HR Block 2016 Annual Report Download - page 38

30 2016 Form 10-K | H&R Block, Inc.
Given the likely availability of a number of liquidity options discussed herein, we believe that, in the absence of
any unexpected developments, our existing sources of capital as of April 30, 2016 are sufficient to meet our future
operating and financing needs.
DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements
of cash flows for fiscal years 2016, 2015 and 2014. See Item 8 for the complete consolidated statements of cash flows
for these periods.
(in 000s)
Year ended April 30, 2016 2015 2014
Net cash provided by (used in):
Operating activities $ 532,394 $ 626,608 $ 809,581
Investing activities 329,515 (148,932) 10,690
Financing activities (1,961,729) (645,807) (364,930)
Effects of exchange rate changes on cash (10,569) (9,986) (17,618)
Net change in cash and cash equivalents $ (1,110,389) $ (178,117) $ 437,723
Operating Activities. Cash provided by operating activities decreased $94.2 million from fiscal year 2015. The
decrease from the prior year was primarily due to lower net income and $88.5 million in settlement payments related
to representations and warranties, partially offset by a decline in income taxes paid of $71.5 million.
Investing Activities. Cash provided by investing activities totaled $329.5 million compared to cash used of $148.9
million in the prior year. This change is principally due to sales of investment securities totaling $436.5 million resulting
primarily from our decision to sell substantially all AFS securities following the divestiture of HRB Bank. In addition,
there was a decrease of $24.5 million in payments for business acquisitions, and a decrease of $23.2 million in capital
expenditures.
Financing Activities. Cash used in financing activities increased $1.3 billion. As described more fully below, changes
in cash from financing activities resulted primarily from share repurchase activity and changes in customer deposit
balances including the sale of deposits to BofI, partially offset by the issuance of new debt.
CASH REQUIREMENTS –
Dividends and Share Repurchase. Returning capital to shareholders in the form of dividends and the repurchase
of outstanding shares has historically been a significant component of our capital allocation plan.
We have consistently paid quarterly dividends. Dividends paid totaled $201.7 million, $220.0 million and $219.0
million in fiscal years 2016, 2015 and 2014, respectively. Although we have historically paid dividends and 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.
In September 2015, we announced that our Board of Directors approved a new $3.5 billion share repurchase
program, effective through June 2019. As a part of the repurchase program, in the current year, we purchased $2.0
billion of our common stock at an average price of $35.46 per share. See Item 8, note 10 to the consolidated financial
statements for additional information. Although we may continue to repurchase shares, there is no assurance that
we will purchase up to the full board authorization.
Divestiture of HRB Bank. At the time of the closing of the P&A Transaction, we made a one-time cash payment
to BofI of $419 million, which was approximately equal to the carrying value of the liabilities (including all deposit
liabilities) assumed by BofI. In connection with the closing, we liquidated the AFS securities previously held by HRB
Bank and received proceeds of $388 million on the sale.
In connection with the P&A Transaction we entered into the RPA dated August 31, 2015 with BofI. Pursuant to
the RPA, we are required to purchase a 90% participation interest, at par, in all EAs originated by BofI throughout the
term of the RPA. At April 30, 2016 the principal balance of purchased participation interests totaled $13.4 million.
See additional discussion in Item 1, under "Recent Developments," and in Item 8, note 2 to the consolidated
financial statements.