HR Block 2010 Annual Report Download - page 70

HRB Bank is a member of the FHLB of Des Moines, which extends credit to member banks based on eligible
collateral. At April 30, 2010, HRB Bank had FHLB advance capacity of $266.4 million. At April 30, 2010, we had
$75.0 million outstanding on this facility, leaving remaining availability of $191.4 million. Mortgage loans held for
investment of $461.1 million serve as eligible collateral and are used to determine total capacity. The maturities
and related interest rates related to this borrowing are as follows:
Amount Due Interest Rate
(dollars in 000s)
Fiscal year:
2011 $ 50,000 1.92%
2012 25,000 2.36%
$ 75,000
NOTE 11: 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 $135.5 million and
$112.6 million at April 30, 2010 and 2009, 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 $112.4 million and $104.0 million at
April 30, 2010 and 2009, respectively. These assets are restricted, as they are only available to fund the related
liability.
NOTE 12: STOCKHOLDERS’ EQUITY
During fiscal year 2010, we purchased and immediately retired 12.8 million shares of our common stock at a cost of
$250.0 million. We may continue to repurchase and retire common stock or retire shares held in treasury in the
future.
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.
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, 2010, 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, 2010, 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 13: STOCK-BASED COMPENSATION
We utilize the fair value method to account for stock-based awards. Stock-based compensation expense of
$29.4 million, $32.6 million and $50.4 million was recorded in fiscal years 2010, 2009 and 2008, respectively, net of
related tax benefits of $10.5 million, $12.2 million and $17.3 million, respectively. Stock-based compensation
expense of our continuing operations totaled $29.3 million, $26.6 million and $40.4 million in fiscal years 2010, 2009
and 2008, respectively.
Accounting standards require 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 $1.6 million, $8.6 million and $3.2 million as cash
inflows from financing activities for fiscal years 2010, 2009 and 2008, respectively. We realized tax benefits of
$6.6 million, $20.2 million and $12.6 million in fiscal years 2010, 2009 and 2008, respectively.
We have four stock-based compensation plans which have been approved by our shareholders. As of April 30,
2010, we had 0.8 million shares reserved for future awards under stock-based compensation plans. We issue shares
from our treasury stock to satisfy the exercise or release of stock-based awards. We believe we have adequate
treasury stock to issue for the exercise or release of stock-based awards.
Our 2003 Long-Term Executive Compensation Plan provides for awards of options (both incentive and
nonqualified), nonvested shares, performance nonvested share units and other stock-based awards to
54 H&R BLOCK 2010 Form 10K