HR Block 2013 Annual Report Download - page 41

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34 H&R Block 2013 Form 10-K
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, 2013 or 2012.
Our commercial paper borrowings peaked at $496.7 million in January of the current year.
Long-Term Debt. On October 25, 2012, we issued $500.0 million of 5.50% Senior Notes. The Senior Notes are
due November 1, 2022, and are not redeemable by the bondholders prior to maturity. Proceeds of these Senior Notes
and other cash balances were used to repay the $600.0 million Senior Notes which were due in January 2013. On
November 26, 2012 we redeemed our $600.0 million Senior Notes at a price of $623.0 million. See additional discussion
in Item 8, note 9 to the consolidated financial statements.
FHLB Borrowings. HRB Bank had historically obtained borrowings from the FHLB in accordance with
regulatory and capital requirements. During fiscal years 2012 and 2011, we had net repayments of $25.0 million and
$50.0 million, respectively. We had no repayments or borrowings during fiscal year 2013.
Customer Banking Deposits. Changes in customer banking deposits resulted in a provision of cash of $103.6
million in fiscal year 2013, compared to a use of cash totaling $26.1 million and $11.4 million in fiscal years 2012 and
2011, respectively. The change over the prior year is primarily due to the delay in the tax season and IRS fundings to
debit cards in fiscal year 2013, resulting in higher deposits. These deposits are held by HRB Bank.
Dividends. We have consistently paid quarterly dividends. Dividends paid totaled $217.2 million, $208.8 million
and $186.8 million in fiscal years 2013, 2012 and 2011, respectively. During fiscal year 2012, our Board of Directors
approved an increase of our quarterly cash dividend from $0.15 per share to $0.20 per share. Although we have
historically paid dividends and currently plan to continue to do so, there can be no assurances that circumstances will
not change in the future that could affect our ability or decisions to pay dividends.
Repurchase and Retirement of Common Stock. During fiscal years 2013, 2012 and 2011, we purchased
and immediately retired 21.3 million shares, 14.6 million shares and 19.0 million shares, respectively, of our common
stock at a cost of $315.0 million, $200.0 million and $279.9 million, respectively. Although we have historically from
time to time repurchased and retired common stock and our Board of Directors has approved an extension of our current
share repurchase program as discussed below, there can be no assurances that circumstances will not change in the
future that could affect our ability or decisions to repurchase and retire common stock.
In June 2012, our Board of Directors extended the authorization to purchase up to $2.0 billion of our common
stock through June 2015. There was $857.5 million remaining under this authorization at April 30, 2013.
Issuances of Common Stock. Proceeds from the issuance of common stock in accordance with our stock-
based compensation plans totaled $25.1 million, $12.3 million and $0.4 million in fiscal years 2013, 2012 and 2011,
respectively.
HRB BANK - At April 30, 2013, HRB Bank had cash balances of $556.7 million. Dividends of this cash balance
would be subject to regulatory approval and it is therefore not available for general corporate purposes.
Block Financial LLC (Block Financial) typically makes capital contributions to HRB Bank to help meet its capital
requirements. Although no such contributions were required in fiscal year 2013, Block Financial made capital
contributions to HRB Bank of $400.0 million and $235.0 million during fiscal years 2012 and 2011, respectively.
Historically, capital contributions by Block Financial have been repaid as dividends or a return of capital by HRB
Bank as capital requirements decline. A return of capital or dividend paid by HRB Bank must be approved by the OCC
and the Federal Reserve. Although such payments have been approved on occasion by our regulators in the past, there
is no assurance that they will continue to be in the future. In addition, Block Financial may elect to maintain higher
capital levels at HRB Bank. HRB Bank paid dividends and returned capital of $400.0 million during fiscal year 2012
and $262.5 million during fiscal year 2011, comprised of $37.5 million in real estate owned (REO) properties and loans
and $225.0 million in cash.
As discussed previously, we are in the process of evaluating alternative means of ceasing to be an SLHC. Our
evaluation of alternatives is ongoing and we cannot predict the timing, the circumstances, or the likelihood of us ceasing
to be regulated as an SLHC.