HR Block 2008 Annual Report Download - page 55

DEBT – In April 2007, we obtained a $500.0 million credit facility to provide funding for the $500.0 million of
8
1
⁄ 2 % Senior Notes which were due April 16, 2007. This facility was amended on December 20, 2007 to extend the
term of the facility. Under the amended facility, $250.0 million matured on February 29, 2008 and $250.0 million
matured on April 30, 2008. At April 30, 2008 there was no outstanding balance under this facility, as the facility was
repaid in full in February 2008, primarily from the proceeds of Senior Notes as discussed below.
On January 11, 2008, we issued $600.0 million of 7.875% Senior Notes under our shelf registration. The Senior
Notes are due January 15, 2013, and are not redeemable by the bondholders prior to maturity. The net proceeds of
this transaction were used to repay the $500.0 million facility discussed above, with the remaining proceeds used
for working capital and general corporate purposes. As of April 30, 2008, we had $250.0 million remaining under
our shelf registration for additional debt issuances.
We had no commercial paper outstanding at April 30, 2008, compared to $1.0 billion at April 30, 2007. During
fiscal year 2008, we borrowed under our CLOCs as an alternative to commercial paper issuance to support off-
season working capital requirements primarily in our Tax Services and Business Services segments and operating
losses from our mortgage businesses. We had no balance outstanding under our CLOCs at April 30, 2008. However,
we do expect to borrow on the CLOCs during fiscal year 2009 to fund our off-season working capital requirements.
See additional discussion in “Borrowings” and note 9 to the consolidated financial statements.
We entered into a committed line of credit agreement with HSBC Finance Corporation effective January 10, 2008
for use as a funding source for the purchase of RAL participations. This line provides funding totaling $3.0 billion
through March 30, 2008 and $120.0 million thereafter through June 30, 2008. This line is subject to various
covenants that are similar to our CLOCs, and is secured by our RAL participations. All borrowings on this facility
were repaid as of April 30, 2008, and the facility is now closed.
DIVIDENDS – We have consistently paid quarterly dividends. Dividends paid totaled $183.6 million,
$172.0 million and $160.0 million in fiscal years 2008, 2007 and 2006, respectively.
Our Board of Directors approved an increase of the quarterly cash dividend from 14.25 cents to 15 cents per
share, a 5.3% increase, effective with the quarterly dividend payment on October 1, 2008.
SHARE REPURCHASES – On June 7, 2006, our Board approved an authorization to repurchase 20.0 million shares. On
June 9, 2004, our Board of Directors approved an authorization to repurchase 15 million shares. There were 22.4 million
shares remaining under these authorizations at the end of fiscal year 2008. We did not repurchase shares during fiscal
year 2008. During fiscal year 2007, we repurchased 8.1 million shares at an aggregate price of $180.9 million or an
average price of $22.22 per share.
In June 2008, our Board of Directors rescinded the previous authorizations to repurchase shares of our common
stock, and approved an authorization to purchase up to $2.0 billion of our common stock over the next four years.
ACQUISITIONS – Total cash paid for acquisitions was $24.9 million, $57.6 million and $210.1 million during fiscal
years 2008, 2007 and 2006, respectively.
RESTRICTED CASH – We hold certain cash balances that are restricted as to use. Cash and cash equivalents –
restricted totaled $219.0 million at fiscal year end. HRBFA held $212.0 million of this total segregated in a special
reserve account for the exclusive benefit of customers pursuant to Rule 15c3-3 of the Securities Exchange Act of
1934.
SEGMENT CASH FLOWS – A condensed consolidating statement of cash flows by segment for the fiscal year ended
April 30, 2008, follows. Generally, interest is not charged on intercompany activities between segments. Our consolidated
statements of cash flows are located in Item 8.
Tax
Services
Business
Services
Consumer
Financial
Services Corporate
(1)
Discontinued
Operations
Consolidated
H&R Block
(in 000s)
Cash provided by (used in):
Operations $ 591,271 $133,169 $ 82,762 $ 30,680 $ (622,095) $ 215,787
Investing (53,924) (31,766) 217,753 (31,970) 1,047,196 1,147,289
Financing (28,588) (15,867) (404,889) (1,054,837) (53,888) (1,558,069)
Net intercompany (469,152) (96,459) 15,462 921,362 (371,213) –
(1)
Income tax payments, net of refunds of $317.8 million received during fiscal year 2008, are included in Corporate.
TAX SERVICES – Tax Services has historically been our largest provider of annual operating cash flows. The
seasonal nature of Tax Services generally results in a large positive operating cash flow in the fourth quarter. Tax
Services generated $591.3 million in operating cash flows primarily related to net income, as cash is generally
collected from clients at the time services are rendered. Cash used in investing activities of $53.9 million was for
capital expenditures and business acquisitions.
H&R BLOCK 2008 Form 10K 35