HR Block 2005 Annual Report Download - page 132

We believe the net deferred tax asset at April 30, 2005 of 2004, provides for a temporary 85% dividends received deduction
$140.1 million is realizable. We have federal taxable income in on certain foreign earnings repatriated during a one-year period.
excess of $2.3 billion and substantial state taxable income in the The deduction would result in an approximate 5.25% federal tax
carry-back period, as well as a history of growth in earnings and rate on any repatriated earnings. To qualify for the deduction, the
prospects for continued earnings growth. earnings must be reinvested in the U.S. pursuant to a domestic
As of April 30, 2005, we had net operating loss carryforwards reinvestment plan established by a company’s chief executive
for tax purposes in various states and foreign countries of officer and approved by the company’s board of directors.
approximately $363.6 million. If not used, these carryforwards Certain other criteria in the Act must be satisfied as well. Our
will expire in varying amounts during fiscal years 2006 through one-year period during which the qualifying distributions can be
2024. made ends on December 31, 2005.
We intend to indefinitely reinvest foreign earnings, therefore, a We have begun our evaluation of the effects of the Act, but do
provision has not been made for income taxes which might be not expect to be able to complete this evaluation until additional
payable upon remittance of such earnings. Moreover, due to the clarifying language on key elements of the Act is issued. As of
availability of foreign income tax credits, management believes April 30, 2005, we have not provided deferred taxes on foreign
the amount of federal income taxes would be immaterial in the earnings because we intended to indefinitely reinvest such
event foreign earnings were repatriated. earnings outside the U.S. Whether we will ultimately take
We have not reevaluated our position with respect to the advantage of this provision depends on our review of the Act and
indefinite reinvestment of foreign earnings to take into account any additional guidance provided and we are therefore currently
the possible election of the repatriation provisions contained in uncertain as to the impact, if any, this matter will have on our
the American Jobs Creation Act of 2004. The status of our consolidated financial statements, and are unable to estimate the
evaluation of these provisions is described in the following amount of earnings we may repatriate.
section.
AMERICAN JOBS CREATION ACT OF 2004 ⬎⬎⬎ The American
Jobs Creation Act of 2004 (the ‘‘Act’’), enacted on October 22,
NOTE 16: SUPPLEMENTAL CASH FLOW INFORMATION
We made the following cash payments: We characterized the following as non-cash investing activities:
(in 000s) (in 000s)
Restated Restated
Year Ended April 30, 2005 2004 2003 Year Ended April 30, 2005 2004 2003
Income taxes paid $ 437,427 $ 331,635 $ 247,057 Additions to residual interests $ 16,914 $ 9,007 $ 753
Interest paid 82,535 84,551 84,094 Residual interest mark-to-market 95,929 167,065 9,176
NOTE 17: COMMITMENTS, CONTINGENCIES AND RISKS
COMMITMENTS AND CONTINGENCIES ⬎⬎⬎ At April 30, 2005, second $1.0 billion CLOC has a maturity date of August 2009 and
we maintained $2.0 billion in back-up credit facilities to support has an annual facility fee of twelve basis points per annum.
the commercial paper program and for general corporate Among other provisions, the credit agreement limits our
purposes. The first $1.0 billion unsecured committed line of indebtedness.
credit (‘‘CLOC’’) is subject to annual renewal in August 2005, has We maintain a revolving credit facility in an amount not to
a one-year term-out provision with a maturity date in August 2006 exceed $125.0 million (Canadian) in Canada to support a
and has an annual facility fee of ten basis points per annum. The commercial paper program with varying borrowing levels
H&R BLOCK 2005 Form 10K
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