HR Block 2006 Annual Report Download - page 101

DIVIDENDS –We have consistently paid quarterly dividends. $394.1 million at fiscal year end. Investment Services held $369.0 million
Dividends paid totaled $160.0 million, $143.0 million and $138.4 million of this total segregated in a special reserve account for the exclusive
in fiscal years 2006, 2005 and 2004, respectively. benefit of customers pursuant to Rule 15c3-3 of the Securities Exchange
SHARE REPURCHASES –On June 9, 2004, our Board of Directors Act of 1934. Restricted cash of $16.4 million at April 30, 2006 held by
approved an authorization to repurchase 15 million shares. This Business Services is related to funds held to pay payroll and related
authorization is in addition to the authorization of 20 million shares on taxes on behalf of its customers. Restricted cash held by Mortgage
June 11, 2003. During fiscal year 2006, we repurchased 9.0 million Services totaled $8.4 million at April 30, 2006 for outstanding
shares pursuant to these authorizations at an aggregate price of commitments to fund mortgage loans.
$254.2 million or an average price of $28.18 per share. There were FISCAL YEAR 2007 OUTLOOK –We began construction on a new
10.5 million shares remaining under the 2004 authorization at the end of corporate headquarters facility during fiscal year 2005. Estimated
fiscal year 2006. remaining construction costs to be incurred during fiscal year 2007 of
We plan to continue to purchase shares on the open market in $63.9 million will be financed from operating cash flows.
accordance with the existing authorizations, subject to various factors Our Board of Directors approved an increase of the quarterly cash
including the price of the stock, our ability to maintain liquidity and dividend from 12.5 cents to 13.5 cents per share, an 8.0% increase,
financial flexibility, securities laws restrictions, targeted capital levels effective with the quarterly dividend payment on October 2, 2006 to
and other investment opportunities available. shareholders of record on September 11, 2006. On June 7, 2006, our
ACQUISITIONS –From time to time we acquire businesses that are Board also approved an additional authorization to repurchase
viewed to be a good strategic fit to our organization. Total cash paid for 20.0 million shares.
acquisitions was $212.5 million, $37.6 million and $280.9 million during We plan to refinance our $500.0 million in Senior Notes, which are
fiscal years 2006, 2005 and 2004, respectively. Acquisitions during fiscal due in April 2007.
year 2006 included American Express Tax and Business Services, Inc. The initial capital contribution for the H&R Block Bank will be
Cash paid in fiscal year 2006 related to the acquisition of this business $160.0 million, which we transferred on May 1, 2006, with an additional
totaled $190.7 million. Significant acquisitions during fiscal year 2004 $10.0 million capital contribution planned during fiscal year 2007. H&R
were the former major franchise territories we now operate as Block Bank is required to maintain a minimum leverage capital to total
company-owned. Cash paid in fiscal year 2004 related to the acquisition asset ratio of 12% during its first three years of operations.
of these territories totaled $243.2 million.
RESTRICTED CASH –We hold certain cash balances that are
restricted as to use. Cash and cash equivalents – restricted totaled
A condensed consolidating statement of cash flows by segment for the fiscal year ended April 30, 2006 follows. Generally, interest is not charged
on intercompany activities between segments. Detailed consolidated statements of cash flows are located in Item 8.
(in 000s)
Tax Mortgage Business Investment Consolidated
Fiscal Year 2006 Services Services Services Services Corporate H&R Block
Cash provided by (used in):
Operations $ 596,025 $ (123,903) $ 31,258 $ 24,894 $ 57,412 $ 585,686
Investing (62,797) (309,302) (221,122) 12,615 (107,899) (688,505)
Financing 14,173 – (23,611) 14,538 (308,136) (303,036)
Net intercompany (527,564) 422,418 233,744 (13,470) (115,128) –
Net intercompany activities are excluded from investing and financing Services generally results in a large positive operating cash flow in the
activities within the segment cash flows. We believe that by excluding fourth quarter. Tax Services generated $596.0 million in operating cash
intercompany activities, the cash flows by segment more clearly depicts flows primarily related to net income, as cash is generally collected
the cash generated and used by each segment. Had intercompany activities from clients at the time services are rendered. We also received a
been included, those segments in a net lending situation would have been signing bonus from HSBC during the current year in connection with
included in investing activities, and those in a net borrowing situation our new RAL participation agreement, which was recorded as deferred
would have been included in financing activities. revenue at April 30, 2006.
TAX SERVICES –Tax Services has historically been our largest Since July 1996, we have been a party to agreements with HSBC and
provider of annual operating cash flows. The seasonal nature of Tax its predecessors to participate in RALs provided by a lending bank to
H&R BLOCK 2006 Form 10K
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