NOTE 24: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Block Financial is an indirect, wholly-owned consolidated subsidiary of the Company. Block Financial is the Issuer and the Company is the Guarantor of the Senior Notes issued on January 11, 2008 and October 26, 2004, the CLOC 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 Income Statements 
 
(in 000s)
 
Year ended
April 30, 2012

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Total revenues

$
—  
  
$
234,925
  
$
2,666,267
  
$
(7,421
) 
 
$
2,893,771
  
Cost of revenues

—  
  
221,988
  
1,487,128
  
(7,421
) 
 
1,701,695
  
Selling, general and administrative

—  
  
24,730
  
601,054
  
—  
  
625,784
  
Total expenses

—  
  
246,718
  
2,088,182
  
(7,421
) 
 
2,327,479
  
Operating income (loss)

—  
  
(11,793
) 
 
578,085
  
—  
  
566,292
  
Other income, net

576,070
  
8,686
  
1,092
  
(576,070
) 
 
9,778
  
Income (loss) from continuing operations before taxes (benefit)

576,070
  
(3,107
) 
 
579,177
  
(576,070
) 
 
576,070
  
Income taxes (benefit)

230,102
  
(1,191
) 
 
231,293
  
(230,102
) 
 
230,102
  
Net income (loss) from continuing operations

345,968
  
(1,916
) 
 
347,884
  
(345,968
) 
 
345,968
  
Net loss from discontinued operations

(80,036
) 
 
(40,172
) 
 
(39,864
) 
 
80,036
  
(80,036
) 
 
Net income (loss)

265,932
  
(42,088
) 
 
308,020
  
(265,932
) 
 
265,932
  
Other comprehensive income (loss)

912
  
3,085
  
(2,173
) 
 
(912
) 
 
912
  
Comprehensive income (loss)

$
266,844
  
$
(39,003
) 
 
$
305,847
  
$
(266,844
) 
 
$
266,844
  
Year ended
April 30, 2011

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Total revenues

$
—  
  
$
251,521
  
$
2,693,459
  
$
—  
  
$
2,944,980
  
Cost of revenues

—  
  
277,099
  
1,499,683
  
—  
  
1,776,782
  
Selling, general and administrative

—  
  
31,914
  
519,945
  
—  
  
551,859
  
Total expenses

—  
  
309,013
  
2,019,628
  
—  
  
2,328,641
  
Operating income (loss)

—  
  
(57,492
) 
 
673,831
  
—  
  
616,339
  
Other income, net

627,703
  
5,503
  
5,861
  
(627,703
) 
 
11,364
  
Income (loss) from continuing operations before taxes (benefit)

627,703
  
(51,989
) 
 
679,692
  
(627,703
) 
 
627,703
  
Income taxes (benefit)

235,156
  
(27,774
) 
 
262,930
  
(235,156
) 
 
235,156
  
Net income (loss) from continuing operations

392,547
  
(24,215
) 
 
416,762
  
(392,547
) 
 
392,547
  
Net income (loss) from discontinued operations

13,563
  
(12,417
) 
 
25,980
  
(13,563
) 
 
13,563
  
Net income (loss)

406,110
  
(36,632
) 
 
442,742
  
(406,110
) 
 
406,110
  
Other comprehensive income

9,555
  
163
  
9,392
  
(9,555
) 
 
9,555
  
Comprehensive income (loss)

$
415,665
  
$
(36,469
) 
 
$
452,134
  
$
(415,665
) 
 
$
415,665
  
Year ended
April 30, 2010

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Total revenues

$
—  
  
$
271,704
  
$
2,743,224
  
$
(93
) 
 
$
3,014,835
  
Cost of revenues

—  
  
257,245
  
1,563,289
  
(117
) 
 
1,820,417
  
Selling, general and administrative

—  
  
36,946
  
443,751
  
(93
) 
 
480,604
  
Total expenses

—  
  
294,191
  
2,007,040
  
(210
) 
 
2,301,021
  
Operating income (loss)

—  
  
(22,487
) 
 
736,184
  
117
  
713,814
  
Other income, net

723,414
  
5,644
  
4,073
  
(723,531
) 
 
9,600
  
Income (loss) from continuing operations before taxes (benefit)

723,414
  
(16,843
) 
 
740,257
  
(723,414
) 
 
723,414
  
Income taxes (benefit)

268,291
  
(6,368
) 
 
274,659
  
(268,291
) 
 
268,291
  
Net income (loss) from continuing operations

455,123
  
(10,475
) 
 
465,598
  
(455,123
) 
 
455,123
  
Net income (loss) from discontinued operations

24,119
  
(5,276
) 
 
29,395
  
(24,119
) 
 
24,119
  
Net income (loss)

479,242
  
(15,751
) 
 
494,993
  
(479,242
) 
 
479,242
  
Other comprehensive income (loss)

13,317
  
(1,107
) 
 
14,424
  
(13,317
) 
 
13,317
  
Comprehensive income (loss)

$
492,559
  
$
(16,858
) 
 
$
509,417
  
$
(492,559
) 
 
$
492,559
  
Condensed Consolidating Balance Sheets 
 
(in 000s)
 
April 30, 2012

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Cash & cash equivalents

$
—  
  
$
515,147
  
$
1,430,030
  
$
(843
) 
 
$
1,944,334
  
Cash & cash equivalents—restricted

—  
  
8,814
  
39,286
  
—  
  
48,100
  
Receivables, net

—  
  
90,755
  
103,103
  
—  
  
193,858
  
Mortgage loans held for investment, net

—  
  
406,201
  
—  
  
—  
  
406,201
  
Intangible assets and goodwill, net

—  
  
—  
  
692,017
  
—  
  
692,017
  
Investments in subsidiaries

2,525,473
  
—  
  
715
  
(2,525,473
) 
 
715
  
Other assets

8,887
  
623,032
  
732,423
  
—  
  
1,364,342
  
Total assets

$
2,534,360
  
$
1,643,949
  
$
2,997,574
  
$
(2,526,316
) 
 
$
4,649,567
  
Customer deposits

$
—  
  
$
828,392
  
$
—  
  
$
(843
) 
 
$
827,549
  
Long-term debt

—  
  
999,325
  
41,224
  
—  
  
1,040,549
  
Other liabilities

22,690
  
(33,609
) 
 
1,466,496
  
—  
  
1,455,577
  
Net intercompany advances

1,185,778
  
62,734
  
(1,248,512
) 
 
—  
  
—  
  
Stockholders' equity

1,325,892
  
(212,893
) 
 
2,738,366
  
(2,525,473
) 
 
1,325,892
  
Total liabilities and stockholders' equity

$
2,534,360
  
$
1,643,949
  
$
2,997,574
  
$
(2,526,316
) 
 
$
4,649,567
  
April 30, 2011

H&R Block,  Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
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
  
128,073
  
—  
  
230,172
  
Mortgage loans held for investment, net

—  
  
485,008
  
—  
  
—  
  
485,008
  
Intangible assets and goodwill, net

—  
  
—  
  
709,493
  
—  
  
709,493
  
Investments in subsidiaries

2,699,555
  
—  
  
32
  
(2,699,555
) 
 
32
  
Assets held for sale

—  
  
—  
  
900,328
  
—  
  
900,328
  
Other assets

13,613
  
469,461
  
755,119
  
—  
  
1,238,193
  
Total assets

$
2,713,256
  
$
1,682,240
  
$
3,593,562
  
$
(2,699,605
) 
 
$
5,289,453
  
Customer deposits

$
—  
  
$
852,270
  
$
—  
  
$
(50
) 
 
$
852,220
  
Long-term debt

—  
  
998,965
  
41,119
  
—  
  
1,040,084
  
FHLB borrowings

—  
  
25,000
  
—  
  
—  
  
25,000
  
Liabilities held for sale

—  
  
—  
  
241,562
  
—  
  
241,562
  
Other liabilities

178
  
(26,769
) 
 
1,707,604
  
—  
  
1,681,013
  
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
  
$
3,593,562
  
$
(2,699,605
) 
 
$
5,289,453

 
Condensed Consolidating Statements of Cash Flows 
 
(in 000s)
 
Year ended
April 30, 2012

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Net cash provided by operating activities:

$
33,046
  
$
15,144
  
$
313,859
  
$
—  
  
$
362,049
  
Cash flows from investing:

Purchases of AFS securities

—  
  
(256,173
) 
 
—  
  
—  
  
(256,173
) 
Maturities and payments received on AFS securities

—  
  
63,291
  
3,091
  
—  
  
66,382
  
Mortgage loans held for investment, net

—  
  
49,142
  
—  
  
—  
  
49,142
  
Purchases of property & equipment

—  
  
(153
) 
 
(82,304
) 
 
—  
  
(82,457
) 
Payments for business acquisitions, net

—  
  
—  
  
(15,258
) 
 
—  
  
(15,258
) 
Proceeds from sales of businesses, net

—  
  
—  
  
560,499
  
—  
  
560,499
  
Loans made to franchisees

—  
  
(46,246
) 
 
—  
  
—  
  
(46,246
) 
Repayments from franchisees

—  
  
56,591
  
—  
  
—  
  
56,591
  
Net intercompany advances

344,000
  
—  
  
—  
  
(344,000
) 
 
—  
  
Other, net

—  
  
11,785
  
7,602
  
—  
  
19,387
  
Net cash provided by (used in) investing activities

344,000
  
(121,763
) 
 
473,630
  
(344,000
) 
 
351,867
  
Cash flows from financing:

Repayments of commercial paper

—  
  
(664,167
) 
 
—  
  
—  
  
(664,167
) 
Proceeds from commercial paper

—  
  
664,167
  
—  
  
—  
  
664,167
  
Repayments of other borrowings

—  
  
(25,000
) 
 
—  
  
—  
  
(25,000
) 
Customer banking deposits, net

—  
  
(25,298
) 
 
—  
  
(793
) 
 
(26,091
) 
Dividends paid

(208,801
) 
 
—  
  
—  
  
—  
  
(208,801
) 
Repurchase of common stock

(180,592
) 
 
—  
  
—  
  
—  
  
(180,592
) 
Proceeds from stock options

12,275
  
—  
  
—  
  
—  
  
12,275
  
Net intercompany advances

—  
  
55,721
  
(399,721
) 
 
344,000
  
—  
  
Other, net

72
  
105
  
(17,030
) 
 
—  
  
(16,853
) 
 
Net cash provided by (used in) financing activities

(377,046
) 
 
5,528
  
(416,751
) 
 
343,207
  
(445,062
) 
 
Effects of exchange rates on cash

—  
  
—  
  
(2,364
) 
 
—  
  
(2,364
) 
 
Net increase (decrease) in cash

—  
  
(101,091
) 
 
368,374
  
(793
) 
 
266,490
  
Cash—beginning of the year

—  
  
616,238
  
1,061,656
  
(50
) 
 
1,677,844
  
Cash—end of the year

$
—  
  
$
515,147
  
$
1,430,030
  
$
(843
) 
 
$
1,944,334
  
Year ended
April 30, 2011

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Net cash provided by (used in) operating activities:

$
9,683
  
$
(153,471
) 
 
$
656,291
  
$
—  
  
$
512,503
  
Cash flows from investing:

Purchases of AFS securities

—  
  
(138,824
) 
 
—  
  
—  
  
(138,824
) 
Maturities and payments received on AFS securities

—  
  
16,690
  
107
  
—  
  
16,797
  
Mortgage loans held for investment, net

—  
  
58,471
  
—  
  
—  
  
58,471
  
Purchases of property & equipment

—  
  
(33
) 
 
(62,926
) 
 
—  
  
(62,959
) 
Payments for business acquisitions, net

—  
  
—  
  
(54,171
) 
 
—  
  
(54,171
) 
Proceeds from sales of businesses, net

—  
  
—  
  
71,083
  
—  
  
71,083
  
Loans made to franchisees

—  
  
(92,455
) 
 
—  
  
—  
  
(92,455
) 
Repayments from franchisees

—  
  
57,552
  
—  
  
—  
  
57,552
  
Net intercompany advances

459,755
  
—  
  
—  
  
(459,755
) 
 
—  
  
Other, net

—  
  
21,556
  
12,793
  
—  
  
34,349
  
Net cash provided by (used in) investing activities

459,755
  
(77,043
) 
 
(33,114
) 
 
(459,755
) 
 
(110,157
) 
 
Cash flows from financing:

Repayments of commercial paper

—  
  
(4,818,766
) 
 
—  
  
—  
  
(4,818,766
) 
Proceeds from commercial paper

—  
  
4,818,766
  
—  
  
—  
  
4,818,766
  
Repayments of other borrowings

—  
  
(50,000
) 
 
—  
  
—  
  
(50,000
) 
Customer banking deposits, net

—  
  
(11,501
) 
 
—  
  
61
  
(11,440
) 
Dividends paid

(186,802
) 
 
—  
  
—  
  
—  
  
(186,802
) 
Repurchase of common stock

(283,534
) 
 
—  
  
—  
  
—  
  
(283,534
) 
Proceeds from stock options

424
  
—  
  
—  
  
—  
  
424
  
Net intercompany advances

—  
  
206,722
  
(666,477
) 
 
459,755
  
—  
  
Other, net

474
  
(490
) 
 
(3,023
) 
 
—  
  
(3,039
) 
 
Net cash provided by (used in) financing activities

(469,438
) 
 
144,731
  
(669,500
) 
 
459,816
  
(534,391
) 
 
Effects of exchange rates on cash

—  
  
—  
  
5,844
  
—  
  
5,844
  
Net increase (decrease) in cash

—  
  
(85,783
) 
 
(40,479
) 
 
61
  
(126,201
) 
Cash—beginning of the year

—  
  
702,021
  
1,102,135
  
(111
) 
 
1,804,045
  
Cash—end of the year

$
—  
  
$
616,238
  
$
1,061,656
  
$
(50
) 
 
$
1,677,844
  
Year ended
April 30, 2010

H&R Block, Inc.
(Guarantor)
 
Block Financial
(Issuer)
 
Other
Subsidiaries
 
Eliminations
 
Consolidated
H&R Block
 
Net cash provided by operating activities:

$
21,252
  
$
16,698
  
$
549,519
  
$
—  
  
$
587,469
  
Cash flows from investing:

Purchases of AFS securities

—  
  
(365
) 
 
(5,000
) 
 
—  
  
(5,365
) 
Sales and maturities of AFS securities

—  
  
14,639
  
1,119
  
—  
  
15,758
  
Mortgage loans held for investment, net

—  
  
72,832
  
—  
  
—  
  
72,832
  
Purchases of property & equipment

—  
  
—  
  
(90,515
) 
 
—  
  
(90,515
) 
Payments for business acquisitions

—  
  
—  
  
(10,539
) 
 
—  
  
(10,539
) 
Proceeds from sales of businesses, net

—  
  
—  
  
66,623
  
—  
  
66,623
  
Loans made to franchisees

—  
  
(89,664
) 
 
—  
  
—  
  
(89,664
) 
Repayments from franchisees

—  
  
40,710
  
—  
  
—  
  
40,710
  
Net intercompany advances

415,591
  
—  
  
—  
  
(415,591
) 
 
—  
  
Other, net

—  
  
73,493
  
(41,980
) 
 
—  
  
31,513
  
Net cash provided by (used in) investing activities

415,591
  
111,645
  
(80,292
) 
 
(415,591
) 
 
31,353
  
Cash flows from financing:

Repayments of commercial paper

—  
  
(1,406,013
) 
 
—  
  
—  
  
(1,406,013
) 
Proceeds from commercial paper

—  
  
1,406,013
  
—  
  
—  
  
1,406,013
  
Repayments of other borrowings

—  
  
(4,267,727
) 
 
(46
) 
 
—  
  
(4,267,773
) 
Proceeds from other borrowings

—  
  
4,242,727
  
—  
  
—  
  
4,242,727
  
Customer banking deposits, net

—  
  
11,428
  
—  
  
6,111
  
17,539
  
Dividends paid

(200,899
) 
 
—  
  
—  
  
—  
  
(200,899
) 
Repurchase of common stock

(254,250
) 
 
—  
  
—  
  
—  
  
(254,250
) 
Proceeds from stock options

16,682
  
—  
  
—  
  
—  
  
16,682
  
Net intercompany advances

—  
  
354,617
  
(770,208
) 
 
415,591
  
—  
  
Other, net

1,624
  
(8,717
) 
 
(28,051
) 
 
—  
  
(35,144
) 
 
Net cash provided by (used in) financing activities

(436,843
) 
 
332,328
  
(798,305
) 
 
421,702
  
(481,118
) 
 
Effects of exchange rates on cash

—  
  
—  
  
11,678
  
—  
  
11,678
  
Net increase (decrease) in cash

—  
  
460,671
  
(317,400
) 
 
6,111
  
149,382
  
Cash—beginning of the year

—  
  
241,350
  
1,419,535
  
(6,222
) 
 
1,654,663
  
Cash—end of the year

$
—  
  
$
702,021
  
$
1,102,135
  
$
(111
) 
 
$
1,804,045