HR Block 2007 Annual Report Download - page 65

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FINANCIAL CONDITION –
CAPITAL RESOURCES & LIQUIDITY
Our sources of capital include cash from operations, issuances of effective with the quarterly dividend payment on October 1, 2007 to
common stock and debt. We use capital primarily to fund working shareholders of record on September 10, 2007.
capital, pay dividends, repurchase shares of our common stock and SHARE REPURCHASES –On June 7, 2006, our Board approved an
acquire businesses. authorization to repurchase 20.0 million shares. On June 9, 2004, our
CASH FROM OPERATIONS –Cash used in operations totaled Board of Directors approved an authorization to repurchase 15 million
$584.7 million for fiscal year 2007, compared to cash provided of shares. During fiscal year 2007, we repurchased 8.1 million shares
$594.1 million and $514.4 million in 2006 and 2005, respectively. pursuant to these authorizations at an aggregate price of $180.9 million
Operating cash flows in fiscal year 2007 decreased from fiscal year 2006 or an average price of $22.22 per share. There were 22.4 million shares
primarily due to net losses and higher income tax payments. Income tax remaining under these authorizations at the end of fiscal year 2007.
payments totaled $405.4 million this year, compared to $270.5 million in We purchase shares on the open market in accordance with existing
fiscal year 2006. authorizations, subject to various factors including the price of the
ISSUANCES OF COMMON STOCK –We issue shares of our common stock, our ability to maintain liquidity and financial flexibility, securities
stock in accordance with our stock-based compensation plans out of laws restrictions, internally and regulatory targeted capital levels and
our treasury shares. Proceeds from the exercise of stock options totaled other investment opportunities.
$25.7 million, $98.5 million and $129.3 million in fiscal years 2007, 2006 Due to our efforts to meet our regulatory capital requirements, we do
and 2005, respectively. not expect to be able to repurchase shares until the fourth quarter of
DEBT –In April 2007, we obtained a $500.0 million credit facility to fiscal year 2008. The significant losses in our mortgage operations
provide funding for the $500.0 million of 8
1
/
2
% Senior Notes which were during fiscal year 2007 and normal seasonal operating losses during the
due April 16, 2007. This facility matures on December 20, 2007. first eight months of fiscal year 2008 are expected to cause us to be non-
Commercial paper borrowings outstanding at April 30, 2007 totaled compliant with our capital requirements until the end of fiscal year
$1.0 billion and were primarily used to fund working capital needs. 2008. See additional discussion of our regulatory capital requirements in
37 m
On October 26, 2004, we issued $400.0 million of 5.125% Senior Notes ‘‘Regulatory Environment.’’
under our shelf registration statements. The proceeds from the notes ACQUISITIONS –From time to time we acquire businesses that we
were used to repay our $250.0 million in 6
3
/
4
% Senior Notes, which were view to be a good strategic fit to our organization. Total cash paid for
due on November 1, 2004. The remaining proceeds were used for acquisitions was $57.6 million, $210.1 million and $23.3 million during
working capital, capital expenditures, repayment of other debt and fiscal years 2007, 2006 and 2005, respectively.
other general corporate purposes. RESTRICTED CASH –We hold certain cash balances that are
DIVIDENDS –We have consistently paid quarterly dividends. restricted as to use. Cash and cash equivalents —restricted totaled
Dividends paid totaled $172.0 million, $160.0 million and $143.0 million $332.6 million at fiscal year end. Consumer Financial Services held
in fiscal years 2007, 2006 and 2005, respectively. $329.0 million of this total segregated in a special reserve account for
Our Board of Directors approved an increase of the quarterly cash the exclusive benefit of customers pursuant to Rule 15c3-3 of the
dividend from 13.5 cents to 14.25 cents per share, a 5.6% increase, Securities Exchange Act of 1934.
H&R BLOCK 2007 Form 10K