HR Block 2016 Annual Report Download - page 40

32 2016 Form 10-K | H&R Block, Inc.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – A summary of our borrowings and known
contractual obligations as of April 30, 2016, and the timing and effect that such commitments are expected to have
on our liquidity and capital requirements in future periods is as follows:
(in 000s)
Total Less Than
1 Year 1 - 3 Years 4 - 5 Years After 5 Years
Long-term debt (including interest) $ 1,982,578 $ 72,688 $ 145,375 $ 780,098 $ 984,417
Contingent acquisition payments 8,657 7,881 776 — —
Capital lease obligations 7,435 826 2,007 2,197 2,405
Operating leases 680,816 213,523 290,031 113,381 63,881
Total contractual cash obligations $ 2,679,486 $ 294,918 $ 438,189 $ 895,676 $ 1,050,703
The table above does not reflect unrecognized tax benefits of approximately $112 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 – 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 RTs, 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 15 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 our non-GAAP financial measures to be performance measures and 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.
We exclude severance and other restructuring charges in connection with the termination of personnel, closure
of offices and related costs.