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 | |
(Do not check if a smaller reporting company) | ||
Page | ||
Number | ||
Consolidated Balance Sheets as of July 31, 2016, April 30, 2016 and July 31, 2015 | ||
Consolidated Statements of Operations for the three months ended July 31, 2016 and 2015 | ||
Consolidated Statements of Comprehensive Loss for the three months ended July 31, 2016 and 2015 | ||
Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 2016 and 2015 | ||
July 31, 2016 | April 30, 2016 | July 31, 2015 | ||||||||||
Assets | (unaudited) | (unaudited) | ||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 4,882 | $ | 9,906 | $ | 4,418 | ||||||
Receivables: | ||||||||||||
Accounts receivable | 38,561 | 49,908 | 33,460 | |||||||||
Notes receivable - current | 34,474 | 26,710 | 35,214 | |||||||||
Interest receivable | 2,826 | 1,944 | 1,934 | |||||||||
Allowance for doubtful accounts - current | (6,284 | ) | (6,840 | ) | (6,208 | ) | ||||||
Total current receivables, net | 69,577 | 71,722 | 64,400 | |||||||||
Assets held for sale | 16,623 | 9,886 | 6,357 | |||||||||
Income taxes receivable | 7,093 | — | 7,901 | |||||||||
Deferred income tax asset | 2,847 | 3,496 | 6,773 | |||||||||
Other current assets | 2,796 | 5,838 | 2,552 | |||||||||
Total current assets | 103,818 | 100,848 | 92,401 | |||||||||
Property, equipment, and software, net of accumulated depreciation of $23,826, $21,052 and $17,665, respectively | 41,013 | 40,957 | 37,937 | |||||||||
Notes receivable, non-current | 24,481 | 25,514 | 23,079 | |||||||||
Allowance for doubtful accounts, non-current | (2,339 | ) | (2,010 | ) | (1,933 | ) | ||||||
Total notes receivables, non-current, net | 22,142 | 23,504 | 21,146 | |||||||||
Goodwill | 4,183 | 4,228 | 3,283 | |||||||||
Other intangible assets, net | 15,884 | 16,270 | 13,339 | |||||||||
Other assets | 3,246 | 7,416 | 3,070 | |||||||||
Total assets | $ | 190,286 | $ | 193,223 | $ | 171,176 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Current installments of long-term obligations | $ | 6,754 | $ | 5,947 | $ | 1,958 | ||||||
Accounts payable and accrued expenses | 9,590 | 11,664 | 16,819 | |||||||||
Due to area developers ("ADs") | 10,449 | 24,977 | 9,403 | |||||||||
Income taxes payable | — | 3,581 | 187 | |||||||||
Deferred revenue - current | 3,687 | 4,682 | 5,585 | |||||||||
Total current liabilities | 30,480 | 50,851 | 33,952 | |||||||||
Long-term obligations, excluding current installments, net of debt issuance costs of $94, $108 and $150, respectively | 18,298 | 17,493 | 20,708 | |||||||||
Revolving credit facility | 27,984 | — | 16,556 | |||||||||
Deferred revenue - non-current | 6,555 | 7,056 | 8,964 | |||||||||
Deferred income tax liability | 6,259 | 6,322 | 3,673 | |||||||||
Total liabilities | 89,576 | 81,722 | 83,853 | |||||||||
Commitments and contingencies | ||||||||||||
Stockholders’ equity: | ||||||||||||
Special voting preferred stock, $0.01 par value per share, 10 shares authorized, issued and outstanding | — | — | — | |||||||||
Class A common stock, $0.01 par value per share, 21,200,000 shares authorized, 12,594,756, 11,993,292 and 11,876,581 shares issued and outstanding, respectively | 126 | 120 | 119 | |||||||||
Class B common stock, $0.01 par value per share, 1,000,000 shares authorized, 300,000, 900,000 and 900,000 shares issued and outstanding, respectively | 3 | 9 | 9 | |||||||||
Exchangeable shares, $0.01 par value, 1,000,000 shares issued and outstanding | 10 | 10 | 10 | |||||||||
Additional paid-in capital | 7,897 | 7,153 | 4,049 | |||||||||
Accumulated other comprehensive income (loss), net of taxes | (1,580 | ) | (1,698 | ) | (1,455 | ) | ||||||
Retained earnings | 94,254 | 105,907 | 84,591 | |||||||||
Total stockholders’ equity | 100,710 | 111,501 | 87,323 | |||||||||
Total liabilities and stockholders’ equity | $ | 190,286 | $ | 193,223 | $ | 171,176 | ||||||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
Revenue: | ||||||||
Franchise fees | $ | 240 | $ | 608 | ||||
Area Developer fees | 970 | 1,604 | ||||||
Royalties and advertising fees | 1,455 | 1,745 | ||||||
Financial products | 536 | 308 | ||||||
Interest income | 2,658 | 2,006 | ||||||
Tax preparation fees, net of discounts | 1,057 | 623 | ||||||
Other revenue | 233 | 629 | ||||||
Total revenue | 7,149 | 7,523 | ||||||
Operating expenses: | ||||||||
Employee compensation and benefits | 9,682 | 8,633 | ||||||
Selling, general, and administrative expenses | 8,279 | 7,759 | ||||||
Area Developer expense | 460 | 726 | ||||||
Advertising expense | 1,918 | 2,609 | ||||||
Depreciation, amortization, and impairment charges | 2,012 | 1,670 | ||||||
Total operating expenses | 22,351 | 21,397 | ||||||
Loss from operations | (15,202 | ) | (13,874 | ) | ||||
Other income (expense): | ||||||||
Foreign currency transaction loss | (8 | ) | (25 | ) | ||||
Gain on sale of available-for-sale securities | 50 | — | ||||||
Interest expense | (344 | ) | (401 | ) | ||||
Loss before income taxes | (15,504 | ) | (14,300 | ) | ||||
Income tax benefit | (6,074 | ) | (5,764 | ) | ||||
Net loss | $ | (9,430 | ) | $ | (8,536 | ) | ||
Net loss per share of Class A and Class B common stock: | ||||||||
Basic and diluted | $ | (0.73 | ) | $ | (0.67 | ) | ||
Weighted-average shares outstanding basic and diluted | 12,894,740 | 12,811,621 | ||||||
Dividends declared per share of common stock and common stock equivalents | $ | 0.16 | $ | 0.16 | ||||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
Net loss | $ | (9,430 | ) | $ | (8,536 | ) | ||
Unrealized gain on available-for-sale securities, net of taxes of $345 and $-, respectively | 580 | — | ||||||
Reclassified gain on sale of available-for-sale securities included in income, net of taxes of $20 and $-, respectively | (30 | ) | — | |||||
Foreign currency translation adjustment | (431 | ) | (758 | ) | ||||
Comprehensive loss | $ | (9,311 | ) | $ | (9,294 | ) | ||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (9,430 | ) | $ | (8,536 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Provision for doubtful accounts | 1,380 | 1,701 | ||||||
Depreciation, amortization, and impairment charges | 2,012 | 1,670 | ||||||
Stock-based compensation expense | 683 | 465 | ||||||
Gain on sale of available-for-sale securities | (50 | ) | — | |||||
Gain on bargain purchases and sales of Company-owned offices | (28 | ) | (117 | ) | ||||
Deferred tax expense | 578 | 1,458 | ||||||
Changes in accrued income taxes | (10,997 | ) | (9,860 | ) | ||||
Changes in other assets and liabilities | (6,071 | ) | (2,241 | ) | ||||
Net cash used in operating activities | (21,923 | ) | (15,460 | ) | ||||
Cash flows from investing activities: | ||||||||
Issuance of operating loans to franchisees | (10,828 | ) | (12,333 | ) | ||||
Payments received on operating loans to franchisees | 1,096 | 654 | ||||||
Purchases of AD rights and Company-owned offices | (1,802 | ) | (336 | ) | ||||
Proceeds from sale of Company-owned offices and AD rights | 46 | 2,239 | ||||||
Proceeds from sale of available-for-sale securities | 5,049 | — | ||||||
Purchases of property, equipment and software | (1,556 | ) | (2,686 | ) | ||||
Net cash used in investing activities | (7,995 | ) | (12,462 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from the exercise of stock options | — | 279 | ||||||
Repurchase of common stock | — | (1,272 | ) | |||||
Dividends paid | (2,223 | ) | (2,212 | ) | ||||
Repayment of amounts due to former ADs and franchisees | (423 | ) | (2,318 | ) | ||||
Repayment of long-term obligations | (416 | ) | (282 | ) | ||||
Borrowings under revolving credit facility | 28,002 | 16,556 | ||||||
Repayments under revolving credit facility | (18 | ) | — | |||||
Tax benefit of stock option exercises | 60 | 495 | ||||||
Net cash provided by financing activities | 24,982 | 11,246 | ||||||
Effect of exchange rate changes on cash, net | (88 | ) | (293 | ) | ||||
Net decrease in cash and cash equivalents | (5,024 | ) | (16,969 | ) | ||||
Cash and cash equivalents at beginning of period | 9,906 | 21,387 | ||||||
Cash and cash equivalents at end of period | $ | 4,882 | $ | 4,418 | ||||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest, net of capitalized interest of $106 and $66, respectively | $ | 241 | $ | 251 | ||||
Cash paid for taxes, net of refunds | 4,286 | 2,144 | ||||||
Accrued capitalized software costs included in accounts payable | 114 | 281 | ||||||
During the three months ended July 31, 2016 and 2015, the Company acquired certain assets from ADs, franchisees, and third parties as follows: | ||||||||
Fair value of assets purchased | $ | 8,622 | $ | 2,134 | ||||
Receivables applied, net of amounts due ADs and related deferred revenue | (4,146 | ) | (1,731 | ) | ||||
Bargain purchase gains | (80 | ) | (24 | ) | ||||
Notes and accounts payable issued | (2,594 | ) | (43 | ) | ||||
Cash paid to ADs, franchisees and third parties | $ | 1,802 | $ | 336 | ||||
During the three months ended July 31, 2016 and 2015, the Company sold certain assets to ADs and franchisees as follows: | ||||||||
Book value of assets sold | $ | 1,191 | $ | 1,683 | ||||
Gain on sale-revenue deferred | 12 | 1,679 | ||||||
Loss on sale - loss recognized | (12 | ) | (28 | ) | ||||
Notes received | (1,145 | ) | (1,095 | ) | ||||
Cash received from ADs and franchisees | $ | 46 | $ | 2,239 | ||||
July 31, 2016 | April 30, 2016 | July 31, 2015 | ||||||||||
(In thousands) | ||||||||||||
Notes receivable - current | $ | 34,474 | $ | 26,710 | $ | 35,214 | ||||||
Notes receivable - non-current | 24,481 | 25,514 | 23,079 | |||||||||
Interest | 2,826 | 1,944 | 1,934 | |||||||||
Total notes and interest receivable | $ | 61,781 | $ | 54,168 | $ | 60,227 | ||||||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
(In thousands) | ||||||||
Balance at beginning of period | $ | 8,850 | $ | 7,355 | ||||
Provision for doubtful accounts | 1,380 | 1,701 | ||||||
Write-offs | (1,571 | ) | (829 | ) | ||||
Foreign currency adjustment | (36 | ) | (86 | ) | ||||
Balance at end of period | $ | 8,623 | $ | 8,141 | ||||
July 31, 2016 | April 30, 2016 | July 31, 2015 | ||||||||||
(In thousands) | ||||||||||||
Impaired: | ||||||||||||
Notes and interest receivable, net of unrecognized revenue | $ | 11,040 | $ | 12,960 | $ | 10,633 | ||||||
Accounts receivable | 6,425 | 7,083 | 6,699 | |||||||||
Less amounts due to ADs and franchisees | (1,251 | ) | (1,426 | ) | (1,304 | ) | ||||||
Amounts receivable less amounts due to ADs and franchisees | $ | 16,214 | $ | 18,617 | $ | 16,028 | ||||||
Allowance for doubtful accounts for impaired notes and accounts receivable | $ | 6,240 | $ | 7,787 | $ | 6,616 | ||||||
Non-impaired: | ||||||||||||
Notes and interest receivable, net of unrecognized revenue | $ | 50,741 | $ | 41,208 | $ | 49,594 | ||||||
Accounts receivable | 32,136 | 42,825 | 26,761 | |||||||||
Less amounts due to ADs and franchisees | (10,335 | ) | (26,183 | ) | (8,795 | ) | ||||||
Amounts receivable less amounts due to ADs and franchisees | $ | 72,542 | $ | 57,850 | $ | 67,560 | ||||||
Allowance for doubtful accounts for non-impaired notes and accounts receivable | $ | 2,383 | $ | 1,063 | $ | 1,525 | ||||||
Total: | ||||||||||||
Notes and interest receivable, net of unrecognized revenue | $ | 61,781 | $ | 54,168 | $ | 60,227 | ||||||
Accounts receivable | 38,561 | 49,908 | 33,460 | |||||||||
Less amounts due to ADs and franchisees | (11,586 | ) | (27,609 | ) | (10,099 | ) | ||||||
Amounts receivable less amounts due to ADs and franchisees | $ | 88,756 | $ | 76,467 | $ | 83,588 | ||||||
Total allowance for doubtful accounts | $ | 8,623 | $ | 8,850 | $ | 8,141 | ||||||
Past due | Current | Total receivables | ||||||||||
(In thousands) | ||||||||||||
Accounts receivable | $ | 36,175 | $ | 2,386 | $ | 38,561 | ||||||
Notes and interest receivable, net of unrecognized revenue | 13,238 | 48,543 | 61,781 | |||||||||
Total accounts, notes and interest receivable | $ | 49,413 | $ | 50,929 | $ | 100,342 | ||||||
July 31, 2016 | July 31, 2015 | |||||||
(In thousands) | ||||||||
Balance at beginning of period | $ | 4,228 | $ | 3,377 | ||||
Acquisitions of assets from franchisees | — | — | ||||||
Disposals and foreign currency changes, net | (45 | ) | (94 | ) | ||||
Impairments | — | — | ||||||
Balance at end of period | $ | 4,183 | $ | 3,283 | ||||
July 31, 2016 | ||||||||||||||
Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
(In thousands) | ||||||||||||||
Amortizable intangible assets: | ||||||||||||||
Customer lists acquired from unrelated third parties | 4 years | $ | 1,027 | $ | (408 | ) | $ | 619 | ||||||
Assets acquired from franchisees: | ||||||||||||||
Customer lists | 4 years | 1,355 | (551 | ) | 804 | |||||||||
Reacquired rights | 2 years | 491 | (452 | ) | 39 | |||||||||
AD rights | 10 years | 20,415 | (5,993 | ) | 14,422 | |||||||||
Total intangible assets | $ | 23,288 | $ | (7,404 | ) | $ | 15,884 | |||||||
April 30, 2016 | ||||||||||||||
Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
(In thousands) | ||||||||||||||
Amortizable intangible assets: | ||||||||||||||
Customer lists acquired from unrelated third parties | 4 years | $ | 1,027 | $ | (339 | ) | $ | 688 | ||||||
Assets acquired from franchisees: | ||||||||||||||
Customer lists | 4 years | 1,380 | (500 | ) | 880 | |||||||||
Reacquired rights | 2 years | 511 | (482 | ) | 29 | |||||||||
AD rights | 10 years | 20,218 | (5,545 | ) | 14,673 | |||||||||
Total intangible assets | $ | 23,136 | $ | (6,866 | ) | $ | 16,270 | |||||||
July 31, 2015 | ||||||||||||||
Weighted average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||
(In thousands) | ||||||||||||||
Amortizable intangible assets: | ||||||||||||||
Customer lists acquired from unrelated third parties | 4 years | $ | 1,027 | $ | (85 | ) | $ | 942 | ||||||
Assets acquired from franchisees: | ||||||||||||||
Customer lists | 4 years | 707 | (513 | ) | 194 | |||||||||
Reacquired rights | 2 years | 518 | (438 | ) | 80 | |||||||||
AD rights | 10 years | 16,505 | (4,382 | ) | 12,123 | |||||||||
Total intangible assets | $ | 18,757 | $ | (5,418 | ) | $ | 13,339 | |||||||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
(In thousands) | ||||||||
Customer lists and reacquired rights | $ | — | $ | 10 | ||||
Total | $ | — | $ | 10 | ||||
Three Months Ended July 31, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
Balance at beginning of period | $ | 9,886 | $ | 5,160 | |||
Reacquired, acquired from third parties, and other | 7,647 | 2,001 | |||||
Dispositions | (910 | ) | (804 | ) | |||
Balance at end of period | $ | 16,623 | $ | 6,357 | |||
July 31, 2016 | April 30, 2016 | July 31, 2015 | ||||||||||
(In thousands) | ||||||||||||
Credit Facility: | ||||||||||||
Revolver | $ | 27,984 | $ | — | $ | 16,556 | ||||||
Term loan, net of debt issuance costs | 18,500 | 18,884 | 20,037 | |||||||||
46,484 | 18,884 | 36,593 | ||||||||||
Due former ADs and franchisees | 4,330 | 2,317 | 335 | |||||||||
Mortgages | 2,222 | 2,239 | 2,294 | |||||||||
53,036 | 23,440 | 39,222 | ||||||||||
Less: current installments | (6,754 | ) | (5,947 | ) | (1,958 | ) | ||||||
Long-term obligations | $ | 46,282 | $ | 17,493 | $ | 37,264 | ||||||
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
(in thousands, except for share amounts) | ||||||||
Class A common shares issued from the exercise of stock options | — | 17,710 | ||||||
Class A common shares issued from the vesting of restricted stock and as Board of Directors compensation | 1,083 | 5,324 | ||||||
Class B common shares converted to Class A common shares | 600,000 | — | ||||||
Class A common shares repurchased | — | 51,609 | ||||||
Proceeds from exercise of stock options | $ | — | $ | 279 | ||||
Stock-based compensation expense | $ | 683 | $ | 465 | ||||
Repurchase of common stock | $ | — | $ | 1,272 | ||||
Tax benefit of stock option exercises | $ | 60 | $ | 495 | ||||
Dividends declared | $ | 2,223 | $ | 2,212 | ||||
July 31, 2016 | April 30, 2016 | July 31, 2015 | ||||||||||
(In thousands) | ||||||||||||
Foreign currency adjustment | $ | (1,580 | ) | $ | (1,148 | ) | $ | (1,455 | ) | |||
Unrealized loss on available-for-sale securities, net of taxes of $-, $324, and $-, respectively | — | (550 | ) | — | ||||||||
Total accumulated other comprehensive loss | $ | (1,580 | ) | $ | (1,698 | ) | $ | (1,455 | ) | |||
Three Months Ended July 31, 2016 | Three Months Ended July 31, 2015 | |||||||||||||||
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) | (in thousands, except for share and per share amounts) | |||||||||||||||
Basic and diluted net loss per share: | ||||||||||||||||
Numerator | ||||||||||||||||
Allocation of undistributed income | $ | (9,120 | ) | $ | (310 | ) | $ | (7,936 | ) | $ | (600 | ) | ||||
Denominator | ||||||||||||||||
Weighted-average common shares outstanding | 12,470,827 | 423,913 | 11,911,621 | 900,000 | ||||||||||||
Basic and diluted net loss per share | $ | (0.73 | ) | $ | (0.73 | ) | $ | (0.67 | ) | $ | (0.67 | ) | ||||
Number of options | Weighted average exercise price | ||||||
Balance at beginning of period | 1,264,562 | $ | 19.77 | ||||
Granted | 27,000 | 10.51 | |||||
Exercised | — | — | |||||
Expired or forfeited | (57,750 | ) | 15.05 | ||||
Balance at end of period | 1,233,812 | 19.79 | |||||
Nonvested options | Weighted average exercise price | ||||||
Balance at beginning of period | 389,053 | $ | 24.76 | ||||
Granted | 27,000 | 10.51 | |||||
Vested | (75,000 | ) | 23.09 | ||||
Forfeited | — | — | |||||
Balance at end of period | 341,053 | 24.00 | |||||
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 | |||||||||||
$10.51 - $15.00 | 472,133 | $ | 14.74 | 1.9 | 445,133 | $ | 15.00 | |||||||||
16.38 - 19.75 | 290,876 | 17.90 | 3.7 | 263,876 | 17.94 | |||||||||||
22.18 - 29.48 | 405,387 | 24.83 | 5.4 | 155,000 | 24.90 | |||||||||||
33.38 | 65,416 | 33.38 | 5.3 | 28,750 | 33.38 | |||||||||||
1,233,812 | 19.79 | 892,759 | 18.18 | |||||||||||||
Number of Restricted stock units | Weighted average fair value at grant date | ||||||
Balance at beginning of period | 42,792 | $ | 26.10 | ||||
Granted | — | — | |||||
Vested | — | — | |||||
Forfeited | — | — | |||||
Balance at end of period | 42,792 | 26.10 | |||||
• | 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, 2016 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Nonrecurring: | ||||||||||||||||
Impaired accounts and notes receivable | $ | 11,224 | $ | — | $ | — | $ | 11,224 | ||||||||
Liabilities: | ||||||||||||||||
Recurring: | ||||||||||||||||
Obligations due former ADs and franchisees | $ | 2,173 | $ | — | $ | — | $ | 2,173 | ||||||||
April 30, 2016 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Recurring: | ||||||||||||||||
Cash equivalents | $ | 7,140 | $ | 7,140 | $ | — | $ | — | ||||||||
Available-for-sale securities | 4,123 | 4,123 | — | — | ||||||||||||
Total recurring assets | 11,263 | 11,263 | — | — | ||||||||||||
Nonrecurring: | ||||||||||||||||
Impaired accounts and notes receivable | 12,256 | — | — | 12,256 | ||||||||||||
Impaired goodwill | 63 | — | — | 63 | ||||||||||||
Impaired reacquired rights | 28 | — | — | 28 | ||||||||||||
Impaired customer lists | 34 | — | — | 34 | ||||||||||||
Assets held for sale | 9,886 | — | — | 9,886 | ||||||||||||
Total nonrecurring assets | 22,267 | — | — | 22,267 | ||||||||||||
Total recurring and nonrecurring assets | $ | 33,530 | $ | 11,263 | $ | — | $ | 22,267 | ||||||||
July 31, 2015 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Nonrecurring: | ||||||||||||||||
Impaired accounts and notes receivable | $ | 10,716 | $ | — | $ | — | $ | 10,716 | ||||||||
• | our inability to sustain growth at our historical pace; |
• | the seasonality of our business; |
• | the continued service of our senior management team and our ability to attract additional talent; |
• | 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 our tax 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; |
• | 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 and as cash is received. |
• | Area Developer 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, which has historically been ten years, with the cumulative amount of revenue recognized not to exceed the amount of cash received. We changed the term of new and renewal AD contracts to six years beginning in July 2014. |
• | Royalties: Our franchise agreements require franchisees to pay us a base royalty typically equal to 14% of the franchisee's tax preparation revenue, subject to certain specified minimums. |
• | Advertising Fees: Our franchise agreements require all franchisees to pay us an advertising fee of 5% of the franchisee's 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 fees and AD territory fees, and for other loans we extend to our franchisees related to the operation of their territories. For franchise fees and AD loans upon which the underlying revenue has not been recognized, we recognize the interest income only to the extent of actual payment. We also earn interest on our accounts receivable. |
• | Tax Preparation Fees: We earn tax preparation fees, net of discounts, directly from both the operation of Company-owned offices and providing tax preparation services through our online tax return products. |
Three Months Ended July 31, | |||||||||||||||
Change | |||||||||||||||
2016 | 2015 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Total revenue | $ | 7,149 | $ | 7,523 | $ | (374 | ) | (5 | )% | ||||||
Loss from operations | (15,202 | ) | (13,874 | ) | (1,328 | ) | 10 | % | |||||||
Net loss | (9,430 | ) | (8,536 | ) | (894 | ) | 10 | % | |||||||
Three Months Ended July 31, | |||||||||||||||
Change | |||||||||||||||
2016 | 2015 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Franchise fees | $ | 240 | $ | 608 | $ | (368 | ) | (61 | )% | ||||||
Area Developer fees | 970 | 1,604 | (634 | ) | (40 | )% | |||||||||
Royalties and advertising fees | 1,455 | 1,745 | (290 | ) | (17 | )% | |||||||||
Financial products | 536 | 308 | 228 | 74 | % | ||||||||||
Interest income | 2,658 | 2,006 | 652 | 33 | % | ||||||||||
Tax preparation fees, net of discounts | 1,057 | 623 | 434 | 70 | % | ||||||||||
Other revenue | 233 | 629 | (396 | ) | (63 | )% | |||||||||
Total revenue | $ | 7,149 | $ | 7,523 | $ | (374 | ) | (5 | )% | ||||||
Three Months Ended July 31, | |||||||||||||||
Change | |||||||||||||||
2016 | 2015 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Employee compensation and benefits | $ | 9,682 | $ | 8,633 | $ | 1,049 | 12 | % | |||||||
Selling, general, and administrative expenses | 8,279 | 7,759 | 520 | 7 | % | ||||||||||
Area Developer expense | 460 | 726 | (266 | ) | (37 | )% | |||||||||
Advertising expense | 1,918 | 2,609 | (691 | ) | (26 | )% | |||||||||
Depreciation, amortization, and impairment charges | 2,012 | 1,670 | 342 | 20 | % | ||||||||||
Total operating expenses | $ | 22,351 | $ | 21,397 | $ | 954 | 4 | % | |||||||
• | 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, and |
• | We must maintain a minimum net worth requirement, measured at April 30 of each year. |
• | The delay by the IRS until at least February 15, 2017 to issue refunds to taxpayers who claim the Earned Income Tax Credit or the Child Tax Credit. |
• | The extent to which we extend additional operating financing to our franchisees and ADs, beyond the levels of prior periods, |
• | 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 fee 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 |
• | The extent, if any, to which our Board of Directors elects to continue to declare cash dividends on our common stock. |
• | Executive severance including stock-based compensation: We exclude from our non-GAAP results cash and non-cash stock-based compensation and perquisites associated with the separation of employment with executives. |
• | Compliance Task Force and related costs: We exclude from our non-GAAP results third-party expenses we incur related to our Compliance Task Force. These expenses include professional and legal fees. |
• | Gain on available-for-sale securities: We exclude from our non-GAAP results gains we record when we sell equity securities. |
Three Months Ended July 31, | ||||||||
2016 | 2015 | |||||||
(in thousands) | ||||||||
Net loss - as reported | $ | (9,430 | ) | $ | (8,536 | ) | ||
Add back: | ||||||||
Interest expense | 344 | 401 | ||||||
Income tax benefit | (6,074 | ) | (5,764 | ) | ||||
Depreciation, amortization, and impairment charges | 2,012 | 1,670 | ||||||
(3,718 | ) | (3,693 | ) | |||||
EBITDA | $ | (13,148 | ) | $ | (12,229 | ) | ||
Three Months Ended July 31, 2016 | |||||||||||||||||||||
(in thousands except per share data) | |||||||||||||||||||||
Revenues | Expenses | Loss from Operations | EBITDA | Loss before Taxes | Net Loss | EPS | |||||||||||||||
As Reported | $ | 7,149 | $ | 22,351 | $ | (15,202 | ) | $ | (13,148 | ) | $ | (15,504 | ) | $ | (9,430 | ) | (0.73 | ) | |||
Adjustments: | |||||||||||||||||||||
Executive severance including stock-based compensation | — | (877 | ) | 877 | 877 | 877 | 533 | 0.04 | |||||||||||||
Compliance Task Force and related costs | — | (640 | ) | 640 | 640 | 640 | 389 | 0.03 | |||||||||||||
Gain on available-for-sale securities | — | — | — | (50 | ) | (50 | ) | (30 | ) | — | |||||||||||
Total adjustments | — | (1,517 | ) | 1,517 | 1,467 | 1,467 | 892 | 0.07 | |||||||||||||
Non-GAAP | $ | 7,149 | $ | 20,834 | $ | (13,685 | ) | $ | (11,681 | ) | $ | (14,037 | ) | $ | (8,538 | ) | $ | (0.66 | ) | ||
Stock-based compensation expense excluding severance related expense | $ | — | $ | (393 | ) | $ | 393 | $ | 393 | ||||||||||||
Three Months Ended July 31, 2015 | |||||||||||||||||||||
(in thousands except per share data) | |||||||||||||||||||||
Revenues | Expenses | Loss from Operations | EBITDA | Loss before Taxes | Net Loss | EPS | |||||||||||||||
As Reported | $ | 7,523 | $ | 21,397 | $ | (13,874 | ) | $ | (12,229 | ) | $ | (14,300 | ) | $ | (8,536 | ) | $ | (0.67 | ) | ||
Adjustments: | |||||||||||||||||||||
Executive severance including stock-based compensation | — | (413 | ) | 413 | 413 | 413 | 248 | 0.02 | |||||||||||||
Total adjustments | — | (413 | ) | 413 | 413 | 413 | 248 | 0.02 | |||||||||||||
Non-GAAP | $ | 7,523 | $ | 20,984 | $ | (13,461 | ) | $ | (11,816 | ) | $ | (13,887 | ) | $ | (8,288 | ) | $ | (0.65 | ) | ||
Stock-based compensation expense excluding severance related expense | $ | — | $ | (373 | ) | $ | 373 | $ | 373 | ||||||||||||
Exhibit Number | Exhibit Description | Filed Herewith | Incorporated by Reference | |||
31.1 | Certification of Chief Executive Officer | X | ||||
31.2 | Certification of Chief Financial Officer | X | ||||
32.1(1) | Section 1350 Certification (Chief Executive Officer) | X | ||||
32.2(1) | Section 1350 Certification (Chief Financial Officer) | X | ||||
101.INS(2) | XBRL Instance Document | X | ||||
101.SCH(2) | XBRL Taxonomy Extension Schema | X | ||||
101.CAL(2) | XBRL Taxonomy Extension Calculation Linkbase | X | ||||
101.LAB(2) | XBRL Taxonomy Extension Label Linkbase | X | ||||
101.PRE(2) | XBRL Taxonomy Extension Presentation Linkbase | X | ||||
101.DEF(2) | XBRL Taxonomy Extension Definition Linkbase | X | ||||
Liberty Tax, Inc. (Registrant) | |||
September 2, 2016 | By: | /s/ John T. Hewitt | |
John T. Hewitt Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | |||
September 2, 2016 | By: | /s/ Kathleen E. Donovan | |
Kathleen E. Donovan Chief Financial Officer (Principal Financial Officer) | |||
Exhibit Number | Exhibit Description | Filed Herewith | Incorporated by Reference | |||
31.1 | Certification of Chief Executive Officer | X | ||||
31.2 | Certification of Chief Financial Officer | X | ||||
32.1(1) | Section 1350 Certification (Chief Executive Officer) | X | ||||
32.2(1) | Section 1350 Certification (Chief Financial Officer) | X | ||||
101.INS(2) | XBRL Instance Document | X | ||||
101.SCH(2) | XBRL Taxonomy Extension Schema | X | ||||
101.CAL(2) | XBRL Taxonomy Extension Calculation Linkbase | X | ||||
101.LAB(2) | XBRL Taxonomy Extension Label Linkbase | X | ||||
101.PRE(2) | XBRL Taxonomy Extension Presentation Linkbase | X | ||||
101.DEF(2) | XBRL Taxonomy Extension Definition Linkbase | X | ||||
September 2, 2016 | By: | /s/ John T. Hewitt |
John T. Hewitt | ||
Chief Executive Officer and Chairman of the Board | ||
(Principal Executive Officer) | ||
September 2, 2016 | By: | /s/ Kathleen E. Donovan |
Kathleen E. Donovan | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
September 2, 2016 | By: | /s/ John T. Hewitt |
John T. Hewitt | ||
Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | ||
September 2, 2016 | By: | /s/ Kathleen E. Donovan |
Kathleen E. Donovan | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Aug. 25, 2016 |
|
| 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, 2016 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --04-30 | |
| Entity Filer Category | Accelerated Filer | |
| Document Fiscal Year Focus | 2017 | |
| Document Fiscal Period Focus | Q1 | |
| Common Class A [Member] | ||
| Entity Information [Line Items] | ||
| Entity Common Stock, Shares Outstanding | 11,971,808 | |
| Common Class B [Member] | ||
| Entity Information [Line Items] | ||
| Entity Common Stock, Shares Outstanding | 300,000 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax | $ 580 | $ 0 |
| Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax | 30 | 0 |
| Net loss | (9,430) | (8,536) |
| Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax | (431) | (758) |
| Comprehensive loss | $ (9,311) | $ (9,294) |
Condensed Consolidated Statements of Comprehensive Loss parentheticals - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $ 345 | $ 0 |
| Other Comprehensive Income (Loss), Available-for-sale Securities, before Reclassification Adjustments, Tax | $ 20 | $ 0 |
Organization and Significant Accounting Policies |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| 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 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 and personal income tax refund discounting in Canada. The Company also offers online tax preparation services. All of the offices are operated under the Liberty Tax Service and SiempreTax+ brands. The Company provides a substantial amount of lending to its franchisees and 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 fund 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 Liberty Tax, Inc. 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 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 exerts significant influence over the entity, the Company applies the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("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. Consolidated balance sheet data as of April 30, 2016 was derived from the Company’s April 30, 2016 Annual Report on Form 10-K filed on June 29, 2016. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements in accordance with GAAP have been recorded. These adjustments consisted only of normal recurring items. The accompanying consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in its April 30, 2016 Annual Report on Form 10-K filed on June 29, 2016. 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 each year and the Company will report office count information for the quarter ended January 31, 2017 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 On May 1, 2016, the Company adopted Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt premiums and discounts, and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which further clarifies the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-03 and 2015-15 applies retrospectively and does not change the recognition and measurement requirements for debt issuance costs. The adoption of ASU 2015-03 and 2015-15 resulted in the reclassification of $0.1 million, $0.1 million and $0.2 million of unamortized debt issuance costs related to the Company's borrowings from other assets to long-term obligations within our consolidated balance sheet for each period ended July 31, 2016, April 30, 2016 and July 31, 2015, respectively. On May 1, 2016, the Company adopted ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which effectively eliminates the presumption that a general partner should consolidate a limited partnership, modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIE"s) or voting interest entities, and affects the consolidation analysis of reporting entities that are involved with VIEs (particularly those that have fee arrangements and related party relationships). The Company has completed its evaluation and has concluded there is no material impact from the adoption of the new standard on its consolidated financial statements. Foreign Operations Canadian operations contributed $0.9 million and $1.0 million in revenues for the three months ended July 31, 2016 and 2015, respectively. |
Notes and Accounts Receivable |
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| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes and Accounts Receivable | Accounts and Notes Receivable The Company provides 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 12%. Notes and interest receivable are presented in the consolidated balance sheets as follows:
Most of the notes receivable are due from the Company's ADs and franchisees and are collateralized by the underlying AD or 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. Accounts and notes receivable include royalties billed that relate to territories operated by franchisees located in AD territories and a portion of those accounts and notes receivable are payable to the AD. The Company has recorded amounts payable to ADs for their share of these receivables of $10.4 million, $25.0 million, and $9.4 million at July 31, 2016, April 30, 2016 and July 31, 2015, respectively. At July 31, 2016, the Company had unfunded lending commitments for working capital loans to franchisees and ADs of $20.9 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 value of the franchises and AD areas supporting 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, 2016 and 2015 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. We perform our impairment analysis annually due to the seasonal nature of our 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 adjust the allowance for doubtful accounts accordingly. While not specifically identifiable as of the balance sheet date, the Company's experience also indicates that a portion of other accounts and notes receivable are also impaired, because management does not expect to collect all principal and interest due under the current contractual terms. 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. 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 allowance for doubtful accounts at July 31, 2016, April 30, 2016 and July 31, 2015, was allocated as follows:
The Company’s average investment in impaired notes receivable during the three months ended July 31, 2016 and 2015 was $12.0 million and $10.8 million, respectively. Analysis of Past Due Receivables 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, at which time the notes are put on non-accrual status. Accounts receivables unpaid as of April 30 each year often remain unpaid until the following tax season due to the seasonal nature of our operations and franchisees' cash flows. Non-accrual notes that are paid current and expected to remain current are moved back into accrual status during the next annual review. The breakdown of accounts and notes receivable past due at July 31, 2016 was as follows:
The Company’s investment in notes receivable on non-accrual status was $13.2 million, $5.5 million, and $15.9 million at July 31, 2016, April 30, 2016, and July 31, 2015, respectively. Payments received on notes in non-accrual status are applied to interest income first until the note is current and then to the principal note balance. |
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Goodwill and Intangible Assets |
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| 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, 2016 and 2015 were as follows:
Components of intangible assets were as follows as of July 31, 2016, April 30, 2016 and July 31, 2015:
During the three months ended July 31, 2016, 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. During the three months ended July 31, 2015, the Company acquired the assets of Canadian franchisees for $10,000. These acquisitions were accounted for as business combinations. The allocation of the purchase price of assets acquired from ADs and franchisees to intangible assets during the three months ended July 31, 2016 and 2015 was as follows:
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Assets Held For Sale (Notes) |
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets Held For Sale Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets Held for Sale | Assets Held For Sale At the end of the first quarter of fiscal 2017 and 2016, assets acquired from U.S. franchisees were classified as assets held for sale. During the three months ended July 31, 2016, the Company acquired $7.6 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 $4.1 million and goodwill of $3.5 million prior to being recorded as assets held for sale. The value of assets acquired includes $2.2 million of estimated contingent consideration that is included in long-term obligations as due to former ADs and franchisees. During the three months ended July 31, 2015, the Company acquired $2.0 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 $0.9 million and goodwill of $1.1 million prior to being recorded as assets held for sale. The acquired businesses are operated as Company-owned offices until a buyer is located and a new franchise agreement is entered into. Changes in the carrying amount of assets held for sale for the three months ended July 31, 2016 and 2015 were as follows:
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Debt |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | The Company has a credit facility that consists of a $21.2 million term loan and a revolving credit facility that currently allows borrowing of up to $203.8 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. At July 31, 2016 and 2015, the average interest rate paid during the three months ended July 31, 2016 and 2015 was 2.07% and 1.81%, respectively. The indebtedness is collateralized by substantially all the assets of the Company and both loans mature on April 30, 2019 (except as to the commitments of one lender that has a small balance under the revolving credit facility, which mature on September 30, 2017). 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 loan 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, 2016. Long-term obligations at July 31, 2016, April 30, 2016, and July 31, 2015 consisted of the following:
As discussed in Note 1, the adoption of ASU 2015-03 and ASU 2015-15 resulted in the reclassification of $0.1 million, $0.1 million and $0.2 million of unamortized debt issuance costs related to the Company's borrowings from other assets to long-term obligations within our consolidated balance sheet for each period ended July 31, 2016, April 30, 2016 and July 31, 2015, respectively. |
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Income Taxes |
3 Months Ended |
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Jul. 31, 2016 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company computes its provision for, or benefit from, income taxes by applying the estimated annual effective tax rate to income or loss from recurring operations and adjusting for the effects of any discrete income tax items specific to the period. |
Stock Compensation Plans |
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| 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, 2016, 1,386,653 shares of Class A common stock remain available for grant. There were 27,000 options granted during the three months ended July 31, 2016. Stock option activity during the three months ended July 31, 2016 was as follows:
Intrinsic value is defined as the market value of the stock less the cost to exercise. There were no options exercised during the three months ended July 31, 2016. The total intrinsic value of stock options outstanding at July 31, 2016 was $0.1 million. Stock options vest from six months to five years from the date of grant and expire from four to five years after the vesting date. Nonvested stock options activity during the three months ended July 31, 2016 was as follows:
At July 31, 2016, unrecognized compensation costs related to nonvested stock options were $1.6 million. These costs are expected to be recognized through fiscal 2021. The following table summarizes information about stock options outstanding and exercisable at July 31, 2016:
Restricted Stock Units Restricted stock activity during the three months ended July 31, 2016 was as follows:
At July 31, 2016, unrecognized compensation costs related to restricted stock units were $0.5 million. These costs are expected to be recognized through fiscal 2019. |
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Fair Value of Financial Instruments |
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| 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, 2016, April 30, 2016 and July 31, 2015, 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, 2016 and 2015. 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. Available-for-sale securities: Available-for-sale securities are carried at their aggregate fair value. Fair values for available-for-sale securities are based on published market prices. Impaired accounts and notes receivable: 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, 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 marketplace transactions. 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. Obligations due former ADs and franchisees: Obligations due 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. Impaired online software and acquired online customer lists: The online software and acquired online customer lists are considered to be impaired if the net carrying amount of these assets exceeds the fair value of these assets. The fair value of these assets was determined using a discounted cash flow model. 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. Receivables other than notes, other current assets, accounts payable, and accrued expenses, and due to ADs: The carrying amounts approximate fair value because of the short maturity of these 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). |
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Related Party Transactions |
3 Months Ended |
|---|---|
Jul. 31, 2014 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions The Company considers directors and their affiliated companies as well as executive officers and members of their immediate family to be related parties. During fiscal 2015, the Company entered into a multi-year contract to purchase a license for the use of Canadian tax software at a price of $0.7 million from a company in which it has an investment accounted for under the equity method. One of the members of the Company's Board of Directors is affiliated with the company providing this service. |
Commitments and Contingencies |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| 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, 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. 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 or financial position. |
Subsequent Event (Notes) |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| Subsequent Events [Abstract] | |
| Subsequent Events [Text Block] | Subsequent Events On September 1, 2016, the Board of Directors approved a quarterly cash dividend to shareholders of $0.16 per share payable on October 24, 2016 to holders of record of common stock and common stock equivalents on October 14, 2016. On August 18, 2016, the Company amended its credit facility, to provide for a modification of certain loan covenants to increase the Company’s leverage ratio during the third quarter of each fiscal year. |
Investments (Notes) |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| Investments, Debt and Equity Securities [Abstract] | |
| Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | Investments During the fiscal 2016, the Company purchased a corporate equity security for $5.0 million, which was classified as available-for-sale and reported in other non-current assets. The security was sold during the first quarter of fiscal 2017. A gain on the sale of $50,000 was recognized and reclassified out of accumulated other comprehensive income, net of taxes and recorded as other income. The Company had no such investments at July 31, 2015. |
Forward Contracts (Notes) |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| Foreign Currency [Abstract] | |
| Forward Contracts [Text Block] | Forward Contracts Related to Foreign Currency Exchange Rates In connection with short-term advances made to its Canadian subsidiary related to personal income tax refund discounting, the Company periodically enters into forward contracts to eliminate the exposure related to foreign currency fluctuations. Under the terms of the forward currency contracts, the exchange rate for repayments is fixed at the time an advance is made and the advances are repaid prior to April 30 of the fiscal year of the advance. At July 31, 2016, we had no forward contracts. |
Organization and Significant Accounting Policies (Policies) |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| Accounting Policies [Abstract] | |
| Description of Business | 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 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 and personal income tax refund discounting in Canada. The Company also offers online tax preparation services. All of the offices are operated under the Liberty Tax Service and SiempreTax+ brands. The Company provides a substantial amount of lending to its franchisees and 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 fund 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 Liberty Tax, Inc. 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 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 exerts significant influence over the entity, the Company applies the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("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. Consolidated balance sheet data as of April 30, 2016 was derived from the Company’s April 30, 2016 Annual Report on Form 10-K filed on June 29, 2016. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements in accordance with GAAP have been recorded. These adjustments consisted only of normal recurring items. The accompanying consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in its April 30, 2016 Annual Report on Form 10-K filed on June 29, 2016. |
| Office Count | 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 each year and the Company will report office count information for the quarter ended January 31, 2017 once all offices have been opened. |
| 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 On May 1, 2016, the Company adopted Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt premiums and discounts, and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which further clarifies the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-03 and 2015-15 applies retrospectively and does not change the recognition and measurement requirements for debt issuance costs. The adoption of ASU 2015-03 and 2015-15 resulted in the reclassification of $0.1 million, $0.1 million and $0.2 million of unamortized debt issuance costs related to the Company's borrowings from other assets to long-term obligations within our consolidated balance sheet for each period ended July 31, 2016, April 30, 2016 and July 31, 2015, respectively. |
| Foreign Operations | Foreign Operations Canadian operations contributed $0.9 million and $1.0 million in revenues for the three months ended July 31, 2016 and 2015, respectively. |
Stockholders' Equity Stockholders' Equity Activity (Policies) |
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| Stockholders' Equity Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Activity [Text Block] | Stockholders’ Equity Stockholders' Equity Activity During the three months ended July 31, 2016 and 2015, activity in stockholders’ equity was as follows:
On May 20, 2016, the holder of the Company's Class B common stock converted 600,000 of those shares to the Company's Class A common stock on a one-for-one basis and for no additional consideration. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss at July 31, 2016, April 30, 2016 and July 31, 2015 were as follows.
Net Income (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 shares and participating securities (exchangeable shares) and using the weighted-average number of common shares 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 shares and, if dilutive, the potential common shares outstanding during the period. Potential common shares consist of the incremental common shares 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, 2016 and 2015 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 1,262,182 and 983,768 shares for the three months ended July 31, 2016 and 2015, respectively, because the effect would be anti-dilutive. |
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Notes and Accounts Receivable (Tables) |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of activity related to notes receivable | Notes and interest receivable are presented in the consolidated balance sheets as follows:
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| Schedule of activity in the allowance for doubtful accounts | Activity in the allowance for doubtful accounts for the three months ended July 31, 2016 and 2015 was as follows:
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| Schedule of allocation of allowance for doubtful accounts | The allowance for doubtful accounts at July 31, 2016, April 30, 2016 and July 31, 2015, was allocated as follows:
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| Schedule of aging of accounts and notes receivable | The breakdown of accounts and notes receivable past due at July 31, 2016 was as follows:
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Goodwill and Intangible Assets (Tables) |
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Goodwill | Changes in the carrying amount of goodwill for the three months ended July 31, 2016 and 2015 were as follows:
|
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| Schedule of the amortizable other intangible assets | Components of intangible assets were as follows as of July 31, 2016, April 30, 2016 and July 31, 2015:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase Price of Assets Acquired from Franchisees | The allocation of the purchase price of assets acquired from ADs and franchisees to intangible assets during the three months ended July 31, 2016 and 2015 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held For Sale (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2016 and 2015 were as follows:
|
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Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of debt | Long-term obligations at July 31, 2016, April 30, 2016, and July 31, 2015 consisted of the following:
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Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of activity in stockholders' equity | During the three months ended July 31, 2016 and 2015, activity in stockholders’ equity was as follows:
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| Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The components of accumulated other comprehensive loss at July 31, 2016, April 30, 2016 and July 31, 2015 were as follows.
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| 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, 2016 and 2015 is as follows:
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Stock Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2016:
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| Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | Restricted stock activity during the three months ended July 31, 2016 was as follows:
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| Schedule of stock option activity | Stock option activity during the three months ended July 31, 2016 was as follows:
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| 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, 2016 was as follows:
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2016, April 30, 2016 and July 31, 2015, 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):
|
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Organization and Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
Apr. 30, 2016 |
|
| Geographical concentration | |||
| Revenues | $ 7,149,000 | $ 7,523,000 | |
| unamortized debt issuance costs | (94,000) | (150,000) | $ (108,000) |
| CANADA | |||
| Geographical concentration | |||
| Revenues | $ 900,000 | $ 1,000,000 | |
Accounts and Notes Receivables - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 |
Apr. 30, 2016 |
Jul. 31, 2015 |
|
| Schedule of Activity Related to Notes Receivable | |||
| Notes, Loans and Financing Receivable, Gross, Current | $ 34,474 | $ 26,710 | $ 35,214 |
| Notes, Loans and Financing Receivable, Gross, Noncurrent | 24,481 | 25,514 | 23,079 |
| Interest Receivable, Current | 2,826 | 1,944 | 1,934 |
| Notes receivable, net of unrecognized revenue: | 61,781 | 54,168 | 60,227 |
| Activity related to notes receivable | |||
| Amounts payable to area developers for their share of receivables | $ 10,449 | $ 24,977 | 9,403 |
| Accounts and Notes Receivable, Unfunded Lending Commitments for Working Capital Loans to Franchisees and Area Developers | $ 20,900 | ||
| 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 - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 |
Apr. 30, 2016 |
Jul. 31, 2015 |
|
| Aging of accounts and notes receivable | |||
| Past due | $ 49,413 | ||
| Current | 50,929 | ||
| Total receivables | 100,342 | ||
| Accounts receivable | |||
| Aging of accounts and notes receivable | |||
| Past due | 36,175 | ||
| Current | 2,386 | ||
| Total receivables | $ 38,561 | ||
| Past due period | 30 days | ||
| Notes receivable | |||
| Aging of accounts and notes receivable | |||
| Past due | $ 13,238 | ||
| Current | 48,543 | ||
| Total receivables | $ 61,781 | ||
| Past due period | 90 days | ||
| Financing Receivable, Recorded Investment, Nonaccrual Status | $ 13,200 | $ 5,500 | $ 15,900 |
Changes in the Carrying Amount of Goodwill - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Goodwill, Balance at Beginning of Period | $ 4,228 | $ 3,377 |
| Acquisitions of assets from franchisees | 0 | 0 |
| Goodwill, Disposals and foreign currency changes, net | (45) | (94) |
| Goodwill Impairments, Gross | 0 | 0 |
| Goodwill, Balance at End of Period | $ 4,183 | $ 3,283 |
Purchase Price of Assets Acquired from Franchisees - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Goodwill [Line Items] | ||
| Finite-lived Intangible Assets Acquired | $ 10,000 | |
| CANADA | ||
| Goodwill [Line Items] | ||
| Finite-lived Intangible Assets Acquired | $ 0 | 10,000 |
| CANADA | Customer Lists and Reacquired Rights [Member] | ||
| Goodwill [Line Items] | ||
| Finite-lived Intangible Assets Acquired | $ 0 | $ 10,000 |
Goodwill and Intangible Assets Goodwill and Intangible Assets (Textuals) (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Goodwill [Line Items] | ||
| Finite-lived Intangible Assets Acquired | $ 10,000 | |
| CANADA | ||
| Goodwill [Line Items] | ||
| Finite-lived Intangible Assets Acquired | $ 0 | $ 10,000 |
Assets Held For Sale Narrative (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Finite-lived Intangible Assets Acquired | $ 10,000 | |
| Finite-lived Intangible Assets Reacquired and Acquired | 2,001,000 | |
| UNITED STATES | ||
| Finite-lived Intangible Assets Reacquired and Acquired | $ 7,647,000 | |
| Customer Lists and Reacquired Rights [Member] | UNITED STATES | ||
| Finite-lived Intangible Assets Acquired | 4,100,000 | 900,000 |
| Goodwill [Member] | UNITED STATES | ||
| Finite-lived Intangible Assets Acquired | 3,500,000 | $ 1,100,000 |
| Obligations [Member] | UNITED STATES | ||
| Finite-lived Intangible Assets Acquired | $ 2,200,000 | |
Assets Held For Sale Carrying Amount of Assets HFS (table) (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
|---|---|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
|
| Property, Plant and Equipment [Line Items] | ||||
| Assets Held for Sale | $ 16,623 | $ 6,357 | $ 9,886 | $ 5,160 |
| Finite-lived Intangible Assets Reacquired and Acquired | 2,001 | |||
| finite-lived intangible assets disposed | (910) | $ (804) | ||
| UNITED STATES | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Finite-lived Intangible Assets Reacquired and Acquired | $ 7,647 | |||
Related Party Transactions (Details) - USD ($) shares in Thousands |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Related Party Transaction [Line Items] | ||
| Number of shares | 0 | 51,609 |
| License Costs | $ 10,000 | |
| CANADA | ||
| Related Party Transaction [Line Items] | ||
| License Costs | $ 0 | $ 10,000 |
| Directors and Affiliated Companies and Officers [Member] | CANADA | License Purchase [Domain] [Domain] | ||
| Related Party Transaction [Line Items] | ||
| License Costs | $ 700,000 | |
Commitments and Contingencies (Details) - $ / shares |
3 Months Ended | ||
|---|---|---|---|
Oct. 24, 2016 |
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Commitments and contingencies | |||
| Dividends declared per share of common stock and common stock equivalents | $ 0.16 | $ 0.16 | |
| Subsequent Event [Member] | |||
| Commitments and contingencies | |||
| Dividends declared per share of common stock and common stock equivalents | $ 0.16 | ||
Investments investments (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
Apr. 30, 2016 |
|
| Schedule of Available-for-sale Securities [Line Items] | |||
| Unrealized Loss on Securities | $ 0 | $ 0 | $ 550 |
| Available-for-sale Securities, Gross Realized Gains | 50,000 | ||
| Equity Securities [Member] | |||
| Schedule of Available-for-sale Securities [Line Items] | |||
| Payments to Acquire Available-for-sale Securities | $ 5,000 | ||