What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-08-16 compared with 2021-06-15 · 375 added, 365 removed, 711 unchanged (51% of the section changed)

8 unchanged sentences

The independent auditor and the Vice President, Audit Services have full access to the Audit Committee and meet with the committee, both with and without management present, to discuss the scope and results of their audits, including internal controls and financial matters.

Deloitte & Touche LLP audited our consolidated financial statements for fiscal years 2021, 2020 and 2019.

Deloitte & Touche LLP audited our consolidated financial statements for the fiscal year ended June 30, 2022, the Transition Period ended June 30, 2021, and for the fiscal years ended April 30, 2021 and April 30, 2020.

The audits were conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States).

1 unchanged sentence

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 12a-15(f).

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), using the 2013 framework, as of April 30, 2021.

Based on our assessment, our Chief Executive Officer and Chief Financial Officer concluded that as of April 30, 2021, the Company's internal control over financial reporting was effective based on the criteria set forth by COSO, using the 2013 framework.

Based on our assessment, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2022, the Company's internal control over financial reporting was effective based on the criteria set forth by COSO, using the 2013 framework.

The Company's external auditor, Deloitte & Touche LLP, an independent registered public accounting firm, has issued an audit report on the effectiveness of the Company's internal control over financial reporting.

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We have audited the accompanying consolidated balance sheets of H&R Block, Inc.

and subsidiaries (the "Company") as of April 30, 2021 and 2020, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended April 30, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2021, in conformity with accounting principles generally accepted in the United States of America .

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 15, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, effective May 1, 2019, the Company adopted Financial Accounting Standards Board Accounting Standards Update 2016-02, Leases .

and subsidiaries (the "Company") as of June 30, 2022, June 30, 2021 and April 30, 2021, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows, for the year ended June 30, 2022, for the two months ended June 30, 2021 (Transition Period) and for the years ended April 30, 2021 and 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022, June 30, 2021 and April 30, 2021, and the results of its operations and its cash flows for the year ended June 30, 2022, for the two months ended June 30, 2021 (Transition Period) and for the years ended April 30, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 16, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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The Company operates in multiple income tax jurisdictions both within the United States and internationally.

Accordingly, management must determine the appropriate allocation of income to each of these jurisdictions based on transfer pricing analyses of comparable third-party companies and predictions of future economic conditions.

Accordingly, management must determine the appropriate allocation of income to each of these jurisdictions based on transfer pricing analyses of comparable companies and predictions of future economic conditions.

Transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact the mix of earnings in countries with differing statutory tax rates.

The Company accrues a liability for unrecognized tax benefits arising from uncertain tax positions reflecting their judgment as to the ultimate resolution of the applicable issues.

For each position, management considers all applicable information including relevant tax laws, the taxing authorities' potential position, management’s tax return

For each position, management considers all applicable information including relevant tax laws, the taxing authorities' potential position, management’s tax return position, and the

2022 Form 10-K | H&R Block, Inc.

position, and the possible settlement outcomes to determine the amount of liability to record.

The Company’s unrecognized tax benefits as of April 30, 2021, were $265 million.

possible settlement outcomes to determine the amount of liability to record.

The Company’s unrecognized tax benefits as of June 30, 2022, were $232 million.

We identified the Company’s determination of uncertain tax positions measured in accordance with the Company’s transfer pricing policies as a critical audit matter because of the significant judgment in the application of the tax law in applying the arm’s length standard to intercompany transactions and scrutiny by local tax authorities.

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◦ Evaluated the application of the transfer pricing method to transactions subject to transfer pricing.

◦ Tested the application of the transfer pricing policies by legal entity through an independent return on investment calculation.

◦ Tested the application of the transfer pricing policies by legal entity through an independent calculation.

◦ Evaluated management’s approach to identifying uncertain tax positions related to changes in the transfer pricing terms and conditions and tested the calculation of the tax positions at the individual legal entity level and at the consolidated level.

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Critical Audit Matter Description

Sand Canyon Corporation (SCC), originated mortgage loans until 2007 that were sold either as whole loans to single third-party buyers, who generally securitized such loans, or in the form of residential mortgage-backed securities.

Although SCC ceased its mortgage loan origination activities in December 2007 and sold its loan servicing business in April 2008, SCC has been, remains, and may in the future be, subject to indemnification claims pertaining to SCC's mortgage business activities that occurred prior to such termination and sale.

Other contracting parties, such as underwriters, depositors, and securitization trustees are, or have been, involved in multiple lawsuits, threatened lawsuits, and settlements related to securitization transactions in which SCC participated.

SCC has received notices of claims for indemnification or potential indemnification obligations relating to such matters, including lawsuits to which underwriters, depositors, or securitization trustees are party.

Sand Canyon Corporation (SCC) ceased its mortgage loan origination activities in December 2007 and sold its loan servicing business in April 2008.

SCC has been and may in the future be, subject to indemnification claims pertaining to SCC's mortgage business activities that occurred prior to such termination and sale.

Parties including underwriters, depositors, and securitization trustees have been, remain, or may in the future be involved in lawsuits, threatened lawsuits, or settlements related to securitization transactions in which SCC participated.

SCC has received notices of potential indemnification obligations relating to such matters and additional lawsuits against the parties to the securitization transactions may be filed in the future and SCC may receive additional notices of potential indemnification.

The Company has not established a liability because they have not determined that it is probable that a liability for a loss contingency has been incurred.

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Given the subjective nature of audit evidence available for indemnification claims, auditing the Company’s conclusion required significant auditor judgment.

H&R Block, Inc.

| 2021 Form 10-K

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the potential liabilities for the indemnification claims included the following, among others:

H&R Block, Inc.

| 2022 Form 10-K

• We tested the effectiveness of management’s internal controls related to the evaluation of potential liabilities from indemnification claims, including controls over the completeness of management’s evaluation of indemnification claims and the disclosure of such matters.

4 unchanged sentences

Kansas City, Missouri

June 15, 2021

August 16, 2022

We have served as the Company's auditor since 2007.

4 unchanged sentences

We have audited the internal control over financial reporting of H&R Block, Inc.

and subsidiaries (the “Company”) as of April 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended April 30, 2021, of the Company and our report dated June 15, 2021, expressed an unqualified opinion on those financial statements.

and subsidiaries (the “Company”) as of June 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2022, of the Company and our report dated August 16, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

16 unchanged sentences

Kansas City, Missouri

June 15, 2021

August 16, 2022

H&R Block, Inc.

2 unchanged sentences

AND COMPREHENSIVE INCOME (LOSS) (in 000s, except per share amounts)

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Service revenues $ 3,134,686 $ 427,575 $ 3,067,223 $ 2,327,323

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Income (loss) from continuing operations before income taxes (benefit) 659,069 120,995 668,736 ( 3,374 )

668,736 ( 3,374 ) 545,160

Income taxes (benefit) 98,423 29,876 78,524 ( 9,530 )

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2022 Form 10-K | H&R Block, Inc.

CONSOLIDATED BALANCE SHEETS (in 000s, except share and

per share amounts)

As of April 30, 2021 2020

CONSOLIDATED BALANCE SHEETS (in 000s, except share and per share amounts)

As of June 30, 2022 June 30, 2021 April 30, 2021

Cash and cash equivalents $ 885,015 $ 1,434,381 $ 934,251

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Accrued income taxes and reserves for uncertain tax positions 280,115 238,863 287,404

Current portion of long-term debt — 649,384

Operating lease liabilities 206,898 214,190 206,393

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Total current liabilities 998,813 982,486 1,163,079

Long-term debt and line of credit borrowings 1,490,039 2,845,873

Long-term debt 1,486,876 1,983,719 1,490,039

Deferred tax liabilities and reserves for uncertain tax positions 226,362 301,658 279,351

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STOCKHOLDERS' EQUITY:

Common stock, no par, stated value $ .01 per share, 800,000,000 shares

authorized, shares issued of 216,655,616 and 228,206,684

Common stock, no par, stated value $ .01 per share, 800,000,000 shares authorized, shares issued of 193,571,309 , 216,665,616 and 216,655,616

1,936 2,167 2,167

Additional paid-in capital 772,182 779,465 783,292

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CONSOLIDATED STATEMENTS OF CASH FLOWS (in 000s)

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

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Other, net 8,902 1,227 8,547 57,041

Net cash used in investing activities ( 45,523 ) ( 470,231 ) ( 155,131 )

Net cash provided by (used in) investing activities ( 76,541 ) 3,692 ( 45,523 ) ( 470,231 )

CASH FLOWS FROM FINANCING ACTIVITIES:

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Net increase (decrease) in cash and cash equivalents, including restricted balances ( 533,451 ) 521,244 ( 1,810,100 ) 1,165,293

Cash, cash equivalents and restricted cash, beginning of the year

2,873,020 1,707,727 1,663,678

Cash, cash equivalents and restricted cash, end of the year $ 1,062,920 $ 2,873,020 $ 1,707,727

Cash, cash equivalents and restricted cash, beginning of the period 1,584,164 1,062,920 2,873,020 1,707,727

Cash, cash equivalents and restricted cash, end of the period $ 1,050,713 $ 1,584,164 $ 1,062,920 $ 2,873,020

SUPPLEMENTARY CASH FLOW DATA:

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Accrued additions to property and equipment 4,315 2,085 1,643 1,185

Accrued dividends payable to common shareholders 43,093 48,998 — —

See accompanying notes to consolidated financial statements.

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Common Stock Additional

Capital Accumulated

Capital Accumulated Other

Comprehensive

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Balances as of May 1, 2019 238,337 $ 2,383 $ 767,636 $ ( 20,416 ) $ 499,386 ( 36,377 ) $ ( 707,462 ) $ 541,527

Net income — — — — 422,509 — — 422,509

Cumulative effect of ASU 2016-16 (2)

— — — — 100,950 — — 100,950

Net loss — — — — ( 7,526 ) — — ( 7,526 )

Other comprehensive loss — — — ( 31,160 ) — — — ( 31,160 )

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Balances as of April 30, 2020 228,207 $ 2,282 $ 775,387 $ ( 51,576 ) $ 42,965 ( 35,731 ) $ ( 698,017 ) $ 71,041

Net loss — — — — ( 7,526 ) — — ( 7,526 )

Other comprehensive loss — — — ( 31,160 ) — — — ( 31,160 )

Net income — — — — 583,791 — — 583,791

Other comprehensive income — — — 56,362 — — — 56,362

Stock-based compensation — — 26,138 — — — — 26,138

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Net income — — — — 89,610 — — 89,610

Other comprehensive income — — — 56,362 — — — 56,362

Other comprehensive loss — — — ( 4,698 ) — — — ( 4,698 )

Stock-based compensation — — 4,285 — — — — 4,285

2 unchanged sentences

— — — — — ( 197 ) ( 4,633 ) ( 4,633 )

Cash dividends declared - $ 0.27 per share

— — — — ( 48,998 ) — — ( 48,998 )

Balances as of June 30, 2021 216,656 $ 2,167 $ 779,465 $ 88 $ 286,694 ( 34,842 ) $ ( 680,356 ) $ 388,058

Net income — — — — 553,674 — — 553,674

Other comprehensive loss — — — ( 21,733 ) — — — ( 21,733 )

Stock-based compensation — — 28,189 — — — — 28,189

Stock-based awards exercised or vested — — ( 21,622 ) — ( 3,126 ) 1,634 31,937 7,189

Acquisition of treasury shares (2)

— — — — — ( 433 ) ( 12,828 ) ( 12,828 )

Repurchase and retirement of common shares ( 23,085 ) ( 231 ) ( 13,850 ) — ( 536,265 ) — — ( 550,346 )

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— — — — ( 180,572 ) — — ( 180,572 )

Balances as of April 30, 2021 216,656 $ 2,167 $ 783,292 $ 4,786 $ 248,506 ( 35,190 ) $ ( 686,350 ) $ 352,401

Balances as of June 30, 2022 193,571 $ 1,936 $ 772,182 $ ( 21,645 ) $ 120,405 ( 33,641 ) $ ( 661,247 ) $ 211,631

(1) The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.

(2) ASU 2016-16 was effective on May 1, 2018 and we adopted using the modified retrospective transition method.

We recognized a $ 101.0 million cumulative effect adjustment to increase the opening balance of retained earnings and increase deferred tax assets resulting from intra-entity transfers of intellectual property in fiscal year 2018.

(2) Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS – Our subsidiaries provide assisted and do-it-yourself (DIY) tax return preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partner, to the general public primarily in the United States (U.S.), Canada and Australia.

NATURE OF OPERATIONS – Our subsidiaries provide assisted and do-it-yourself (DIY) tax return preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partners, to the general public primarily in the United States (U.S.), Canada and Australia.

Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices, virtually or via an internet review) or prepared and filed by our clients through our DIY tax solutions.

We also offer small business financial solutions through our company-owned or franchise offices and online through Wave.

We also offer small business solutions through our company-owned or franchise offices and online through Wave.

"H&R Block," "the Company," "we," "our" and "us" are used interchangeably to refer to H&R Block, Inc., to H&R Block, Inc.

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DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation (including its subsidiaries, collectively, SCC), which exited its mortgage business in fiscal year 2008.

See note 12 for additional information on litigation, claims, and other loss contingencies related to our discontinued operations.

See note 12 for additional information on loss contingencies related to our discontinued operations.

SEGMENT INFORMATION – We report a single segment that includes all of our continuing operations.

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As such, actual results could differ materially from those estimates.

CHANGE IN FISCAL YEAR END – On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30.

The Company's 2022 fiscal year began on July 1, 2021 and ended on June 30, 2022.

As a result of this change, the Company filed a Transition Report on Form 10-Q that included financial information for the transition period from May 1, 2021 to June 30, 2021 (Transition Period).

CASH AND CASH EQUIVALENTS – All non-restricted highly liquid instruments purchased with an original maturity of three months or less are considered to be cash equivalents.

Outstanding checks in excess of funds on deposit (book overdrafts) included in accounts payable totaled $ 2.9 million and $ 15.2 million as of April 30, 2021 and 2020, respectively.

Outstanding checks in excess of funds on deposit (book overdrafts) included in accounts payable totaled $ 2.7 million, $ 1.4 million and $ 2.9 million as of June 30, 2022, June 30, 2021 and April 30, 2021, respectively.

CASH AND CASH EQUIVALENTS – RESTRICTED – Cash and cash equivalents – restricted consists primarily of cash held by our captive insurance subsidiary that is expected to be used to pay claims.

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In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Our financing receivables consist primarily of participations in H&R Block Emerald Advance ® lines of Credit (EAs), loans made to franchisees, and amounts due under H&R Block Instant Refund SM (Instant Refund).

Our accounting policies related to receivables and related allowances are discussed further in note 4 .

2022 Form 10-K | H&R Block, Inc.

PROPERTY AND EQUIPMENT – Buildings and equipment are initially recorded at cost and are depreciated over the estimated useful life of the assets using the straight-line method.

Leasehold improvements are initially recorded at cost and are amortized over the estimated useful life using the straight-line method.

Our financing receivables consist primarily of participations in H&R Block Emerald Advance ® lines of Credit (EAs), loans made to franchisees, and amounts due under H&R Block's Instant Refund SM (Instant Refund).

Our accounting policies related to receivables and related allowances are discussed further in note 4 .

PROPERTY AND EQUIPMENT – Buildings, equipment and leasehold improvements are initially recorded at cost and are depreciated over the estimated useful life of the assets using the straight-line method.

Estimated useful lives are generally 15 to 40 years for buildings, two to five years for computers and other equipment, three to five years for purchased software and up to eight years for leasehold improvements.

GOODWILL AND INTANGIBLE ASSETS – Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses.

Goodwill is not amortized, but rather is tested for impairment annually during our fourth quarter, or more frequently if indications of potential impairment exist.

Goodwill is not amortized, but rather is tested for impairment annually during our third quarter, or more frequently if indications of potential impairment exist.

Intangible assets, including internally-developed software, with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

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The majority of our lease portfolio consists of retail office space in the U.S., Canada, and Australia.

The contract terms for these retail offices generally are from May 1 to April 30, and generally run three to five years .

The contract terms for these retail offices generally are from May 1 to April 30, and generally run two to five years .

We record operating lease ROU assets and operating lease liabilities based on the discounted future minimum lease payments over the term of the lease.

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We recognize lease expenses for our operating leases on a straight-line basis.

For lease payments that are subject to adjustments based on indexes or rates, the most current index or rate adjustments were included in the measurement of our ROU assets and lease liabilities at adoption or commencement of the lease.

Variable lease costs, including non-lease components (such as common area maintenance, utilities, insurance, and taxes) and certain index-based changes in lease payments, are expensed as incurred.

Our ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

We adopted Accounting Standards Update No.

2016-02, "Leases" (ASU 2016-02) as of May 1, 2019 using the alternative transition method, which allows us to use the effective date of the new standard as the initial application date.

Therefore our consolidated statement of operations and cash flows for the year ended April 30, 2019 are presented under the previous accounting standard.

FOREIGN CURRENCY – The financial statements of the Company’s foreign operations are translated into U.S.

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Translation adjustments are not included in net income, but are recorded as a separate component of other comprehensive income in stockholders' equity.

Foreign currency gains and losses included in operating results for fiscal years 2021, 2020 and 2019 were not material.

Foreign currency gains and losses included in operating results for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020 and the Transition Period ended June 30, 2021 were not material.

TREASURY SHARES – We record shares of common stock repurchased by us as treasury shares, at cost, resulting in a reduction of stockholders' equity.

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Assisted tax preparation services include tax preparation and electronic filing or printing of the completed tax return.

Revenues from tax preparation services, including printing for clients that choose to print and mail their returns, are recognized when a completed return is accepted by the customer.

Revenues from tax preparation and printing for clients that choose to print and mail their returns, are recognized when a completed return is accepted by the customer.

Revenues for electronic filing are recognized when the return is electronically filed.

Royalties are based on contractual percentages of franchise gross receipts and are generally recorded in the period in which the services are provided by the franchisee to the customer.

DIY tax preparation includes fees for online and desktop tax preparation software and for electronic filing or printing.

Revenues for online software, including printing for clients that choose to print and mail their returns, are recognized when the customer uses the software to complete a return and revenues for desktop software are recognized when the software is sold to the end user.

DIY tax preparation services includes fees for online and desktop tax preparation software and for electronic filing or printing.

Revenues for online software and printing for clients that choose to print and mail their returns, are recognized when the customer uses the software to complete a return.

Revenues for desktop software are recognized when the software is sold to the end user.

Revenues for electronic filing are recognized when the return is electronically filed.

Refund Transfer revenues are recognized when the IRS filing acknowledgment is received and the bank account is established at our bank partner, MetaBank®, N.A.

(Meta), a wholly-owned subsidiary of Meta Financial Group, Inc.

Refund Transfer revenues are recognized when the IRS filing acknowledgment is received and the bank account is established at our bank partner, Pathward TM , N.A., formerly known as MetaBank®, N.A.

(Pathward), a wholly-owned subsidiary of Pathward Financial, Inc.

(formerly known as Meta Financial Group, Inc.).

2022 Form 10-K | H&R Block, Inc.

Emerald Card® revenues consist of interchange income from the use of debit cards and fees related to the card, such as fees from the use of ATM networks.

Emerald Card® revenues consist of interchange income from the use of debit cards and fees paid by cardholders.

Interchange income is a fee paid by merchants to our bank partner through the interchange network.

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TIS has multiple performance obligations where we provide clients assistance in helping protect their tax identity and access to services to help restore their tax identity, if necessary.

Protection services include a daily scan of the dark web for personal information, a monthly scan for social security number in credit header data, notifying clients if their information is detected on a tax return filed through H&R Block, and obtaining additional IRS identity protections when eligible.

Protection services include a daily scan of the dark web for personal information, a monthly scan for the client's social security number in credit header data, notifying clients if their information is detected on a tax return filed through H&R Block, and obtaining additional IRS identity protections when eligible.

Interest and fee income on Emerald Advance SM lines of credit is recorded over the life of the underlying loan.

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MARKETING AND ADVERTISING – Advertising costs for radio and television ads are expensed over the course of the tax season, with online, print and mailing advertising expensed as incurred.

Marketing and advertising expenses totaled $ 262.0 million, $ 255.1 million and $ 269.8 million in fiscal years 2021, 2020 and 2019, respectively.

Marketing and advertising expenses totaled $ 284.2 million, $ 262.0 million and $ 255.1 million for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020, respectively, and $ 11.9 million for the Transition Period.

EMPLOYEE BENEFIT PLANS – We have a 401(k) defined contribution plan covering eligible full-time and seasonal employees following the completion of an eligibility period.

Employer contributions to this plan are discretionary and totaled $ 26.6 million, $ 18.8 million and $ 19.3 million for continuing operations in fiscal years 2021, 2020 and 2019, respectively.

Employer contributions to this plan are discretionary and totaled $ 25.1 million, $ 26.6 million and $ 18.8 million for continuing operations for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020, respectively, and $ 3.4 million for the Transition Period.

We have severance plans covering executives and eligible regular full-time or part-time active employees who incur a qualifying termination.

Expenses related to severance benefits of continuing operations totaled $ 8.4 million, $ 2.5 million and $ 5.0 million in fiscal years 2021, 2020 and 2019, respectively.

Expenses related to severance benefits for continuing operations totaled $ 2.6 million, $ 8.4 million and $ 2.5 million for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020, respectively, and $ 1.2 million for the Transition Period.

H&R Block, Inc.

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tax services revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

assisted tax preparation $ 2,094,612 $ 259,527 $ 2,035,107 $ 1,533,303

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Total revenues $ 3,463,270 $ 466,106 $ 3,413,987 $ 2,639,720

Changes in the balances of deferred revenue and wages for POM are as follows:

POM Deferred Revenue Deferred Wages

Year ended April 30, 2021 2020 2021 2020

Balance, beginning of the year $ 183,685 $ 212,511 $ 21,618 $ 27,306

Changes in the balances of deferred revenue for POM are as follows:

POM Deferred Revenue

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Balance, beginning of the period $ 172,759 $ 183,871 $ 183,685 $ 212,511

Amounts deferred 110,679 12,464 115,114 95,032

Amounts recognized on previous deferrals ( 109,952 ) ( 23,576 ) ( 114,928 ) ( 123,858 )

Balance, end of the year $ 183,871 $ 183,685 $ 20,169 $ 21,618

As of April 30, 2021, deferred revenue related to POM was $ 183.9 million.

We expect that $ 101.9 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following sixty months .

The related liabilities are included in deferred revenue and other liabilities in the consolidated balance sheets.

The related assets are included in prepaid expenses and other current assets or other noncurrent assets.

As of April 30, 2021, and 2020, TIS deferred revenue was $ 28.9 million and $ 30.8 million, respectively.

Balance, end of the period $ 173,486 $ 172,759 $ 183,871 $ 183,685

Changes in the balances of deferred wages for POM are as follows:

POM Deferred Wages

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Balance, beginning of the period $ 17,867 $ 20,169 $ 21,618 $ 27,306

Amounts deferred 12,668 8 11,367 10,708

Amounts recognized on previous deferrals ( 11,040 ) ( 2,310 ) ( 12,816 ) ( 16,396 )

Balance, end of the period $ 19,495 $ 17,867 $ 20,169 $ 21,618

As of June 30, 2022, deferred revenue related to POM was $ 173.5 million.

We expect that $ 102.5 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following five years .

POM deferred revenues are included in deferred revenue and other liabilities in the consolidated balance sheets.

POM deferred wages are included in prepaid expenses and other current assets or other noncurrent assets.

As of June 30, 2022, June 30, 2021 and April 30, 2021, TIS deferred revenue was $ 25.8 million, $ 28.3 million, and $ 28.9 million, respectively.

The related liabilities are included in deferred revenue and other current liabilities in the consolidated balance sheets.

All deferred revenue related to TIS as of April 30, 2021 will be recognized within the next twelve months.

All deferred revenue related to TIS as of June 30, 2022 will be recognized by April 2023 .

2022 Form 10-K | H&R Block, Inc.

A significant portion of our accounts receivable balances arise from services and products that we provide to our customers, with the exception of those related to EAs, which arise from purchased participation interests with our bank partner.

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The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings.

Per share amounts are

2021 Form 10-K | H&R Block, Inc.

computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period.

Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period.

The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:

(in 000s, except per share amounts)

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Net income from continuing operations attributable to shareholders $ 560,646 $ 91,119 $ 590,212 $ 6,156

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Diluted 3.26 0.49 3.11 0.03

Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 0.8 million, 0.9 million and 0.4 million shares of stock for fiscal years 2021, 2020 and 2019, respectively, as the effect would be antidilutive.

Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 0.4 million, 0.8 million and 0.9 million shares of stock for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020, respectively, and 0.3 million shares of stock for the Transition Period as the effect would be antidilutive.

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| 2022 Form 10-K

Receivables, net of their related allowance, consist of the following:

As of April 30, 2021 2020

Short-term Long-term Short-term Long-term

As of June 30, 2022 June 30, 2021 April 30, 2021

Short-term Long-term Short-term Long-term Short-term Long-term

Loans to franchisees $ 6,194 $ 22,036 $ 9,497 $ 28,026 $ 16,666 $ 28,909

1 unchanged sentence

assisted and DIY tax preparation and related fees 18,893 2,560 41,900 3,793 92,531 3,793

H&R Block Instant Refund SM receivables

H&R Block's Instant Refund SM receivables

3,491 198 2,357 159 35,665 1,463

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Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and revolving lines of credit primarily for the purpose of funding working capital needs.

As of April 30, 2021 and 2020, loans with a principal balance of $ 0.1 million and $ 0.2 million, respectively, were more than 90 days past due.

We had no loans to franchisees on non-accrual status as of April 30, 2021 or 2020.

As of June 30, 2022, June 30, 2021, and April 30, 2021 loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.

The credit quality of these receivables is assessed at origination at an individual franchisee level.

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Additionally, the franchise territory serves as additional protection in the event a franchisee defaults on the loan, as we may revoke franchise rights, write off the remaining balance of the loan and refranchise the territory or begin operating it as company-owned.

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| 2021 Form 10-K

H&R Block Instant Refund SM .

H&R Block's Instant Refund SM .

Our Canadian operations advance refunds due to certain clients from the Canada Revenue Agency (CRA), in exchange for a fee.

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This serves to greatly reduce the amounts of uncollectible receivables and the risk of fraudulent returns.

H&R Block Instant Refund SM amounts are generally received from the CRA within 60 days of filing the client's return, with the remaining balance collectible from the client.

H&R Block's Instant Refund SM amounts are generally received from the CRA within 60 days of filing the client's return, with the remaining balance collectible from the client.

Credit losses from these receivables are not specifically identified and charged off;

instead we review the credit quality of these receivables on a pooled basis, segregated by the year of origination with older years being deemed more unlikely to be repaid.

instead we review the credit quality of these receivables on a pooled basis, segregated by the tax return year of origination with older years being deemed more unlikely to be repaid.

At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent tax seasons.

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In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by year of origination, as of April 30, 2021 are as follows:

Year of Origination Current Balance Non-Accrual

2022 Form 10-K | H&R Block, Inc.

Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by tax return year of origination, as of June 30, 2022 are as follows:

Tax return year of origination Current Balance More Than 60 Days Past Due

2021 $ 4,997 $ 2,903

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Credit losses from EAs are not specifically identified and charged off;

instead we review the credit quality of these receivables on a pooled basis, segregated by the year of origination with older years being deemed more unlikely to be repaid.

instead we review the credit quality of these receivables on a pooled basis, segregated by the fiscal year of origination with older years being deemed more unlikely to be repaid.

At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent tax seasons.

1 unchanged sentence

In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by year of origination as of April 30, 2021, are as follows:

Year of Origination Current Balance Non-Accrual

Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by fiscal year of origination as of June 30, 2022, are as follows:

Fiscal year of origination Current Balance Non-Accrual

2022 $ 26,040 $ 26,040

4 unchanged sentences

Net balance $ 15,516

2021 Form 10-K | H&R Block, Inc.

Allowance for Doubtful Accounts.

Activity in the allowance for doubtful accounts for EAs and all other short-term and long-term receivables for the years ended April 30, 2021 , 2020, and 2019 is as follows:

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| 2022 Form 10-K

Allowance for Credit Losses.

Activity in the allowance for credit losses for EAs and all other short-term and long-term receivables for the periods ended June 30, 2022, June 30, 2021, April 30, 2021 and April 30, 2020 is as follows:

EAs All Other Total

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Charge-offs, recoveries and other — ( 149 ) ( 149 )

Balances as of April 30, 2021 $ 27,704 $ 55,804 $ 83,508

Balances as of June 30, 2021 27,704 60,272 87,976

Provision 14,814 51,993 66,807

Charge-offs, recoveries and other ( 16,377 ) ( 61,139 ) ( 77,516 )

Balances as of June 30, 2022 $ 26,141 $ 51,126 $ 77,267

PROPERTY AND EQUIPMENT

The components of property and equipment, net of accumulated depreciation and amortization, are as follows:

As of April 30, 2021 2020

As of June 30, 2022 June 30, 2021 April 30, 2021

Buildings $ 34,303 $ 42,379 $ 44,121

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$ 123,912 $ 139,276 $ 148,490

Depreciation expense of property and equipment for continuing operations for fiscal years 2021, 2020 and 2019 was $ 73.4 million, $ 85.9 million and $ 93.5 million, respectively.

The carrying value of long-lived assets held outside the U.S., which is comprised of property and equipment, totaled $ 18.9 million, $ 19.1 million and $ 23.6 million as of April 30, 2021, 2020 and 2019, respectively.

Depreciation expense of property and equipment for continuing operations for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020 was $ 64.7 million, $ 73.4 million and $ 85.9 million, respectively and was $ 10.8 million for the Transition Period.

The carrying value of long-lived assets held outside the U.S., which is comprised of property and equipment, totaled $ 15.4 million, $ 17.8 million and $ 18.9 million as of June 30, 2022, June 30, 2021 and April 30, 2021, respectively.

2022 Form 10-K | H&R Block, Inc.

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the years ended April 30, 2021 and 2020 are as follows:

Changes in the carrying amount of goodwill for the periods ended June 30, 2022, June 30, 2021, April 30, 2021 and April 30, 2020 are as follows:

Goodwill Accumulated Impairment Losses Net

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Balances as of April 30, 2021 895,956 ( 138,297 ) 757,659

We tested goodwill for impairment in the fourth quarter of fiscal year 2021, and did not identify any impairment.

Acquisitions 166 — 166

Disposals and foreign currency changes, net ( 3,304 ) — ( 3,304 )

Impairments — — —

Balances as of June 30, 2021 892,818 ( 138,297 ) 754,521

Acquisitions 18,696 — 18,696

Disposals and foreign currency changes, net ( 12,816 ) — ( 12,816 )

Impairments — — —

Balances as of June 30, 2022 $ 898,698 $ ( 138,297 ) $ 760,401

We test goodwill for impairment annually as of February 1, or more frequently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.

In fiscal year 2020, we recorded a goodwill impairment loss of $ 106.0 million related to Wave.

2 unchanged sentences

Components of intangible assets are as follows:

As of April 30, 2021 2020

Amount Accumulated

Amortization Net Gross

Amount Accumulated

Amortization Net

As of June 30, 2022:

Reacquired franchise rights $ 379,114 $ ( 197,068 ) $ 182,046

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Trade name 5,800 ( 1,740 ) 4,060

Acquired assets pending final allocation (1)

$ 1,037,262 $ ( 727,618 ) $ 309,644

As of June 30, 2021:

Reacquired franchise rights $ 370,405 $ ( 182,366 ) $ 188,039

Customer relationships 316,547 ( 255,294 ) 61,253

Internally-developed software 160,315 ( 119,460 ) 40,855

Noncompete agreements 41,228 ( 35,802 ) 5,426

Franchise agreements 19,201 ( 16,108 ) 3,093

Purchased technology 122,700 ( 74,913 ) 47,787

Trade name 5,800 ( 1,160 ) 4,640

$ 1,036,196 $ ( 685,103 ) $ 351,093

(1) Represents recent business acquisitions for which final purchase price allocations have not yet been determined.

Amortization of intangible assets of continuing operations for the years ended April 30, 2021, 2020 and 2019 was $ 83.4 million, $ 83.6 million and $ 73.2 million, respectively.

As of April 30, 2021:

Reacquired franchise rights $ 370,112 $ ( 179,356 ) $ 190,756

Customer relationships 316,508 ( 251,160 ) 65,348

Internally-developed software 156,308 ( 116,126 ) 40,182

Noncompete agreements 41,212 ( 35,484 ) 5,728

Franchise agreements 19,201 ( 15,894 ) 3,307

Purchased technology 122,700 ( 72,609 ) 50,091

Trade name 5,800 ( 1,064 ) 4,736

$ 1,031,841 $ ( 671,693 ) $ 360,148

Amortization of intangible assets for continuing operations for the fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020 was $ 77.5 million, $ 83.4 million and $ 83.6 million, respectively, and was $ 13.8 million for the Transition Period.

Estimated amortization of intangible assets for fiscal years 2023, 2024, 2025, 2026 and 2027 is $ 66.3 million, $ 45.8 million, $ 24.8 million, $ 17.0 million and $ 11.9 million, respectively.

We made payments to acquire businesses totaling $ 15.6 million, $ 450.2 million and $ 43.6 million during the fiscal years ended April 30, 2021, 2020 and 2019, respectively.

We made payments to acquire businesses totaling $ 35.9 million, $ 15.6 million and $ 450.2 million during the fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020, respectively, and $ 0.8 million for the Transition Period.

The fiscal year ended April 30, 2020 included the acquisition of Wave.

The amounts and weighted-average lives of assets acquired during fiscal year 2021, including amounts capitalized and placed in service related to internally-developed software, are as follows:

The amounts and weighted-average lives of assets acquired during fiscal year 2022, including amounts capitalized related to internally-developed software, are as follows:

(dollars in 000s)

5 unchanged sentences

Total $ 36,779 4

2022 Form 10-K | H&R Block, Inc.

During the fiscal year ended April 30, 2020, we acquired Wave for $ 408.4 million.

Included in the transaction price was $ 8.2 million which will be treated as compensation expense.

Included in the transaction price was $ 8.2 million which was treated as compensation expense.

The assets acquired, net of liabilities assumed on the acquisition date, and the identified intangible assets and goodwill, are as follows:

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(1) See discussion of Wave's goodwill impairment of $ 106.0 million in fiscal year 2020 above.

2021 Form 10-K | H&R Block, Inc.

LONG-TERM DEBT

The components of long-term debt are as follows:

As of April 30, 2021 2020

Senior Notes, 4.125 %, due October 2020 (1)

$ — $ 650,000

As of June 30, 2022 June 30, 2021 April 30, 2021

Senior Notes, 5.500 %, due November 2022 (1)

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350,000 350,000 350,000

Senior Notes, 2.500 %, due July 2028 (1)

500,000 500,000 —

Senior Notes, 3.875 %, due August 2030 (1)

Committed line of credit borrowings — 2,000,000

650,000 650,000 650,000

Debt issuance costs and discounts ( 13,124 ) ( 16,281 ) ( 9,961 )

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The interest rates on our Senior Notes are subject to adjustment based upon our credit ratings.

On August 7, 2020, we issued $ 650.0 million of 3.875 % Senior Notes due August 15, 2030 (2030 Senior Notes).

The proceeds of the 2030 Senior Notes were used to repay the $ 650 million Senior Notes that matured on October 1, 2020.

UNSECURED COMMITTED LINE OF CREDIT – Our unsecured committed line of credit (CLOC) provides for an unsecured senior revolving credit facility in the aggregate principal amount of $ 2.0 billion, which includes a $ 200.0 million sublimit for swingline loans and a $ 50.0 million sublimit for standby letters of credit.

On June 22, 2021, we issued $ 500.0 million of 2.500 % Senior Notes due July 15, 2028.

On May 2, 2022, we redeemed the $ 500.0 million 5.5 % Senior Notes originally due in November 2022.

The redemption price was 100 % of the outstanding principal amount, plus accrued and unpaid interest up to, but not including, the redemption date.

Our unsecured committed line of credit (CLOC) provides for an unsecured senior revolving credit facility in the aggregate principal amount of $ 1.5 billion, which includes a $ 175.0 million sublimit for swingline loans and a $ 50.0 million sublimit for standby letters of credit.

We may request increases in the aggregate principal amount of the revolving credit facility of up to $ 500.0 million, subject to obtaining commitments from lenders and meeting certain other conditions.

The CLOC will mature on September 21, 2023, unless extended pursuant to the terms of the CLOC, at which time all outstanding amounts thereunder will be due and payable.

The CLOC will mature on June 11, 2026, unless extended pursuant to the terms of the CLOC, at which time all outstanding amounts thereunder will be due and payable.

Our CLOC includes an annual facility fee, which will vary depending on our then current credit ratings.

The CLOC is subject to various conditions, triggers, events or occurrences that could result in earlier termination and contains customary representations, warranties, covenants and events of default, including, without limitation:

(1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on April 30, July 31, and October 31 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on January 31 of each year;

(2) a covenant requiring us to maintain an interest coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter;

(1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio, as defined by the CLOC agreement, calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on March 31, June 30, and September 30 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on December 31 of each year;

(2) a covenant requiring us to maintain an interest

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| 2022 Form 10-K

coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter;

and (3) covenants restricting our ability to incur certain additional debt, incur liens, merge or consolidate with other companies, sell or dispose of assets (including equity interests), liquidate or dissolve, engage in certain transactions with affiliates or enter into certain restrictive agreements.

The CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults.

Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes.

We were in compliance with these requirements as of April 30, 2021.

In September 2020, we utilized our cash on hand to repay the outstanding $ 2.0 billion CLOC.

We had no outstanding balance under our CLOC as of April 30, 2021 and amounts available to borrow were limited by the debt-to-EBITDA coven ant to approximately $ 1.7 billion as of April 30, 2021.

See n ote 13 for discussion regarding an amendment to our CLOC effective June 11, 2021.

Proceeds under the CLOC may be used for working capital needs or for other general corporate pu rposes.

We were in compliance with these requirements as of June 30, 2022.

We had no outstanding balance under our CLOC as of June 30, 2022 and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of June 30, 2022.

OTHER INFORMATION – The aggregate payments required to retire long-term debt are $ 350.0 million in fiscal year 2026, $ 500.0 million in fiscal year 2029 and $ 650.0 million in fiscal year 2031.

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| 2021 Form 10-K

STOCK-BASED COMPENSATION

1 unchanged sentence

Stock-based compensation expense and related tax items are as follows:

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Stock based compensation expense $ 34,252 $ 4,700 $ 28,271 $ 28,045

1 unchanged sentence

Realized tax benefit 5,438 2,356 1,690 5,856

As of April 30, 2021, we had 11.2 million shares reserved for future awards under our Plan.

As of June 30, 2022, we had 10.9 million shares reserved for future awards under our Plan.

We issue shares from our treasury stock to satisfy the exercise or vesting of stock-based awards and believe we have adequate treasury stock balances available for future issuances.

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Options granted under our Plan have a maximum contractual term of ten years .

A summary of restricted share units and deferred stock units, including those that are performance-based, for the year ended April 30, 2021, is as follows:

2022 Form 10-K | H&R Block, Inc.

A summary of restricted share units and deferred stock units, including those that are performance-based, for the year ended June 30, 2022, is as follows:

(shares in 000s)

8 unchanged sentences

Outstanding, end of the year 1,970 $ 24.40 1,918 $ 23.79

The total fair value of shares and units vesting during fiscal years 2021, 2020 and 2019 was $ 16.1 million, $ 22.1 million and $ 17.9 million, respectively.

As of April 30, 2021, we had $ 37.9 million of total unrecognized

2021 Form 10-K | H&R Block, Inc.

compensation cost related to these shares.

The total fair value of shares and units vesting during fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020 was $ 33.3 million, $ 16.1 million and $ 22.1 million, respectively, and was $ 12.3 million for the Transition Period.

As of June 30, 2022, we had $ 50.2 million of total unrecognized compensation cost related to these shares.

This cost is expected to be recognized over a weighted-average period of two years .

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Both expected volatility and the risk-free interest rate are based on a period that approximates the expected term.

There were no performance-based share units issued during the Transition Period.

The following assumptions were used to value performance-based share units using the Monte Carlo valuation model during the periods:

Year ended April 30, 2021 2020 2019

June 30, 2022 Year Ended

April 30, 2021 Year Ended

April 30, 2020

Expected volatility 23.19 % - 88.48 %

8 unchanged sentences

We file a consolidated federal income tax return in the U.S.

with the IRS and file tax returns in various state, local, and foreign jurisdictions.

with the Internal Revenue Service (IRS) and file tax returns in various state, local, and foreign jurisdictions.

Tax returns are typically examined and either settled upon completion of the examination or through the appeals process.

On July 14, 2021, we filed a U.S.

federal income tax form 1139 carryback claim to utilize net operating losses against income earned in tax years 2015 and 2016.

Filing this carryback claim has opened our 2015 and 2016 tax years to examination.

Consequently, our U.S.

federal income tax returns for 2015, 2016, 2018 and later years remain open for examination.

federal income tax returns for 2016 and all prior periods are currently closed.

federal income tax returns for 2017, 2014 and all years prior to 2014 are closed.

With respect to state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed.

Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed into law.

The CARES Act includes, among other items, modifications to net operating loss carryback periods, net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act allows a five-year carryback of net operating losses generated between 2018 and 2021 to fully offset certain taxable income previously subject to a 35% statutory tax rate.

As a result of the CARES Act and changes to our methods of accounting for items under the Internal Revenue Code, we generated a loss for tax purposes on our calendar 2020 tax return, will carry back the loss to two of the five preceding tax years, and obtain a refund of previously paid federal income taxes.

The net operating loss carryback has reduced our effective tax rate and income taxes payable and increased our unrecognized tax benefits, income tax refund receivables, and deferred tax liabilities.

The net operating loss carryback will reopen our 2015 tax return to examination.

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| 2022 Form 10-K

The components of income (loss) from continuing operations upon which domestic and foreign income taxes have been provided are as follows:

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Domestic $ 478,166 $ 145,714 $ 489,499 $ 56,121

1 unchanged sentence

$ 659,069 $ 120,995 $ 668,736 $ ( 3,374 )

We operate in multiple income tax jurisdictions both within the United States and internationally.

We operate in multiple income tax jurisdictions both within the U.S.

and internationally.

Although these intercompany transactions reflect arm’s length terms and the proper transfer pricing documentation is in place,

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| 2021 Form 10-K

transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax rates.

Although these intercompany transactions reflect arm’s length terms and the proper transfer pricing documentation is in place, transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax rates.

The reconciliation between the income tax provision and the amount computed by applying the statutory U.S.

federal tax rate to income taxes of continuing operations is as follows:

Year ended April 30, 2021 2020 2019

federal tax rate to income taxes for continuing operations is as follows:

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

statutory tax rate 21.0 % 21.0 % 21.0 % 21.0 %

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Effective tax rate 14.9 % 24.7 % 11.7 % 282.4 %

Our effective tax rate for continuing operations was 11.7 % and 282.4 % for fiscal year 2021 and 2020, respectively.

The decrease in the effective tax rate in 2021 compared to 2020 is primarily due to the near break-even loss in 2020 of $ 3.4 million, which caused an exaggerated impact for nearly all adjustments impacting the rate.

Our 2021 effective tax rate is also lower because of net operating loss carrybacks generated during the year, partially offset by uncertain tax positions recorded in the current year.

The increase in the effective tax rate in fiscal year 2020 compared to fiscal year 2019 is also primarily due to the near break-even loss in 2020 of $ 3.4 million, which caused an exaggerated impact for nearly all adjustments impacting the rate.

For 2020, the largest increases in the effective tax rate over 2019 are tax benefits from statute of limitations expiring on certain uncertain tax positions and the mix of earnings in foreign jurisdictions, offset by the adverse tax impacts associated with the nondeductible goodwill impairment to the Wave reporting unit.

Due to the pretax loss in 2020, the tax benefits increased the effective tax rate while tax expense decreased the effective tax rate.

Our effective tax rate for continuing operations was 14.9 %, 11.7 % and 282.4 % for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020, respectively, and was 24.7 % for the Transition Period.

The increase in the effective tax rate for the year ended June 30, 2022 compared to the year ended April 30, 2021 is primarily due to the impact of net operating loss carrybacks under the CARES Act in 2021 to years with a statutory tax rate of 35% offset in part by the expiration of statute of limitation on certain uncertain tax positions during the current year.

2022 Form 10-K | H&R Block, Inc.

The components of income tax expense (benefit) for continuing operations are as follows:

Year ended April 30, 2021 2020 2019

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Federal $ 121,319 $ 11,563 $ 58,834 $ 18,048

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Total income taxes (benefit) for continuing operations $ 98,423 $ 29,876 $ 78,524 $ ( 9,530 )

The net loss from discontinued operations for fiscal years 2021, 2020 and 2019 totaled $ 6.4 million, $ 13.7 million and $ 22.7 million, respectively, and was net of tax benefits of $ 3.9 million, $ 4.1 million and $ 6.8 million, respectively.

The significant components of deferred tax assets and liabilities are reflected in the following table:

As of April 30, 2021 2020

As of June 30, 2022 June 30, 2021 April 30, 2021

Deferred tax assets:

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Lease right of use assets ( 107,445 ) ( 111,762 ) ( 109,726 )

Property and equipment — ( 12,221 )

Income tax method change ( 5,892 ) ( 56,249 ) ( 56,257 )

2 unchanged sentences

Net deferred tax assets $ 163,500 $ 106,541 $ 125,592

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| 2021 Form 10-K

A reconciliation of the deferred tax assets and liabilities and the corresponding amounts reported in the consolidated balance sheets is as follows:

As of April 30, 2021 2020

As of June 30, 2022 June 30, 2021 April 30, 2021

Deferred income tax assets $ 163,500 $ 142,981 $ 141,836

1 unchanged sentence

Net deferred tax asset $ 163,500 $ 106,541 $ 125,592

Changes in our valuation allowance for fiscal years 2021, 2020 and 2019 are as follows:

Year ended April 30, 2021 2020 2019

Balance, beginning of the year $ 45,124 $ 47,070 $ 49,215

H&R Block, Inc.

| 2022 Form 10-K

Changes in our valuation allowance for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020 and for the Transition Period are as follows:

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Balance, beginning of the period $ 55,784 $ 55,401 $ 45,124 $ 47,070

Additions charged to costs and expenses 4,752 389 13,492 2,151

Deductions ( 5,364 ) ( 6 ) ( 3,215 ) ( 4,097 )

Balance, end of the year $ 55,401 $ 45,124 $ 47,070

Our valuation allowance on deferred tax assets has a net increase of $ 10.3 million during the current period.

The gross increase in valuation allowance of $ 13.5 million is related to net operating loss deferred tax assets generated by foreign losses that we do not expect to utilize in future years.

This $ 13.5 million increase is offset by a $ 3.2 million decrease to our valuation allowance balance for adjustments to certain state and foreign net operating losses we now expect to utilize in future periods.

Balance, end of the period $ 55,172 $ 55,784 $ 55,401 $ 45,124

Our valuation allowance on deferred tax assets has a net decrease of $ 0.6 million during the current period.

The gross increase in valuation allowance of $ 4.8 million is related to net operating loss deferred tax assets generated by foreign and domestic losses that we do not expect to utilize in future years.

This increase is offset by a $ 5.4 million decrease to our valuation allowance balance for adjustments to certain foreign net operating losses utilized in the current fiscal year and net operating losses that are no longer available.

Certain of our subsidiaries file stand-alone returns in various state, local and foreign jurisdictions, and others join in filing consolidated or combined returns in such jurisdictions.

As of April 30, 2021, we had net operating losses in various states and foreign jurisdictions.

As of June 30, 2022, we had net operating losses in various states and foreign jurisdictions.

The amount of state and foreign net operating losses varies by taxing jurisdiction.

We maintain a valuation allowance of $ 21.3 million on state net operating losses and $ 33.2 million on foreign net operating losses for the portion of such loses that, more likely than not, will not be realized.

Of the $ 49.5 million of net operating loss deferred tax assets, $ 10.4 million will expire in varying amounts during fiscal years 2022 through 2041 and the remaining $ 39.1 million has no expiration.

We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a material tax liability;

We maintain a valuation allowance of $ 22.7 million on state and federal net operating losses and $ 31.1 million on foreign net operating losses for the portion of such loses that, more likely than not, will not be realized.

Of the $ 105.7 million of net operating loss deferred tax assets, $ 26.7 million will expire in varying amounts during fiscal years 2023 through 2041 and the remaining $ 79.0 million have no expiration.

Of the total net operating loss deferred tax assets, $ 51.9 million are more likely than not to be realized.

We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability;

therefore, no provision has been made for income taxes that might be payable upon remittance of such earnings.

The amount of unrecognized tax liability on these foreign earnings, net of expected foreign tax credits, is immaterial as of April 30, 2021.

Changes in unrecognized tax benefits for fiscal years 2021, 2020 and 2019 are as follows:

Year ended April 30, 2021 2020 2019

Balance, beginning of the year $ 168,062 $ 185,144 $ 186,061

The amount of unrecognized tax liability on these foreign earnings, net of expected foreign tax credits, is immaterial as of June 30, 2022.

Changes in unrecognized tax benefits for fiscal years ended June 30, 2022, April 30, 2021 and April 30, 2020 and for the Transition Period are as follows:

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Balance, beginning of the period $ 264,323 $ 264,810 $ 168,062 $ 185,144

Additions based on tax positions related to prior years 2,499 485 121,364 1,501

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Expiration of statute of limitations ( 52,634 ) — ( 4,584 ) ( 19,568 )

Balance, end of the year $ 264,810 $ 168,062 $ 185,144

The total gross unrecognized tax benefit ending balance as of April 30, 2021, 2020 and 2019, includes $ 214.9 million, $ 132.3 million and $ 122.5 million, respectively, which if recognized, would impact our effective tax rate.

The difference results from adjusting the gross balances for such items as federal, state and foreign deferred items, interest and deductible taxes.

The current year additions in unrecognized tax benefits related to prior years are primarily related to net operating loss carryback allowed by the CARES Act.

Reductions from prior year are primarily related to settlements with taxing authorities and expirations of statute of limitations.

2021 Form 10-K | H&R Block, Inc.

Balance, end of the period $ 232,004 $ 264,323 $ 264,810 $ 168,062

The total gross unrecognized tax benefit ending balance as of June 30, 2022, June 30, 2021, April 30, 2021 and April 30, 2020, includes $ 203.7 million, $ 224.5 million, $ 214.9 million and $ 132.3 million, respectively, which if recognized, would impact our effective tax rate.

The difference from the gross unrecognized tax benefits recorded and those in the table above results from the requirement to adjust the gross balances for such items as federal, state and foreign deferred items and deductible interest and taxes.

Reductions from prior year are primarily related to expirations of statute of limitations and settlements with taxing authorities.

We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $ 33.6 million within the next twelve months.

The anticipated decrease is due to the expiration of statutes of limitations, anticipated closure of various tax matters currently under examination, and settlements with tax authorities.

The anticipated decrease is due to the expiration of statutes of limitations, anticipated closure of various tax matters currently under examination, and settlements

2022 Form 10-K | H&R Block, Inc.

with tax authorities.

For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.

Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense.

The total gross interest and penalties accrued as of April 30, 2021, 2020 and 2019 totaled $ 24.9 million, $ 22.0 million and $ 22.4 million, respectively.

The total gross interest and penalties accrued as of June 30, 2022, June 2021 and April 30, 2021 totaled $ 22.7 million, $ 26.4 million and $ 24.9 million, respectively.

COMMITMENTS AND CONTINGENCIES

All assisted tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client for penalties and interest attributable to an H&R Block error on a return.

Assisted tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client for penalties and interest attributable to an H&R Block error on a return.

DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client up to a maximum of $ 10,000 , if our software makes an arithmetic error that results in payment of penalties and/or interest to the IRS that a client would otherwise not have been required to pay.

Our liability related to estimated losses under the 100% accuracy guarantee was $ 12.2 million and $ 9.4 million as of April 30, 2021 and 2020, respectively.

Our liability related to estimated losses under the 100% accuracy guarantee was $ 14.0 million, $ 12.6 million and $ 12.2 million as of June 30, 2022, June 30, 2021 and April 30, 2021, respectively.

The short-term and long-term portions of this liability are included in deferred revenue and other liabilities in the consolidated balance sheets.

Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $ 17.6 million and $ 14.2 million as of April 30, 2021 and 2020, respectively, with amounts recorded in deferred revenue and other liabilities.

These liabilities will be settled within the next ten years.

Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $ 12.9 million, $ 17.3 million and $ 17.6 million as of June 30, 2022, June 30, 2021 and April 30, 2021, respectively, with amounts recorded in deferred revenue and other liabilities.

These liabilities will be settled within the next nine years.

Should actual results differ from our estimates, future payments made will differ from the above estimate and any differences will be recorded in results from continuing operations.

We have contractual commitments to fund certain franchises with approved revolving lines of credit.

Our total obligation under these lines of credit was $ 14.2 million as of April 30, 2021, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 6.1 million.

Both the U.S.

and Canada implemented emergency economic relief programs as a way of minimizing the economic impact of the global COVID-19 pandemic.

In the U.S., the CARES Act included, among other items, provisions relating to refundable payroll tax credits and deferment of certain tax payments through the end of calendar 2020.

In Canada the COVID-19 Economic Response Plan includes the Canada Emergency Wage Subsidy (CEWS).

businesses we have elected to defer the employer-paid portion of social security taxes and are evaluating the employee retention credit, and in Canada we have received $ 15.9 million in wage subsidies during the year ended April 30, 2021, which has been treated as a government subsidy to offset related operating expenses.

We are self-insured for certain risks, including, employer provided medical benefits, workers' compensation, property and casualty, tax errors and omissions, and claims related to POM.

Our total oblig ation under these lines of credit was $ 0.6 million as of June 30, 2022, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 0.2 million.

In March 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide economic and other relief as a result of the COVID-19 pandemic.

The CARES Act includes, among other items, provisions relating to refundable employee retention payroll tax credits.

Due to the complex nature of the employee retention credit computations, any benefits we may receive are uncertain and may significantly differ from our current estimates.

We plan to record any benefit related to these credits upon both the receipt of the benefit and the resolution of the uncertainties, including, but not limited to, the completion of any potential audit or examination, or the expiration of the related statute of limitations.

During the year ended June 30, 2022, we received $ 7.3 million related to these credits, recognized $ 2.2 million as an offset to related operating expenses, and we have deferred recognition of $ 5.1 million, which is recorded in deferred revenue and other current liabilities.

We are self-insured for certain risks, including, employer provide d medical benefits, workers' compensation, property and casualty, tax errors and omissions, and claims related to POM.

These programs maintain various self-insured retentions.

For all but POM in company-owned offices, commercial insurance is purchased in excess of the self-insured retentions.

For all but POM in company-owned offices and employer provided medical benefits, commercial insurance is purchased in excess of the self-insured retentions.

We accrue estimated losses for self-insured retentions using actuarial models and assumptions based on historical loss experience.

We have a deferred compensation plan that permits certain employees to defer portions of their compensation and accrue income on the deferred amounts.

Included in deferred revenue and other liabilities is $ 15.0 million and $ 15.1 million as of April 30, 2021 and 2020, respectively, reflecting our obligation under these plans.

On August 5, 2020, we entered into a Program Management Agreement with Meta.

Under the Program Management Agreement and its ancillary agreements and related product schedules, Meta acts as the bank provider of H&R Block-branded financial products.

EAs are originated by Meta, and pursuant to our participation agreement, we purchase a 90 % participation interest in each advance made by Meta.

Included in deferred revenue and other liabilities is $ 10.5 million, $ 14.7 million and $ 15.0 million as of June 30, 2022, June 30, 2021 and April 30, 2021, respectively, reflecting our obligation under these plans.

Emerald Advances are originated by Pathward, and pursuant to our participation agreement, we purchase a 90 % participation interest in each advance made by Pathward.

See note 4 for additional information about these balances.

Refund Advance loans are originated by Pathward and offered to certain assisted U.S.

tax preparation clients, based on client eligibility as determined by Pathward.

We pay fees primarily based on loan size and customer type.

H&R Block, Inc.

| 2022 Form 10-K

Refund Advance loans are originated by Meta and offered to certain assisted U.S.

tax preparation clients, based on client eligibility as determined by Meta.

We pay fees based on loan size and customer type.

The fees are intended to cover expected loan losses and payments to capital providers, among other items.

We have provided two guarantees related to this agreement.

We have provided a guarantee up to $ 18.0 million related to certain loans to clients prior to the IRS accepting electronic filing.

We accrued an estimated liability of $ 2.6 million at April 30, 2021 related to this guarantee.

Additionally, we provided a guarantee for loans to virtual assisted clients.

There is no maximum exposure under this guarantee.

At April 30, 2021, we had no amounts accrued under this guarantee and we do not expect that a material amount will be paid for this guarantee under anticipated loss scenarios.

As of April 30, 2020, we had accrued $ 5.4 million under the RA guarantee arrangements with our prior bank partner, and we paid $ 2.1 million, net of recoveries, related to that guarantee during the fiscal year ended April 30, 2021.

We accrued an estimated liability of $ 0.6 million at June 30, 2022 related to this guarantee.

As of June 30, 2021 and April 30, 2021 we had $ 2.6 million accrued under the RA guarantee agreement, and we paid $ 2.6 million, net of recoveries, related to that guarantee during the fiscal year ended June 30, 2022.

We offer POM to U.S.

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A loss on POM would be recognized if the sum of expected costs for services exceeded unearned revenue.

For the year ended April 30, 2021, and 2020, our lease costs consisted of the following:

Year ended April 30, 2021 2020

O ur lease costs and other information related to operating leases consisted of the following:

(dollars in 000s)

June 30, 2022 Two Months Ended

June 30, 2021

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2020

Operating lease costs $ 233,004 $ 36,853 $ 239,357 $ 242,314

2 unchanged sentences

Total lease costs $ 312,407 $ 51,160 $ 316,465 $ 312,356

As disclosed in our Annual Report on Form 10-K for the fiscal year ended April 30, 2019, our rent expense for fiscal year 2019 totaled $ 255.0 million.

Other information related to operating leases for the fiscal years 2021 and 2020 are as follows:

(dollars in 000s)

Year ended April 30, 2021 2020

Cash paid for operating lease costs $ 236,946 $ 35,394 $ 240,299 $ 223,080

3 unchanged sentences

Weighted-average operating lease discount rate 2.8 % 2.9 % 3.0 % 3.3 %

(1) The new operating right of use assets and related lease liabilities for the year ended April 30, 2020 excludes the initial impacts of the adoption of ASU 2016-02.

The decrease from the prior year is due to the timing of the renegotiation of lease contracts approaching expiration.

Aggregate operating lease maturities as of April 30, 2021 are as follows:

(1) The new operating right of use assets and related lease liabilities for the year ended April 30, 2020 excludes the initial impacts of the adoption of Accounting Standards Update No.

2016-02, “Leases.”

Aggregate operating lease maturities as of June 30, 2022 are as follows:

2023 $ 215,348

3 unchanged sentences

Total operating lease liabilities $ 435,718

2021 Form 10-K | H&R Block, Inc.

LITIGATION AND OTHER RELATED CONTINGENCIES

We are a defendant in numerous litigation matters, arising both in the ordinary course of business and otherwise, including as described below.

The matters described below are not all of the lawsuits to which we are subject.

In some of the matters, very large or indeterminate amounts, including punitive damages, are sought.

We are a defendant in numerous litigation and arbitration matters, arising both in the ordinary course of business and otherwise, including as described below.

The matters described below are not all of the lawsuits or arbitrations to which we are subject.

In some of the matters, very large or indeterminate amounts, including punitive damages, may be sought.

jurisdictions permit considerable variation in the assertion of monetary damages or other relief.

Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the court.

Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction.

In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters.

We believe that the monetary relief which may be specified in a lawsuit or a claim bears little relevance to its merits or disposition value due to this variability in pleadings and our experience in litigating or resolving through settlement of numerous claims over an extended period of time.

The outcome of a litigation matter and the amount or range of potential loss at particular points in time may be difficult to ascertain.

Among other things, uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law.

Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

In addition to litigation matters, we are also subject to claims and other loss contingencies arising out of our business activities, including as described below.

We accrue liabilities for litigation, claims, including indemnification and contribution claims, and other related loss contingencies and any related settlements (each referred to, individually, as a "matter" and, collectively, as "matters") when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

We believe that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value due to this variability in pleadings and our experience in handling and resolving numerous claims over an extended period of time.

2022 Form 10-K | H&R Block, Inc.

The outcome of a matter and the amount or range of potential loss at particular points in time may be difficult to ascertain.

Among other things, uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how courts and arbitrators will apply the law.

Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will view the relevant evidence and applicable law.

In addition to litigation and arbitration matters, we are also subject to other loss contingencies arising out of our business activities, including as described below.

We accrue liabilities for litigation, arbitration and other related loss contingencies and any related settlements when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued.

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For such matters where a loss is believed to be reasonably possible, but not probable, or the loss cannot be reasonably estimated, no accrual has been made.

It is possible that such matters could require us to pay damages or make other expenditures or accrue liabilities in amounts that could not be reasonably estimated as of April 30, 2021.

It is possible that such matters could require us to pay damages or make other expenditures or accrue liabilities in amounts that could not be reasonably estimated as of June 30, 2022.

While the potential future liabilities could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known, we do not believe any such liabilities are likely to have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.

As of April 30, 2021 and 2020, our total accrued liabilities were $ 5.5 million and $ 1.6 million, respectively.

As of June 30, 2022, June 30, 2021 and April 30, 2021 our total accrued liabilities were $ 1.7 million, $ 1.6 million and $ 5.5 million, respectively.

Our estimate of the aggregate range of reasonably possible losses includes (1) matters where a liability has been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2) matters where a liability has not been accrued but we believe a loss is reasonably possible.

2 unchanged sentences

Matters for which we are not currently able to estimate the reasonably possible loss or range of loss are not included in this range.

We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the reasonably possible loss or range of loss, such as precise information about the amount of damages or other remedies being asserted, the defenses to the claims being asserted, discovery from other parties and investigation of factual allegations, rulings by courts on motions or appeals, analysis by experts, or the status or terms of any settlement negotiations.

We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the reasonably possible loss or range of loss, such as precise information about the amount of damages or other remedies being asserted, the defenses to the claims being asserted, discovery from other parties and investigation of factual allegations, rulings by courts or arbitrators on motions or appeals, analyses by experts, or the status or terms of any settlement negotiations.

The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties.

The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.

As of April 30, 2021, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.

On a quarterly and annual basis, we review relevant information with respect to litigation and other loss contingencies and update our accruals, disclosures, and estimates of reasonably possible loss or range of loss

H&R Block, Inc.

| 2021 Form 10-K

based on such reviews.

As of June 30, 2022, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.

At the end of each reporting period, we review relevant information with respect to litigation, arbitration and other related loss contingencies and update our accruals, disclosures, and estimates of reasonably possible loss or range of loss based on such reviews.

Costs incurred with defending matters are expensed as incurred.

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in addition, the amounts that may be required to be paid to discharge or settle the matters could be substantial and could have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.

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| 2022 Form 10-K

LITIGATION, CLAIMS OR OTHER LOSS CONTINGENCIES PERTAINING TO CONTINUING OPERATIONS –

10 unchanged sentences

We filed a motion to stay the case based on the primary jurisdiction doctrine, which was denied.

A trial date has been set for August 9, 2022.

We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

On May 17, 2019, a putative class action complaint was filed against H&R Block, Inc., HRB Tax Group, Inc.

and HRB Digital LLC in the Superior Court of the State of California, County of San Francisco (Case No.

CGC-19576093).

The case is styled Snarr v.

HRB Tax Group, Inc., et al .

The case was removed to the United States District Court for the Northern District of California on June 21, 2019 (Case No.

3:19-cv-03610-SK).

The plaintiff filed a first amended complaint on August 9, 2019, dropping H&R Block, Inc.

from the case.

In the amended complaint, the plaintiff seeks to represent classes of all persons, between May 17, 2015 and the present, who (1) paid to file one or more federal tax returns through H&R Block’s internet-based filing system, (2) were eligible to file those tax returns for free through the H&R Block Free File offer of the IRS Free File Program, and (3) resided in and were citizens of California at the time of the payments.

The plaintiff generally alleges unlawful, unfair, fraudulent and deceptive business practices and acts in connection with the IRS Free File Program in violation of the California Consumers Legal Remedies Act, California Civil Code §§1750, et seq., California False Advertising Law, California Business and Professions Code §§17500, et seq., and California Unfair Competition Law, California Business and Professions Code §§17200 et seq.

The plaintiff seeks declaratory and injunctive relief, restitution, compensatory damages, punitive damages, interest, attorneys’ fees and costs.

We filed a motion to stay the proceedings based on the primary jurisdiction doctrine and a motion to compel arbitration, both of which were denied.

Our appeal of the court's order on the motion to compel arbitration was denied;

we filed a petition for review with the United States Supreme Court.

We filed an answer to the amended complaint.

We filed a renewed motion to compel arbitration, which the court denied on May 13, 2021.

We also filed a motion to dismiss the plaintiff's claim for public injunctive relief, which is pending.

A trial date is set for June 6, 2023.

We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

On September 26, 2019, a putative class action complaint was filed against H&R Block, Inc., HRB Tax Group, Inc., HRB Digital LLC and Free File, Inc.

in the United States District Court for the Western District of Missouri (Case No.

4:19-cv-00788-GAF) styled Swanson v.

H&R Block, Inc., et al .

The plaintiff seeks to represent both a nationwide class and a California subclass of all persons eligible for the IRS Free File Program who paid to use an H&R Block product to file an online tax return for the 2002 through 2018 tax filing years.

The plaintiff generally alleges unlawful, unfair, fraudulent and deceptive business practices and acts in connection with the IRS Free File Program in violation of the California Consumers Legal Remedies Act, California Civil Code §§1750, et seq ., California False Advertising Law, California Business and Professions Code §§17500, et seq ., California Unfair Competition Law, California Business and Professions Code §§17200, et seq ., in addition to breach of contract and fraud.

The plaintiff

2021 Form 10-K | H&R Block, Inc.

seeks injunctive relief, disgorgement, compensatory damages, statutory damages, punitive damages, interest, attorneys’ fees and costs.

The court granted a motion to dismiss filed by defendant Free File, Inc.

for lack of personal jurisdiction.

The court granted our motion to compel arbitration and stayed the case pending the outcome of arbitration.

A trial date is set for January 17, 2023.

We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

We have also received and are responding to certain governmental inquiries relating to the IRS Free File Program.

LITIGATION, CLAIMS, INCLUDING INDEMNIFICATION AND CONTRIBUTION CLAIMS, OR OTHER LOSS CONTINGENCIES PERTAINING TO DISCONTINUED MORTGAGE OPERATIONS – Although SCC ceased its mortgage loan origination activities in December 2007 and sold its loan servicing business in April 2008, SCC or the Company has been, remains, and may in the future be, subject to litigation, claims, including indemnification and contribution claims, and other loss contingencies pertaining to SCC's mortgage business activities that occurred prior to such termination and sale.

These lawsuits, claims, and other loss contingencies include actions by regulators, third parties seeking indemnification or contribution, including depositors, underwriters, and securitization trustees, individual plaintiffs, and cases in which plaintiffs seek to represent a class of others alleged to be similarly situated.

Among other things, these lawsuits, claims, and contingencies allege or may allege discriminatory or unfair and deceptive loan origination and servicing (including debt collection, foreclosure, and eviction) practices, other common law torts, rights to indemnification or contribution, breach of contract, violations of securities laws, and violations of a variety of federal statutes, including the Truth in Lending Act (TILA), Equal Credit Opportunity Act, Fair Housing Act, Real Estate Settlement Procedures Act (RESPA), Home Ownership & Equity Protection Act (HOEPA), as well as similar state statutes.

DISCONTINUED MORTGAGE OPERATIONS – Although SCC ceased its mortgage loan origination activities in December 2007 and sold its loan servicing business in April 2008, SCC or the Company has been and may in the future be subject to litigation and other loss contingencies, including indemnification and contribution claims, pertaining to SCC's mortgage business activities that occurred prior to such termination and sale.

Parties, including underwriters, depositors, and securitization trustees, have been, remain, or may in the future be, involved in lawsuits, threatened lawsuits, or settlements related to securitization transactions in which SCC participated.

A variety of claims are alleged in these matters, including violations of federal and state securities laws and common law fraud, breaches of representations and warranties, or violations of statutory requirements.

SCC has received notices of potential indemnification or contribution obligations relating to such matters.

Additional lawsuits against the parties to the securitization transactions may be filed in the future, and SCC may receive additional notices of potential indemnification, contribution or similar obligations with respect to existing or new lawsuits or settlements of such lawsuits or other claims.

We have not concluded that a loss related to any of these potential indemnification or contribution claims is probable, nor have we accrued a liability related to any of these claims.

It is difficult to predict either the likelihood of new matters being initiated or the outcome of existing matters.

In many of these matters it is not possible to estimate a reasonably possible loss or range of loss due to, among other things, the inherent uncertainties involved in these matters, some of which are beyond the Company's control, and the indeterminate damages sought in some of these matters.

Mortgage loans originated by SCC were sold either as whole loans to single third-party buyers, who generally securitized such loans, or in the form of residential mortgage-backed securities (RMBSs).

In connection with the sale of loans and/or RMBSs, SCC made certain representations and warranties.

Claims under these representations and warranties together with any settlement arrangements related to these losses are collectively referred to as "representation and warranty claims." The statute of limitations for a contractual claim to enforce a representation and warranty obligation is generally six years or such shorter limitations period that may apply under the law of a state where the economic injury occurred.

On June 11, 2015, the New York Court of Appeals, New York’s highest court, held in ACE Securities Corp.

DB Structured Products, Inc.

, that the six-year statute of limitations under New York law starts to run at the time the representations and warranties are made, not the date when the repurchase demand was denied.

This decision applies to claims and lawsuits brought against SCC where New York law governs.

New York law governs many, though not all, of the RMBS transactions into which SCC entered.

However, this decision would not affect representation and warranty claims and lawsuits SCC has received or may receive, for example, where the statute of limitations has been tolled by agreement or a suit was timely filed.

In response to the statute of limitations rulings in the ACE case and similar rulings in other state and federal courts, parties seeking to pursue representation and warranty claims or lawsuits have sought, and may in the future seek, to distinguish certain aspects of the ACE decision, pursue alternate legal theories of recovery, or assert claims against other contractual parties such as securitization trustees.

For example, a 2016 ruling by a New York intermediate appellate court, followed by the federal district court in the second Homeward case described below, allowed a counterparty to pursue litigation on additional loans in the same trust even though only some of the loans complied with the condition precedent of timely pre-suit notice and opportunity to cure or repurchase.

Additionally, plaintiffs in litigation to which SCC is not party have alleged breaches of an independent contractual duty to provide notice of material breaches of representations and warranties and pursued separate claims to which, they argue, the statute of limitations ruling in the ACE case does not apply.

The impact on SCC from alternative legal theories seeking to avoid or distinguish the ACE decision, or judicial limitations on the ACE decision, is unclear.

SCC has not accrued liabilities for claims not subject to a tolling arrangement or not relating back to timely filed litigation.

H&R Block, Inc.

| 2021 Form 10-K

On May 31, 2012, a lawsuit was filed by Homeward Residential, Inc.

(Homeward) in the Supreme Court of the State of New York, County of New York, against SCC styled Homeward Residential, Inc.

Sand Canyon Corporation (Index No.

651885/2012).

SCC removed the case to the United States District Court for the Southern District of New York on June 28, 2012 (Case No.

The plaintiff, in its capacity as the master servicer for Option One Mortgage Loan Trust 2006-2 and for the benefit of the trustee and the certificate holders of such trust, asserts claims for breach of contract, anticipatory breach, indemnity, and declaratory judgment in connection with alleged losses incurred as a result of the breach of representations and warranties relating to SCC and to loans sold to the trust.

The trust was originally collateralized with approximately 7,500 loans.

The plaintiff seeks specific performance of alleged repurchase obligations or damages to compensate the trust and its certificate holders for alleged actual and anticipated losses, as well as a repurchase of all loans due to alleged misrepresentations by SCC as to itself and as to the loans' compliance with its underwriting standards and the value of underlying real estate.

In response to a motion filed by SCC, the court dismissed the plaintiff's claims for breach of the duty to cure or repurchase, anticipatory breach, indemnity, and declaratory judgment.

The case proceeded on the remaining claims.

Representatives of a holder of certificates in the trust filed a motion to intervene to add H&R Block, Inc.

to the lawsuit and assert claims against H&R Block, Inc.

based on alter ego, corporate veil-piercing, and agency law.

On February 12, 2018, the court denied the motion to intervene.

Discovery in the case closed on September 30, 2019, with motions for summary judgment filed on December 6, 2019.

On November 9, 2020, the court granted SCC's motion for summary judgment and dismissed Homeward's claims in their entirety as untimely under the applicable statute of limitations.

Homeward appealed that ruling on December 4, 2020, and the appeal remains pending.

We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

On September 28, 2012, a second lawsuit was filed by Homeward in the United States District Court for the Southern District of New York against SCC styled Homeward Residential, Inc.

Sand Canyon Corporation (Case No.

The plaintiff, in its capacity as the master servicer for Option One Mortgage Loan Trust 2006-3 and for the benefit of the trustee and the certificate holders of such trust, asserts claims for breach of contract and indemnity in connection with losses allegedly incurred as a result of the breach of representations and warranties relating to 96 loans sold to the trust.

The trust was originally collateralized with approximately 7,500 loans.

The plaintiff seeks specific performance of alleged repurchase obligations or damages to compensate the trust and its certificate holders for alleged actual and anticipated losses.

In response to a motion filed by SCC, the court dismissed the plaintiff's claims for breach of the duty to cure or repurchase and for indemnification of its costs associated with the litigation.

On September 30, 2016, the court granted a motion allowing the plaintiff to file a second amended complaint to include breach of contract claims with respect to 649 additional loans in the trust and to allow such claims with respect to other loans in the trust proven to be in material breach of SCC’s representations and warranties.

SCC filed a motion for reconsideration, followed by a motion for leave to appeal the ruling, both of which were denied.

On October 6, 2016, the plaintiff filed its second amended complaint.

In response to a motion filed by SCC, the court dismissed the plaintiff's claim for breach of one of the representations.

The case proceeded on the remaining claims.

Representatives of a holder of certificates in the trust filed a motion to intervene to add H&R Block, Inc.

to the lawsuit and assert claims against H&R Block, Inc.

based on alter ego, corporate veil-piercing, and agency law.

On February 12, 2018, the court denied the motion to intervene.

The settlement payments that were made in fiscal year 2018 for representation and warranty claims related to some of the loans in this case.

Discovery in the case closed on September 30, 2019, with motions for summary judgment filed on December 6, 2019.

On November 9, 2020, the court granted SCC's motion for summary judgment and dismissed Homeward's claims in their entirety as untimely under the applicable statute of limitations.

Homeward appealed that ruling on December 4, 2020, and the appeal remains pending.

We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

Parties, including underwriters, depositors, and securitization trustees, are, or have been, involved in multiple lawsuits, threatened lawsuits, and settlements related to securitization transactions in which SCC participated.

A variety of claims are alleged in these matters, including violations of federal and state securities laws and common law fraud, based on alleged materially inaccurate or misleading disclosures, that originators, depositors, securitization trustees, or servicers breached their representations and warranties or otherwise failed to fulfill their obligations, or that securitization trustees violated statutory requirements by failing to properly protect the certificate holders’ interests.

SCC has received notices of claims for indemnification or potential indemnification obligations relating to such matters, including lawsuits or settlements to which underwriters, depositors, or

2021 Form 10-K | H&R Block, Inc.

securitization trustees are party.

Additional lawsuits against the parties to the securitization transactions may be filed in the future, and SCC may receive additional notices of claims for indemnification, contribution or similar obligations with respect to existing or new lawsuits or settlements of such lawsuits or other claims.

Certain of the notices received included, and future notices may include, a reservation of rights to assert claims for contribution, which are referred to herein as "contribution claims." Contribution claims may become operative if indemnification is unavailable or insufficient to cover all of the losses and expenses involved.

We have not concluded that a loss related to any of these indemnification or contribution claims is probable, nor have we accrued a liability related to any of these claims.

If the amount that SCC is ultimately required to pay with respect to claims and litigation related to its past sales and securitizations of mortgage loans, together with payment of SCC's related administration and legal expense, exceeds SCC's net assets, the creditors of SCC, other potential claimants, or a bankruptcy trustee if SCC were to file or be forced into bankruptcy, may attempt to assert claims against us for payment of SCC's obligations.

Claimants may also attempt to assert claims against or seek payment directly from the Company even if SCC's assets exceed its liabilities.

SCC's principal assets, as of April 30, 2021, total approximately $ 270 million and consist of an intercompany note receivable.

If the amount that SCC is ultimately required to pay with respect to loss contingencies, together with payment of SCC's related administration and legal expense, exceeds SCC's net assets, the creditors of SCC, other potential claimants, or a bankruptcy trustee if SCC were to file or be forced into bankruptcy, may attempt to assert claims against us for payment of SCC's obligations.

Claimants also may attempt to assert claims against or seek payment directly from the Company even if SCC's assets exceed its liabilities.

SCC's principal assets, as of June 30, 2022, total approximately $ 264 million and consist of an intercompany note receivable.

We believe our legal position is strong on any potential corporate veil-piercing arguments;

however, if this position is challenged and not upheld, it could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.

OTHER — We are from time to time a party to litigation, claims and other loss contingencies not discussed herein arising out of our business operations.

OTHER — We are from time to time a party to litigation, arbitration and other loss contingencies not discussed herein arising out of our business operations.

These matters may include actions by state attorneys general, other state regulators, federal regulators, individual plaintiffs, and cases in which plaintiffs seek to represent others who may be similarly situated.

While we cannot provide assurance that we will ultimately prevail in each instance, we believe the amount, if any, we are required to pay to discharge or settle these other matters will not have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.

SUBSEQUENT EVENTS

On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30, effective immediately.

The Company plans to file a transition report on Form 10-QT for the transition period of May 1, 2021 through June 30, 2021.

The Company's 2022 fiscal year will begin on July 1, 2021 and end on June 30, 2022.

On June 11, 2021, we entered into a Fourth Amended and Restated Credit and Guarantee Agreement, which amended and restated the existing CLOC, extending the scheduled maturity date to June 11, 2026, decreasing the aggregate principal amount to $ 1.5 billion, revising the applicable rate table, and adjusting the covenant measurement dates due to our fiscal year end change.

Other material terms remain substantially unchanged from our existing CLOC.

2022 Form 10-K | H&R Block, Inc.

TRANSITION PERIOD COMPARATIVE DATA

On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30.

The Company's 2022 fiscal year began on July 1, 2021 and ended on June 30, 2022.

The following is the statement of operations and comprehensive income for the Transition Period ended June 30, 2021, and the comparable unaudited two-month period ended June 30, 2020.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (in 000s, except per share amounts)

Two months ended:

June 30, 2021

(Transition Period) June 30, 2020

Service revenues $ 427,575 $ 266,154

Royalty, product and other revenues 38,531 25,294

466,106 291,448

OPERATING EXPENSES:

Costs of revenues 232,763 197,431

Selling, general and administrative 98,988 81,670

Total operating expenses 331,751 279,101

Other income (expense), net 672 1,661

Interest expense on borrowings ( 14,032 ) ( 21,410 )

Income (loss) from continuing operations before income taxes 120,995 ( 7,402 )

Income taxes 29,876 1,725

Net income (loss) from continuing operations 91,119 ( 9,127 )

Net loss from discontinued operations, net of tax benefits of $ 451 and $ 424

( 1,509 ) ( 1,423 )

NET INCOME (LOSS) $ 89,610 $ ( 10,550 )

BASIC EARNINGS (LOSS) PER SHARE:

Continuing operations $ 0.50 $ ( 0.05 )

Discontinued operations ( 0.01 ) ( 0.01 )

Consolidated $ 0.49 $ ( 0.06 )

DILUTED EARNINGS (LOSS) PER SHARE:

Continuing operations $ 0.49 $ ( 0.05 )

Discontinued operations ( 0.01 ) ( 0.01 )

Consolidated $ 0.48 $ ( 0.06 )

COMPREHENSIVE INCOME:

Net income (loss) $ 89,610 $ ( 10,550 )

Change in foreign currency translation adjustments ( 4,698 ) 11,795

Other comprehensive income (loss) ( 4,698 ) 11,795

Comprehensive income $ 84,912 $ 1,245

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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What changed 10-K

Item 8. Financial Statements and Supplementary Data