HR Block 2012 Annual Report Download - page 41

pay dividends, repurchase treasury shares and acquire businesses. Our operations are highly seasonal and
therefore generally require the use of cash to fund operating losses during the period May through mid-January.
Given the likely availability of a number of liquidity options discussed herein, including borrowing capacity
under our CLOC, we believe that in the absence of any unexpected developments our existing sources of capital
at April 30, 2012 are sufficient to meet our operating needs.
These comments should be read in conjunction with the consolidated balance sheets and consolidated
statements of cash flows included in Item 8.
(in 000s)
Year ended April 30, 2012 2011 2010
Net cash provided by (used in):
Operating activities $ 362,049 $ 512,503 $ 587,469
Investing activities 351,867 (110,157) 31,353
Financing activities (445,062) (534,391) (481,118)
Effect of exchange rates on cash (2,364) 5,844 11,678
Net change in cash and cash equivalents $ 266,490 $ (126,201) $ 149,382
CASH FROM OPERATING ACTIVITIES – Cash provided by operations, which consists primarily of cash
received from customers, decreased $150.5 million from fiscal year 2011. The decline from the prior year was
primarily due to lower net income of our continuing operations and losses in our discontinued operations.
Restricted Cash. We hold certain cash balances that are restricted as to use. Cash and cash equivalents –
restricted totaled $48.1 million at April 30, 2012, and primarily consisted of cash held by our captive insurance
subsidiary that will be used to pay claims and cash held by HRB Bank required for regulatory compliance.
CASH FROM INVESTING ACTIVITIES – Changes in cash provided by investing activities primarily relate to
the following:
Available-for-Sale Securities. During fiscal year 2012, HRB Bank purchased $256.2 million in mortgage-
backed securities for regulatory purposes, compared to $138.8 million in fiscal year 2011. Additionally, we
received payments on AFS securities of $66.4 million in fiscal year 2012 compared to $16.8 million and
$15.8 million in fiscal years 2011 and 2010, respectively. See additional discussion in Item 8, note 5 to the
consolidated financial statements.
Mortgage Loans Held for Investment. We received net proceeds of $49.1 million, $58.5 million and
$72.8 million on our mortgage loans held for investment in fiscal years 2012, 2011 and 2010, respectively.
Purchases of Property and Equipment. Total cash paid for property and equipment was $82.5 million,
$63.0 million and $90.5 million for fiscal years 2012, 2011 and 2010, respectively.
Business Acquisitions. Total cash paid for acquisitions was $15.3 million, $54.2 million and $10.5 million
during fiscal years 2012, 2011 and 2010, respectively. In fiscal year 2011 our previously reported Business
Services segment acquired Caturano, a Boston-based accounting firm, and cash used in investing activities
includes payments totaling $32.6 million related to this acquisition.
Sales of Businesses. We received proceeds from the sales of businesses of $560.5 million, $71.1 million and
$66.6 million for fiscal years 2012, 2011 and 2010, respectively. Current year amounts include net proceeds of
$523.1 million from the sale of RSM and proceeds of $37.4 million from the sale of ancillary businesses and
offices. During fiscal year 2012, we sold 83 tax offices to franchisees, compared to 280 tax offices in fiscal year
2011, and 267 in fiscal year 2010. The majority of these sales were financed through affiliate loans.
Loans Made to Franchisees. Loans made to franchisees totaled $46.2 million, $92.5 million and $89.7 million
for fiscal years 2012, 2011 and 2010, respectively. We received payments from franchisees totaling $56.6 million,
$57.6 million and $40.7 million, respectively. These amounts include both the financing of sales of tax offices
and franchisee draws under our Franchise Equity Lines of Credit (FELCs).
CASH FROM FINANCING ACTIVITIES – Changes in cash used in financing activities primarily relate to the
following:
Short-Term Borrowings. While we use commercial paper borrowings to fund our off-season losses and
cover our seasonal working capital needs, we had no commercial paper borrowings outstanding as of April 30,
2012 or 2011. Our commercial paper borrowings peaked at $331.5 million in January of the current year. Our
borrowings in the current year were lower than previous years due to cash received from the sale of RSM.
FHLB Borrowings. HRB Bank obtains borrowings from the FHLB in accordance with regulatory and capital
requirements. During fiscal years 2012, 2011 and 2010, we had net repayments of $25.0 million, $50.0 million and
$25.0 million, respectively.
H&R BLOCK 2012 Form 10K 27