HR Block 2006 Annual Report Download - page 133

NOTE 15: SUPPLEMENTAL CASH FLOW INFORMATION
We made the following cash payments: We characterized the following as non-cash investing activities:
(in 000s) (in 000s)
Year Ended April 30, 2006 2005 2004 Year Ended April 30, 2006 2005 2004
Income taxes paid $ 270,540 $ 437,427 $ 331,635 Additions to available-for-sale residual
Interest paid (net of amounts interests $ 61,651 $ 16,914 $ 9,007
capitalized) 102,317 82,535 84,551 Residual interest mark-to-market 35,274 95,929 167,065
NOTE 16: COMMITMENTS, CONTINGENCIES AND RISKS
COMMITMENTS AND CONTINGENCIES –At April 30, 2006, we revenue liability for the fiscal years ended April 30, 2006 and 2005 are
maintained $2.0 billion in back-up credit facilities to support the as follows:
(in 000s)
commercial paper program and for general corporate purposes. These
CLOCs have a maturity date of August 2010 and an annual facility fee of April 30, 2006 2005
eight and one-half basis points per annum. These lines are subject to
Balance, beginning of year $ 130,762 $ 123,048
various affirmative and negative covenants, including a minimum net Amounts deferred for new guarantees issued 78,900 77,756
Revenue recognized on previous deferrals (67,978) (70,042)
worth covenant and limit our indebtedness.
We obtained an additional $900.0 million line of credit for the period Balance, end of year $ 141,684 $ 130,762
of January 3 to February 24, 2006 to back-up peak commercial paper We have commitments to fund mortgage loans to customers as long
issuance or use as an alternate source of funding for RAL participations. as there is no violation of any condition established in the contract.
This line was subject to various covenants, substantially similar to the Commitments generally have fixed expiration dates or other
primary CLOCs. termination clauses. The commitments to fund loans amounted to
We maintain a revolving credit facility in an amount not to exceed $4.0 billion and $4.2 billion at April 30, 2006 and 2005, respectively.
$225.0 million (Canadian) in Canada to support a commercial paper External market forces impact the probability of commitments being
program with varying borrowing levels throughout the year, reaching its exercised, and therefore, total commitments outstanding do not
peak during February and March for the Canadian tax season. necessarily represent future cash requirements.
We offer guarantees under our POM program to tax clients whereby In the normal course of business, we maintain recourse with standard
we will assume the cost, subject to certain limits, of additional tax representations and warranties customary to the mortgage banking
assessments, up to a cumulative per client limit of $5,000, attributable to industry. Violations of these representations and warranties may require
tax return preparation error for which we are responsible. We defer all us to repurchase loans previously sold. In accordance with these loan
revenues and direct costs associated with these guarantees, recognizing sale agreements, we repurchased loans with an outstanding principal
these amounts over the term of the guarantee based upon historic and balance of $297.6 million and $195.3 million during the fiscal years
actual payment of claims. The related current asset is included in ended April 30, 2006 and 2005, respectively. A liability has been
prepaid expenses and other current assets. The related liability is established related to the potential loss on repurchase of loans
included in accounts payable, accrued expenses and other on the previously sold of $33.4 million and $41.2 million at April 30, 2006 and
consolidated balance sheets. The related noncurrent asset and liability 2005, respectively. Repurchased loans are normally sold in subsequent
are included in other assets and other noncurrent liabilities, sale transactions. On an ongoing basis, we monitor the adequacy of this
respectively, on the consolidated balance sheets. A loss on these POM liability, which is established upon the initial sale of the loans, and is
guarantees would be recognized if the sum of expected costs for included in accounts payable, accrued expenses and other current
services exceeded unearned revenue. The changes in the deferred liabilities in the consolidated balance sheets. In determining the
adequacy of the recourse liability, we consider such factors as known
problem loans, underlying collateral values, historical loan loss
experience, assessment of economic conditions and other appropriate
data to identify the risks in the mortgage loans held for sale.
H&R BLOCK 2006 Form 10K
63