Delaware | 27-3561876 | |
(State of incorporation) | (IRS employer identification no.) |
Large accelerated filer | o | Accelerated filer | x |
Non-accelerated filer | o | Smaller reporting company | o |
Emerging growth company | o | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | o |
Page | ||
Number | ||
July 31, 2018 | April 30, 2018 | July 31, 2017 | |||||||||
Assets | (unaudited) | (unaudited) | |||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 6,186 | $ | 18,522 | $ | 6,254 | |||||
Receivables: | |||||||||||
Accounts receivable | 41,224 | 52,517 | 43,225 | ||||||||
Notes receivable - current | 29,402 | 24,295 | 33,493 | ||||||||
Interest receivable, net of uncollectible amounts | 2,023 | 1,526 | 2,554 | ||||||||
Allowance for doubtful accounts - current | (11,917 | ) | (11,522 | ) | (8,745 | ) | |||||
Total current receivables, net | 60,732 | 66,816 | 70,527 | ||||||||
Assets held for sale | 5,231 | 8,941 | 14,678 | ||||||||
Income taxes receivable | 4,989 | — | 47 | ||||||||
Other current assets | 3,201 | 5,429 | 4,717 | ||||||||
Total current assets | 80,339 | 99,708 | 96,223 | ||||||||
Property, equipment, and software, net | 37,091 | 38,636 | 39,744 | ||||||||
Notes receivable, non-current | 9,882 | 6,554 | 18,202 | ||||||||
Allowance for doubtful accounts, non-current | (1,642 | ) | (965 | ) | (1,880 | ) | |||||
Total non-current notes receivables, net | 8,240 | 5,589 | 16,322 | ||||||||
Goodwill | 7,997 | 8,640 | 7,620 | ||||||||
Other intangible assets, net | 22,765 | 22,837 | 21,902 | ||||||||
Deferred income taxes | 1,272 | 343 | 173 | ||||||||
Other assets | 2,056 | 2,250 | 2,814 | ||||||||
Total assets | $ | 159,760 | $ | 178,003 | $ | 184,798 | |||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Current installments of long-term obligations | $ | 16,923 | $ | 18,113 | $ | 5,202 | |||||
Accounts payable and accrued expenses | 21,213 | 14,521 | 13,958 | ||||||||
Due to Area Developers (ADs) | 7,186 | 17,906 | 9,168 | ||||||||
Income taxes payable | — | 4,511 | 208 | ||||||||
Revolving credit facility | 12,590 | — | — | ||||||||
Deferred revenue - current | 4,018 | 2,021 | 2,854 | ||||||||
Total current liabilities | 61,930 | 57,072 | 31,390 | ||||||||
Long-term obligations, excluding current installments, net | 1,895 | 2,270 | 17,816 | ||||||||
Revolving credit facility | — | — | 20,611 | ||||||||
Deferred revenue and other - non-current | 7,870 | 4,692 | 5,466 | ||||||||
Deferred income tax liability | 919 | 1,397 | 3,585 | ||||||||
Long-term income taxes payable | 1,070 | 1,070 | — | ||||||||
Total liabilities | 73,684 | 66,501 | 78,868 | ||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Special voting preferred stock, $0.01 par value per share, 0, 10 and 10 shares authorized, issued and outstanding, respectively | — | — | — | ||||||||
Class A common stock, $0.01 par value per share, 21,200,000 shares authorized, 14,024,111, 12,823,020 and 12,682,550 shares issued and outstanding, respectively | 140 | 128 | 127 | ||||||||
Class B common stock, $0.01 par value per share, 1,000,000 shares authorized, 0, 200,000 and 200,000 shares issued and outstanding, respectively | — | 2 | 2 | ||||||||
Exchangeable shares, $0.01 par value per share, 1,000,000 shares authorized, 0, 1,000,000 and 1,000,000 shares issued and outstanding, respectively | — | 10 | 10 | ||||||||
Additional paid-in capital | 11,769 | 11,570 | 8,925 | ||||||||
Accumulated other comprehensive loss, net of taxes | (1,539 | ) | (1,347 | ) | (1,065 | ) | |||||
Retained earnings | 75,706 | 101,139 | 97,931 | ||||||||
Total stockholders’ equity | 86,076 | 111,502 | 105,930 | ||||||||
Total liabilities and stockholders’ equity | $ | 159,760 | $ | 178,003 | $ | 184,798 |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
Revenue: | ||||||||
Franchise fees | $ | 557 | $ | 71 | ||||
Area Developer fees | 1,028 | 1,068 | ||||||
Royalties and advertising fees | 1,562 | 1,689 | ||||||
Financial products | 579 | 582 | ||||||
Interest income | 1,656 | 2,297 | ||||||
Assisted tax preparation fees, net of discounts | 1,518 | 1,639 | ||||||
Electronic filing fees | 28 | — | ||||||
Other revenues | 235 | 842 | ||||||
Total revenues | 7,163 | 8,188 | ||||||
Operating expenses: | ||||||||
Employee compensation and benefits | 10,769 | 9,991 | ||||||
Selling, general, and administrative expenses | 11,304 | 9,202 | ||||||
Area Developer expense | 304 | 372 | ||||||
Advertising expense | 1,685 | 2,376 | ||||||
Depreciation, amortization, and impairment charges | 3,194 | 2,196 | ||||||
Restructuring expense | 8,266 | — | ||||||
Total operating expenses | 35,522 | 24,137 | ||||||
Loss from operations | (28,359 | ) | (15,949 | ) | ||||
Other income (expense): | ||||||||
Foreign currency transaction gain | 2 | 110 | ||||||
Interest expense | (530 | ) | (281 | ) | ||||
Loss before income taxes | (28,887 | ) | (16,120 | ) | ||||
Income tax benefit | (9,516 | ) | (6,362 | ) | ||||
Net loss | (19,371 | ) | (9,758 | ) | ||||
Net loss per share of common stock: | ||||||||
Basic and diluted | $ | (1.48 | ) | $ | (0.76 | ) | ||
Weighted-average shares outstanding basic and diluted | 13,078,091 | 12,882,550 | ||||||
Dividends declared per share of common stock and common stock equivalents | $ | 0.16 | $ | 0.16 |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
Net loss | $ | (19,371 | ) | $ | (9,758 | ) | ||
Unrealized gain (loss) on interest rate swap agreement, net of taxes of $17 and $0, respectively | 10 | (15 | ) | |||||
Foreign currency translation adjustment | (202 | ) | 1,034 | |||||
Comprehensive loss | $ | (19,563 | ) | $ | (8,739 | ) |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (19,371 | ) | $ | (9,758 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Provision for doubtful accounts | 1,939 | 1,408 | ||||||
Depreciation, amortization, and impairment charges | 3,194 | 2,196 | ||||||
Amortization of deferred financing costs | 102 | — | ||||||
Loss on disposal of fixed and intangible assets | 4,083 | — | ||||||
Stock-based compensation expense | 205 | 554 | ||||||
Gain (loss) on bargain purchases and sales of Company-owned offices | 55 | (536 | ) | |||||
Equity in loss of affiliate | (8 | ) | — | |||||
Deferred tax expense | 45 | (34 | ) | |||||
Changes in accrued income taxes | (9,489 | ) | (6,187 | ) | ||||
Changes in other assets and liabilities | 5,587 | (2,167 | ) | |||||
Net cash used in operating activities | (13,658 | ) | (14,524 | ) | ||||
Cash flows from investing activities: | ||||||||
Issuance of operating loans to franchisees and ADs | (8,850 | ) | (11,275 | ) | ||||
Payments received on operating loans to franchisees | 1,390 | 1,545 | ||||||
Purchases of AD rights, Company-owned offices and acquired customer lists | (58 | ) | (352 | ) | ||||
Proceeds from sale of Company-owned offices and AD rights | — | 76 | ||||||
Purchases of property, equipment and software | (769 | ) | (1,110 | ) | ||||
Net cash used in investing activities | (8,287 | ) | (11,116 | ) | ||||
Cash flows from financing activities: | ||||||||
Dividends paid | — | (2,339 | ) | |||||
Repayment of long-term obligations | (2,901 | ) | (3,283 | ) | ||||
Borrowings under revolving credit facility | 12,717 | 20,706 | ||||||
Repayments under revolving credit facility | (127 | ) | (95 | ) | ||||
Cash paid for taxes on exercises/vesting of stock-based compensation | (6 | ) | — | |||||
Net cash provided by financing activities | 9,683 | 14,989 | ||||||
Effect of exchange rate changes on cash, net | (74 | ) | 478 | |||||
Net decrease in cash and cash equivalents | (12,336 | ) | (10,173 | ) | ||||
Cash and cash equivalents at beginning of period | 18,522 | 16,427 | ||||||
Cash and cash equivalents at end of period | $ | 6,186 | $ | 6,254 |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest, net of capitalized interest of $3 and $145, respectively | $ | 522 | $ | 281 | ||||
Cash paid for taxes, net of refunds | (16 | ) | (137 | ) | ||||
Accrued capitalized software costs included in accounts payable | 117 | 54 | ||||||
During the three months ended July 31, 2018 and 2017, the Company acquired certain assets from ADs, franchisees, and third parties as follows: | ||||||||
Fair value of assets purchased | $ | 1,840 | $ | 3,664 | ||||
Receivables applied, net of amounts written off, due ADs and related deferred revenue | (289 | ) | (2,714 | ) | ||||
Bargain purchase gains | (191 | ) | (322 | ) | ||||
Long-term obligations and accounts payable issued to seller | (1,302 | ) | (276 | ) | ||||
Cash paid to ADs, franchisees and third parties | $ | 58 | $ | 352 | ||||
During the three months ended July 31, 2018 and 2017, the Company sold certain assets to ADs and franchisees as follows: | ||||||||
Book value of assets sold | $ | 1,163 | $ | 24 | ||||
Gain on sale - revenue deferred | — | 18 | ||||||
Gain (loss) on sale - gain (loss) recognized | (72 | ) | 37 | |||||
Notes received | (312 | ) | (3 | ) | ||||
Restructuring | (779 | ) | — | |||||
Cash received from ADs and franchisees | $ | — | $ | 76 |
• | Assisted tax preparation fees, net of discounts, which are recorded at the time the return is filed. The related discounts are recorded as reductions to revenues. |
• | Financial products, which are recorded at the time the return is filed. A change to certain financial products offered in the third quarter will be disclosed at that time. |
• | Royalties and advertising fees, which are based on a percent of the franchisees’ sales are recognized at the time the underlying sales occur. The Company has elected to use the right to invoice practical expedient for recognition of minimum royalties. |
• | Interest income on notes receivable, which is recognized based on the outstanding principal note balance unless it is put on non-accrual status. Interest income on notes receivable that are placed on a non-accrual basis is recognized when cash is received. Interest income on accounts receivable is recognized based on the outstanding receivable balance over 30 days old, net of an allowance. |
• | Gains on sales of Company-owned offices, which are recognized when cash is received. Losses on sales of Company-owned offices are recognized immediately. |
Condensed Consolidated Balance Sheet | As Reported | ASC 606 Adjustment | Balances Without Adoption of ASC 606 | |||||||||
(In thousands) | ||||||||||||
Notes receivable, current | $ | 29,402 | $ | 985 | $ | 28,417 | ||||||
Allowance for doubtful accounts - current | (11,917 | ) | 161 | (12,078 | ) | |||||||
Income taxes receivable | 4,989 | (321 | ) | 5,310 | ||||||||
Notes receivable, non-current | 9,882 | 421 | 9,461 | |||||||||
Other intangible assets, net | 22,765 | (169 | ) | 22,934 | ||||||||
Deferred income taxes | 1,272 | 936 | 336 | |||||||||
Total assets | 159,760 | 2,011 | 157,749 | |||||||||
Deferred revenue, current | 4,018 | 2,163 | 1,855 | |||||||||
Deferred revenue and other, non-current | 7,870 | 3,418 | 4,452 | |||||||||
Deferred income tax liability | 919 | (456 | ) | 1,375 | ||||||||
Total liabilities | 73,684 | 5,125 | 68,559 | |||||||||
Retained earnings | 75,706 | (3,114 | ) | 78,820 | ||||||||
Total stockholders' equity | 86,076 | (3,114 | ) | 89,190 | ||||||||
Total liabilities and stockholders’ equity | $ | 159,760 | $ | 2,011 | $ | 157,749 |
Condensed Consolidated Statement of Operations | As Reported | ASC 606 Adjustment | Balances Without Adoption of ASC 606 | |||||||||
(In thousands) | ||||||||||||
Franchise fees | $ | 557 | $ | 461 | $ | 96 | ||||||
Area Developer fees | 1,028 | 422 | 606 | |||||||||
Electronic filing fees | 28 | (112 | ) | 140 | ||||||||
Other revenues | 235 | 130 | 105 | |||||||||
Total revenues | 7,163 | 903 | 6,260 | |||||||||
Selling, general, and administrative expenses | 11,304 | (111 | ) | 11,415 | ||||||||
Total operating expenses | 35,522 | (112 | ) | 35,634 | ||||||||
Loss from operations | (28,359 | ) | 1,015 | (29,374 | ) | |||||||
Loss before income taxes | (28,887 | ) | 1,015 | (29,902 | ) | |||||||
Income tax benefit | (9,516 | ) | 334 | (9,850 | ) | |||||||
Net loss | $ | (19,371 | ) | $ | 681 | $ | (20,052 | ) |
July 31, 2018 | April 30, 2018 | |||||||
(In thousands) | ||||||||
Notes receivable (1) | $ | 39,284 | $ | 30,849 | ||||
Deferred revenue (2) | 10,938 | 5,667 |
Three Months Ended | ||||
July 31, 2018 | ||||
(In thousands) | ||||
Deferred franchise and AD fees at beginning of period | $ | 5,667 | ||
ASC 606 deferred franchise and AD fees adoption | 6,940 | |||
Revenue recognized during the period | (1,584 | ) | ||
New deferrals (terminations) of franchise and AD fees | (85 | ) | ||
Deferred franchise and AD fees at end of period | $ | 10,938 |
Estimate for Fiscal Year | ||||
(In thousands) | ||||
2019 (a) | $ | 2,871 | ||
2020 | 3,392 | |||
2021 | 2,430 | |||
2022 | 1,401 | |||
2023 | 610 | |||
Thereafter | 234 | |||
Total | $ | 10,938 |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Balance at beginning of period | $ | 12,487 | $ | 12,020 | ||||
Provision for doubtful accounts | 1,939 | 1,408 | ||||||
Write-offs | (840 | ) | (2,950 | ) | ||||
Foreign currency adjustment | (27 | ) | 147 | |||||
Balance at end of period | $ | 13,559 | $ | 10,625 |
July 31, 2018 | April 30, 2018 | July 31, 2017 | ||||||||||
(In thousands) | ||||||||||||
Impaired: | ||||||||||||
Notes and interest receivable, net of unrecognized revenue | $ | 11,697 | $ | 11,654 | $ | 12,397 | ||||||
Accounts receivable | 13,121 | 13,891 | 10,146 | |||||||||
Less amounts due to ADs and franchisees | (1,687 | ) | (1,907 | ) | (1,312 | ) | ||||||
Amounts receivable less amounts due to ADs and franchisees | $ | 23,131 | $ | 23,638 | $ | 21,231 | ||||||
Allowance for doubtful accounts for impaired notes and accounts receivable | $ | 9,619 | $ | 10,322 | $ | 7,973 | ||||||
Non-impaired: | ||||||||||||
Notes and interest receivable, net of unrecognized revenue | $ | 29,610 | $ | 20,721 | $ | 41,852 | ||||||
Accounts receivable | 28,103 | 38,626 | 33,079 | |||||||||
Less amounts due to ADs and franchisees | (5,701 | ) | (11,722 | ) | (8,239 | ) | ||||||
Amounts receivable less amounts due to ADs and franchisees | $ | 52,012 | $ | 47,625 | $ | 66,692 | ||||||
Allowance for doubtful accounts for non-impaired notes and accounts receivable | $ | 3,940 | $ | 2,165 | $ | 2,652 | ||||||
Total: | ||||||||||||
Notes and interest receivable, net of unrecognized revenue | $ | 41,307 | $ | 32,375 | $ | 54,249 | ||||||
Accounts receivable | 41,224 | 52,517 | 43,225 | |||||||||
Less amounts due to ADs and franchisees | (7,388 | ) | (13,629 | ) | (9,551 | ) | ||||||
Amounts receivable less amounts due to ADs and franchisees | $ | 75,143 | $ | 71,263 | $ | 87,923 | ||||||
Total allowance for doubtful accounts | $ | 13,559 | $ | 12,487 | $ | 10,625 |
Past due | Current | Interest receivable, net | Total receivables | |||||||||||||
(In thousands) | ||||||||||||||||
Accounts receivable | $ | 36,310 | $ | 4,914 | $ | — | $ | 41,224 | ||||||||
Notes and interest receivable, net (1) | 13,367 | 25,917 | 2,023 | 41,307 | ||||||||||||
Total accounts, notes and interest receivable | $ | 49,677 | $ | 30,831 | $ | 2,023 | $ | 82,531 |
Expense | Cash | Accrued Expenses | Non-cash | Total Expense | ||||||||||||
(In thousands) | ||||||||||||||||
Property and intangible impairments and exit costs | 193 | 3,859 | 4,214 | 8,266 | ||||||||||||
Total | $ | 193 | $ | 3,859 | $ | 4,214 | $ | 8,266 |
Contract termination costs - maintenance | Property and intangible impairments and exit costs | Total accrued expenses | ||||||||||
(In thousands) | ||||||||||||
Balance at beginning of period | $ | 1,359 | $ | — | $ | 1,359 | ||||||
Additions accrued against the liability | — | 3,859 | 3,859 | |||||||||
Cash payments | — | — | — | |||||||||
Balance at end of period | $ | 1,359 | $ | 3,859 | $ | 5,218 |
July 31, 2018 | July 31, 2017 | |||||||
(In thousands) | ||||||||
Balance at beginning of period | $ | 8,640 | $ | 8,576 | ||||
Acquisitions of assets from franchisees and others | — | 22 | ||||||
Disposals and foreign currency changes, net | (643 | ) | 54 | |||||
Purchase price reallocation | — | (1,032 | ) | |||||
Balance at end of period | $ | 7,997 | $ | 7,620 |
July 31, 2018 | ||||||||||||||
Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
(In thousands) | ||||||||||||||
Customer lists acquired from unrelated third parties | 5 years | $ | 3,187 | $ | (1,700 | ) | $ | 1,487 | ||||||
Tradenames | 3 years | 539 | (252 | ) | 287 | |||||||||
Non-compete agreements | 2 years | 241 | (175 | ) | 66 | |||||||||
Assets acquired from franchisees: | ||||||||||||||
Customer lists | 4 years | 1,459 | (1,220 | ) | 239 | |||||||||
Reacquired rights | 2 years | 1,157 | (1,122 | ) | 35 | |||||||||
AD rights | 9 years | 32,002 | (11,351 | ) | 20,651 | |||||||||
Total intangible assets | $ | 38,585 | $ | (15,820 | ) | $ | 22,765 |
April 30, 2018 | ||||||||||||||
Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
(In thousands) | ||||||||||||||
Customer lists acquired from unrelated third parties | 5 years | $ | 3,187 | $ | (1,555 | ) | $ | 1,632 | ||||||
Tradenames | 3 years | 431 | (172 | ) | 259 | |||||||||
Non-compete agreements | 2 years | 241 | (145 | ) | 96 | |||||||||
Assets acquired from franchisees: | ||||||||||||||
Customer lists | 4 years | 1,842 | (1,427 | ) | 415 | |||||||||
Reacquired rights | 2 years | 1,436 | (1,393 | ) | 43 | |||||||||
AD rights | 9 years | 30,907 | (10,515 | ) | 20,392 | |||||||||
Total intangible assets | $ | 38,044 | $ | (15,207 | ) | $ | 22,837 |
July 31, 2017 | ||||||||||||||
Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
(In thousands) | ||||||||||||||
Customer lists acquired from unrelated third parties | 5 years | $ | 3,188 | $ | (1,058 | ) | $ | 2,130 | ||||||
Tradenames | 3 years | 431 | (64 | ) | 367 | |||||||||
Non-compete agreements | 2 years | 241 | (55 | ) | 186 | |||||||||
Assets acquired from franchisees: | ||||||||||||||
Customer lists | 4 years | 1,266 | (1,000 | ) | 266 | |||||||||
Reacquired rights | 2 years | 956 | (934 | ) | 22 | |||||||||
AD rights | 10 years | 27,072 | (8,141 | ) | 18,931 | |||||||||
Total intangible assets | $ | 33,154 | $ | (11,252 | ) | $ | 21,902 |
Three Months Ended July 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Balance at beginning of period | $ | 8,941 | $ | 11,989 | |||
Reacquired and acquired from third parties | 37 | 2,979 | |||||
Sold or terminated, impairments and other | (3,747 | ) | (290 | ) | |||
Balance at end of period | $ | 5,231 | $ | 14,678 |
July 31, 2018 | April 30, 2018 | July 31, 2017 | ||||||||||
(In thousands) | ||||||||||||
Credit Facility: | ||||||||||||
Revolver | $ | 12,590 | $ | — | $ | 20,611 | ||||||
Term loan, net of debt issuance costs | 14,334 | 14,855 | 16,409 | |||||||||
Total credit facility | 26,924 | 14,855 | 37,020 | |||||||||
Long-Term Obligations | ||||||||||||
Term loan, net of debt issuance costs | 14,334 | 14,855 | 16,409 | |||||||||
Due former ADs, franchisees and third parties | 2,477 | 3,490 | 4,479 | |||||||||
Mortgages | 2,007 | 2,038 | 2,130 | |||||||||
18,818 | 20,383 | 23,018 | ||||||||||
Less: current installments | (16,923 | ) | (18,113 | ) | (5,202 | ) | ||||||
Long-term obligations, excluding current installments, net | $ | 1,895 | $ | 2,270 | $ | 17,816 |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
(In thousands, except for share amounts) | ||||||||
Class A common stock issued from the vesting of restricted stock and as director compensation | 1,091 | — | ||||||
Class B common stock converted to Class A common stock | 200,000 | — | ||||||
Special voting preferred stock converted to Class A common stock | 1,000,000 | — | ||||||
Stock-based compensation expense | $ | 205 | $ | 554 | ||||
Dividends declared | $ | 2,267 | $ | 2,339 |
July 31, 2018 | April 30, 2018 | July 31, 2017 | ||||||||||
(In thousands) | ||||||||||||
Foreign currency adjustment | $ | (1,583 | ) | $ | (1,381 | ) | $ | (1,026 | ) | |||
Unrealized gain on interest rate swap agreement, net of taxes | 44 | 34 | (39 | ) | ||||||||
Total accumulated other comprehensive loss | $ | (1,539 | ) | $ | (1,347 | ) | $ | (1,065 | ) |
Three Months Ended July 31, 2018 | Three Months Ended July 31, 2017 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Common Stock | Common Stock | Common Stock | Common Stock | |||||||||||||
(In thousands, except for share and per share amounts) | ||||||||||||||||
Basic and diluted net loss per share: | ||||||||||||||||
Numerator | ||||||||||||||||
Allocation of undistributed losses | $ | (19,081 | ) | $ | (290 | ) | $ | (9,607 | ) | $ | (151 | ) | ||||
Denominator | ||||||||||||||||
Weighted-average common stock outstanding | 12,882,439 | 195,652 | 12,682,550 | 200,000 | ||||||||||||
Basic and diluted net loss per share | $ | (1.48 | ) | $ | (1.48 | ) | $ | (0.76 | ) | $ | (0.76 | ) | ||||
Number of options | Weighted average exercise price | ||||||
Balance at beginning of period | 472,503 | $ | 17.41 | ||||
Granted | 572,569 | 9.78 | |||||
Expired or forfeited | (297,586 | ) | 18.61 | ||||
Balance at end of period | 747,486 | $ | 11.09 |
Nonvested options | Weighted average exercise price | ||||||
Balance at beginning of period | 267,433 | $ | 14.27 | ||||
Granted | 572,569 | 9.78 | |||||
Vested | (50,000 | ) | 8.30 | ||||
Forfeited | (197,088 | ) | 14.30 | ||||
Balance at end of period | 592,914 | $ | 10.04 |
Options Outstanding | Options Exercisable | |||||||||||||||
Range of exercise prices | Number of shares outstanding | Weighted average exercise price | Weighted average remaining contractual life (in years) | Number of options exercisable | Weighted average exercise price | |||||||||||
$0.00 - $10.89 | 572,569 | $ | 9.78 | 6.7 | 50,000 | $ | 8.30 | |||||||||
$10.90 - $16.38 | 124,738 | 11.72 | 3.8 | 54,393 | 12.79 | |||||||||||
$16.39 - $26.17 | 37,471 | 21.44 | 1.5 | 37,471 | 21.44 | |||||||||||
$26.18 - $33.38 | 12,708 | 33.38 | 1.1 | 12,708 | 33.38 | |||||||||||
747,486 | $ | 11.09 | 154,572 | $ | 15.13 |
Number of Restricted stock units | Weighted average fair value at grant date | ||||||
Balance at beginning of period | 127,030 | $ | 12.48 | ||||
Granted | 112,923 | 9.86 | |||||
Vested | (1,690 | ) | 14.30 | ||||
Forfeited | (68,096 | ) | 12.43 | ||||
Balance at end of period | 170,167 | $ | 10.74 |
• | Level 1 — Quoted prices for identical assets and liabilities in active markets. |
• | Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-based valuations in which all significant inputs are observable in the market. |
• | Level 3 — Unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions. |
July 31, 2018 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Recurring assets: | ||||||||||||||||
Interest rate swap agreement | $ | 61 | $ | — | $ | 61 | $ | — | ||||||||
Total recurring assets | 61 | — | 61 | — | ||||||||||||
Nonrecurring assets: | ||||||||||||||||
Impaired accounts and notes receivable, net of unrecognized revenue and allowance | 15,199 | — | — | 15,199 | ||||||||||||
Total nonrecurring assets | 15,199 | — | — | 15,199 | ||||||||||||
Total recurring and nonrecurring assets | $ | 15,260 | $ | — | $ | 61 | $ | 15,199 | ||||||||
Liabilities: | ||||||||||||||||
Recurring liabilities: | ||||||||||||||||
Contingent consideration included in obligations due to former ADs, franchisees and others | $ | 1,432 | $ | — | $ | — | $ | 1,432 | ||||||||
Total recurring liabilities | $ | 1,432 | $ | — | $ | — | $ | 1,432 |
April 30, 2018 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Recurring assets: | ||||||||||||||||
Cash equivalents | $ | 12,056 | $ | 12,056 | $ | — | $ | — | ||||||||
Interest rate swap agreement | 57 | — | 57 | — | ||||||||||||
Total recurring assets | 12,113 | 12,056 | 57 | — | ||||||||||||
Nonrecurring assets: | ||||||||||||||||
Impaired accounts and notes receivable, net of unrecognized revenue and allowance | 15,223 | — | — | 15,223 | ||||||||||||
Impaired goodwill | 109 | — | — | 109 | ||||||||||||
Impaired customer lists | 4 | — | — | 4 | ||||||||||||
Assets held for sale | 8,941 | — | — | 8,941 | ||||||||||||
Total nonrecurring assets | 24,277 | — | — | 24,277 | ||||||||||||
Total recurring and nonrecurring assets | $ | 36,390 | $ | 12,056 | $ | 57 | $ | 24,277 | ||||||||
Liabilities: | ||||||||||||||||
Recurring liabilities: | ||||||||||||||||
Contingent consideration included in obligations due to former ADs, franchisees and others | $ | 1,545 | $ | — | $ | — | $ | 1,545 | ||||||||
Total recurring liabilities | $ | 1,545 | $ | — | $ | — | $ | 1,545 |
July 31, 2017 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Nonrecurring assets: | ||||||||||||||||
Impaired accounts and notes receivable, net of unrecognized revenue and allowance | $ | 14,570 | $ | — | $ | — | $ | 14,570 | ||||||||
Total recurring and nonrecurring assets | $ | 14,570 | $ | — | $ | — | $ | 14,570 | ||||||||
Liabilities: | 9539 | |||||||||||||||
Recurring liabilities: | ||||||||||||||||
Interest rate swap agreement | $ | 39 | $ | — | $ | 39 | $ | — | ||||||||
Contingent consideration included in obligations due to former ADs, franchisees and others | 4,186 | — | — | 4,186 | ||||||||||||
Total recurring liabilities | $ | 4,225 | $ | — | $ | 39 | $ | 4,186 |
• | our inability to grow on a sustainable basis; |
• | the seasonality of our business; |
• | departures of key executives or directors; |
• | our ability to attract additional talent to our senior management team; |
• | our delisting determination by Nasdaq; |
• | our inability to secure reliable sources of the tax settlement products we make available to our customers; |
• | government regulation and oversight, including the regulation of tax preparers or settlement products such as refund transfers and loan settlement products; |
• | government initiatives that simplify tax return preparation, improve the timing and efficiency of processing tax returns, limit payments to tax preparers, or decrease the number of tax returns filed or the size of the refunds; |
• | government initiatives to pre-populate income tax returns; |
• | the effect of regulation of the products and services that we offer, including changes in laws and regulations; |
• | the possible characterization of refund transfers as a form of loan or extension of credit; |
• | changes in the tax settlement products offered to our customers that make our services less attractive to customers or more costly to us; |
• | our ability to maintain relationships with our tax settlement product service providers; |
• | any potential non-compliance, fraud or other misconduct by our franchisees or employees; |
• | our ability and the ability of our franchisees to comply with legal and regulatory requirements; |
• | failures by our franchisees and their employees to comply with their contractual obligations to us and with laws and regulations, to the extent these failures affect our reputation or subject us to legal risk; |
• | the ability of our franchisees to open new territories and operate them successfully; |
• | the ability of our franchisees to generate sufficient revenue to repay their indebtedness to us; |
• | our ability to manage Company-owned offices; |
• | our exposure to litigation; |
• | our ability and our franchisees' ability to protect customers' personal information, including from a cyber-security incident; |
• | the impact of identity-theft concerns on customer attitudes toward our services; |
• | our ability to access the credit markets and satisfy our covenants to lenders; |
• | challenges in deploying accurate tax software in a timely way each tax season; |
• | the impact of the Tax Cuts and Job Act (the “Tax Act”), including, but not limited to, the effect of the lower corporate tax rate, including on the valuation of our tax assets and liabilities; |
• | any future refinements to our preliminary analysis of the impact of the Tax Act; |
• | changes in the effect of the Tax Act due to issuance of interpretive regulatory guidance or enactment of corrective or supplement legislation; |
• | delays in the commencement of the tax season attributable to Congressional action affecting tax matters and the resulting inability of federal and state tax agencies to accept tax returns on a timely basis, or other changes that have the effect of delaying the tax refund cycle; |
• | competition in the tax preparation market; |
• | the effect of federal and state legislation that affects the demand for paid tax preparation, such as the Affordable Care Act and potential immigration reform; |
• | our reliance on technology systems and electronic communications; |
• | our ability to effectively deploy software in a timely manner and with all the features our customers require; |
• | the impact of any acquisitions or dispositions, including our ability to integrate acquisitions and capitalize on their anticipated synergies; and |
• | other factors, including the risk factors discussed in our latest annual report filed with the SEC. |
• | Franchise Fees: Our standard franchise fee per territory is $40,000, and we offer our franchisees flexible structures and financing options for franchise fees. Franchise fee revenue is recognized when our obligations to prepare the franchisee for operation are substantially complete. |
• | Area Developer ("AD") Fees: Our fees for AD areas vary based on our assessment of the revenue potential of each AD area and also depend on the performance of any existing franchisees within the AD area being sold. Our ADs generally receive 50% of franchise fees, royalties, and a portion of the interest income derived from territories located in their area. AD fees received are recognized as revenue on a straight-line basis over the initial contract term of each AD agreement. |
• | Royalties: Our franchise agreements require franchisees to pay us a base royalty typically equal to 14% of the franchisees' tax preparation revenue, generally subject to certain specified minimums. |
• | Advertising Fees: Our franchise agreements require all franchisees to pay us an advertising fee of 5% of the franchisees' tax preparation revenue, which we use primarily to fund collective advertising efforts. |
• | Financial Products: We offer two types of tax settlement financial products: refund transfer products, which involve providing a means by which a customer may receive his or her refund more quickly and conveniently, and refund-based loans. We earn fees from the arranging of the sale of these financial products. |
• | Interest Income: We earn interest income from our franchisees and ADs related to both indebtedness for the unpaid portions of their franchise and AD fees, and for other loans we extend to our franchisees related to the operation of their territories. We also earn interest on our accounts receivable. |
• | Assisted Tax Preparation Fees: We earn tax preparation fees, net of discounts, directly from the operation of Company-owned offices in the U.S. and Canada. |
• | Electronic Filing Fee: We earn fees for the electronic filing of federal returns prepared in U.S. franchisee owned offices. Each location determines if they want to charge an electronic filing fee. |
Three Months Ended July 31, | |||||||||||||||
Change | |||||||||||||||
2018 | 2017 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Total revenues | $ | 7,163 | $ | 8,188 | $ | (1,025 | ) | (13 | )% | ||||||
Loss from operations | (28,359 | ) | (15,949 | ) | (12,410 | ) | 78 | % | |||||||
Net loss | (19,371 | ) | (9,758 | ) | (9,613 | ) | 99 | % |
Three Months Ended July 31, | |||||||||||||||
Change | |||||||||||||||
2018 | 2017 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Franchise fees | $ | 557 | $ | 71 | $ | 486 | 685 | % | |||||||
Area Developer fees | 1,028 | 1,068 | (40 | ) | (4 | )% | |||||||||
Royalties and advertising fees | 1,562 | 1,689 | (127 | ) | (8 | )% | |||||||||
Financial products | 579 | 582 | (3 | ) | (1 | )% | |||||||||
Interest income | 1,656 | 2,297 | (641 | ) | (28 | )% | |||||||||
Assisted tax preparation fees, net of discounts | 1,518 | 1,639 | (121 | ) | (7 | )% | |||||||||
Electronic filing fees | 28 | — | 28 | — | % | ||||||||||
Other revenues | 235 | 842 | (607 | ) | (72 | )% | |||||||||
Total revenues | $ | 7,163 | $ | 8,188 | $ | (1,025 | ) | (13 | )% |
• | a decrease of $0.6 million in interest income related to a reduction in working capital loans to franchisees as well as a decrease in the loans due from reacquired ADs and franchisees; and |
• | a decrease of $0.6 million in other revenues primarily related to gains recorded in 2018 on AD and franchisee acquisitions where the consideration was less than the value of the acquired asset; and |
• | an increase of $0.5 million in franchisee fees primarily due to the implementation of ASC 606. |
Three Months Ended July 31, | |||||||||||||||
Change | |||||||||||||||
2018 | 2017 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Employee compensation and benefits | $ | 10,769 | $ | 9,991 | $ | 778 | 8 | % | |||||||
Selling, general, and administrative expenses | 11,304 | 9,202 | 2,102 | 23 | % | ||||||||||
Area Developer expense | 304 | 372 | (68 | ) | (18 | )% | |||||||||
Advertising expense | 1,685 | 2,376 | (691 | ) | (29 | )% | |||||||||
Depreciation, amortization, and impairment charges | 3,194 | 2,196 | 998 | 45 | % | ||||||||||
Restructuring expense | 8,266 | — | 8,266 | — | % | ||||||||||
Total operating expenses | $ | 35,522 | $ | 24,137 | $ | 11,385 | 47 | % |
• | a $8.3 million increase in restructuring expenses related to Company-store exit costs; and |
• | a $2.1 million increase in selling, general and administrative expenses primarily related to audit and legal costs for the Company completing its required filings with the SEC for fiscal 2018 and 2019; and |
• | a $0.8 million increase in employee compensation and benefits primarily resulting from executive severance; and |
• | a $1.0 million increase in depreciation, amortization, and impairment expense mainly due to assets put into service. |
• | a decrease of $0.7 million in advertising expenses due to the timing of spending. |
• | We must satisfy a "leverage ratio" test that is based on our outstanding indebtedness at the end of each fiscal quarter. |
• | We must satisfy a "fixed charge coverage ratio" test at the end of each fiscal quarter. |
• | We must reduce the outstanding balance under our revolving loan to zero for a period of at least 45 consecutive days each fiscal year. |
• | We must also maintain a minimum net worth requirement, measured at April 30 of each year. |
(In millions) | At July 31, 2018 | |||||
Loans to franchisees and ADs for working capital and equipment loans | $ | 16.7 | ||||
Unpaid purchase price of franchise territories, royalties and other amounts, gross | 75.8 | |||||
Unrecognized revenue | (10.0 | ) | ||||
Unpaid purchase price of franchise territories, royalties and other amounts, net | 65.8 | |||||
Book balance of amounts due | 82.5 | |||||
AD share of royalties and franchise fees | (7.2 | ) | ||||
Exposure to potential credit loss | $ | 75.3 |
• | the delay by the IRS to issue refunds to taxpayers who claim the Earned Income Tax Credit or the Child Tax Credit; |
• | the extent to which we extend operating financing to our franchisees and ADs and the extent that our franchisees and ADs repay their notes to us; |
• | the extent and timing of capital expenditures; |
• | the cash flow effect of stock option exercises and the extent to which we engage in stock repurchases; |
• | our ability to generate fees and other income related to tax settlement products in light of regulatory pressures on us and our business partners; |
• | the extent to which we repurchase AD areas, which will involve the use of cash in the short-term, but improve cash receipts in future periods from what would have been the AD's share of royalties and franchise fees; |
• | the extent to which we repurchase certain assets from franchisees and third parties and our ability to operate these assets profitably; |
• | the extent, if any, to which our Board of Directors elects to continue to declare cash dividends on our common stock; |
• | the extent and timing of payments related to litigation settlements; and |
• | our ability to enter into a new credit facility prior to the maturity of our current facility on April 30, 2019. |
• | Executive severance and related costs, including stock-based compensation: We exclude from our non-GAAP financial measures cash and non-cash stock-based compensation, related third-party expenses and perquisites associated with the separation of employment with executives of the Company. |
• | Compliance Task Force and related costs: We exclude from our non-GAAP financial measures third-party expenses we incur related to our Compliance Task Force. These expenses include professional and legal fees. |
• | Restructuring expense: We exclude from our non-GAAP financial measures cash and non-cash expenses of restructuring activities. These expenses include property and intangible impairments and exit costs. |
• | Executive recruitment costs: We exclude from our non-GAAP financial measures one-time costs incurred to recruit and hire new executives. |
• | Shareholder litigation costs: We exclude from our non-GAAP financial measures one-time costs incurred related to shareholder litigation. |
Three Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Net loss - as reported | $ | (19,371 | ) | $ | (9,758 | ) | ||
Add back: | ||||||||
Interest expense | 530 | 281 | ||||||
Income tax benefit | (9,516 | ) | (6,362 | ) | ||||
Depreciation, amortization, and impairment charges: | ||||||||
As reported | 3,194 | 2,196 | ||||||
Total Adjustments | (5,792 | ) | (3,885 | ) | ||||
EBITDA | $ | (25,163 | ) | $ | (13,643 | ) |
Three Months Ended July 31, 2018 | |||||||||||||||||||||
(In thousands except per share data) | |||||||||||||||||||||
Revenues | Operating Expenses | Loss from Operations | EBITDA | Pre-tax Loss | Net Loss | Basic and Diluted EPS | |||||||||||||||
As Reported | $ | 7,163 | $ | 35,522 | $ | (28,359 | ) | $ | (25,163 | ) | $ | (28,887 | ) | $ | (19,371 | ) | $ | (1.48 | ) | ||
Adjustments: (1) | |||||||||||||||||||||
Executive severance and related costs including stock-based compensation | — | (933 | ) | 933 | 933 | 933 | 681 | 0.05 | |||||||||||||
Executive recruitment costs | — | (725 | ) | 725 | 725 | 725 | 529 | 0.04 | |||||||||||||
Shareholder litigation costs | — | (55 | ) | 55 | 55 | 55 | 40 | — | |||||||||||||
Restructuring expense | — | (8,266 | ) | 8,266 | 8,266 | 8,266 | 6,034 | 0.46 | |||||||||||||
Total adjustments | — | (9,979 | ) | 9,979 | 9,979 | 9,979 | 7,284 | 0.55 | |||||||||||||
Non-GAAP | $ | 7,163 | $ | 25,543 | $ | (18,380 | ) | $ | (15,184 | ) | $ | (18,908 | ) | $ | (12,087 | ) | $ | (0.93 | ) | ||
Three Months Ended July 31, 2017 | |||||||||||||||||||||
(In thousands except per share data) | |||||||||||||||||||||
Revenues | Operating Expenses | Loss from Operations | EBITDA | Pre-tax Loss | Net Loss | Basic and Diluted EPS | |||||||||||||||
As Reported | $ | 8,188 | $ | 24,137 | $ | (15,949 | ) | $ | (13,643 | ) | $ | (16,120 | ) | $ | (9,758 | ) | $ | (0.76 | ) | ||
Adjustments: (1) | |||||||||||||||||||||
Executive recruiting cost | — | (325 | ) | 325 | 325 | 325 | 197 | 0.02 | |||||||||||||
Compliance Task Force and related costs | — | (172 | ) | 172 | 172 | 172 | 104 | 0.01 | |||||||||||||
Total adjustments | — | (497 | ) | 497 | 497 | 497 | 301 | 0.03 | |||||||||||||
Non-GAAP | $ | 8,188 | $ | 23,640 | $ | (15,452 | ) | $ | (13,146 | ) | $ | (15,623 | ) | $ | (9,457 | ) | $ | (0.73 | ) |
• | On July 24, 2018, the Company's former President and Chief Executive Officer and Chairman of the Board of Directors, entered into a stock purchase agreement to sell all of the shares of the Company’s Class A common stock and Class B common stock owned directly and indirectly by him. As a result of this transaction, Mr. Hewitt resigned as Chairman of the Board. |
• | In addition to the resignation of Mr. Hewitt as Chairman of the Board, all remaining Class B directors previously appointed by our former Chairman tendered their resignation to the Board. |
• | In February 2018, the Board of Directors appointed Nicole Ossenfort as the Company's new President and Chief Executive Officer. Ms. Ossenfort has brought expertise and leadership to the Company and has helped establish open lines of communication with her internal business unit leaders and the finance and accounting team. |
• | In June 2018, the Company hired a new Chief Financial Officer, Michael S. Piper, who has brought expertise and leadership to the Company and our finance and accounting team. |
• | Most recently, the Company elected five new Class A directors through written consent executed by stockholders representing a majority of the outstanding shares of the Company’s Class A common stock that are “independent” for purposes of the Nasdaq Listing Rules. |
• | The Board of Directors has elected Andrew M. Laurence as the Chairman of our Board of Directors. |
• | The Company hired Ernst & Young to conduct a review of its corporate governance practices. |
Exhibit Number | Exhibit Description | Filed Herewith | Incorporated by Reference | |||
X | ||||||
X | ||||||
X | ||||||
X | ||||||
X | ||||||
X | ||||||
X | ||||||
X | ||||||
X | ||||||
101.INS | XBRL Instance Document | X | ||||
101.SCH | XBRL Taxonomy Extension Schema | X | ||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | ||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X | ||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X |
Liberty Tax, Inc. (Registrant) | |||
November 30, 2018 | By: | /s/ Nicole Ossenfort | |
Nicole Ossenfort Chief Executive Officer (Principal Executive Officer) | |||
November 30, 2018 | By: | /s/ Michael S. Piper | |
Michael S. Piper Chief Financial Officer (Principal Financial Officer) | |||
November 30, 2018 | By: | /s/ Nicole Ossenfort |
Nicole Ossenfort | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
November 30, 2018 | By: | /s/ Michael S. Piper |
Michael S. Piper | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
November 30, 2018 | By: | /s/ Nicole Ossenfort |
Nicole Ossenfort | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
November 30, 2018 | By: | /s/ Michael S. Piper |
Michael S. Piper | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jul. 31, 2018 |
Nov. 27, 2018 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | Liberty Tax, Inc. | |
Entity Central Index Key | 0001528930 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --04-30 | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Common Class A [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 14,036,684 | |
Common Class B [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Net loss | $ 19,371 | $ 9,758 |
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax, Portion Attributable to Parent | 10 | (15) |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax | (202) | 1,034 |
Comprehensive loss | $ (19,563) | $ (8,739) |
Condensed Consolidated Statements of Comprehensive Loss parentheticals $ in Thousands |
3 Months Ended |
---|---|
Jul. 31, 2018
USD ($)
| |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $ 0 |
Other Comprehensive Income (Loss), Available-for-sale Securities, before Reclassification Adjustments, Tax | $ 0 |
Organization and Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Significant Accounting Policies | Organization and Significant Accounting Policies Description of Business Liberty Tax, Inc. (the "Company"), a Delaware corporation, is a holding company engaged through its subsidiaries as a franchisor and, to a lesser degree, an operator of a system of income tax preparation offices located in the United States of America (the "U.S.") and Canada. The Company's principal operations are conducted through JTH Tax, Inc. (d/b/a Liberty Tax Service), the Company's largest subsidiary. Through this system of income tax preparation offices, the Company also facilitates refund-based tax settlement financial products, such as Refund Transfer products in the U.S. and personal income tax Refund Discounting products in Canada. The Company also offers online tax preparation services. In fiscal 2015, the Company changed its name from JTH Holding, Inc. to Liberty Tax, Inc. The Company provides a substantial amount of lending to its franchisees and area developers ("ADs"). The Company allows franchisees and ADs to defer a portion of the franchise fee and AD fee, which are paid over time. The Company also offers its franchisees working capital loans to assist in funding their operations between tax seasons. The Company’s operating revenues are seasonal in nature, with peak revenues occurring in the months of January through April. Therefore, results for interim periods are not indicative of results to be expected for the full year. Unless the context requires otherwise, the terms "Liberty Tax," "Liberty Tax Service," "we," the "Company," "us," and "our" refer to Liberty Tax, Inc. and its consolidated subsidiaries. Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Assets and liabilities of the Company's Canadian operations have been translated into U.S. dollars using the exchange rate in effect at the end of the period. Revenues and expenses have been translated using the average exchange rates in effect each month of the period. Foreign exchange transaction gains and losses are recognized when incurred. The Company reclassifies to accounts payable checks issued in excess of funds available and reports them as cash flow from operating activities. The Company consolidates any entities in which it has a controlling interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation an entity in which the Company has certain interests where a controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity ("VIE"), is required to be consolidated by its primary beneficiary. The Company does not possess any ownership interests in franchisee entities; however, the Company may provide financial support to franchisee entities. Because the Company's franchise arrangements provide franchisee entities the power to direct the activities that most significantly impact their economic performance, the Company does not consider itself the primary beneficiary of any such entity that might be a VIE. Based on the results of management's analysis of potential VIEs, the Company has not consolidated any franchisee entities. The Company's maximum exposure to loss resulting from involvement with potential VIEs is attributable to accounts and notes receivables and future lease payments due from franchisees. When the Company does not have a controlling interest in an entity but has the ability to exert significant influence over the entity, the Company applies the equity method of accounting. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required only in annual financial statements. The consolidated balance sheet data as of April 30, 2018 was derived from the Company’s April 30, 2018 Annual Report on Form 10-K filed on October 5, 2018, as amended by Amendment No. 1 to the Annual Report on Form 10-K filed on October 10, 2018. In the opinion of management, all adjustments necessary for a fair presentation of such condensed consolidated financial statements in accordance with GAAP have been recorded. These adjustments consisted only of normal recurring items. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its April 30, 2018 Annual Report on Form 10-K filed on October 5, 2018, as amended by Amendment No. 1 to the Annual Report on Form 10-K filed on October 10, 2018. Office Count As a seasonal business, the Company works throughout the off season to open new offices, and, at the same time, some of our franchisees will choose not to reopen for the next season. Some of these decisions are not made until January of each year, and the Company expects to report office count information for the quarter ended January 31, 2019 once all offices have been opened. Use of Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period, to prepare these condensed consolidated financial statements and accompanying notes in conformity with GAAP. Actual results could differ from those estimates. Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)." This update will replace existing lease guidance in GAAP and will require lessees to recognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements, such as information about variable lease payments and options to renew and terminate leases. When implemented, lessees and lessors will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The update is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently finalizing its implementation plan and evaluating the impact of the new pronouncement on its consolidated financial statements. The Company expects the adoption of this pronouncement to result in a material increase in the assets and liabilities on its consolidated balance sheets, but does not expect it to have a material impact on its consolidated statements of income. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230)", which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The update is intended to reduce the existing diversity in practice and is effective for the Company beginning with its first quarterly filing in fiscal year 2019. The Company adopted the update for all periods beginning on or after May 1, 2018. In June 2016, the FASB issued ASU No. 2016-13, "Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which changes how companies will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard replaces the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost (which generally will result in the earlier recognition of allowances for losses) and requires companies to record allowances for available-for-sale debt securities, rather than reduce the carrying amount. In addition, companies will have to disclose significantly more information, including information used to track credit quality by year of origination, for most financing receivables. The ASU should be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the standard is effective. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018, and interim periods therein. The ASU is effective for the Company beginning in the first quarter of fiscal year 2021. The Company is currently evaluating the impact of the adoption of this newly issued standard to its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business", which clarifies the definition of a business with the objection of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The ASU is effective for the Company beginning in the first quarter of fiscal year 2019. The Company adopted the update for all periods beginning on or after May 1, 2018 and it does not have an impact on the Company's current accounting for business combinations. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This new standard eliminates Step 2 from the goodwill impairment test. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The standard will be effective for the Company in the first quarter of fiscal year 2021. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this newly issued standard to its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Codification ("ASC") 606, “Revenues from Contracts with Customers” which amends the guidance in ASC 605, “Revenue Recognition.” The core principle of this new standard is to recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received for those goods or services. ASC 606 also requires additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of this new standard did not materially impact the Company’s recognition of revenues generated from the following:
The details of the significant changes in revenue recognition and quantitative impact of the changes are discussed below. Initial Franchise Fees Typically, franchise rights are granted to franchisees for an initial term of five years with an option to renew. In exchange for initial franchise fees, royalties and advertising fees, the Company is obligated by its franchise agreements to provide training, an operations manual, site selection guidance, tax preparation software, operational assistance, tax and technical support, the ability to perform electronic filing, and marketing and advertising. Under the previous revenue recognition guidance, revenues from initial franchise fees were recognized when the obligations of the Company to prepare the franchisee for operation were substantially complete, up to the amount of cash received. Under the new guidance, the standard requires that the transaction price received from customers be allocated to each separate and distinct performance obligation. The transaction price attributable to each separate and distinct performance obligation is then recognized as the performance obligations are satisfied. The services that the Company provides related to the initial franchise fees the Company receives from franchisees do not contain separate and distinct performance obligations from the franchise right or a financing component. Accordingly, under the new standard, initial franchise fees, as constrained for amounts the Company does not expect to collect, will be recognized over the initial term of the franchise agreement, which is generally five years. AD Fees Historically, the rights to develop a new territory were granted to an AD for an initial term of generally six or ten years. Under the previous revenue recognition guidance, AD fees were recognized as revenue on a straight-line basis over the initial contract term of each AD agreement with the cumulative amount of revenue recognized not to exceed the amount of cash received. Under the new guidance, the standard requires the Company to recognize AD fees, as constrained for amounts not expected to be collected, over the initial term of the AD agreement. The Company also sells a developed territory and simultaneously grants the right to operate as the exclusive AD in such developed territory to a new AD for an initial term of six years or ten years. Under the previous revenue recognition guidance, gains on sales of developed territories were recognized as revenues over the initial term, with the cumulative amount of revenues recognized not to exceed the amount of cash received. Losses on sales of developed territories were recognized immediately. Such gains and losses represented the difference between the transaction price and the net book value of the intangible asset recorded upon the Company’s reacquisition of the developed territory as of the date of the sale. Under the new guidance, the transaction price, as constrained for amounts the Company does not expect to collect, is recognized as revenues over the initial term of the AD agreement. The net book value of the intangible asset is written-off to operating expenses at the date of the sale. Electronic Filing Fees Electronic filing fees are recorded in the period the tax return is electronically filed. Under the previous revenue recognition guidance, the electronic filing fees and the franchisees’ share in such fees were recorded as revenues and expense in the consolidated income statement, respectively. Under the new guidance, the electronic filing fees, net of the franchisees’ share in such fees, will be recorded as revenues in the consolidated statement of operations. Transition Method The Company applied the new guidance on all contracts that were not completed as of May 1, 2018 using the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of retained earnings at May 1, 2018 in the amount of $3.8 million decrease, net of tax, with corresponding increases in deferred revenue and notes receivable . Therefore, the results of operations from the comparative period have not been adjusted and continue to be reported under the previous revenue recognition guidance. Impacts on Condensed Consolidated Financial Statements The following tables summarize the impacts of adopting ASC 606 on the Company’s condensed consolidated financial statements as of and for the three months ended July 31, 2018:
There have been no other significant changes in the Company's condensed consolidated balance sheets or statements of operations and cash flows as a result of the adoption of ASC 606. Contract Balances The following table provides information about receivables and contract liabilities (deferred revenue) from contracts with customers:
(1) Notes receivable increased by $1.7 million as of May 1, 2018 due to the change in the Company's revenue recognition policy for initial franchise and AD fees upon adoption of ASC 606. (2) Deferred revenue increased $6.9 million as of May 1, 2018 due to the cumulative effect of adopting ASC 606. Significant changes in deferred franchise and AD fees are as follows:
Anticipated Future Recognition of Deferred Franchise and AD Fees The following table reflects the estimated franchise and AD fees expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
(1) Represents franchise and AD fees expected to be recognized for the remainder of fiscal 2019. The amount does not include $1.6 million of franchise and AD fee revenues recognized for the three months ended July 31, 2018. The Company has applied the optional exemption, as provided for under ASC 606, which allows the Company not to disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty. Foreign Operations Canadian operations contributed $0.8 million and $1.0 million in revenues for the three months ended July 31, 2018 and 2017, respectively. The Company may have exposure to foreign currency fluctuations due to transactions between its U.S. and Canadian subsidiaries. |
Restructuring Expense |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Expense | Restructuring Expense In the three months ended October 31, 2017, the Company began restructuring initiatives involving a review of Company-owned stores and service providers to improve the Company's overall long-term profitability. The Company incurred $8.3 million of expenses in the three months ended July 31, 2018 related to these initiatives. The expenses incurred are presented in the Restructuring expense line item in the consolidated statements of income. The composition of the restructuring expenses incurred for the three months ended July 31, 2018 were as follows:
The property and intangible impairments and exit costs, which were primarily recorded in assets held for sale, were comprised of expenses related to lease obligations and non-cash charges associated with intangible write-downs. The accrued restructuring expenses of $2.7 million are included in "Accounts payable and accrued expenses" in the accompanying consolidated balance sheets. A summary of the activity in accrued expenses related to restructuring initiatives for the three months ended July 31, 2018 is as follows:
|
Notes and Accounts Receivable |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes and Accounts Receivable | Accounts and Notes Receivable The Company provides select financing to ADs and franchisees for the purchase of franchises, areas, Company-owned offices, and operating loans for working capital and equipment needs. The franchise-related notes generally are payable over five years and the operating loans generally are due within one year. Most notes bear interest at an annual rate of 12%. Most of the notes receivable are due from the Company's ADs and franchisees and are collateralized by the underlying franchise and, when the AD or franchise is an entity, are guaranteed by the owners of the respective entity. The debtors' ability to repay the notes is dependent upon both the performance of the tax preparation industry as a whole and the individual franchise or AD areas. At July 31, 2018, the Company had unfunded lending commitments for working capital loans to franchisees and ADs of $17.4 million through the end of the current fiscal year. Allowance for Doubtful Accounts The adequacy of the allowance for doubtful accounts is assessed on a quarterly basis and adjusted as deemed necessary. Management believes the recorded allowance is adequate based upon its consideration of the estimated fair value of the franchises and AD areas collateralizing the receivables. Any adverse change in the tax preparation industry or the individual franchise or AD areas could affect the Company's estimate of the allowance. Activity in the allowance for doubtful accounts for the three months ended July 31, 2018 and 2017 was as follows:
Management considers specific accounts and notes receivable to be impaired if the net amounts due exceed the fair value of the underlying franchise at the time of the annual valuation performed as of April 30 of each year, and estimates an allowance for doubtful accounts based on that excess. In establishing the fair value of the underlying franchise, management considers a variety of factors, including recent sales between franchisees, sales of Company-owned stores, net fees of open offices earned during the most recently completed tax season, and the number of unopened offices. The Company performs its impairment analysis annually due to the seasonal nature of its operations. At the end of each fiscal quarter, the Company considers the activity during the period for accounts and notes receivable impaired at each prior fiscal year end and adjusts the allowance for doubtful accounts accordingly. While not specifically identifiable as of the balance sheet date, the Company's analysis of its experience also indicates that a portion of other accounts and notes receivable may not be collectible. Net amounts due include contractually obligated accounts and notes receivable plus accrued interest, reduced by unrecognized revenue, the allowance for uncollected interest, amounts due ADs, and amounts owed to the franchisee by the Company. The allowance for doubtful accounts at July 31, 2018, April 30, 2018 and July 31, 2017, was allocated as follows:
The Company’s average investment in impaired receivables during the three months ended July 31, 2018 and 2017 was $23.4 million and $22.7 million, respectively. Analysis of Past Due Receivables The breakdown of accounts and notes receivable past due at July 31, 2018 was as follows:
(1) Interest receivable is shown net of an allowance for uncollectible interest of $2.8 million. Accounts receivable are considered to be past due if unpaid 30 days after billing, and notes receivable are considered past due if unpaid 90 days after the due date. If it is determined the likelihood of collecting substantially all of the notes and accrued interest is not probable, the notes are put on non-accrual status. The Company’s investment in notes receivable on non-accrual status was $13.4 million, $13.6 million and $13.7 million at July 31, 2018, April 30, 2018, and July 31, 2017, respectively. Payments received on notes in non-accrual status are applied to the principal until the note is current and then to interest income. Non-accrual notes that are paid current and expected to remain current are moved back into accrual status during the next annual review. |
Goodwill and Intangible Assets |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Changes in the carrying amount of goodwill for the three months ended July 31, 2018 and 2017 were as follows:
Components of intangible assets were as follows as of July 31, 2018, April 30, 2018 and July 31, 2017:
The Company acquired $1.3 million and $0.6 million of AD rights during the three months ended July 31, 2018 and 2017, respectively. During the three months ended July 31, 2018 and 2017, the Company did not acquire any assets of U.S. or Canadian franchisees, or third parties that were not classified as assets held for sale. |
Assets Held For Sale (Notes) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held For Sale Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held for Sale | Assets Held For Sale At the end of the first quarter of fiscal 2019 and 2018, assets acquired from U.S. franchisees were classified as assets held for sale. During the three months ended July 31, 2018, the Company acquired less than $0.1 million in assets from U.S. franchisees and third parties that were first accounted for as business combinations, with the value allocated to customer lists and reacquired rights of less than $0.1 million and goodwill of less than $0.1 million prior to being recorded as assets held for sale. During the three months ended July 31, 2017, the Company acquired $3.0 million in assets from U.S. franchisees and third parties that were first accounted for as business combinations, with the value allocated to customer lists and reacquired rights of $1.5 million and goodwill of $1.5 million prior to being recorded as assets held for sale. The Company intends to sell the majority of assets associated with Company-owned offices within one year. The acquired businesses are operated as Company-owned offices until a buyer is located and a new franchise agreement is entered into. During the three months ended July 31, 2018, the Company sold, terminated, or impaired $3.7 million in assets from U.S. franchisees, of which $3.4 million was included in the Company's restructuring initiative. Changes in the carrying amount of assets held for sale for the three months ended July 31, 2018 and 2017 were as follows:
|
Debt |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Long-Term Obligations The Company has a credit facility that consists of a term loan with an original principal amount of $21.2 million and a revolving credit facility that currently allows borrowing of up to $170.0 million with an accordion feature that permits the Company to request an increase in availability of up to an additional $50.0 million. Outstanding borrowings accrue interest, which is paid monthly at a rate of the one-month London Interbank Offered Rate ("LIBOR") plus a margin ranging from 1.50% to 2.25% depending on the Company’s leverage ratio. The average interest rate paid during the three months ended July 31, 2018 and 2017 was 3.74% and 2.81%, respectively. The indebtedness is collateralized by substantially all the assets of the Company, and both loans mature on April 30, 2019. The credit facility contains certain financial covenants that the Company must meet, including leverage and fixed-charge coverage ratios as well as minimum net worth requirements. In addition, the Company must reduce the outstanding balance under its revolving credit facility to zero for a period of at least 45 consecutive days each fiscal year. The Company was in compliance with the financial covenants at July 31, 2018. In December 2016, the Company obtained a mortgage payable to a bank in monthly installments of principal payments plus interest at the one-month LIBOR plus 1.85% through December 2026 with a balloon payment of $0.8 million due at maturity. The mortgage is collateralized by land and buildings. In December 2016, in connection with obtaining a mortgage payable to a bank, the Company entered into an interest rate swap agreement that allows it to manage fluctuations in cash flow resulting from changes in the interest rate on the mortgage. This swap effectively changes the variable-rate of the Company's mortgage into a fixed rate of 4.12%. The Company has designated this swap agreement as a cash flow hedge. At July 31, 2018, the fair value of the interest rate swap is less than $0.1 million and is included in other current assets. The interest rate swap expires in December 2026. Long-term obligations at July 31, 2018, April 30, 2018, and July 31, 2017 consisted of the following:
|
Income Taxes |
3 Months Ended |
---|---|
Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the first quarter of fiscal 2019, the Company continued its assessment of the corporate income tax impacts expected to result from the Tax Cuts and Jobs Act (the “Tax Act”). During the three months ended July 31, 2018, the Company did not adjust its provisional amounts recorded as of April 30, 2018. The Company is finalizing its assessment of the impact of the Tax Act and the provisional estimates may change because of additional analysis of the underlying calculations or additional regulatory guidance. Similar to prior years, pre-tax book income estimated in the fourth quarter of fiscal 2019 is expected to offset pre-tax book loss for the three months ended July 31, 2018 due to the established pattern of seasonality in the Company's primary business operations. Management has determined it is at least more-likely-than-not that realization of tax benefits recorded in the Company's financial statements will occur during fiscal 2019. The amount of tax benefit recorded for the three months ended July 31, 2018 reflects the Company’s estimated annual effective tax rate applied to the year-to-date loss from continuing operations adjusted for the tax impact of discrete items. The Company's effective tax rate from continuing operations, including discrete income tax items, was 32.9% and 39.5% for the three months ended July 31, 2018 and 2017, respectively. The reduced effective tax rate results primarily from the decrease in the U.S. federal corporate income tax rate from 35% to 21%, effective after December 31, 2017. |
Stockholders' Equity |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Stockholders' Equity Activity During the three months ended July 31, 2018 and 2017, activity in stockholders’ equity was as follows:
During the three months ended July 31, 2018, the sole holder of the Company's Class B common stock entered into a stock purchase agreement to sell all of their outstanding shares of the Company's Class A common stock and Class B common stock owned directly and indirectly by them. In connection with the sale, the shares of the Company’s Class B common stock converted into shares of the Company’s Class A common stock on a one-for-one basis and for no additional consideration. As of July 31, 2018, no shares of the Company’s Class B common stock remained outstanding. In addition, an agreement was reached which converted the 10 shares of special voting preferred stock to 1,000,000 shares of Class A common stock. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss at July 31, 2018, April 30, 2018 and July 31, 2017 were as follows.
Net Loss per Share Net income (loss) per share of Class A and Class B common stock is computed using the two-class method. Basic net income (loss) per share is computed by allocating undistributed earnings to common stock and participating securities (exchangeable shares) and using the weighted-average number of common stock outstanding during the period. Undistributed losses are not allocated to participating securities because they do not meet the required criteria for such allocation. Diluted net income (loss) per share is computed using the weighted-average number of common stock and, if dilutive, the potential common stock outstanding during the period. Potential common stock consists of the incremental common stock issuable upon the exercise of stock options and vesting of restricted stock units. The dilutive effect of outstanding stock options and restricted stock units is reflected in diluted earnings per share by application of the treasury stock method. Additionally, the computation of the diluted net income (loss) per share of Class A common stock assumes the conversion of Class B common stock and exchangeable shares, if dilutive, while the diluted net loss per share of Class B common stock does not assume conversion of those shares. The rights, including liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, with the exception of the election of directors. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year had been distributed. Participating securities have dividend rights that are identical to Class A and Class B common stock. The computation of basic and diluted net loss per share for the three months ended July 31, 2018 and 2017 is as follows:
As a result of the net losses for the periods shown, diluted net loss per share excludes the impact of shares of potential common stock from the exercise of options to purchase 692,205 and 1,391,423 shares for the three months ended July 31, 2018 and 2017, respectively, because the effect would be anti-dilutive. |
Stock Compensation Plans |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation Plans | Stock Compensation Plans Stock Options The Company has an equity and cash incentive plan, for the issuance of up to 2,500,000 shares of Class A common stock in which employees and outside directors are eligible to receive awards. At July 31, 2018, 1,530,432 shares of Class A common stock remain available for grant. Stock option activity during the three months ended July 31, 2018 was as follows:
Intrinsic value is defined as the fair value of the stock less the cost to exercise. No options were exercised during the three months ended July 31, 2018. The total intrinsic value of stock options outstanding at July 31, 2018 was $0.4 million. Stock options vest from the date of grant to five years after the date of grant and expire from four to seven years after the vesting date. Nonvested stock options activity during the three months ended July 31, 2018 was as follows:
At July 31, 2018, unrecognized compensation costs related to nonvested stock options were $1.0 million. These costs are expected to be recognized through fiscal 2022. The following table summarizes information about stock options outstanding and exercisable at July 31, 2018:
Restricted Stock Units Restricted stock activity during the three months ended July 31, 2018 was as follows:
At July 31, 2018, unrecognized compensation costs related to restricted stock units were $1.4 million. These costs are expected to be recognized through fiscal 2022. |
Fair Value of Financial Instruments |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities subject to fair value measurements on a recurring basis are classified according to a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. Valuation methodologies for the fair value hierarchy are as follows:
The Company measures or monitors certain of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for those assets and liabilities for which fair value is the primary basis of accounting. Other assets and liabilities are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The following tables present, at July 31, 2018, April 30, 2018 and July 31, 2017, for each of the fair value hierarchy levels, the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis (In thousands):
The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of level 1 or 2 requiring fair value measurements for each of the three months ended July 31, 2018 and 2017. The following methods and assumptions are used to estimate the fair value of our financial instruments. Cash equivalents: The carrying amounts approximate fair value because of the short maturity of these instruments. Cash equivalent financial instruments consist of money market accounts. Impaired accounts and notes receivable, net of unrecognized revenue: Accounts and notes receivable are considered to be impaired if the net amounts due exceed the fair value of the underlying franchise or if management considers it probable that all principal and interest will not be collected when contractually due. In establishing the estimated fair value of the underlying franchise, consideration is given to recent sales between franchisees, sales of Company-owned stores, the net fees of open offices, and the number of unopened offices. Impaired goodwill, reacquired rights, and customer lists: Goodwill, reacquired rights and customer lists associated with a Company-owned office are considered to be impaired if the net carrying amount exceeds the fair value of the underlying office. In establishing the fair value of the underlying office, consideration is given to the related net fees and third-party transactions of franchises and when appropriate a discounted cash flow model. Assets held for sale: Assets held for sale are recorded at the lower of the carrying value or the sales price, less costs to sell, which approximates fair value. The sales price is calculated as a percentage of prior year net fees and marketplace transactions. Contingent consideration included in obligations due to former ADs, franchisee and others: Obligations due to former ADs and franchisees related to estimated contingent consideration are carried at fair value. The fair value of these obligations was determined using a discounted cash flow model. Interest rate swap agreement: Value of interest rate swap on variable rate mortgage debt. The fair value of this instrument was determined based on third-party market research. Other Fair Value Measurements Additionally, accounting standards require the disclosure of the estimated fair value of financial instruments that are not recorded at fair value. For the financial instruments that the Company does not record at fair value, estimates of fair value are made at a point in time based on relevant market data and information about the financial instrument. No readily available market exists for a significant portion of the Company's financial instruments. Fair value estimates for these instruments are based on current economic conditions, interest rate risk characteristics, and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the calculated fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument. In addition, changes in assumptions could significantly affect these fair value estimates. The following methods and assumptions were used by the Company in estimating fair value of these financial instruments. Notes receivable: The carrying amount approximates fair value because the interest rate charged by the Company on these notes approximates rates currently offered by local lending institutions for loans of similar terms to individuals/entities with comparable credit risk (Level 3). Long-term obligations: The carrying amount approximates fair value because the interest rate paid has a variable component (Level 2). |
Related Party Transactions |
3 Months Ended |
---|---|
Jul. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company considers directors and their affiliated companies, as well as named executive officers and members of their immediate families, to be related parties. Nicole Ossenfort’s (Chief Executive Officer) franchise agreement The Company is or was a participant in the following related party transactions with Ms. Ossenfort since the beginning of fiscal 2019: Ossenfort Franchise. Ms. Ossenfort, together with her husband, Scott Ossenfort (together, with Ms. Ossenfort, the “Ossenforts”), jointly own a Company franchise through JL Enterprises. JL Enterprises borrows operating funds for working capital to operate the franchises each year. During the three months ended July 31, 2018, JL Enterprises did not borrow operating funds for working capital to operate the franchise. During the three months ended July 31, 2018, the Company has recorded $34,642 of accounts receivable from the Ossenforts for royalties, advertising and financial product charges, of which a balance of $6,434 remained outstanding and payable to the Company as of July 31, 2018. Shaun York’s (Chief Operating Officer) franchises and AD agreements The Company is or was a participant in the following related party transactions with Mr. York since the beginning of fiscal 2019: York Franchises. Mr. York operates eleven Company franchises through Yorkompany LLC, S&P Holding Group LLC, My Business Group LLC and Core Fitness Partners LLC (the “York Franchise Entities”). The York Franchise Entities borrow operating funds from the Company for working capital to operate the franchises each year. During the three months ended July 31, 2018, the York Franchise Entities borrowed operating funds in the amount of $40,065, of which $40,065 remained outstanding and payable to the Company as of July 31, 2018. In addition, during the three months ended July 31, 2018, the Company recorded $46,997 of accounts receivable from the York Franchise Entities for royalties, advertising and financial product charges, of which $41,332 remained outstanding and payable to the Company as of July 31, 2018. York AD. Mr. York has Area Development arrangements with the Company that are conducted through Yorkompany LLC, S&P Holding Group LLC and TNT Florida Investments LLC (the “York AD Entities”). The York AD Entities were acquired by Mr. York through various transactions with the Company and through third party agreements with AD sellers. In connection with those transactions, the York AD Entities financed a total of $4,059,460 through the Company to acquire the Area Development territories and associated rights. The loans are payable by the York AD Entities in annual installments at 12% interest. As of July 31, 2018, the aggregate outstanding principal balance owed by the York AD Entities on the notes was $1,789,040. As of July 31, 2018, the Company had accounts receivable from the York AD Entities of $3,105. The York AD Entities earned $73,620 for their portion of franchise fees, royalties and interest during the three months ended July 31, 2018. York Debt Guarantees. Mr. York also has entered into multiple guarantee agreements with the Company whereby Mr. York has guaranteed all or a portion of the indebtedness owed by other franchisees and ADs to the Company as related to certain financial transactions for which Mr. York had an interest. The indebtedness owed by these franchisees and ADs as of July 31, 2018 is approximately $3,416,535. John Seal’s (Director) AD agreement The Company is or was a participant in the following related party transactions with Mr. Seal since the beginning of fiscal 2019: JMS Tax, an entity controlled by Mr. Seal, a former director of the Company, owns an AD territory in Texas which a portion of the purchase price was financed through a note issued by the Company. There was no outstanding principal balance on the note as of July 31, 2018. As of July 31, 2018, the Company had accounts receivable from JMS Tax of $675. JMS Tax earned $11,453 for their portion of franchise fees, royalties and interest during the three months ended July 31, 2018. |
Commitments and Contingencies |
3 Months Ended |
---|---|
Jul. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the ordinary course of operations, the Company may become a party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company's business, financial condition, cash flows, or results of operations except as provided below. Delaware Derivative Litigation Asbestos Workers’ Philadelphia Pension Fund, derivatively on behalf of Liberty Tax, Inc., v. John Hewitt, Defendant, and Liberty Tax, Inc., Nominal Defendant, Case No. 2017-0883, filed in the Court of Chancery of the State of Delaware on December 12, 2017. Plaintiff alleges that the Company's former CEO, John T. Hewitt (“Hewitt”), breached his fiduciary duties as an officer based upon certain allegations of misconduct on his part. The Plaintiff also alleges breach of fiduciary duty against Hewitt in his capacity as a director of LT, Inc. The Complaint seeks compensatory damages and attorney’s fees. No claim or relief is asserted against the Company, which is named solely as a Nominal Defendant. Erie County Employees Retirement System, derivatively on behalf of Liberty Tax, Inc., v. John T. Hewitt, Defendant, and Liberty Tax, Inc., Nominal Defendant, Case No. 2017-0914, brought a second derivative suit filed in the Court of Chancery of the State of Delaware on December 22, 2017. Plaintiff also alleges that Hewitt breached his fiduciary duties as an officer based upon certain allegations of misconduct on his part. The Plaintiff also alleges breach of fiduciary duty against Hewitt in his capacity as a director of the Company. The Complaint seeks to enjoin Hewitt from managing our business operations, and seeks compensatory damages and attorney’s fees. On December 27, 2017, the two above-referenced shareholder matters were consolidated into the case with the caption In Re: Liberty Tax, Inc. Stockholder Litigation, C.A. No. 2017-0883. On April 17, 2018, Plaintiffs filed an amended complaint (the "Amended Complaint"). The Amended Complaint added Gordon D’Angelo, Ellen McDowell, Nicole Ossenfort, and John Seal, with Hewitt as individual defendants (the “Individual Defendants”) and asserted class action allegations. Plaintiffs seek (i) a declaration that the Individual Defendants have breached the Company's Nominating Charter; (ii) a declaration that the Individual Defendants have breached their fiduciary duties; (iii) an award to the Plaintiffs and the Class in the amount of damages sustained as a result of the Individual breaches; (iv) certification of the action as a class action; (v) an award to the Company in the amount of damages sustained as a result of the Individual Defendants’ breaches of their fiduciary duties; (vi) a grant of further appropriate equitable relief to remedy the Individual Defendants’ breaches, including injunctive relief; (vii) an award to Plaintiffs of the costs and disbursements of this action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs and expenses; and (viii) such further relief as the Court deems just and proper. The Company has answered the Amended Complaint and discovery is underway. The individuals have filed a notice of motion to dismiss. No briefing schedule has been set on the motion. A mediation took place on November 12, 2018 but did not result in a resolution. A scheduling order has been entered which currently schedules trial in this matter to begin on March 18, 2019. Eastern District of New York Securities Litigation Rose Mauro, individually and on behalf of all others similarly situated v. Liberty Tax, Inc., Edward L. Brunot, John T. Hewitt, and Kathleen E. Donovan, filed in the United States District Court for the Eastern District of New York on January 12, 2018, Case No. 18 CV 245. Plaintiff filed a securities class action asserting violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 10b-5 against all defendants and a second count for violations of Section 20(a) of the Exchange Act against the individual defendants. According to the complaint, throughout the class period, the Company allegedly issued materially false and misleading statements and/or failed to disclose that: (1) Hewitt created an inappropriate tone at the top; (2) the inappropriate tone at the top led to ineffective entity level controls over the organization; and (3) as a result, defendants’ statements about the operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times. Patrick Beland, individually and on behalf of all others similarly situated vs. Liberty Tax, Inc., Edward L. Brunot, John T. Hewitt, and Kathleen E. Donovan, filed in the United States District Court for the Eastern District of New York on December 15, 2017, case number 17 CV 7327. Plaintiff filed a securities class action asserting violations of Section 10(b) of the Exchange Act and Rule 10b-5 against all defendants and a second count for violations of Section 20(a) of the Exchange Act against the individual defendants. According to the complaint, throughout the class period, the Company allegedly issued materially false and misleading statements and/or failed to disclose that: (1) Hewitt created an inappropriate tone at the top; (2) the inappropriate tone at the top led to ineffective entity level controls over the organization; and (3) as a result, defendants’ statements about the business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times. These actions were consolidated with the caption In Re Liberty Tax, Inc. Securities Litigation, Case No. 27 CV 07327 and IBEW Local 98 Pension Fund was appointed the Lead Plaintiff ("Lead Plaintiff"). On June 12, 2018, Lead Plaintiff filed its Consolidated Amended Class Action Complaint, which removed Brunot as a defendant, and added additional securities claim based on Section 14(a) of the Exchange Act and Rules 14a-3 and 14a-9. The Consolidated Amended Class Action Complaint, among other things, asserts that the Company’s SEC filings over a multi-year period failed to disclose the alleged misconduct of the individual defendants and that disclosure of the alleged misconduct caused the Company’s stock price to drop and, thereby harm the purported class of shareholders. The Class Period is alleged to be October 1, 2013 through February 23, 2018. The defendants filed a joint motion to dismiss the Consolidated Amended Class Action Complaint on September 17, 2018. Lead Plaintiff served their opposition on November 1, 2018 and the defendants filed their reply brief on November 27, 2018. A mediation took place on November 12, 2018 but did not result in a resolution. Eastern District of Virginia Securities and Derivative Litigation RSL Senior Partners LLC, derivatively and on behalf of Liberty Tax, Inc. v. Edward L. Brunot, John T. Hewitt, Kathleen E. Donovan, Gordon D’Angelo, John Garel, Thomas Herskovits, Robert M. Howard, Ross N. Longfield. Steven Ibbotson, Ellen M. McDowell, Nicole Ossenfort, George Robson and John Seal and Liberty Tax. Inc. (Nominal Defendant), Case No. 18 cv 127, filed on March 7, 2018 in the United States District Court for the Eastern District of Virginia. This shareholder derivative action was filed on behalf of the Company seeking to address the alleged wrongs of the Company’s directors and officers. The complaint alleges that certain conduct created an inappropriate tone at the top, which resulted in the loss of key executives, employees, directors and otherwise harmed the Company. The complaint asserts claims under Section 14(a) of the Exchange Act, 10(b) and 10b-5 and 20(a) of the Exchange Act, breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. The Complaint seeks the following relief: (a) declaring that Plaintiff may maintain this action on behalf of the Company, and that Plaintiff is an adequate representative of the Company; (b) declaring that the Individual Defendants have breached and/or aided and abetted the breach of their fiduciary duties to the Company; (c) determining and awarding to the Company the damages sustained by it as a result of the violations set forth above from each of the Individual Defendants, jointly and severally, together with pre-judgment and post-judgment interest thereon; (d) directing the Company and the Individual Defendants to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and to protect the Company and its shareholders from a repeat of the damaging events described herein, including, but not limited to, putting forward for shareholder vote the following resolutions for amendments to the Company’s Bylaws or Articles of Incorporation and the following actions as may be necessary to ensure proper corporate governance policies: (1) a proposal to strengthen the Board’s supervision of operations and develop and implement procedures for greater shareholder input into the policies and guidelines of the board; (2) a provision to permit the Class A shareholders of the Company to nominate at least five candidates for election to the board; (3) a proposal to ensure the establishment of effective oversight of compliance with applicable laws, rules, and regulations; (4) a proposal to revise the Code of Conduct to include provisions prohibiting sexual harassment and discrimination, and governing the maintenance and disclosure of sexual and romantic relationships between individuals associated with the Company; (e) awarding the Company restitution from Individual Defendants; (f) awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees, costs, and expenses; and (g) granting such other and further relief as the Court may deem just and proper. No claim or relief is asserted against the Company, which is named solely as a Nominal Defendant. On July 30, 2018, various motions were filed: (i) Defendants Hewitt, McDowell, Ossenfort and Seal collectively moved to dismiss the Complaint; (ii) Defendants Garel, Herskovits, Howard, Ibbotson, Longfield, and Robson collectively moved to dismiss the Complaint; (iii) Defendants Brunot and Donovan collectively moved to dismiss the Complaint; (iv) Company moved to stay the action pending resolution of parallel state (Delaware) and/or federal (New York) proceedings. Plaintiff’s oppositions were due by August 31, 2018. Defendants’ replies to Plaintiff’s oppositions were filed on September 10, 2018. A mediation took place on November 12, 2018 but did not result in a resolution. The Court has set a hearing date for December 13, 2018 for the respective motions. Franchise Litigation JTH Tax, Inc. and SiempreTax LLC v. Gregory Aime, Aime Consulting, LLC, Aime Consulting, Inc. and Wolf Ventures, Inc. The Company filed suit in the United States District Court for the Eastern District of Virginia against the defendants, former Company franchisees, on June 9, 2016, as amended on June 22, 2016, claiming the defendants breached the purchase and sale agreement (the “PSA”) entered between the parties on January 21, 2016 and that the defendants had failed to comply with the post termination obligations of the franchise agreements (together with the PSA, the “Aime Agreements”). The Company sought damages in an amount equal to three times the defendants’ earnings and profits, as well as injunctive relief to enforce the defendants to comply with the post termination obligations of the Aime Agreements, to be determined by the trier of fact. The Company specifically sought, in part, to enjoin the defendants from continued operation of a tax preparation business using the Company’s protected trademarks, enforcement of the non-compete provision of the Aime Agreements, and an order that the defendants assign all of the leases related to the franchised businesses to the Company. On July 1, 2016, the Magistrate Judge issued a report and recommendation finding a likelihood of success on the merits and recommending entry of the requested temporary restraining order (the “TRO”) in favor of the Company, which was adopted in part on August 3, 2016. On September 9, 2016, the defendants filed an answer and counterclaim against the Company, alleging breach of the PSA, breach of the implied covenant of good faith and fair dealing and fraud and seeking approximately $2.4 million in damages, plus future loss profits, punitive damages and other expenses. After a three-day bench trial, on January 13, 2017, the court vacated the TRO, finding in favor of the defendants. On February 15, 2017, the court issued its written opinion and order granting the defendants’ breach of contract and breach of the implied covenant of good faith and fair dealing claims, denying the Company’s claims against the defendants and finding certain post termination obligations to be unenforceable. Judgment was entered in favor of the defendants for approximately $2.7 million. The Company accrued $2.7 million as of the fourth quarter of fiscal 2017 in connection with the judgment, which is recorded in "Accounts payable and accrued expense" in the accompanying consolidated balance sheets. The Company has filed an appeal of the judgment with the Fourth Circuit Court of Appeals. On August 8, 2018, the Fourth Circuit Court of Appeals issued an unpublished opinion affirming in part, vacating in part, and remanding to the District Court with instructions via the opinion. The Court of Appeals affirmed the District Courts finding that the Company breached the PSA first, however, the Court of Appeals concluded the District Court erred as a matter of law when it determined that that the defendants were entitled to lost profits based on the purported extension of the PSA buyback deadline. The Court of Appeals held the alleged extension was not supported by independent consideration and thus not enforceable. It remanded the case for the District Court to recalculate damages consistent with said opinion. On August 23, 2018, the defendants filed a petition for rehearing of the Fourth Circuit's decision. On September 5, 2018 the Fourth Circuit issued an order denying the petition for rehearing. On September 13, 2018 the Fourth Circuit issued a mandate that the judgment of the Fourth Circuit entered August 8, 2018 takes effect as of the same date of said filing. The matter has now officially be sent back to the District Court to recalculate damages consistent with the Fourth Circuit’s decision. The District Court entered an order on October 18, 2018 ordering Aime to provide the Court with a brief on damages within ten days of the entry of the Order and the Company has ten days to respond after the filing of the defendants' brief. The parties have filed their respective briefs and the Court held a hearing on damages on November 28, 2018. On November 29, 2018, the Court issued an order awarding Aime approximately $0.3 million in damages. Either party may potentially exercise a right to appeal the Court’s order, therefore the ultimate outcome of this action and the timing of such outcome is uncertain and there can be no assurance that the Company will benefit financially from such litigation. Class Action Litigation Broward Psychology P.A., v. JTH Tax, Inc. (Case 0:18-cv-60412). On February 26, 2018, a class action complaint was filed in the U.S. District Court for the Southern District of Florida by an individual plaintiff for itself and on behalf of all other “similarly situated” persons. The Complaint alleges, among other things, that from March 10, 2014 to 2018, the Company allegedly violated the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 (collectively, the “TCPA”), by sending a facsimile advertisement to plaintiff and other putative class members that either were unsolicited and/or did not contain a valid opt-out notice. The complaint seeks certification of the lawsuit as a class action and the award to class members of the greater of actual damages or the sum of $500 for each violation and injunctive and other relief. Under the TCPA, the statutory remedy of $500 per violation may be trebled (i.e., $1,500 per violation) if the court finds the violations to be willful or knowing. On March 30, 2018 the Company filed a dispositive motion arguing that Plaintiff lacked Article III standing to sue Company. By Order dated August 21, 2018, the Court denied the Company’s motion. A mediation was held on September 20, 2018 and the case was settled for an immaterial amount. Rene Labrado v. JTH Tax, Inc. (Case BC 715076). On July 3, 2018, a class action complaint was filed in the Superior Court of California, County of Los Angeles by a former employee for herself and on behalf of all other “similarly situated” persons. The Complaint alleges, among other things, that the Company allegedly violated various provisions of the California Labor Code, including: unpaid overtime, unpaid meal period premiums, unpaid rest premiums, unpaid minimum wages, final wages not timely paid, wages not timely paid, non-compliant wage statements, failure to keep pay records, unreimbursed business expenses and violation of California Business and Profession Code Section 17200. The Complaint seeks actual, consequential and incidental losses and damages, injunctive relief and other damages. The Company highly disputes the allegations set forth in the Complaint and plans on filing a dispositive motion. The Company intends to defend the case vigorously. The Company is also party to claims and lawsuits that are considered to be ordinary, routine litigation incidental to the business, including claims and lawsuits concerning the preparation of customers' income tax returns, the fees charged to customers for various products and services, relationships with franchisees, intellectual property disputes, employment matters, and contract disputes. Although the Company cannot provide assurance that it will ultimately prevail in each instance, it believes the amount, if any, it will be required to pay in the discharge of liabilities or settlements in these claims will not have a material adverse impact on its consolidated results of operations, financial position, or cash flows. |
Subsequent Event Subsequent Events (Notes) |
3 Months Ended |
---|---|
Jul. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On July 19, 2018, the Company’s former Chairman and Chief Executive Officer, John T. Hewitt, entered into a stock purchase agreement, dated July 19, 2018, to sell all of the shares of the Company’s Class A common stock and Class B common stock owned directly and indirectly by him to Vintage Tributum LP, an affiliate of Vintage Capital Management, LLC (“Vintage”), as an unaffiliated third party (the “Sale”). In connection with the Sale, the shares of the Company’s Class B common stock converted into shares of the Company’s Class A common stock, and no shares of the Company’s Class B common stock remained outstanding. On August 3, 2018, in connection with the Sale, Mr. Hewitt agreed to tender his resignation to the Board and agreed to cause the following members of the Board previously elected to the Board by Mr. Hewitt to tender their resignations to the Board, in each case, effective upon the closing of the Sale: Gordon D’Angelo, Ellen M. McDowell, Nicole Ossenfort and John Seal. Ms. Ossenfort continues to serve as the Company’s President and Chief Executive Officer following her resignation from the Board. On August 9, 2018, the Company received a written consent executed by stockholders representing a majority of the outstanding shares of the Company’s Class A common stock electing Brian R. Kahn, Andrew M. Laurence, Matthew Avril, Bryant R. Riley, and Kenneth M. Young as Class A directors of the Company to serve until the Company’s next annual meeting of stockholders and until their successors are duly elected and qualified. On September 5, 2018, the Company submitted its appeal of the Panel’s determination to delist the Company’s Class A common stock to the Nasdaq Listing and Review Council (the “Council”). On October 18, 2018, the Council affirmed the Panel’s determination. On November 7, 2018, the Nasdaq Board of Directors informed the Company that it had declined to review the Council's decision and, as such, the Company’s Class A common stock will continue to be quoted on the OTC Market under the symbol “TAXA”. On November 28, 2018, the Company received an unsolicited and non-binding proposal from an unaffiliated private equity fund to acquire all of the outstanding shares. The Board of Directors intends to carefully review the unsolicited proposal and other strategic alternatives that may be available to the Company in consultation with its advisors. |
Organization and Significant Accounting Policies (Policies) |
3 Months Ended |
---|---|
Jul. 31, 2018 | |
Accounting Policies [Abstract] | |
Description of Business | (1) Organization and Significant Accounting Policies Description of Business Liberty Tax, Inc. (the "Company"), a Delaware corporation, is a holding company engaged through its subsidiaries as a franchisor and, to a lesser degree, an operator of a system of income tax preparation offices located in the United States of America (the "U.S.") and Canada. The Company's principal operations are conducted through JTH Tax, Inc. (d/b/a Liberty Tax Service), the Company's largest subsidiary. Through this system of income tax preparation offices, the Company also facilitates refund-based tax settlement financial products, such as Refund Transfer products in the U.S. and personal income tax Refund Discounting products in Canada. The Company also offers online tax preparation services. In fiscal 2015, the Company changed its name from JTH Holding, Inc. to Liberty Tax, Inc. The Company provides a substantial amount of lending to its franchisees and area developers ("ADs"). The Company allows franchisees and ADs to defer a portion of the franchise fee and AD fee, which are paid over time. The Company also offers its franchisees working capital loans to assist in funding their operations between tax seasons. The Company’s operating revenues are seasonal in nature, with peak revenues occurring in the months of January through April. Therefore, results for interim periods are not indicative of results to be expected for the full year. Unless the context requires otherwise, the terms "Liberty Tax," "Liberty Tax Service," "we," the "Company," "us," and "our" refer to Liberty Tax, Inc. and its consolidated subsidiaries. |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Assets and liabilities of the Company's Canadian operations have been translated into U.S. dollars using the exchange rate in effect at the end of the period. Revenues and expenses have been translated using the average exchange rates in effect each month of the period. Foreign exchange transaction gains and losses are recognized when incurred. The Company reclassifies to accounts payable checks issued in excess of funds available and reports them as cash flow from operating activities. The Company consolidates any entities in which it has a controlling interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation an entity in which the Company has certain interests where a controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity ("VIE"), is required to be consolidated by its primary beneficiary. The Company does not possess any ownership interests in franchisee entities; however, the Company may provide financial support to franchisee entities. Because the Company's franchise arrangements provide franchisee entities the power to direct the activities that most significantly impact their economic performance, the Company does not consider itself the primary beneficiary of any such entity that might be a VIE. Based on the results of management's analysis of potential VIEs, the Company has not consolidated any franchisee entities. The Company's maximum exposure to loss resulting from involvement with potential VIEs is attributable to accounts and notes receivables and future lease payments due from franchisees. When the Company does not have a controlling interest in an entity but has the ability to exert significant influence over the entity, the Company applies the equity method of accounting. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required only in annual financial statements. The consolidated balance sheet data as of April 30, 2018 was derived from the Company’s April 30, 2018 Annual Report on Form 10-K filed on October 5, 2018, as amended by Amendment No. 1 to the Annual Report on Form 10-K filed on October 10, 2018. In the opinion of management, all adjustments necessary for a fair presentation of such condensed consolidated financial statements in accordance with GAAP have been recorded. These adjustments consisted only of normal recurring items. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its April 30, 2018 Annual Report on Form 10-K filed on October 5, 2018 |
Office Count | Office Count |
Use of Estimates | Use of Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period, to prepare these condensed consolidated financial statements and accompanying notes in conformity with GAAP. Actual results could differ from those estimates. |
New Accounting Pronouncements, Policy | Accounting Pronouncements |
Foreign Operations | Foreign Operations Canadian operations contributed $0.8 million and $1.0 million in revenues for the three months ended July 31, 2018 and 2017, respectively |
Restructuring Expense (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring costs | The composition of the restructuring expenses incurred for the three months ended July 31, 2018 were as follows:
|
Notes and Accounts Receivable (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity in the allowance for doubtful accounts | Activity in the allowance for doubtful accounts for the three months ended July 31, 2018 and 2017 was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allocation of allowance for doubtful accounts | The allowance for doubtful accounts at July 31, 2018, April 30, 2018 and July 31, 2017, was allocated as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of aging of accounts and notes receivable | The breakdown of accounts and notes receivable past due at July 31, 2018 was as follows:
|
Goodwill and Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill for the three months ended July 31, 2018 and 2017 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the amortizable other intangible assets | Components of intangible assets were as follows as of July 31, 2018, April 30, 2018 and July 31, 2017:
|
Assets Held For Sale (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held For Sale Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of Assets Held for Sale | Changes in the carrying amount of assets held for sale for the three months ended July 31, 2018 and 2017 were as follows:
During fiscal 2018, the Company reviewed assets held for sale that were deemed unlikely to be sold in the preceding 12 months. Those identified were transferred to assets held for use and amortization expense was recorded on a cumulative basis for customer lists and reacquired rights. |
Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Long-term obligations at July 31, 2018, April 30, 2018, and July 31, 2017 consisted of the following:
|
Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity in stockholders' equity | During the three months ended July 31, 2018 and 2017, activity in stockholders’ equity was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The components of accumulated other comprehensive loss at July 31, 2018, April 30, 2018 and July 31, 2017 were as follows.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted net income (loss) per share | The computation of basic and diluted net loss per share for the three months ended July 31, 2018 and 2017 is as follows:
As a result of the net losses for the periods shown, diluted net loss per share excludes the impact of shares of potential common stock from the exercise of options to purchase 692,205 and 1,391,423 shares for the three months ended July 31, 2018 and 2017, respectively, because the effect would be anti-dilutive. |
Stock Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of information about stock options outstanding and exercisable | The following table summarizes information about stock options outstanding and exercisable at July 31, 2018:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | Restricted stock activity during the three months ended July 31, 2018 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | Stock option activity during the three months ended July 31, 2018 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of nonvested (options that did not vest in the period in which granted) stock option activity | Nonvested stock options activity during the three months ended July 31, 2018 was as follows:
|
Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis, for each of the fair value hierarchy levels | The following tables present, at July 31, 2018, April 30, 2018 and July 31, 2017, for each of the fair value hierarchy levels, the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis (In thousands):
|
Restructuring Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||
Cash | $ 193 | |
Accrued Expenses | 3,859 | |
Non-cash | 4,214 | |
Total Expense | 8,266 | $ 0 |
Property and Intangible Impairments and Exit Costs [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash | 193 | |
Restructuring Reserve, Accrued Expenses | 3,859 | |
Restructuring Reserve, Settled without Cash | 4,214 | |
Non-cash | $ 8,266 |
Restructuring Expense - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||
Payments for Restructuring | $ 193 | |
Restructuring costs | 8,266 | $ 0 |
Property and Intangible Impairments and Exit Costs [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Payments for Restructuring | $ 193 |
Accounts and Notes Receivables (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 31, 2018 |
Apr. 30, 2018 |
Jul. 31, 2017 |
|
Schedule of Activity Related to Notes Receivable | |||
Notes, Loans and Financing Receivable, Gross, Current | $ 29,402 | $ 24,295 | $ 33,493 |
Notes, Loans and Financing Receivable, Gross, Noncurrent | 9,882 | 6,554 | 18,202 |
Activity related to notes receivable | |||
Amounts payable to area developers for their share of receivables | 7,186 | $ 17,906 | $ 9,168 |
Accounts and Notes Receivable, Unfunded Lending Commitments for Working Capital Loans to Franchisees and Area Developers | $ 17,400 | ||
Franchise-related notes | |||
Activity related to notes receivable | |||
Notes Receivable | 5 years | ||
Interest rate (as a percent) | 12.00% | ||
Working capital and equipment notes | |||
Activity related to notes receivable | |||
Notes Receivable | 1 year |
Analysis of Past Due Receivables (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Apr. 30, 2017 |
|
Aging of accounts and notes receivable | |||
Interest receivable, net of allowance for uncollectible amount | $ 2,800 | ||
Past due | 49,677 | ||
Interest receivable, net | 30,831 | ||
Financing Receivable Allowance for Uncollected Interest | 2,023 | ||
Total receivables | 82,531 | ||
Accounts receivable | |||
Aging of accounts and notes receivable | |||
Past due | 36,310 | ||
Interest receivable, net | 4,914 | ||
Financing Receivable Allowance for Uncollected Interest | 0 | ||
Total receivables | $ 41,224 | ||
Past due period | 30 days | ||
Notes receivable | |||
Aging of accounts and notes receivable | |||
Past due | $ 13,367 | ||
Interest receivable, net | 25,917 | ||
Financing Receivable Allowance for Uncollected Interest | 2,023 | ||
Total receivables | $ 41,307 | ||
Past due period | 90 days | ||
Financing Receivable, Recorded Investment, Nonaccrual Status | $ 13,400 | $ 13,700 | $ 13,600 |
Assets Held For Sale Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Apr. 30, 2018 |
|
Accounts and Notes Receivable, Allowance for Uncollected Interest Amounts Due ADs Related Deferred Revenue and Amounts Due Franchisees | $ 7,388 | $ 9,551 | $ 13,629 |
Finite-lived Intangible Assets Reacquired and Acquired | 2,979 | ||
UNITED STATES | |||
Finite-lived Intangible Assets Reacquired and Acquired | 37 | 3,000 | |
Customer Lists and Reacquired Rights [Member] | UNITED STATES | |||
Finite-lived Intangible Assets Acquired | 100 | 1,500 | |
Goodwill [Member] | UNITED STATES | |||
Finite-lived Intangible Assets Acquired | $ 100 | $ 1,500 |
Assets Held For Sale Carrying Amount of Assets HFS (table) (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Apr. 30, 2018 |
Apr. 30, 2016 |
|
Property, Plant and Equipment [Line Items] | ||||
Assets Held for Sale | $ 5,231 | $ 14,678 | $ 8,941 | $ 11,989 |
Finite-lived Intangible Assets Reacquired and Acquired | 2,979 | |||
finite-lived intangible assets disposed | (3,747) | (290) | ||
UNITED STATES | ||||
Property, Plant and Equipment [Line Items] | ||||
Finite-lived Intangible Assets Reacquired and Acquired | $ 37 | $ 3,000 |
Forward Contracts (Details) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jul. 31, 2017 |
---|---|---|
Forward Contracts [Abstract] | ||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 4.12% | |
Interest Rate Derivative Liabilities, at Fair Value | $ 100 | $ 39 |
Income Taxes Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 3290.00% | 3950.00% |
Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Nov. 29, 2018 |
Feb. 15, 2017 |
Jan. 13, 2017 |
Sep. 09, 2016 |
Jun. 09, 2016 |
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Commitments and contingencies | |||||||
Dividends declared per share of common stock and common stock equivalents | $ 0.16 | $ 0.16 | |||||
JTH Tax, Inc. and Siempre Tax LLC v. Gregory Aime, Aime Consulting, LLC, Aime Consulting, Inc. and Wolf Ventures, Inc. (Case No. 2:16-cv279) [Member] | |||||||
Commitments and contingencies | |||||||
Loss Contingency, Damages Sought | three | ||||||
Loss Contingency, Damages Sought, Value | $ 2,400 | ||||||
Loss Contingency, Trial Period | 3 days | ||||||
Litigation Settlement, Amount Awarded to Other Party | $ 2,700 | ||||||
Loss Contingency Accrual | $ 2,700 | ||||||
Litigation Settlement, Amount Awarded from Other Party | $ 300 |
WQ!/O!Q<2I"Y'UL-7
M<-_&L_$165E:+D%9KA4RT%7X(3^>BH"/@.\<9KO9H]#)1>OG$'QJ*YP%0R"@
M<8&!^>4*CR!$(/(V?BZ<>)4,A=O]C?U#[-WW 4?N>=E;LU([-3[GH 7"-#Q)_J,I3'T,=V%00,FNW#S+_A.,]:S#
M8"S^"]R 6[C+Q'KDDFO_#?*K-E*,*C85P=Z&L6G]V \[FSL-)]"10"?"SA/(
M8.0S_\ ,RU(E^T -9]\Q]XOC [5GD[N@/PJ_9Y/7-GK+:+Q*R '7R5IM[UIY#-9%V]'MON<.CJZ>6D\Y&Z@S/V?"$>
MEL-YY<\TP_'IWWF].QR;R4O5ME79'YYMJZHUUF7TR8[NWN2;RTUAMFUWF=CK
M>CBV'&[:ZC0>R8:7<^'Y_U!+ P04 " "#@WY-2#^TW.P" #S"P &0
M 'AL+W=O L.RG* >M2))0EC#J?
M@SIW46<\, 3>'./-$;G$DH%C7S;VOS;& Z:2W. (M?C!9D-"[!:2$[6F31=S9%AH-3LH.S(7;0
M6IBW$R@<<[JG[XXGV;0N.%B1]:*!;^"^]V?C+;:P5%)#9R5VQ$"=T[O]\92&
M^!CP0\)H5V<2*KD@/@?CHT#
M^ +@*^ 8\[ Y453^07A1YM9,Q,Z]'T1XXO3$L3=5<,96Q#L4[]![*WF6Y.P6
MB):8\QS#-S'I&L&0?4W!]U*<^7]PO@\_["H\1/AAF_UXOT^0[1)DD2#[I\3T
M38E[,6]5LDU/%=@V3I,CE1EUG.2-=QW8!Q[?Y&_X/.U?A6U[[S>F9IC$WX4!HU!XH!J%H*(98OMY%4:,
M0O&!9)JB$2-:UX:,PI!1**^01%.@\NBM;<C.2T666-&5AU*-T?% X2#U-E%[WL^2_B!9.\Q);QS6^3]02P,$
M% @ @X-^3;E'T30' @ K04 !D !X;"]W;W)K1,FSS#4\!B5Q3!R_8Q#*\"#W
M![\)Z#- H'@B#MQ14 1(3/0D!/<41/ZCJO WCL8?.5!5".1VOV!P9%1,G.QQ
M++T]O]3V+C!8[8_\);9'S@>\O2]\H^)4U-+;<:4/+GN\'#E73'L)G[27L[ZB
M]).2'949IGHLVG.ZG2C>='>0H+\(+?X 4$L#!!0 ( (.#?DWE8_;1@ 0
M ",6 9 >&PO=V]R:W-H965T/%+=4?U\.*78'/C5@]L2.P>
MD;^AD2P2_#-C!;.EF6_N8>)(1!S?*0=>_/*.[8W$BU^"[8U;O@PKS18$%DHJ7OHJ6$)IWA"FD (64BAU1"OF@^56!PA!2 $)*QPF0#2%@
MF6:CPFQ1B"T^SB' %BD-ZTMCMFA0R2C#3('!H46^$C7F@08\($K4J:KA> <^
M-EDG3>:Q8O!HL)8AHM.T]N"\,*T3Q*98;SJ[[M 8(!H!)!:;SEY^:,P.C=@1
MRTRGEA]3(-DK%(W9HC-6*&N=O4+1F"H:487I[VE, 'W!$L5@81LD[%A2)E4T
M3.VU#TW629-YK)@@!I0>1%(F>VEB,&0,@DPL*9.-!X/Q8! >8DF9;#P8C >#
M\!!+RGS