 
$
4,997,436

 
$
3,110,000

 
$
5,112,047

 
 
 
 
 
 
 
See accompanying notes to consolidated financial statements.

2
Q1 FY2021 Form 10-Q | H&R Block, Inc.


CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(unaudited, in 000s)
 
Three months ended July 31,
 
2020

 
2019

CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income (loss)
 
$
91,259

 
$
(150,247
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
39,508

 
38,605

Provision
 
2,809

 
552

Deferred taxes
 
(1,368
)
 
6,825

Stock-based compensation
 
7,597

 
6,674

Changes in assets and liabilities, net of acquisitions:
 
 
 
 
Receivables
 
26,052

 
60,519

Prepaid expenses, other current and noncurrent assets
 
(8,460
)
 
(9,917
)
Accounts payable, accrued expenses, salaries, wages and payroll taxes
 
(123,011
)
 
(284,643
)
Deferred revenue, other current and noncurrent liabilities
 
(7,136
)
 
(45,769
)
Income tax receivables, accrued income taxes and income tax reserves
 
(46,964
)
 
(99,929
)
Other, net
 
(786
)
 
(6,499
)
Net cash used in operating activities
 
(20,500
)
 
(483,829
)
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Capital expenditures
 
(8,311
)
 
(15,181
)
Payments made for business acquisitions, net of cash acquired
 
(13
)
 
(394,411
)
Franchise loans funded
 
(128
)
 
(2,806
)
Payments from franchisees
 
14,150

 
2,647

Other, net
 
(1,318
)
 
50,944

Net cash provided by (used in) investing activities
 
4,380

 
(358,807
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Dividends paid
 
(50,044
)
 
(52,512
)
Repurchase of common stock, including shares surrendered
 
(2,913
)
 
(36,456
)
Proceeds from exercise of stock options
 
1,147

 
1,206

Other, net
 
(4,910
)
 
(12,431
)
Net cash used in financing activities
 
(56,720
)
 
(100,193
)
 
 
 
 
 
Effects of exchange rate changes on cash
 
6,405

 
556

 
 
 
 
 
Net decrease in cash and cash equivalents, including restricted balances
 
(66,435
)
 
(942,273
)
Cash, cash equivalents and restricted cash, beginning of period
 
2,873,020

 
1,707,727

Cash, cash equivalents and restricted cash, end of period
 
$
2,806,585

 
$
765,454

 
 
 
 
 
SUPPLEMENTARY CASH FLOW DATA:
 
 
 
 
Income taxes paid, net of refunds received
 
$
79,138

 
$
36,138

Interest paid on borrowings
 
26,457

 
15,519

Accrued purchase of common stock
 

 
16,801

Accrued additions to property and equipment
 
1,716

 
127

New operating right of use assets and related lease liabilities
 
52,171

 
157,216

 
 
 
 
 
See accompanying notes to consolidated financial statements.

H&R Block, Inc. | Q1 FY2021 Form 10-Q
3


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
(amounts in 000s, except per share amounts)
 
 
 
Common Stock
 
Additional
Paid-in
Capital

 
Accumulated Other
Comprehensive
Income (Loss)

 
Retained
Earnings

 
Treasury Stock
 
Total
Stockholders’
Equity

 
 
Shares

 
Amount

 
 
 
 
Shares

 
Amount

 
Balances as of May 1, 2020
 
228,207

 
$
2,282

 
$
775,387

 
$
(51,576
)
 
$
42,965

 
(35,731
)
 
$
(698,017
)
 
$
71,041

Net income
 

 

 

 

 
91,259

 

 

 
91,259

Other comprehensive income
 

 

 

 
17,539

 

 

 

 
17,539

Stock-based compensation
 

 

 
7,422

 

 

 

 

 
7,422

Stock-based awards exercised or vested
 

 

 
(10,027
)
 

 
(1,247
)
 
627

 
12,247

 
973

Acquisition of treasury shares
 

 

 

 

 

 
(204
)
 
(2,913
)
 
(2,913
)
Cash dividends declared - $0.26 per share
 

 

 

 

 
(50,044
)
 

 

 
(50,044
)
Balances as of July 31, 2020
 
228,207

 
$
2,282

 
$
772,782

 
$
(34,037
)
 
$
82,933

 
(35,308
)
 
$
(688,683
)
 
$
135,277

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in
Capital

 
Accumulated
Other
Comprehensive
Income (Loss)

 
Retained
Earnings

 
Treasury Stock
 
Total
Stockholders’
Equity

 
 
Shares

 
Amount

 
 
 
 
Shares

 
Amount

 
Balances as of May 1, 2019
 
238,337

 
$
2,383

 
$
767,636

 
$
(20,416
)
 
$
499,386

 
(36,377
)
 
$
(707,462
)
 
$
541,527

Net loss
 

 

 

 

 
(150,247
)
 

 

 
(150,247
)
Other comprehensive loss
 

 

 

 
(2,320
)
 

 

 

 
(2,320
)
Stock-based compensation
 

 

 
6,557

 

 

 

 

 
6,557

Stock-based awards exercised or vested
 

 

 
(13,789
)
 

 
(2,786
)
 
906

 
17,631

 
1,056

Acquisition of treasury shares
 

 

 

 

 

 
(314
)
 
(9,185
)
 
(9,185
)
Repurchase and retirement of common shares
 
(1,593
)
 
(16
)
 
(955
)
 

 
(43,101
)
 

 

 
(44,072
)
Cash dividends declared - $0.26 per share
 

 

 

 

 
(52,512
)
 

 

 
(52,512
)
Balances as of July 31, 2019
 
236,744

 
$
2,367

 
$
759,449

 
$
(22,736
)
 
$
250,740

 
(35,785
)
 
$
(699,016
)
 
$
290,804

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

See accompanying notes to consolidated financial statements.


4
Q1 FY2021 Form 10-Q | H&R Block, Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                  (unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe consolidated balance sheets as of July 31, 2020 and 2019, the consolidated statements of operations and comprehensive income (loss) for the three months ended July 31, 2020 and 2019, the consolidated statements of cash flows for the three months ended July 31, 2020 and 2019, and the consolidated statements of stockholders' equity for the three months ended July 31, 2020 and 2019 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 July 31, 2020 and 2019 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. or to H&R Block, Inc. and its 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 April 30, 2020 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of April 30, 2020 or for the year then ended are derived from our Annual Report on Form 10-K.
MANAGEMENT ESTIMATESThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses arising from our discontinued mortgage business, contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, fair value of reporting units, and related matters. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
SEASONALITY OF BUSINESS – Because the majority of our clients file their tax returns during the period from February through April in a typical year, a substantial majority of our revenues from income tax return preparation and related services and products are earned during this period. As a result, we generally operate at a loss through the first three quarters of our fiscal year. As a result of the COVID-19 pandemic, on March 21, 2020, the federal tax filing deadline in the United States (U.S.) for individual 2019 tax returns was extended from April 15, 2020 to July 15, 2020. Substantially all U.S. states with an April 15 individual state income tax filing requirement extended their respective deadlines. In Canada, the deadline for individuals to file was extended to June 1, 2020. These extensions have impacted the typical seasonality of our business and the comparability of our financial results. Consequently, a portion of revenues and expenses that would have normally been recognized in our fourth quarter of fiscal year 2020 shifted to the first quarter of fiscal year 2021. Results for interim periods are not indicative of results to be expected for the full fiscal 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 10 for additional information on litigation, claims, and other loss contingencies related to our discontinued operations.
NEW ACCOUNTING PRONOUNCEMENTS – 
Current Expected Credit Losses. In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13), "Measurement of Credit Losses on Financial Instruments," which replaces the existing incurred credit loss model for an expected credit loss model. We adopted ASU 2016-13 as of May 1, 2020, which did not have a material impact on our consolidated financial statements.

H&R Block, Inc. | Q1 FY2021 Form 10-Q
5


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 July 31,
 
 
2020
 
2019
Revenues:
 
 
 
 
U.S. assisted tax preparation
 
$
337,728

 
$
32,992

U.S. royalties
 
35,949

 
6,859

U.S. DIY tax preparation
 
67,595

 
3,410

International
 
67,818

 
40,581

Refund Transfers
 
10,553

 
1,509

Emerald Card®
 
17,055

 
13,855

Peace of Mind® Extended Service Plan
 
31,995

 
32,837

Tax Identity Shield®
 
9,367

 
4,522

Interest and fee income on Emerald AdvanceTM
 
663

 
554

Wave
 
12,067

 
3,625

Other
 
10,240

 
9,618

Total revenues
 
$
601,030

 
$
150,362

 
 
 
 
 

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 July 31,
 
2020

 
2019

 
2020

 
2019

Balance, beginning of the period
 
$
183,685

 
$
212,511

 
$
21,618

 
$
27,306

Amounts deferred
 
18,217

 
1,723

 
128

 
23

Amounts recognized on previous deferrals
 
(37,205
)
 
(38,212
)
 
(4,348
)
 
(5,324
)
Balance, end of the period
 
$
164,697

 
$
176,022

 
$
17,398

 
$
22,005

 
 
 
 
 
 
 
 
 

As of July 31, 2020, deferred revenue related to POM was $164.7 million. We expect that $102.4 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following sixty months.
As of July 31, 2020 and 2019, Tax Identity Shield® (TIS) deferred revenue was $24.8 million and $25.4 million, respectively. Deferred revenue related to TIS was $30.8 million and $29.7 million at April 30, 2020 and 2019, respectively. All deferred revenue related to TIS will be recognized within the next nine months.
NOTE 3: EARNINGS (LOSS) PER SHARE AND STOCKHOLDERS' EQUITY
EARNINGS (LOSS) 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 or loss from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. The dilutive effect of potential common shares is included in diluted earnings per share except in those periods with a loss from continuing operations. 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 1.3 million shares for the three months ended July 31, 2020 as the effect would be antidilutive, and 3.7 million shares for the three months ended July 31, 2019, as the effect would be antidilutive due to the net loss from continuing operations during the period.

6
Q1 FY2021 Form 10-Q | H&R Block, Inc.


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 July 31,
 
 
2020

 
2019

Net earnings (loss) from continuing operations attributable to shareholders
 
$
93,556

 
$
(145,724
)
Amounts allocated to participating securities
 
(327
)
 
(149
)
Net earnings (loss) from continuing operations attributable to common shareholders
 
$
93,229

 
$
(145,873
)
 
 
 
 
 
Basic weighted average common shares
 
192,598

 
202,037

Potential dilutive shares
 
1,469

 

Dilutive weighted average common shares
 
194,067

 
202,037

 
 
 
 
 
Earnings (loss) per share from continuing operations attributable to common shareholders:
Basic
 
$
0.48

 
$
(0.72
)
Diluted
 
0.48

 
(0.72
)
 
 
 
 
 

The weighted average shares outstanding for the three months ended July 31, 2020 decreased to 192.6 million from 202.0 million for the three months ended July 31, 2019. The decrease is due to share repurchases completed in the prior year.
STOCK-BASED COMPENSATION – During the three months ended July 31, 2020, we acquired 0.2 million shares of our common stock at an aggregate cost of $2.9 million, which represent shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards. During the three months ended July 31, 2019, we acquired 0.3 million shares at an aggregate cost of $9.2 million for similar purposes.
During the three months ended July 31, 2020 and 2019, we issued 0.6 million and 0.9 million shares of common stock, respectively, due to the vesting or exercise of stock-based awards.
During the three months ended July 31, 2020, we granted awards equivalent to 1.8 million shares under our stock-based compensation plans, consisting of nonvested units. Stock-based compensation expense of our continuing operations totaled $7.6 million for the three months ended July 31, 2020 and $6.7 million for the three months ended July 31, 2019. As of July 31, 2020, unrecognized compensation cost for nonvested shares and units totaled $53.8 million.

H&R Block, Inc. | Q1 FY2021 Form 10-Q
7


NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
 
As of
 
July 31, 2020
 
July 31, 2019
 
April 30, 2020
 
 
Short-term
 
Long-term
 
Short-term
 
Long-term
 
Short-term
 
Long-term
Loans to franchisees
 
$
10,981

 
$
31,360

 
$
12,301

 
$
45,542

 
$
25,397

 
$
31,329

Receivables for U.S. assisted and DIY tax preparation and related fees
 
34,586

 
3,112

 
19,686

 
3,716

 
47,030

 
3,112

H&R Block Instant RefundTM receivables
 
1,129

 
1,596

 
880

 
1,780

 
15,031

 
1,325

H&R Block Emerald Advance® lines of credit
 
9,372

 
10,478

 
8,136

 
10,249

 
10,001

 
14,081

Software receivables from retailers
 
2,004

 

 
1,395

 

 
7,341

 

Royalties and other receivables from franchisees
 
20,135

 
39

 
7,834

 
99

 
9,861

 
42

Wave payment processing receivables
 
2,324

 

 
3,041

 

 
3,200

 

Other
 
16,691

 
1,646

 
22,855

 
2,251

 
15,336

 
1,828

Total
 
$
97,222

 
$
48,231

 
$
76,128

 
$
63,637

 
$
133,197

 
$
51,717

 
 
 
 
 
 
 
 
 
 
 
 
 

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 July 31, 2020 loans with a principal balance of $0.1 million were more than 90 days past due. As of July 31, 2019, loans with a principal balance of $2.0 million were more than 90 days past due. We had no loans to franchisees on non-accrual status.
H&R BLOCK INSTANT REFUNDTM PROGRAM H&R Block Instant RefundTM amounts are generally received from the Canada Revenue Agency (CRA) 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 year of origination, with older years being deemed more unlikely to be repaid. Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by year of origination, as of July 31, 2020 are as follows:
 
 
 
 
(in 000s)

Year of Origination
 
Balance
 
Non-Accrual
 
 
 
 
 
2020
 
$
4,737

 
$
366

2019 and prior
 
241

 
241

 
 
4,978

 
$
607

Allowance
 
(2,253
)
 
 
Net balance
 
$
2,725

 
 
 
 
 
 
 


8
Q1 FY2021 Form 10-Q | H&R Block, Inc.


H&R BLOCK EMERALD ADVANCE® LINES OF CREDIT We review the credit quality of our purchased participation interests in Emerald AdvanceTM (EA) receivables based on pools, which are segregated by the year of origination, with older years being deemed more unlikely to be repaid. Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, as of July 31, 2020, by year of origination, are as follows:
(in 000s)
 
Year of origination:
 
Balance

 
Non-Accrual

2020
 
$
29,176

 
$
29,176

2019 and prior
 
4,886

 
4,886

Revolving loans
 
14,962

 
13,729

 
 
49,024

 
$
47,791

Allowance
 
(29,174
)
 
 
Net balance
 
$
19,850

 
 
 
 
 
 
 

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 July 31, 2020 and 2019 is as follows:
(in 000s)
 
 
 
EAs

 
All Other

 
Total

Balances as of April 30, 2020
 
$
32,034

 
$
50,446

 
$
82,480

Provision
 
(2,860
)
 
5,669

 
2,809

Charge-offs, recoveries and other
 

 
(2,214
)
 
(2,214
)
Balances as of July 31, 2020
 
$
29,174

 
$
53,901

 
$
83,075

 
 
 
 
 
 
 
Balances as of April 30, 2019
 
$
27,535

 
$
53,938

 
$
81,473

Provision
 

 
552

 
552

Charge-offs, recoveries and other
 

 
(322
)
 
(322
)
Balances as of July 31, 2019
 
$
27,535

 
$
54,168

 
$
81,703

 
 
 
 
 
 
 

NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the three months ended July 31, 2020 and 2019 are as follows:
(in 000s)
 
 
 
Goodwill

 
Accumulated Impairment Losses

 
Net

Balances as of April 30, 2020
 
$
850,435

 
$
(