HR Block 2014 Annual Report Download - page 42

34 2014 Form 10-K | H&R Block, Inc.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – A summary of our obligations to make future
payments as of April 30, 2014, is as follows:
(in 000s)
Total Less Than
1 Year 1 - 3 Years 4 - 5 Years After 5 Years
Long-term debt (including interest) $ 1,154,786 $ 437,632 $ 55,000 $ 55,000 $ 607,154
Customer deposits (including interest) 771,088 770,567 175 346 —
Contingent acquisition payments 9,206 8,016 1,190 — —
Capital lease obligations 8,980 755 1,616 2,007 4,602
Operating leases 423,630 183,701 189,824 44,939 5,166
Total contractual cash obligations $ 2,367,690 $ 1,400,671 $ 247,805 $ 102,292 $ 616,922
The table above does not reflect unrecognized tax benefits of approximately $111 million due to the high degree
of uncertainty regarding the future cash flows associated with these amounts.
See discussion of contractual obligations and commitments in Item 8, within the notes to the consolidated financial
statements.
REGULATORY ENVIRONMENT – See discussion in Item 1, "Regulation and Supervision - Bank and Holding
Companies," and in Item 1A, "Risk Factors," for additional information on regulatory capital requirements for SLHCs,
including the new capital requirements for SLHCs published by the Federal Reserve in July 2013.
The federal government, various state, local, provincial and foreign governments, and some self-regulatory
organizations have enacted statutes and ordinances, or adopted rules and regulations, regulating aspects of our
business. These aspects include, but are not limited to, commercial income tax return preparers, income tax courses,
the electronic filing of income tax returns, the offering of RACs, loan originations and assistance in loan originations,
mortgage lending, privacy, consumer protection, franchising, sales methods and banking. We determine the
applicability of such statutes, ordinances, rules and regulations (collectively, Laws) and work to comply with those
Laws that are applicable to us or our services or products.
From time to time in the ordinary course of business, we receive inquiries from governmental and self-regulatory
agencies regarding the applicability of Laws to our services and products. In response to past inquiries, we have
demonstrated that we comply with such Laws, convinced the authorities that such Laws were not applicable or that
compliance already exists, or modified our activities in the applicable jurisdiction to avoid the application of all or
certain parts of such Laws. We believe the past resolution of such inquiries and our ongoing compliance with Laws
has not had a material effect on our consolidated financial statements. We cannot predict what effect future Laws,
changes in interpretations of existing Laws or the results of future regulatory inquiries with respect to the applicability
of Laws may have on our consolidated financial position, results of operations and cash flows. See additional discussion
of legal matters in Item 8, note 17 to the consolidated financial statements.
NON-GAAP FINANCIAL INFORMATION
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. Because these measures are not measures of financial performance
under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for
other companies.
We consider non-GAAP financial measures to be a useful metric for management and investors to evaluate and
compare the ongoing operating performance of our business on a consistent basis across reporting periods, as it
eliminates the effect of items that are not indicative of our core operating performance.
The following are descriptions of adjustments we make for our non-GAAP financial measures:
We exclude losses from settlements and estimated contingent losses from litigation and favorable reserve
adjustments. This does not include legal defense costs.
We exclude non-cash charges to adjust the carrying values of goodwill, intangible assets, other long-lived assets
and investments to their estimated fair values.