06. Dezember 2007 Fitch believes H&R Block has reduced financial flexibility as a result of various net worth constraints including an OTS requirement that the company maintain an adjusted tangible capital to adjusted assets ratio of 3% which, as of July 31, 2007, Fitch estimated to be negative 3%. In addition, H&R Block's credit facilities require that the company maintain at least $450 million of adjusted net worth at the quarter end for January 2008, and $650 million thereafter. H&R Block's adjusted net worth was $1.1 billion at July 31, 2007 but Fitch believes this figure has declined considerably due to expected write downs and net operating loss in the recently ended October quarter.
However, Fitch expects H&R Block will generate approximately $2 billion of free cash flow for the quarter ending April 30, 2008, reflecting the high seasonality of the tax season, which could serve to aid any potential liquidity or balance sheet issues.
--Refinancing of the $500 million bridge facility due December 2007; --Resolution of H&R Block's non-compliance with the OTS adjusted net worth ratio requirement. H&R Block Bank - Office of Thrift Supervision