What changed in this filing

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Item 1. Financial Statements

2023-02-07 compared with 2022-11-03 · 116 added, 76 removed, 379 unchanged (34% of the section changed)

3 unchanged sentences

per share amounts)

Three months ended September 30,

Three months ended December 31, Six months ended December 31,

2022 2021 2022 2021

Service revenues $ 139,565 $ 133,725 $ 306,759 $ 310,702

21 unchanged sentences

Change in foreign currency translation adjustments 9,307 1,656 ( 23,038 ) ( 9,521 )

Other comprehensive loss ( 32,345 ) ( 11,177 )

Other comprehensive income (loss) 9,307 1,656 ( 23,038 ) ( 9,521 )

Comprehensive loss $ ( 214,272 ) $ ( 188,949 ) $ ( 415,038 ) $ ( 351,727 )

4 unchanged sentences

share and per share amounts)

As of September 30, 2022 June 30, 2022

As of December 31, 2022 June 30, 2022

Cash and cash equivalents $ 264,455 $ 885,015

20 unchanged sentences

Total current liabilities 645,833 998,813

Long-term debt 1,487,407 1,486,876

Long-term debt and line of credit borrowings 2,067,937 1,486,876

Deferred tax liabilities and reserves for uncertain tax positions 231,041 226,362

15 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in 000s)

Three months ended September 30, 2022 2021

Six months ended December 31, 2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

21 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of line of credit borrowings ( 170,000 ) ( 210,000 )

Proceeds from line of credit borrowings 750,000 485,000

Dividends paid ( 89,193 ) ( 96,938 )

2 unchanged sentences

Other, net 2,212 ( 7,423 )

Net cash used in financing activities ( 246,893 ) ( 217,322 )

Net cash provided by (used in) financing activities 128,813 ( 149,883 )

Effects of exchange rate changes on cash ( 7,790 ) ( 3,330 )

5 unchanged sentences

Interest paid on borrowings 31,812 36,539

Accrued purchase of common stock 32,356 4,785

Accrued additions to property and equipment 2,499 1,393

1 unchanged sentence

Accrued dividends payable to common shareholders 44,569 46,497

Accrued purchase of common stock — 4,845

See accompanying notes to consolidated financial statements.

20 unchanged sentences

Balances as of September 30, 2022 188,644 $ 1,887 $ 759,629 $ ( 53,990 ) $ ( 311,671 ) ( 33,177 ) $ ( 660,840 ) $ ( 264,985 )

Net loss — — — — ( 223,579 ) — — ( 223,579 )

Other comprehensive income — — — 9,307 — — — 9,307

Stock-based compensation — — 9,544 — — — — 9,544

Stock-based awards exercised or vested — — 421 — ( 209 ) 52 1,023 1,235

Acquisition of treasury shares (2)

— — — — — ( 2 ) ( 79 ) ( 79 )

Repurchase and retirement of common shares ( 3,241 ) ( 33 ) ( 1,911 ) — ( 128,409 ) — — ( 130,353 )

Cash dividends declared - $ 0.29 per share

— — — — ( 44,569 ) — — ( 44,569 )

Balances as of December 31, 2022 185,403 $ 1,854 $ 767,683 $ ( 44,683 ) $ ( 708,437 ) ( 33,127 ) $ ( 659,896 ) $ ( 643,479 )

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

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

See accompanying notes to consolidated financial statements.

Q2 FY2023 Form 10-Q| H&R Block, Inc.

(amounts in 000s, except per share amounts)

Common Stock Additional

16 unchanged sentences

Balances as of September 30, 2021 209,854 $ 2,099 $ 770,683 $ ( 11,089 ) $ ( 74,757 ) ( 34,342 ) $ ( 671,408 ) $ 15,528

Net loss — — — — ( 190,605 ) — — ( 190,605 )

Other comprehensive income — — — 1,656 — — — 1,656

Stock-based compensation — — 5,640 — — — — 5,640

Stock-based awards exercised or vested — — ( 1,709 ) — ( 219 ) 122 2,400 472

Acquisition of treasury shares (2)

— — — — — ( 2 ) ( 52 ) ( 52 )

Repurchase and retirement of common shares ( 6,589 ) ( 66 ) ( 3,953 ) — ( 154,778 ) — — ( 158,797 )

Cash dividends declared - $ 0.27 per share

— — — — ( 46,497 ) — — ( 46,497 )

Balances as of December 31, 2021 203,265 $ 2,033 $ 770,661 $ ( 9,433 ) $ ( 466,856 ) ( 34,222 ) $ ( 669,060 ) $ ( 372,655 )

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

1 unchanged sentence

See accompanying notes to consolidated financial statements.

Q1 FY2023 Form 10-Q| H&R Block, Inc.

H&R Block, Inc.

|Q2 FY2023 Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION – The consolidated balance sheets as of September 30, 2022 and June 30, 2022, the consolidated statements of operations and comprehensive loss for the three months ended September 30, 2022 and 2021, the consolidated statements of cash flows for the three months ended September 30, 2022 and 2021, and the consolidated statements of stockholders' equity for the three months ended September 30, 2022 and 2021 have been prepared by the Company, without audit.

In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of September 30, 2022 and 2021 and for all periods presented, have been made.

BASIS OF PRESENTATION – The consolidated balance sheets as of December 31, 2022 and June 30, 2022, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2022 and 2021, the consolidated statements of cash flows for the six months ended December 31, 2022 and 2021, and the consolidated statements of stockholders' equity for the three and six months ended December 31, 2022 and 2021 have been prepared by the Company, without audit.

In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of December 31, 2022 and 2021 and for all periods presented, have been made.

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

11 unchanged sentences

See note 9 for additional information on loss contingencies related to our discontinued operations.

H&R Block, Inc.

|Q1 FY2023 Form 10-Q

Q2 FY2023 Form 10-Q| H&R Block, Inc.

REVENUE RECOGNITION

3 unchanged sentences

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

Three months ended September 30,

Three months ended December 31, Six months ended December 31,

2022 2021 2022 2021

assisted tax preparation $ 41,216 $ 30,845 $ 77,528 $ 64,452

7 unchanged sentences

Interest and fee income on Emerald Advance SM

12,903 12,424 13,517 12,903

International 28,046 27,907 86,880 86,232

4 unchanged sentences

POM Deferred Revenue Deferred Wages

Three months ended September 30, 2022 2021 2022 2021

Six months ended December 31, 2022 2021 2022 2021

Balance, beginning of the period $ 173,486 $ 172,759 $ 19,495 $ 17,867

2 unchanged sentences

Balance, end of the period $ 128,937 $ 126,686 $ 14,493 $ 13,072

As of September 30, 2022, deferred revenue related to POM was $ 146.1 million.

As of December 31, 2022, deferred revenue related to POM was $ 128.9 million.

We expect that $ 94.8 million will be recognized over the next twelve months , while the remaining balance will be recognized over the following five years .

As of September 30, 2022 and 2021, Tax Identity Shield® (TIS) deferred revenue was $ 21.2 million and $ 23.5 million, respectively.

As of December 31, 2022 and 2021, Tax Identity Shield® (TIS) deferred revenue was $ 16.8 million and $ 18.5 million, respectively.

Deferred revenue related to TIS was $ 25.8 million and $ 28.3 million as of June 30, 2022 and June 30, 2021, respectively.

4 unchanged sentences

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.

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 4.4 million shares and 5.3 million shares for the three months ended September 30, 2022 and 2021, respectively, as the effect would be antidilutive due to the net loss from continuing operations during the periods.

Q1 FY2023 Form 10-Q| H&R Block, Inc.

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 4.5 million shares for the three and six months ended December 31, 2022 and 5.1 million shares for the three and six months ended December 31, 2021, as the effect would be antidilutive due to the net loss from continuing operations during the periods.

H&R Block, Inc.

|Q2 FY2023 Form 10-Q

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

(in 000s, except per share amounts)

Three months ended September 30,

Three months ended December 31, Six months ended December 31,

2022 2021 2022 2021

Net loss from continuing operations attributable to shareholders $ ( 220,863 ) $ ( 189,073 ) $ ( 388,230 ) $ ( 339,018 )

8 unchanged sentences

The decrease in the weighted average shares outstanding is due to share repurchases completed in the current and prior fiscal years.

STOCK-BASED COMPENSATION – During the three months ended September 30, 2022, we granted 0.9 million shares under our stock-based compensation plan.

We granted awards of 1.4 million shares under our stock-based compensation plans during the three months ended September 30, 2021.

Stock-based compensation expense of our continuing operations totaled $ 7.7 million for the three months ended September 30, 2022 and $ 6.8 million for the three months ended September 30, 2021.

As of September 30, 2022, unrecognized compensation cost for stock options totaled $ 0.4 million, and for nonvested shares and units totaled $ 76.9 million.

STOCK-BASED COMPENSATION – During the six months ended December 31, 2022, we granted 1.0 million shares under our stock-based compensation plan.

We granted awards of 1.5 million shares under our stock-based compensation plans during the six months ended December 31, 2021.

Stock-based compensation expense of our continuing operations totaled $ 10.2 million and $ 17.9 million for the three and six months ended December 31, 2022, respectively, and $ 6.4 million and $ 13.2 million for the three and six months ended December 31, 2021, respectively.

As of December 31, 2022, unrecognized compensation cost for stock options totaled $ 0.3 million, and for nonvested shares and units totaled $ 66.9 million.

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

As of September 30, 2022 June 30, 2022

As of December 31, 2022 June 30, 2022

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

13 unchanged sentences

LOANS TO FRANCHISEES – 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 September 30, 2022 and June 30, 2022, loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.

H&R Block, Inc.

|Q1 FY2023 Form 10-Q

Q2 FY2023 Form 10-Q| H&R Block, Inc.

of December 31, 2022 and June 30, 2022, loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.

H&R BLOCK'S INSTANT REFUND SM – H&R Block's Instant Refund SM amounts are generally received from the Canada Revenue Agency within 60 days of filing the client's return, with the remaining balance collectible from the client.

2 unchanged sentences

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

B alances 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 September 30, 2022 are as foll ows:

B alances 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 December 31, 2022 are as foll ows:

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

1 unchanged sentence

2020 and prior 102 102

2,892 $ 2,372

Allowance ( 1,368 )

Net balance $ 1,296

2 unchanged sentences

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

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 September 30, 2022 are as follows:

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 December 31, 2022 are as follows:

Fiscal year of origination Current Balance Non-Accrual

5 unchanged sentences

Net balance $ 271,546

ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for our EA and all other short-term and long-term receivables for the three months ended September 30, 2022 and 2021 is as follows:

ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for our EA and all other short-term and long-term receivables for the six months ended December 31, 2022 and 2021 is as follows:

EAs All Other Total

2 unchanged sentences

Charge-offs, recoveries and other ( 14,814 ) ( 51,429 ) ( 66,243 )

Balances as of September 30, 2022 $ 26,141 $ 50,922 $ 77,063

Balances as of December 31, 2022 $ 26,408 $ 1,197 $ 27,605

Balances as of July 1, 2021 $ 27,704 $ 60,272 $ 87,976

1 unchanged sentence

Charge-offs, recoveries and other ( 16,377 ) ( 60,437 ) ( 76,814 )

Balances as of September 30, 2021 $ 27,704 $ 58,539 $ 86,243

Q1 FY2023 Form 10-Q| H&R Block, Inc.

Balances as of December 31, 2021 $ 23,756 $ 2,045 $ 25,801

H&R Block, Inc.

|Q2 FY2023 Form 10-Q

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the three months ended September 30, 2022 are as follows:

Changes in the carrying amount of goodwill for the six months ended December 31, 2022 are as follows:

Goodwill Accumulated Impairment Losses Net

3 unchanged sentences

Impairments — — —

Balances as of September 30, 2022 $ 885,008 $ ( 138,297 ) $ 746,711

Balances as of December 31, 2022 $ 903,099 $ ( 138,297 ) $ 764,802

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.

2 unchanged sentences

Amortization Net

As of September 30, 2022:

As of December 31, 2022:

Reacquired franchise rights $ 390,631 $ ( 204,396 ) $ 186,235

15 unchanged sentences

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

We made payments to acquire businesses totaling $ 16.5 million and $ 4.3 million during the three months ended September 30, 2022 and 2021, respectively.

The amounts and weighted-average lives of intangible assets acquired

H&R Block, Inc.

|Q1 FY2023 Form 10-Q

during the three months e nded September 30, 2022, including amounts capitalized related to internally-developed software, a re as follows:

Q2 FY2023 Form 10-Q| H&R Block, Inc.

We made payments to acquire businesses totaling $ 39.8 million and $ 19.3 million during the six months ended December 31, 2022 and 2021, respectively.

The amounts and weighted-average lives of intangible assets acquired during the six months e nded December 31, 2022, including amounts capitalized related to internally-developed software, a re as follows:

(dollars in 000s)

5 unchanged sentences

Total $ 32,173 5

Amortization of intangible assets for the three months ended September 30, 2022 was $ 18.4 million compared to $ 19.8 million for the three months ended September 30, 2021.

Amortization of intangible assets for the three and six months ended December 31, 2022 was $ 18.5 million and $ 36.9 million, respectively, compared to $ 19.4 million and $ 39.2 million for the three and six months ended December 31, 2021, respectively.

Estimated amortization of intangible assets for fiscal years ending June 30, 2023, 2024, 2025, 2026, and 2027 is $ 71.4 million, $ 53.6 million, $ 31.4 million, $ 22.7 million and $ 16.9 million, respectively.

1 unchanged sentence

The components of long-term debt are as follows:

As of September 30, 2022 June 30, 2022

As of December 31, 2022 June 30, 2022

Senior Notes, 5.250 %, due October 2025

4 unchanged sentences

650,000 650,000

Committed line of credit borrowings 580,000 —

Debt issuance costs and discounts ( 12,063 ) ( 13,124 )

11 unchanged sentences

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.

H&R Block, Inc.

|Q2 FY2023 Form 10-Q

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 pu rposes.

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

Q1 FY2023 Form 10-Q| H&R Block, Inc.

We had no outst anding balance under our CLOC and amounts available to borrow were limited by the debt-to-EBITDA covenant to approximately $ 1.47 billion as of September 30, 2022.

We were in compliance with these requirements as of December 31, 2022.

We had an outst anding balance of $ 580.0 million under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2022.

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

1 unchanged sentence

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

federal income tax returns for 2015, 2016, 2019 and later years remain open for examination.

federal income tax returns for 2018, 2017, 2014 and all years prior to 2014 are closed.

On October 4, 2022, the IRS notified us that it plans to audit our 2020 tax return and related carryback claims.

With respect to federal, 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.

On November 7, 2022, the IRS commenced their examination of our 2020 tax return and related carryback claims to tax years 2015 through 2018.

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.

We had gross unrecognized tax benefits of $ 231.7 million and $ 232.0 million as of September 30, 2022 and June 30, 2022, respectively.

The gross unrecognized tax benefits decreased by $ 0.3 million during the three months ended September 30, 2022 due to settlements with state tax authorities.

We had gross unrecognized tax benefits of $ 221.3 million and $ 232.0 million as of December 31, 2022 and June 30, 2022, respectively.

The gross unrecognized tax benefits decreased by $ 10.7 million during the six months ended December 31, 2022 due to expiration of statutes and settlements with state tax authorities.

We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $ 34.0 million within the next twelve months.

The anticipated decrease is due to the expiration of statutes of limitations and anticipated closure of various state matters currently under examination or in appeals.

The anticipated decrease is due to the expiration of statutes of limitations and anticipated closure of various matters currently under examination or in appeals.

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

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 24.4 % and 24.0 % for the three months ended September 30, 2022 and 2021, respectively.

Consistent with prior years, our pretax loss for the three months ended September 30, 2022 is expected to be offset by income in our third and fourth quarters due to the established pattern of seasonality in our primary business operations.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 25.2 % and 31.7 % for the six months ended December 31, 2022 and 2021, respectively.

Discrete items increased the effective tax rate by 1.4 % and 10.1 % for the six months ended December 31, 2022, and 2021, respectively.

A discrete income tax benefit of $ 7.2 million and $ 50.0 million were recorded in the six months ended December 31, 2022 and 2021, respectively.

The discrete tax benefit recorded in the current period primarily resulted from state statute of limitations expirations and refund interest.

The discrete tax benefit recorded in the prior period primarily resulted from federal and state statute of limitations expirations.

Consistent with prior years, our pretax loss for the six months ended December 31, 2022 is expected to be offset by income in our third and fourth quarters due to the established pattern of seasonality in our primary business operations.

As such, management has determined that it is more-likely-than-not that realization of tax benefits recorded in our financial statements will occur within our fiscal year.

The amount of tax benefit recorded for the three months ended September 30, 2022 reflects management’s estimate of the annual effective tax rate applied to year-to-date loss from continuing operations adjusted for the tax impact of discrete items for the periods presented.

The amount of tax benefit recorded for the six months ended December 31, 2022 reflects management’s estimate of the annual effective tax rate applied to year-to-date loss from continuing operations adjusted for the tax impact of discrete items for the periods presented.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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 $ 12.7 million and $ 14.0 million as of September 30, 2022 and June 30, 2022, respectively.

Our liability related to estimated losses under the 100% accuracy guarantee was $ 11.7 million and $ 14.0 million as of December 31, 2022 and June 30, 2022, 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 $ 16.0 million and $ 12.9 million as of September 30, 2022 and June 30, 2022, respectively, with amounts recorded in deferred revenue and other liabilities.

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 $ 21.4 million and $ 12.9 million as of December 31, 2022 and June 30, 2022, respectively, with amounts recorded in deferred revenue and other

Q2 FY2023 Form 10-Q| H&R Block, Inc.

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 $ 15.3 million at September 30, 2022, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 8.7 million.

H&R Block, Inc.

|Q1 FY2023 Form 10-Q

Our total obligation under these lines of credit was $ 21.1 million at December 31, 2022, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 7.4 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 stat ute of limitations.

During the six months ended December 31, 2022, we received $ 12.1 million related to these credits and recognized $ 3.2 million as an offset to related operating expenses.

As of December 31, 2022 and June 30, 2022, we had deferre d balances of $ 13.9 million and $ 5.1 million, respectively, which is recorded in deferred revenue and other current liabilities.

Emerald Advance SM lines of credit (EAs) are originated by Pathward TM N.A.

We purchase a 90 % participation interest, at par, in all EAs originated by Pathward in accordance with our participation agreement.

At December 31, 2022, the principal balance of purchased participation interests for the current year totaled $ 270.4 million.

LITIGATION AND OTHER RELATED CONTINGENCIES

14 unchanged sentences

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 September 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.

Our total accrued liabilities were $ 1.7 million as of September 30, 2022 and June 30, 2022.

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 December 31, 2022.

H&R Block, Inc.

|Q2 FY2023 Form 10-Q

operations, and cash flows.

Our total accrued liabilities were $ 1.6 million and $ 1.7 million as of December 31, 2022 and June 30, 2022, 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.

5 unchanged sentences

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

As of September 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.

Q1 FY2023 Form 10-Q| H&R Block, Inc.

As of December 31, 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.

16 unchanged sentences

from the case and amended its complaint to add HRB Tax Group, Inc.

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

We filed a motion for summary judgment, which remains pending.

We filed a motion for summary judgment, which was denied on December 1, 2022.

A trial date is set for August 14, 2023.

2 unchanged sentences

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.

Q2 FY2023 Form 10-Q| H&R Block, Inc.

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.

2 unchanged sentences

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.

An accrual related to these matters is included in our loss contingency accrual.

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

2 unchanged sentences

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 September 30, 2022, total approximately $ 264 million and consist of an intercompany note receivable.

SCC's principal assets, as of December 31, 2022, total approximately $ 267 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

H&R Block, Inc.

|Q1 FY2023 Form 10-Q

have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.

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, arbitration and other loss contingencies not discussed herein arising out of our business operations.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements