What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-08-17 compared with 2022-08-16 · 187 added, 284 removed, 802 unchanged (37% 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 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.

Deloitte & Touche LLP audited our consolidated financial statements for the fiscal years ended June 30, 2023 and 2022, the two months ended June 30, 2021 (Transition Period), and for the fiscal year ended April 30, 2021.

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

14 unchanged sentences

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

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.

and subsidiaries (the "Company") as of June 30, 2023, and June 30, 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows, for the years ended June 30, 2023, and June 30, 2022, the two months ended June 30, 2021 (Transition Period) and the year 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 June 30, 2023, and June 30, 2022, and the results of its operations and its cash flows for the years ended June 30, 2023 and June 30, 2022, the two months ended June 30, 2021 (Transition Period) and the year 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 June 30, 2023, 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 17, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Income Taxes - Uncertain Tax Positions - Refer to Note 9 to the consolidated financial statements

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◦ 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.

Litigation and Other Related Contingencies - Indemnification Claims - Refer to Note 12 to the consolidated financial statements

Critical Audit Matter Description

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.

We have identified the potential liability and disclosure of indemnification claims as a critical audit matter because of the significant amount of judgment required by management in 1) assessing the completeness of available information used in its loss contingency analysis, 2) interpreting and applying relevant laws, 3) predicting outcomes of a litigation and 4) determining SCC’s contractual responsibilities related to the securitization transactions.

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

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.

• We evaluated the reasonableness of the Company’s determination of potential liabilities from indemnification claims and their conclusion that it is not probable that a liability for a loss contingency has been incurred or that the amount of loss or range of loss cannot be reasonably estimated.

• We tested the completeness of management’s evaluation by independently obtaining legal inquiry letters and searching external sources for corroborating and contradictory evidence.

• We evaluated the Company’s disclosures for completeness and clarity of the information disclosed.

/s/ Deloitte & Touche LLP

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

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

H&R Block, Inc.

| 2023 Form 10-K

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

24 unchanged sentences

August 17, 2023

H&R Block, Inc.

| 2022 Form 10-K

2023 Form 10-K | H&R Block, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

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

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

4 unchanged sentences

Costs of revenues 1,923,452 1,881,262 232,763 1,842,092

Impairment of goodwill — — — 106,000

Selling, general and administrative 800,035 837,111 98,988 802,268

2 unchanged sentences

Interest expense on borrowings ( 72,978 ) ( 88,282 ) (14,032) ( 106,870 )

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

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

Income from continuing operations before income taxes 711,212 659,069 120,995 668,736

Income taxes 149,412 98,423 29,876 78,524

Net income from continuing operations 561,800 560,646 91,119 590,212

1 unchanged sentence

( 8,100 ) ( 6,972 ) (1,509) ( 6,421 )

NET INCOME (LOSS) $ 553,674 $ 89,610 $ 583,791 $ ( 7,526 )

BASIC EARNINGS (LOSS) PER SHARE:

NET INCOME $ 553,700 $ 553,674 $ 89,610 $ 583,791

BASIC EARNINGS PER SHARE:

Continuing operations $ 3.63 $ 3.31 $ 0.50 $ 3.15

1 unchanged sentence

Consolidated $ 3.58 $ 3.27 $ 0.49 $ 3.11

DILUTED EARNINGS (LOSS) PER SHARE:

DILUTED EARNINGS PER SHARE:

Continuing operations $ 3.56 $ 3.26 $ 0.49 $ 3.11

1 unchanged sentence

Consolidated $ 3.51 $ 3.22 $ 0.48 $ 3.08

COMPREHENSIVE INCOME (LOSS):

Net income (loss) $ 553,674 $ 89,610 $ 583,791 $ ( 7,526 )

COMPREHENSIVE INCOME:

Net income $ 553,700 $ 553,674 $ 89,610 $ 583,791

Change in foreign currency translation adjustments ( 15,454 ) ( 21,733 ) (4,698) 56,362

Other comprehensive income (loss) ( 15,454 ) ( 21,733 ) (4,698) 56,362

Comprehensive income (loss) $ 531,941 $ 84,912 $ 640,153 $ ( 38,686 )

Comprehensive income $ 538,246 $ 531,941 $ 84,912 $ 640,153

See accompanying notes to consolidated financial statements.

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

H&R Block, Inc.

| 2023 Form 10-K

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

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

As of June 30, 2023 June 30, 2022

Cash and cash equivalents $ 986,975 $ 885,015

Cash and cash equivalents - restricted 28,341 165,698

Receivables, less allowance for doubtful accounts of $ 65,351 , $ 77,518 and $ 70,689

Receivables, less allowance for credit losses of $ 55,502 and $ 65,351

59,987 58,447

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Common stock, no par, stated value $ .01 per share, 800,000,000 shares authorized, shares issued of 178,935,578 and 193,571,309

1,936 2,167 2,167

Additional paid-in capital 770,376 772,182

Accumulated other comprehensive income (loss) ( 21,645 ) 88 4,786

Retained earnings 120,405 286,694 248,506

Accumulated other comprehensive loss ( 37,099 ) ( 21,645 )

Retained earnings (deficit) ( 48,677 ) 120,405

Less treasury shares, at cost, of 32,785,658 and 33,640,988

3 unchanged sentences

See accompanying notes to consolidated financial statements.

H&R Block, Inc.

| 2022 Form 10-K

2023 Form 10-K | H&R Block, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (in 000s)

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 553,674 $ 89,610 $ 583,791 $ ( 7,526 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 553,700 $ 553,674 $ 89,610 $ 583,791

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 130,501 142,178 24,586 156,852

Provision for bad debt 66,807 4,617 73,451 76,621

Provision for credit losses 52,290 66,807 4,617 73,451

Deferred taxes 49,579 ( 53,352 ) 22,926 ( 22,583 )

Stock-based compensation 31,326 34,252 4,700 28,271

Impairment of goodwill — — — 106,000

Changes in assets and liabilities, net of acquisitions:

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SUPPLEMENTARY CASH FLOW DATA:

Income taxes paid, net of refunds received $ 31,689 $ 52,149 $ 236,459 $ 89,204

Income taxes paid (received), net $ ( 45,539 ) $ 31,689 $ 52,149 $ 236,459

Interest paid on borrowings 69,554 81,960 14,317 103,855

2 unchanged sentences

See accompanying notes to consolidated financial statements.

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

H&R Block, Inc.

| 2023 Form 10-K

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (amounts in 000s, except per share amounts)

3 unchanged sentences

Income (Loss) (1)

Earnings Treasury Stock Total

(Deficit) Treasury Stock Total

Stockholders’

1 unchanged sentence

Balances as of May 1, 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

7 unchanged sentences

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 )

Repurchase and retirement of common shares ( 11,551 ) ( 115 ) ( 6,816 ) — ( 181,282 ) — — ( 188,213 )

Cash dividends declared - $ 0.27 per share

— — — — ( 48,998 ) — — ( 48,998 )

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

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

4 unchanged sentences

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

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

Cash dividends declared - $ 1.08 per share

14 unchanged sentences

See accompanying notes to consolidated financial statements.

H&R Block, Inc.

| 2022 Form 10-K

2023 Form 10-K | H&R Block, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

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 solutions through our company-owned or franchise offices and online through Wave.

We also offer small business solutions through our company-owned and 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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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 $ 2.7 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 – All non-restricted highly liquid instruments maturing within three months at acquisition are considered to be cash equivalents.

Outstanding checks in excess of funds on deposit (book overdrafts) included in accounts payable totaled $ 3.3 million and $ 2.7 million as of June 30, 2023 and 2022, 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.

RECEIVABLES AND RELATED ALLOWANCES – Our trade receivables consist primarily of accounts receivable from tax clients for tax return preparation and related fees.

The allowance for doubtful accounts for these receivables requires management's judgment regarding collectibility and current economic conditions to establish an amount considered by management to be adequate to cover estimated losses as of the balance sheet date.

The allowance for credit losses for these receivables requires management's judgment regarding collectibility and current economic conditions to establish an amount considered by management to be adequate to cover estimated losses as of the balance sheet date.

Losses from tax clients for tax return preparation and related fees are not specifically identified and charged off;

1 unchanged sentence

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.

We establish an allowance for doubtful accounts at an amount that we believe represents the net realizable value.

We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value.

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

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

H&R Block, Inc.

| 2023 Form 10-K

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).

23 unchanged sentences

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 ended June 30, 2022, April 30, 2021 and April 30, 2020 and the Transition Period ended June 30, 2021 were not material.

Foreign currency gains and losses included in operating results for fiscal years ended June 30, 2023, June 30, 2022, April 30, 2021 and the Transition Period 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.

2 unchanged sentences

When shares are reissued, we determine the cost using the average cost method.

H&R Block, Inc.

| 2022 Form 10-K

2023 Form 10-K | H&R Block, Inc.

FAIR VALUE MEASUREMENT – We use the following classification of financial instruments pursuant to the fair value hierarchy methodologies for assets measured at fair value:

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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, Pathward TM , N.A., formerly known as MetaBank®, N.A.

Refund Transfer revenues are recognized when the Internal Revenue Service (IRS) filing acknowledgment is received and the bank account is established at our bank partner, Pathward TM , 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 paid by cardholders.

H&R Block, Inc.

| 2023 Form 10-K

Emerald Card® and Spruce SM 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.

Revenue associated with our Emerald Card® is recognized based on authorization of cardholder transactions.

Revenues associated with Emerald Card® and Spruce SM are recognized based on authorization of cardholder transactions.

Peace of Mind® Extended Service Plan revenues are initially deferred and recognized over the term of the plan, based on the historical pattern of actual claims paid, as claims paid represent the transfer of POM services to the customer.

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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 $ 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 $ 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.

Marketing and advertising expenses totaled $ 286.3 million, $ 284.2 million and $ 262.0 million for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021, respectively, and $ 11.9 million for the Transition Period.

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

Employer contributions to these plans are discretionary and totaled $ 25.6 million, $ 25.1 million and $ 26.6 million for continuing operations for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021, 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 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.

| 2022 Form 10-K

Expenses related to severance benefits for continuing operations totaled $ 6.9 million, $ 2.6 million and $ 8.4 million for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021, respectively, and $ 1.2 million for the Transition Period.

2023 Form 10-K | H&R Block, Inc.

REVENUE RECOGNITION

2 unchanged sentences

The following table disaggregates our U.S.

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

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

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

2 unchanged sentences

DIY tax preparation 314,758 319,086 76,106 313,055

International 231,335 22,071 249,868 180,065

Refund Transfers 143,310 162,893 14,269 163,329

Emerald Card® 125,444 19,193 136,717 92,737

Peace of Mind® Extended Service Plan 95,181 94,637 20,231 98,882

Tax Identity Shield® 38,265 39,114 3,928 40,624

Emerald Card® and Spruce SM

84,651 125,444 19,193 136,717

Interest and fee income on Emerald Advance SM

47,554 43,981 299 53,430

International 235,131 231,335 22,071 249,868

Wave 90,314 80,965 12,481 58,277

3 unchanged sentences

POM Deferred Revenue

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

5 unchanged sentences

POM Deferred Wages

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

6 unchanged sentences

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.

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

As of June 30, 2023 and 2022, TIS deferred revenue was $ 25.2 million and $ 25.8 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 June 30, 2023 will be recognized by April 2024 .

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

H&R Block, Inc.

| 2023 Form 10-K

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.

5 unchanged sentences

EARNINGS PER SHARE

Basic and diluted earnings (loss) per share is computed using the two-class method.

Basic and diluted earnings per share is computed using the two-class method.

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 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:

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

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

(in 000s, except per share amounts)

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

8 unchanged sentences

Diluted 3.56 3.26 0.49 3.11

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.

H&R Block, Inc.

| 2022 Form 10-K

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 0.6 million, 0.4 million and 0.8 million shares of stock for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021, respectively, and 0.3 million shares of stock for the Transition Period as the effect would be antidilutive.

2023 Form 10-K | H&R Block, Inc.

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

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

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

As of June 30, 2023 June 30, 2022

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

Loans to franchisees $ 6,344 $ 19,206 $ 6,194 $ 22,036

12 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 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.

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

As of June 30, 2023 and 2022 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.

15 unchanged sentences

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.

We establish an allowance for doubtful accounts at an amount that we believe represents the net realizable value.

We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value.

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

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

H&R Block, Inc.

| 2023 Form 10-K

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 June 30, 2023 are as follows:

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

2022 $ 10,608 $ 7,920

13 unchanged sentences

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.

We establish an allowance for doubtful accounts at an amount that we believe represents the net realizable value.

We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value.

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 fiscal year of origination as of June 30, 2022, are as follows:

Fiscal year of origination Current Balance Non-Accrual

B alances 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, 2023, are as follows:

Fiscal year of origination Balance Non-Accrual

2023 $ 28,031 $ 28,031

4 unchanged sentences

Net balance $ 17,923

H&R Block, Inc.

| 2022 Form 10-K

2023 Form 10-K | H&R Block, Inc.

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:

Activity in the allowance for credit losses for EAs and all other short-term and long-term receivables for the periods ended June 30, 2023, June 30, 2022, June 30, 2021 and April 30, 2021 is as follows:

EAs All Other Total

Balances as of May 1, 2020 $ 32,034 $ 50,446 $ 82,480

Provision 21,771 54,850 76,621

Provision for credit losses 14,319 59,132 73,451

Charge-offs, recoveries and other ( 18,649 ) ( 53,774 ) ( 72,423 )

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

Provision 14,319 59,132 73,451

Provision for credit losses — 4,617 4,617

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

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

Provision — 4,617 4,617

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

Provision for credit losses 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

Provision 14,814 51,993 66,807

Provision for credit losses 16,059 36,231 52,290

Charge-offs, recoveries and other ( 14,814 ) ( 52,249 ) ( 67,063 )

2 unchanged sentences

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

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

As of June 30, 2023 June 30, 2022

Buildings $ 28,954 $ 34,303

4 unchanged sentences

$ 130,015 $ 123,912

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.

Depreciation expense of property and equipment for continuing operations for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021 was $ 58.5 million, $ 64.7 million and $ 73.4 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 $ 19.2 million and $ 15.4 million as of June 30, 2023 and 2022 respectively.

H&R Block, Inc.

| 2023 Form 10-K

GOODWILL AND INTANGIBLE ASSETS

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:

Changes in the carrying amount of goodwill for the periods ended June 30, 2023 and 2022 are as follows:

Goodwill Accumulated Impairment Losses Net

Balances as of May 1, 2019 $ 552,234 $ ( 32,297 ) $ 519,937

Acquisition of Wave 300,560 — 300,560

Other acquisitions 23,795 — 23,795

Disposals and foreign currency changes, net ( 26,154 ) — ( 26,154 )

Impairments — ( 106,000 ) ( 106,000 )

Balances as of April 30, 2020 850,435 ( 138,297 ) 712,138

Acquisitions 6,948 — 6,948

Disposals and foreign currency changes, net 38,573 — 38,573

Impairments — — —

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

Balances as of July 1, 2021 $ 892,818 $ ( 138,297 ) $ 754,521

Acquisitions 18,696 — 18,696

3 unchanged sentences

Acquisitions (1)

23,832 — 23,832

Disposals and foreign currency changes, net ( 8,780 ) — ( 8,780 )

1 unchanged sentence

Balances as of June 30, 2023 $ 913,750 $ ( 138,297 ) $ 775,453

(1) All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.

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.

H&R Block, Inc.

| 2022 Form 10-K

Components of intangible assets are as follows:

1 unchanged sentence

Amortization Net

As of June 30, 2022:

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

Customer relationships 331,020 ( 278,717 ) 52,303

Internally-developed software 137,638 ( 107,111 ) 30,527

Noncompete agreements 41,789 ( 37,684 ) 4,105

Franchise agreements 19,201 ( 17,388 ) 1,813

Purchased technology 122,700 ( 87,910 ) 34,790

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

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

As of June 30, 2021:

June 30, 2023:

Reacquired franchise rights $ 392,452 $ ( 212,495 ) $ 179,957

6 unchanged sentences

$ 1,067,824 $ ( 790,781 ) $ 277,043

As of April 30, 2021:

June 30, 2022:

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

6 unchanged sentences

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

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.

Amortization of intangible assets for continuing operations for the fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021 was $ 72.0 million, $ 77.5 million and $ 83.4 million, respectively, and was $ 13.8 million for the Transition Period.

Estimated amortization of intangible assets for fiscal years 2024, 2025, 2026, 2027 and 2028 is $ 55.6 million, $ 32.8 million, $ 23.6 million, $ 17.8 million and $ 10.5 million, 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.

We made payments to acquire businesses totaling $ 48.2 million, $ 35.9 million and $ 15.6 million during the fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021, respectively, and $ 0.8 million for the Transition

2023 Form 10-K | H&R Block, Inc.

The amounts and weighted-average lives of assets acquired during fiscal year 2023, including amounts capitalized related to internally-developed software, are as follows:

6 unchanged sentences

Total $ 39,937 5

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 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:

(dollars in 000s)

Amount Acquired Weighted-Average Life (in years)

Assets acquired and liabilities assumed, net $ 3,928

Deferred tax liability ( 8,126 )

Purchased technology 68,000 10

Customer relationships 23,000 5

Non-compete agreements 7,070 5

Trade name 5,800 10

Total identifiable net assets 99,672

Total identifiable assets and goodwill $ 400,232

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

LONG-TERM DEBT

The components of long-term debt are as follows:

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

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

— 500,000 500,000

As of June 30, 2023 June 30, 2022

Senior Notes, 5.250 %, due October 2025 (1)

11 unchanged sentences

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

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.

4 unchanged sentences

(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

H&R Block, Inc.

| 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;

(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;

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 pu rposes.

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 June 30, 2023.

1 unchanged sentence

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.

H&R Block, Inc.

| 2023 Form 10-K

STOCK-BASED COMPENSATION

1 unchanged sentence

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

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

3 unchanged sentences

As of June 30, 2023, we had 9.3 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.

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

We measure the fair value of restricted share units (other than performance-based share units) based on the closing price of our common stock on the grant date.

8 unchanged sentences

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

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, 2023, is as follows:

9 unchanged sentences

Outstanding, end of the year 1,750 $ 30.96 1,687 $ 25.04

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.

The total fair value of shares vesting during fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021 was $ 33.6 million, $ 33.3 million and $ 16.1 million, respectively, and was $ 12.3 million for the Transition Period.

2023 Form 10-K | H&R Block, Inc.

of June 30, 2023, we had $ 41.3 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 .

8 unchanged sentences

June 30, 2023 Year Ended

April 30, 2021 Year Ended

June 30, 2022 Year Ended

April 30, 2021

9 unchanged sentences

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

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

with the 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 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.

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.

federal income tax returns for tax years 2014 and prior are closed.

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.

H&R Block, Inc.

| 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:

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

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

6 unchanged sentences

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 for continuing operations is as follows:

H&R Block, Inc.

| 2023 Form 10-K

The reconciliation between the statutory U.S.

federal tax rate and our effective tax rate from continuing operations is as follows:

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

4 unchanged sentences

Permanent differences 0.6 % 0.9 % 0.4 % 0.5 %

Impairment of goodwill — % — % — % ( 832.5 ) %

Uncertain tax positions ( 0.9 ) % ( 6.3 ) % 2.9 % 7.5 %

3 unchanged sentences

Federal income tax credits ( 1.3 ) % ( 2.6 ) % ( 0.5 ) % ( 0.9 ) %

Tax impacts of stock-based compensation vesting — % — % — % 44.8 %

Tax benefit due to NOL carryback under CARES Act ( 0.2 ) % ( 0.1 ) % — % ( 17.5 ) %

4 unchanged sentences

Effective tax rate 21.0 % 14.9 % 24.7 % 11.7 %

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:

Our effective tax rate from continuing operations was 21.0 %, 14.9 % and 11.7 % for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021, respectively, and was 24.7 % for the Transition Period.

The increase in the effective tax rate for the year ended June 30, 2023 compared to the year ended June 30, 2022 is primarily due to lower benefits in the current year resulting from the expiration of statutes of limitations related to uncertain tax positions.

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

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

7 unchanged sentences

14,745 ( 56,960 ) 19,051 ( 18,342 )

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

Total income taxes for continuing operations $ 149,412 $ 98,423 $ 29,876 $ 78,524

2023 Form 10-K | H&R Block, Inc.

We account for income taxes under the asset and liability method, which requires us to record deferred income tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying value of existing assets and liabilities and their respective tax basis.

Deferred taxes are determined separately for each tax-paying component within each tax jurisdiction based on provisions of enacted tax law.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record a valuation allowance to reduce our deferred tax assets to the estimated amount that we believe is more likely than not to be realized.

Determination of a valuation allowance for deferred tax assets requires that we make judgments about future matters that are not certain, including projections of future taxable income and evaluating potential tax-planning strategies.

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

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

As of June 30, 2023 June 30, 2022

Deferred tax assets:

1 unchanged sentence

Deferred revenue 17,702 35,519

Allowance for credit losses and related reserves 30,565 34,411 33,027

Allowance for credit losses 22,715 30,565

Deferred and stock-based compensation 6,629 6,964

9 unchanged sentences

Lease right of use assets ( 109,814 ) ( 107,445 )

Property and equipment ( 1,421 ) —

Income tax method change ( 1,018 ) ( 5,892 )

3 unchanged sentences

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

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

As of June 30, 2023 June 30, 2022

Deferred income tax assets $ 152,699 $ 163,500

3 unchanged sentences

| 2023 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:

Changes in our valuation allowance for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021 and for the Transition Period are as follows:

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

3 unchanged sentences

Balance, end of the period $ 57,566 $ 55,172 $ 55,784 $ 55,401

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.

Our valuation allowance on deferred tax assets has a net increase of $ 2.4 million during the current period.

The gross increase in valuation allowance of $ 6.4 million is primarily related to net operating loss deferred tax assets generated in foreign jurisdictions that we do not expect to utilize in future years.

This increase is offset by a $ 4.0 million decrease to our valuation allowance balance for adjustments to certain domestic and foreign net operating losses utilized in the current fiscal year and changes in future projections of net operating loss utilization.

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.

1 unchanged sentence

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

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.

We maintain a valuation allowance of $ 19.3 million on state net operating losses and $ 36.2 million on foreign net operating losses for the portion of such loses that, more likely than not, will not be realized.

Of the $ 117.0 million of net operating loss deferred tax assets, $ 25.7 million will expire in varying amounts during fiscal years 2024 through 2041 and the remaining $ 91.3 million have no expiration.

3 unchanged sentences

The amount of unrecognized tax liability on these foreign earnings, net of expected foreign tax credits, is immaterial as of June 30, 2023.

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:

Changes in unrecognized tax benefits for fiscal years ended June 30, 2023, June 30, 2022 and April 30, 2021 and for the Transition Period are as follows:

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

6 unchanged sentences

Balance, end of the period $ 240,063 $ 232,004 $ 264,323 $ 264,810

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.

Included in the total gross unrecognized tax benefit ending balance as of June 30, 2023, June 30, 2022, June 30, 2021 and April 30, 2021, are $ 209.0 million, $ 203.7 million, $ 224.5 million and $ 214.9 million, respectively, which if recognized, would impact our effective tax rate.

Increases from prior year are primarily related to additions based on current year tax positions offset by 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 $ 33.7 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

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

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 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.

2023 Form 10-K | H&R Block, Inc.

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 June 30, 2022, June 2021 and April 30, 2021 totaled $ 22.7 million, $ 26.4 million and $ 24.9 million, respectively.

The total gross interest and penalties accrued as of June 30, 2023 and 2022 totaled $ 32.6 million and $ 22.7 million, respectively.

COMMITMENTS AND CONTINGENCIES

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 $ 14.0 million, $ 12.6 million and $ 12.2 million as of June 30, 2022, June 30, 2021 and April 30, 2021, respectively.

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 respective taxing authority that a client would otherwise not have been required to pay.

Our liability related to estimated losses under the 100% accuracy guarantee was $ 15.8 million and $ 14.0 million as of June 30, 2023 and 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 $ 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.

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 $ 18.3 million and $ 12.9 million as of June 30, 2023 and 2022, respectively, with amounts recorded in deferred revenue and other liabilities.

These liabilities will be settled within the next ten 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.

We have contractual commitments to fund certain franchises with approved short-term lines of credit for the purpose of meeting their seasonal working capital needs.

Our total oblig ation under these lines of credit was $ 0.4 million as of June 30, 2023, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 0.2 million.

4 unchanged sentences

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 and employer provided medical benefits, commercial insurance is purchased in excess of the self-insured retentions.

During the year ended June 30, 2023, we received $ 15.4 million related to these credits and recognized $ 5.1 million as an offset to related operating expense.

During the year ended June 30, 2022, we received $ 7.3 million related to these credits and recognized $ 2.2 million as an offset to related operating expense.

As of June 30, 2023 and 2022 we had deferred balances of $ 15.4 million and $ 5.1 million, respectively, 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, general liability, tax errors and omissions, and claims related to POM.

These programs maintain various self-insured retentions and commercial insurance is purchased in excess of the self-insured retentions for all but POM in company-owned offices and employer provided medical benefits.

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 $ 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.

As of June 30, 2023 and 2022, $ 10.5 million is included in deferred revenue and other liabilities reflecting our obligation under this plan.

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

3 unchanged sentences

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

H&R Block, Inc.

| 2022 Form 10-K

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 $ 0.7 million at June 30, 2023 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.

H&R Block, Inc.

| 2023 Form 10-K

June 30, 2022 we had $ 0.6 million accrued under the RA guarantee agreement, and we paid $ 0.5 million, net of recoveries, related to that guarantee during the fiscal year ended June 30, 2023.

We offer POM to U.S.

5 unchanged sentences

(dollars in 000s)

June 30, 2023 Year Ended

June 30, 2022 Two Months Ended

1 unchanged sentence

(Transition Period) Year Ended

April 30, 2021 Year Ended

April 30, 2021

5 unchanged sentences

New operating right of use assets and related lease liabilities $ 253,755 $ 222,352 $ 48,307 $ 167,827

$ 222,352 $ 48,307 $ 167,827 $ 345,079

Weighted-average remaining operating lease term (years) 2 2 2 3

Weighted-average operating lease discount rate 4.1 % 2.8 % 2.9 % 3.0 %

(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, 2023 are as follows:

12 unchanged sentences

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.

2023 Form 10-K | H&R Block, Inc.

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

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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 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.

As of June 30, 2023 and 2022 our total accrued liabilities were $ 0.2 million and $ 1.7 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.

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

Free File Litigation.

On May 6, 2019, the Los Angeles City Attorney filed a lawsuit on behalf of the People of the State of California in the Superior Court of California, County of Los Angeles (Case No.

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and HRB Digital LLC engaged in unfair, fraudulent and deceptive business practices and acts in connection with the IRS Free File Program in violation of the California Unfair Competition Law, California Business and Professions Code §§17200 et seq.

The complaint seeks injunctive relief, restitution of monies paid to H&R Block by persons in the State of California who were eligible to file under the IRS Free File Program for the time period starting 4 years prior to the date of the filing of the complaint, pre-judgment interest, civil penalties and costs.

The complaint seeks injunctive relief, restitution of monies paid to H&R Block by persons in the State of California who were eligible to file under the IRS Free File Program for the time period startin g 4 years prior to the date of the filing of the complaint, pre-judgment interest, civil penalties and costs.

The City Attorney subsequently dismissed H&R Block, Inc.

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.

A trial date is set for January 17, 2023.

We filed a motion for summary judgment, which was denied.

The August 14, 2023 trial date was continued.

A new trial date has not yet been set.

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.

We have received and are responding to certain governmental inquiries relating to the IRS Free File Program and our DIY tax preparation services.

In February 2023, we received a demand and draft complaint from the Federal Trade Commission (FTC) relating to our DIY tax preparation services.

If the parties are not able to reach amicable resolution, the FTC may seek resolution through litigation.

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

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.

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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.

In June 2023, a settlement was paid resolving certain of these matters.

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

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

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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.

2023 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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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-K

Item 8. Financial Statements and Supplementary Data