H&R BLOCK INC — Annual Report 2002

Sep 30, 2002

11-K 1 c72056e11vk.htm FORM 11-K FOR FISCAL YEAR END JUNE 30, 2002 H&R Block, Inc. PAGEBREAK

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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 11-K

(Mark One)

| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
| --- | --- |
| | For the fiscal year ended June 30, 2002 |
| o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
| | For the transition period from to |

Commission file number 1-6089

H&R Block, Inc. 2000 Employee Stock Purchase Plan (Full title of the Plan)

H&R BLOCK, INC. 4400 Main Street Kansas City, Missouri 64111 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)

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Report of Independent Accountants
Financial Statements
Statements of Financial Condition as of June 30, 2002 and 2001
Statements of Operations and Changes in Plan Equity for the Year Ended June 30, 2002 and the Period from September 13, 2000 (date of inception) to June 30, 2001
Notes to Financial Statements
Signatures
EX-23 Consent of PricewaterhouseCoopers LLP

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Report of Independent Accountants	2
Financial Statements
Statements of Financial Condition as of June 30, 2002 and 2001	3
Statements of Operations and Changes in Plan Equity for the
Year Ended June 30, 2002 and the Period from
September 13, 2000 (date of inception) to June 30, 2001	4
Notes to Financial Statements	5
Signatures	8
Consent of Independent Accountants (Exhibit 23)	9

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link1 "Report of Independent Accountants"

Report of Independent Accountants

To the Compensation Committee of the Board of Directors of H&R Block, Inc. and the Participants of the H&R Block, Inc. 2000 Employee Stock Purchase Plan:

In our opinion, the accompanying statements of financial condition and the related statements of operations and changes in plan equity present fairly, in all material respects, the financial condition of the H&R Block, Inc. 2000 Employee Stock Purchase Plan (the “Plan”) at June 30, 2002 and 2001, and the results of its operations and changes in plan equity for the year ended June 30, 2002 and the period from September 13, 2000 (date of inception) to June 30, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Kansas City, Missouri September 27, 2002

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link1 "Financial Statements"

link2 "Statements of Financial Condition as of June 30, 2002 and 2001"

H&R Block, Inc. 2000 Employee Stock Purchase Plan STATEMENTS OF FINANCIAL CONDITION

	June 30, — 2002	2001
Assets	$ —	$ —
Liabilities	—	—
Plan equity	—	—
Total Liabilities & Plan equity	$ —	$ —

See Notes to Financial Statements

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link2 "Statements of Operations and Changes in Plan Equity for the Year Ended June 30, 2002 and the Period from September 13, 2000 (date of inception) to June 30, 2001"

H&R Block, Inc. 2000 Employee Stock Purchase Plan STATEMENTS OF OPERATIONS AND CHANGES IN PLAN EQUITY

		September 13, 2000
	For the Year Ended	(date of inception) to
	June 30, 2002	June 30, 2001
Participant contributions	$ 3,172,638	$	1,955,462
Participant withdrawals	(245,142	)	(114,520	)
Purchases of H&R Block, Inc.
common stock	(2,927,496	)	(1,840,942	)
Net additions	—		—
Plan equity at beginning of period	—		—
Plan equity at end of period	$ —	$	—

See Notes to Financial Statements

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link2 "Notes to Financial Statements"

H&R Block, Inc. 2000 Employee Stock Purchase Plan NOTES TO FINANCIAL STATEMENTS June 30, 2002

| 1. |
| --- |
| The following is a brief description of the H&R Block, Inc. 2000 Employee
Stock Purchase Plan (the “Plan”). The Plan is designed to encourage and
assist employees of the subsidiaries of H&R Block, Inc. (the “Company”) to
acquire an equity interest in the Company through the purchase of shares of
the Company’s common stock. Participants should refer to the Plan document
for a more complete description of the Plan. |
| The Plan was adopted by the Board of Directors of the Company on June 28,
2000 and by the shareholders at its Annual Meeting on September 13, 2000. |
| Common stock for the Plan is issued directly from the Company’s authorized
but unissued shares or treasury shares. The aggregate number of shares that
may be issued under the Plan cannot exceed 3,000,000 (prior to a two-for-one
stock split of the Company’s common stock effective August 1, 2001), and
6,000,000 (effective August 1, 2001, the effective date of the two-for-one
stock split of the Company’s common stock). |
| Eligibility. An employee of a participating subsidiary of the Company is
eligible to participate in the Plan if the employee has been continuously
employed by a participating subsidiary for at least twelve months. In
addition, employees must be customarily employed at least 20 hours per week
and at least five months in any calendar year. |
| Each eligible employee may enroll in the Plan as of the first day of an
Option Period during open enrollment, which ends at least 15 days prior to
the commencement of such Option Period. The Option Periods are six-month
periods beginning on July 1 and January 1 of each year and ending on
December 31 and June 30 of each year, respectively. |
| Contributions . A Plan participant can contribute from 1% to 10% of the
participant’s “compensation,” as such term is defined in the Plan, through
after-tax payroll deductions during the Option Period. Participants can
increase or decrease their withholding percentage during an Option Period.
In addition to these limits, a participant cannot accrue at a rate that
exceeds $25,000 for the calendar year, as measured by the fair market value
of shares (as determined in the case of each such share as of the first day
of an Option Period). The Company holds contributions until the end of the
Option Period at which point the Company issues shares for the contributions
received. No interest is paid or accrued on the participants’ payroll
deductions. Contributions from participant payroll deductions are held by
the Company and are used for general corporate purposes. |

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| | Participant withdrawals : A participant may choose to withdraw from the Plan
at any time during an Option Period. Participants who terminate their
employment with all subsidiaries of the Company are not eligible to continue participation in
the Plan. Upon withdrawal, termination from employment or death, any
accumulated contributions during an Option Period are distributed to the
employee or beneficiary, without interest, by the Company. |
| --- | --- |
| | Stock Purchase Provisions . On the first day of the Option Period (“Grant
Date”), eligible employees are granted the option to purchase shares of the
Company’s common stock. On the last day of the Option Period (“Purchase
Date”), the Company issues common stock to the participants. The purchase
price per share of common stock issued by the Company is 90% of the lower of
either the fair market value of the Company’s common stock on the Grant Date
or the Purchase Date. Fair market value is determined using the closing
price of the Company’s common stock as listed on the New York Stock
Exchange. All shares issued under the Plan may not be sold, transferred or
assigned for a period of six months after the Purchase Date. |
| | Shares purchased pursuant to the Plan during the two Option Periods in the
year ended June 30, 2002 were 41,474 shares and 41,982
shares, respectively. The purchase price per share for the common stock was
$30.78 and $39.32 for the two Option Periods, respectively. |
| | Shares purchased pursuant to the Plan during the two Option Periods in the
period from September 13, 2000 to June 30, 2001 were 55,346 shares and
53,970 shares, respectively. The purchase price per share for the common
stock was $15.61 and $18.12 for the two Option Periods, respectively. The
foregoing numbers of shares and purchase prices per share have been adjusted
to reflect the two-for-one stock split of the Company’s common stock, which
was effective August 1, 2001. |
| | Plan Administration . The Plan is administered by the Compensation Committee
of the Company’s Board of Directors. The Company pays all expenses of the
Plan. |
| | Plan Termination . Although the Board of Directors of the Company has not
expressed any intent to do so, it has the right to terminate the Plan at any
time. In the event the Plan is terminated, the Board of Directors may elect
to restrict purchase of shares under the Plan during the Option Period in
which the Plan was terminated. If such right is exercised, all funds
contributed to the Plan that have not been used to purchase shares will be
returned without interest to the participants. |
| 2. | Accounting Policy |
| | The accompanying financial statements have been prepared on the accrual
basis of accounting. The preparation of financial statements in conformity
with generally accepted accounting principles requires the Plan’s management
to use estimates and |

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| | assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from these estimates. |
| --- | --- |
| 3. | Federal Income Taxes |
| | The Plan is intended to constitute an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code (the “Code”).
Issuance of shares under this Plan is not intended to result in taxable
income to participants in the Plan based on provisions of the Code.
Accordingly, the Plan is designed to be exempt from income taxes. The
Plan’s management believes that the Plan has been operated in accordance
with the Code and therefore no provision for income taxes has been reflected
in the accompanying financial statements. |

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link1 "Signatures"

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed by the undersigned hereunto duly authorized.

Date	9/30/02	H&R Block, Inc. 2000 Employee Stock Purchase Plan — By:	/s/ Mark A. Ernst Mark A. Ernst President and Chief Executive Officer H&R Block, Inc.

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