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H&R Block 2013 Form 10-K 37
We may consider whether other significant items that arise in the future should also be excluded from our non-
GAAP financial measures.
We measure the performance of our business using a variety of metrics, including EBITDA, adjusted EBITDA and
adjusted pretax income of continuing operations. We also use EBITDA and pretax income of continuing operations as
factors in incentive compensation calculations for our employees. Adjusted EBITDA and adjusted pretax income
eliminate the impact of items that we do not consider indicative of our core operating performance and, we believe,
provide meaningful information to assist in understanding our financial results, analyzing trends in our underlying
business, and assessing our prospects for future performance.
The following is a reconciliation of EBITDA and adjusted EBITDA:
(in 000s)
Year ended April 30, 2013 2012 2011
Net income from continuing operations - reported $ 465,158 $ 345,968 $ 392,547
Add back:
Income taxes 236,853 230,102 235,156
Interest expense 79,957 92,089 94,183
Depreciation and amortization 92,407 89,157 91,102
409,217 411,348 420,441
EBITDA from continuing operations 874,375 757,316 812,988
Adjustments:
Loss contingencies - litigation (4,579) 22,961 16,014
Impairment of goodwill and intangible assets 3,581 11,389 22,700
Severance 4,785 32,474 29,598
Loss on extinguishment of debt 5,790 — —
Gain on sales of tax offices (1,272) (16,601) (45,101)
8,305 50,223 23,211
Adjusted EBITDA from continuing operations $ 882,680 $ 807,539 $ 836,199
The following is a reconciliation of adjusted pretax income:
(in 000s)
Year ended April 30, 2013 2012 2011
Pretax income from continuing operations - reported $ 702,011 $ 576,070 $ 627,703
Adjustments:
Loss contingencies - litigation (4,579) 22,961 16,014
Impairment of goodwill and intangible assets 3,581 11,389 22,700
Severance 4,785 32,474 29,598
Loss on extinguishment of debt 5,790 — —
Gain on sales of tax offices (1,272) (16,601) (45,101)
8,305 50,223 23,211
Pretax income from continuing operations - adjusted $ 710,316 $ 626,293 $ 650,914