HR Block 2009 Annual Report Download - page 61

through March 30, 2009 and $120.0 million thereafter through June 30, 2009. All borrowings on this facility were
repaid as of April 30, 2009 and the facility is now closed.
The aggregate payments required to retire long-term debt are $8.8 million, $3.2 million, $20.2 million,
$0.7 million, $600.3 million and $407.7 million in fiscal years 2010, 2011, 2012, 2013, 2014 and beyond, respectively.
HRB Bank is a member of the FHLB of Des Moines, which extends credit to member banks based on eligible
collateral, which consists primarily of mortgage loans held for investment and certain AFS securities. At April 30,
2009, HRB Bank had FHLB advance capacity of $319.7 million based on eligible pledged collateral of
$632.6 million. On April 13, 2009, we borrowed $100.0 million from the FHLB for liquidity purposes, leaving
remaining availability of $219.7 million. The maturities and related interest rates related to this borrowing are as
follows:
Amount Due Interest Rate
(dollars in 000s)
Fiscal year:
2010 $ 25,000 1.76%
2011 50,000 1.92%
2012 25,000 2.36%
$ 100,000
NOTE 10: OTHER NONCURRENT ASSETS AND LIABILITIES
We have deferred compensation plans that permit certain employees to defer portions of their compensation and
accrue income on the deferred amounts. Included in other noncurrent liabilities is $112.6 million and
$155.5 million at April 30, 2009 and 2008, respectively, reflecting our obligation under these plans. We may
purchase whole-life insurance contracts on certain employee participants to recover distributions made or to be
made under the plans. The cash surrender value of the policies and other assets held by the Deferred
Compensation Trust is recorded in other noncurrent assets and totaled $104.0 million and $163.1 million at
April 30, 2009 and 2008, respectively. These assets are restricted, as they are only available to fund the related
liability. The decrease in value of these assets and liabilities is primarily due to current market conditions. Losses
on certain invested assets are not deductible for income taxes and therefore had an impact on our income tax rates
in the current fiscal year.
NOTE 11: STOCKHOLDERS’ EQUITY
On October 27, 2008, we sold 8.3 million shares of our common stock, without par value, at a price of $17.50 per
share in a registered direct offering through subscription agreements with selected institutional investors. We
received net proceeds of $141.4 million, after deducting placement agent fees and other offering expenses. The
purpose of the equity offering was to ensure we maintained adequate equity levels, as a condition of our CLOCs,
during our off-season. Proceeds were used for general corporate purposes.
We are authorized to issue 6.0 million shares of Preferred Stock without par value. At April 30, 2009, we had
5.6 million shares of authorized but unissued Preferred Stock. Of the unissued shares, 0.6 million shares have been
designated as Participating Preferred Stock.
On March 8, 1995, our Board of Directors authorized the issuance of a series of 0.5 million shares of non-voting
Preferred Stock designated as Convertible Preferred Stock without par value. At April 30, 2009, we had 0.5 million
shares of authorized but unissued Convertible Preferred Stock. The holders of the Convertible Preferred Stock are
not entitled to receive dividends paid in cash, property or securities and, in the event of any dissolution, liquidation
or wind-up of the Company, will share ratably with the holders of Common Stock then outstanding in the assets of
the Company after any distribution or payments are made to the holders of Participating Preferred stock or the
holders of any other class or series of stock of the Company with preference over the Common Stock.
NOTE 12: STOCK-BASED COMPENSATION
We utilize the fair value method to account for stock-based awards. Stock-based compensation expense of
$32.6 million, $50.4 million and $50.5 million was recorded in fiscal years 2009, 2008 and 2007, respectively. The
related tax benefits of $12.2 million, $17.3 million and $17.9 million are included in our results for fiscal years 2009,
2008 and 2007, respectively. Stock-based compensation expense of our continuing operations totaled
$26.6 million, $40.4 million and $37.0 million in fiscal years 2009, 2008 and 2007, respectively.
Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (SFAS 123R) requires excess
tax benefits from stock-based compensation to be included as a financing activity in the statements of cash flows.
As a result, we classified $8.6 million, $3.2 million and $3.2 million as cash inflows from financing activities rather
H&R BLOCK 2009 Form 10K 57