15. Condensed Consolidating Financial Statements

Block Financial LLC (BFC) is an indirect, wholly-owned consolidated subsidiary of the Company. BFC is the Issuer and the Company is the Guarantor of the Senior Notes issued on January 11, 2008 and October 26, 2004, our CLOCs and other indebtedness issued from time to time. These condensed consolidating financial statements have been prepared using the equity method of accounting. Earnings of subsidiaries are, therefore, reflected in the Company's investment in subsidiaries account. The elimination entries eliminate investments in subsidiaries, related stockholders' equity and other intercompany balances and transactions.


Condensed Consolidating Statements of Operations													(in 000s)
Three months ended	H&R Block, Inc.				BFC			Other					Consolidated
July 31, 2011	(Guarantor)				(Issuer)			Subsidiaries			Elims		H&R Block
Total revenues	$	-		$	21,773		$	245,861		$	-	$	267,634
Cost of revenues		-			37,662			319,338			-		357,000
Selling, general and administrative		-			7,895			199,968			-		207,863
Total expenses		-			45,557			519,306			-		564,863
Operating loss		-			(23,784	)		(273,445	)		-		(297,229	)
Other income (expense), net		(293,142	)		3,281			806			293,142		4,087
Loss from continuing
operations before tax benefit		(293,142	)		(20,503	)		(272,639	)		293,142		(293,142	)
Income tax benefit		(119,699	)		(1,850	)		(117,849	)		119,699		(119,699	)
Net loss from continuing operations		(173,443	)		(18,653	)		(154,790	)		173,443		(173,443	)
Net loss from discontinued
operations		(1,655	)		(1,637	)		(18	)		1,655		(1,655	)
Net loss	$	(175,098	)	$	(20,290	)	$	(154,808	)	$	175,098	$	(175,098	)


Three months ended	H&R Block, Inc.				BFC			Other					Consolidated
July 31, 2010	(Guarantor)				(Issuer)			Subsidiaries			Elims		H&R Block
Total revenues	$	-		$	21,000		$	253,474		$	-	$	274,474
Cost of revenues		-			39,028			328,988			-		368,016
Selling, general and administrative		-			2,090			114,939			-		117,029
Total expenses		-			41,118			443,927			-		485,045
Operating loss		-			(20,118	)		(190,453	)		-		(210,571	)
Other income (expense), net		(207,317	)		382			2,872			207,317		3,254
Loss from continuing
operations before tax benefit		(207,317	)		(19,736	)		(187,581	)		207,317		(207,317	)
Income tax benefit		(79,679	)		(7,841	)		(71,838	)		79,679		(79,679	)
Net loss from continuing operations		(127,638	)		(11,895	)		(115,743	)		127,638		(127,638	)
Net loss from discontinued
operations		(3,043	)		(3,004	)		(39	)		3,043		(3,043	)
Net loss	$	(130,681	)	$	(14,899	)	$	(115,782	)	$	130,681	$	(130,681	)


Condensed Consolidating Balance Sheets														(in 000s)
		H&R Block, Inc.			BFC			Other						Consolidated
July 31, 2011		(Guarantor)			(Issuer)			Subsidiaries			Elims			H&R Block
Cash & cash equivalents		$	-	$	413,141		$	599,595		$	(27	)	$	1,012,709
Cash & cash equivalents – restricted			-		849			43,553			-			44,402
Receivables, net			-		224,573			104,815			-			329,388
Mortgage loans held for investment			-		466,663			-			-			466,663
Intangible assets and goodwill, net			-		-			1,102,646			-			1,102,646
Investments in subsidiaries			2,478,748		-			94			(2,478,748	)		94
Other assets			12,474		299,379			1,040,297			-			1,352,150
Total assets	$	2,491,222		$	1,404,605		$	2,891,000		$	(2,478,775	)	$	4,308,052
Customer deposits		$	-	$	666,295		$	-		$	(27	)	$	666,268
Long-term debt			-		999,055			20,376			-			1,019,431
FHLB borrowings			-		25,000			-			-			25,000
Other liabilities			214		(132,742	)		1,496,004			-			1,363,476
Net intercompany advances			1,257,131		40,201			(1,297,332	)		-			-
Stockholders' equity			1,233,877		(193,204	)		2,671,952			(2,478,748	)		1,233,877
Total liabilities and
stockholders' equity	$	2,491,222		$	1,404,605		$	2,891,000		$	(2,478,775	)	$	4,308,052


		H&R Block, Inc.			BFC			Other						Consolidated
April 30, 2011		(Guarantor)			(Issuer)			Subsidiaries			Elims			H&R Block
Cash & cash equivalents		$	-	$	616,238		$	1,061,656		$	(50	)	$	1,677,844
Cash & cash equivalents – restricted			-		9,522			38,861			-			48,383
Receivables, net			88		102,011			390,191			-			492,290
Mortgage loans held for investment, net			-		485,008			-			-			485,008
Intangible assets and goodwill, net			-		-			1,214,164			-			1,214,164
Investments in subsidiaries		2,699,555			-			32			(2,699,555	)		32
Other assets		13,613			469,461			807,166			-			1,290,240
Total assets	$	2,713,256		$	1,682,240		$	3,512,070		$	(2,699,605	)	$	5,207,961
Customer deposits		$	-	$	852,270		$	-		$	(50	)	$	852,220
Long-term debt			-		998,965			50,789			-			1,049,754
FHLB borrowings			-		25,000			-			-			25,000
Other liabilities			178		(26,769	)		1,858,004			-			1,831,413
Net intercompany advances		1,263,504			24,173			(1,287,677	)		-			-
Stockholders' equity		1,449,574			(191,399	)		2,890,954			(2,699,555	)		1,449,574
Total liabilities and
stockholders' equity	$	2,713,256		$	1,682,240		$	3,512,070		$	(2,699,605	)	$	5,207,961


Condensed Consolidating Statements of Cash Flows														(in 000s)
Three months ended	H&R Block, Inc.				BFC			Other						Consolidated
July 31, 2011	(Guarantor)				(Issuer)			Subsidiaries			Elims			H&R Block
Net cash provided by (used in)
operating activities:	$	2,048		$	(22,900	)	$	(373,697	)	$	-		$	(394,549	)
Cash flows from investing:
Purchases of available-for-sale securities		-			(39,275	)		-			-			(39,275	)
Mortgage loans originated for
investment, net		-			11,192			-			-			11,192
Purchase property & equipment		-			(54	)		(10,899	)		-			(10,953	)
Payments made for business
acquisitions, net		-			-			(3,457	)		-			(3,457	)
Proceeds from sale of businesses, net		-			-			21,230			-			21,230
Loans made to franchisees		-			(16,477	)		-			-			(16,477	)
Repayments from franchisees		-			5,320			-			-			5,320
Net intercompany advances		44,084			-			-			(44,084	)		-
Other, net		-			12,031			6,136			-			18,167
Net cash provided by (used in)
investing activities		44,084			(27,263	)		13,010			(44,084	)		(14,253	)
Cash flows from financing:
Customer banking deposits		-			(186,268	)		-			23			(186,245	)
Dividends paid		(45,894	)		-			-			-			(45,894	)
Repurchase of common stock		(2,002	)		-			-			-			(2,002	)
Proceeds from exercise of
stock options		1,762			-			-			-			1,762
Net intercompany advances		-			33,312			(77,396	)		44,084			-
Other, net		2			22			(24,940	)		-			(24,916	)
Net cash used in financing activities		(46,132	)		(152,934	)		(102,336	)		44,107			(257,295	)
Effects of exchange rates on cash		-			-			962			-			962
Net decrease in cash		-			(203,097	)		(462,061	)		23			(665,135	)
Cash – beginning of period		-			616,238			1,061,656			(50	)		1,677,844
Cash – end of period	$	-		$	413,141		$	599,595		$	(27	)	$	1,012,709


Three months ended	H&R Block, Inc.				BFC			Other						Consolidated
July 31, 2010	(Guarantor)				(Issuer)			Subsidiaries			Elims			H&R Block
Net cash provided by (used in)
operating activities:	$	22,849		$	(43,301	)	$	(327,799	)	$	-		$	(348,251	)
Cash flows from investing:
Mortgage loans originated for
investment, net		-			17,618			-			-			17,618
Purchase property & equipment		-			-			(8,634	)		-			(8,634	)
Payments made for business
acquisitions, net		-			-			(33,226	)		-			(33,226	)
Proceeds from sale of businesses, net		-			-			26,387			-			26,387
Loans made to franchisees		-			(33,720	)		-			-			(33,720	)
Repayments from franchisees		-			6,724			-			-			6,724
Net intercompany advances		188,324			-			-			(188,324	)		-
Other, net		-			40,668			(21,820	)		-			18,848
Net cash provided by (used in)
investing activities		188,324			31,290			(37,293	)		(188,324	)		(6,003	)
Cash flows from financing:
Customer banking deposits		-			(121,166	)		-			(235	)		(121,401	)
Dividends paid		(48,692	)		-			-			-			(48,692	)
Repurchase of common stock		(164,369	)		-			-			-			(164,369	)
Proceeds from exercise of
stock options		1,500			-			-			-			1,500
Net intercompany advances		-			35,507			(223,831	)		188,324			-
Other, net		388			176			(16,551	)		-			(15,987	)
Net cash used in financing activities		(211,173	)		(85,483	)		(240,382	)		188,089			(348,949	)
Effects of exchange rates on cash		-			-			(2,232	)		-			(2,232	)
Net decrease in cash		-			(97,494	)		(607,706	)		(235	)		(705,435	)
Cash – beginning of period		-			702,021			1,102,135			(111	)		1,804,045
Cash – end of period	$	-		$	604,527		$	494,429		$	(346	)	$	1,098,610