HR Block 2007 Annual Report Download - page 97

The aggregate payments required to retire long-term debt are Based upon borrowing rates currently available for indebtedness with
$9.3 million, $106.1 million, $3.1 million, $1.3 million, $0.6 million and similar terms, the fair value of long-term debt was approximately
$408.7 million in 2008, 2009, 2010, 2011, 2012 and beyond, respectively. $505.8 million at April 30, 2007.
NOTE 11: OTHER NONCURRENT ASSETS AND LIABILITIES
We have deferred compensation plans that permit directors and certain other noncurrent assets and totaled $139.6 million and $127.4 million at
employees to defer portions of their compensation and accrue income April 30, 2007 and 2006, respectively.
on the deferred amounts. Their deferred compensation and our In connection with our acquisition of the non-attest assets of
matching amounts have been accrued. Included in other noncurrent McGladrey & Pullen, LLP (M&P) in August 1999, we assumed certain
liabilities is $186.3 million and $153.2 million at April 30, 2007 and 2006, retirement liabilities related to M&P’s partners. We make payments in
respectively, reflecting our obligation under these plans. We may varying amounts on a monthly basis. Included in other noncurrent
purchase whole-life insurance contracts on certain director and liabilities at April 30, 2007 and 2006 is $12.9 million and $14.3 million,
employee participants to recover distributions made or to be made respectively, related to this liability.
under the plans. The cash surrender value of the policies is recorded in
NOTE 12: STOCKHOLDERS’ EQUITY
We are authorized to issue 6.0 million shares of Preferred Stock, without Stock. The holders of the Convertible Preferred Stock are not entitled to
par value. At April 30, 2007, we had 5.6 million shares of authorized but receive dividends paid in cash, property or securities and, in the event
unissued Preferred Stock. Of the unissued shares, 0.6 million shares of any dissolution, liquidation or wind-up of the Company, will share
have been designated as Participating Preferred Stock in connection ratably with the holders of Common Stock then outstanding in the
with our shareholder rights plan. assets of the Company after any distribution or payments are made to
On March 8, 1995, our Board of Directors authorized the issuance of a the holders of Participating Preferred Stock or the holders of any other
series of 0.5 million shares of nonvoting Preferred Stock designated as class or series of stock of the Company with preference over the
69 m
Convertible Preferred Stock, without par value. At April 30, 2007, we Common Stock.
had 0.5 million shares of authorized but unissued Convertible Preferred
NOTE 13: STOCK-BASED COMPENSATION
Beginning May 1, 2006, we adopted SFAS 123R under the modified We have four stock-based compensation plans which have been
prospective approach. Under SFAS 123R, we continue to measure and approved by our shareholders. As of April 30, 2007, we had 25.8 million
recognize the fair value of stock-based compensation consistent with shares reserved for future awards under these plans. We issue shares
our past practice under Statement of Financial Accounting Standards from our treasury stock to satisfy the exercise or release of stock-based
No. 123, ‘‘Accounting for Stock-Based Compensation,’’ which we awards. We believe we have adequate treasury stock to issue for the
adopted on May 1, 2003 under the prospective transition method. The exercise or release of stock-based awards.
adoption of SFAS 123R did not have a material impact on our Our 2003 Long-Term Executive Compensation Plan provides for
consolidated financial statements. awards of options (both incentive and nonqualified), nonvested shares,
Stock-based compensation expense of $50.5 million, $57.0 million, performance nonvested share units and other stock-based awards to
and $44.1 million was recorded in fiscal years 2007, 2006 and 2005, employees. These awards entitle the holder to shares or the right to
respectively. The related tax benefits of $17.9 million, $19.8 million and purchase shares of common stock as the award vests, typically over a
$15.3 million are included in our results for fiscal years 2007, 2006 and three-year period with one-third vesting each year. Nonvested shares
2005, respectively. Stock-based compensation expense of our receive dividends during the vesting period and performance nonvested
continuing operations totaled $41.3 million, $47.2 million, and share units receive cumulative dividends at the end of the vesting
$36.9 million in fiscal years 2007, 2006 and 2005, respectively. period. We measure the fair value of options on the grant date or
SFAS 123R requires excess tax benefits from stock-based modification date using the Black-Scholes option valuation model. We
compensation to be included as a financing activity in the statements of measure the fair value of nonvested shares and performance nonvested
cash flows. As a result, we classified $3.2 million as a cash inflow from share units based on the closing price of our common stock on the grant
financing activities rather than as an operating activity for fiscal year date. Generally, we expense the grant-date fair value, net of estimated
2007. forfeitures, over the vesting period on a straight-line basis. Upon
H&R BLOCK 2007 Form 10K