Condensed Consolidating Financial Statements

9 Months Ended

Jan. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

NOTE 17: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Block Financial is a 100% owned subsidiary of the Company. Block Financial is the Issuer and the Company is the full and unconditional Guarantor of the Senior Notes issued on October 25, 2012, our 2012 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.

Certain amounts included in the following statements of operations for the three and nine months ended January 31, 2014, the statements of cash flows for the nine months ended January 31, 2014, and the balance sheet as of January 31, 2014 have been restated to correct errors in presentation. The statements of operations have been corrected to properly reflect equity earnings in subsidiaries of H&R Block, Inc. (Guarantor) in "Other income (expense), net" to include income taxes and discontinued operations which were previously shown on separate lines. The balance sheet has been corrected to properly reflect a classified balance sheet and to show the investment in Block Financial by Other Subsidiaries. The statements of cash flows have been corrected to properly reflect intercompany borrowings and payments as either investing or financing activities, as appropriate. These restatements impacted disclosures required by this note, but had no impact on the consolidated financial statements as of and for the three and nine months ended January 31, 2014.

Additionally, as discussed in note 11, the presentation of interest expense on borrowings for the three and nine months ended January 31, 2014 has been restated to correct errors in presentation. We reclassified such interest expense from cost of revenues to a separate caption.



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS													(in 000s)
Nine months ended January 31, 2015	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	107,233		$	672,000		$	(1,945	)	$	777,288
Cost of revenues	—			66,063			749,978			(1,940		)	814,101
Selling, general and administrative	—			12,598			371,533			(5		)	384,126
Total operating expenses	—			78,661			1,121,511			(1,945		)	1,198,227
Other expense (income), net	264,699			(180		)	12,878			(267,768		)	9,629
Interest expense on borrowings	—			36,388			298			—			36,686
Loss from continuing operations before tax benefit	(264,699		)	(7,636		)	(462,687		)	267,768			(467,254		)
Income tax expense (benefit)	479			(19,486		)	(190,858		)	—			(209,865		)
Net income (loss) from continuing operations	(265,178		)	11,850			(271,829		)	267,768			(257,389		)
Net income (loss) from discontinued operations	—			(11,458		)	3,669			—			(7,789		)
Net income (loss)	(265,178		)	392			(268,160		)	267,768			(265,178		)
Other comprehensive income (loss)	(6,440		)	7,765			(6,440		)	(1,325		)	(6,440		)
Comprehensive income (loss)	$	(271,618	)	$	8,157		$	(274,600	)	$	266,443		$	(271,618	)



Nine months ended January 31, 2014	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	102,840		$	360,095		$	(1,630	)	$	461,305
Cost of revenues	—			80,777			673,831			(1,630		)	752,978
Selling, general and administrative	—			25,753			339,484			—			365,237
Total operating expenses	—			106,530			1,013,315			(1,630		)	1,118,215
Other expense (income), net ⁽¹⁾	434,841			(1,938		)	15,233			(434,841		)	13,295
Interest expense on borrowings ⁽¹⁾	—			41,148			328			—			41,476
Loss from continuing operations before tax benefit	(434,841		)	(42,900		)	(668,781		)	434,841			(711,681		)
Income tax benefit ⁽¹⁾	—			(3,999		)	(278,646		)	—			(282,645		)
Net loss from continuing operations	(434,841		)	(38,901		)	(390,135		)	434,841			(429,036		)
Net loss from discontinued operations ⁽¹⁾	—			(4,834		)	(971		)	—			(5,805		)
Net loss	(434,841		)	(43,735		)	(391,106		)	434,841			(434,841		)
Other comprehensive loss	(15,326		)	(9,668		)	(5,658		)	15,326			(15,326		)
Comprehensive loss	$	(450,167	)	$	(53,403	)	$	(396,764	)	$	450,167		$	(450,167	)


⁽¹⁾	Amounts have been restated, including the presentation of interest expense on borrowings, and equity in earnings of subsidiaries net of income taxes and discontinued operations.



CONDENSED CONSOLIDATING BALANCE SHEETS										(in 000s)
As of January 31, 2014	H&R Block, Inc. (Guarantor)		Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—	$	181,483	$	256,541	$	(620	)	$	437,404
Cash & cash equivalents - restricted	—		4,883		39,972		—			44,855
Receivables, net	—		529,954		147,267		—			677,221
Prepaid expenses and other current assets ⁽¹⁾	—		14,686		343,228		(12,683		)	345,231
Total current assets	—		731,006		787,008		(13,303		)	1,504,711
Mortgage loans held for investment, net	—		282,149		—		—			282,149
Investments in AFS securities	—		439,395		4,375		—			443,770
Property and equipment, net	—		126		314,439		—			314,565
Intangible assets, net	—		—		318,719		—			318,719
Goodwill	—		—		437,386		—			437,386
Investments in subsidiaries ⁽¹⁾	2,845,467		—		3,037		(2,848,504		)	—
Amounts due from affiliates	—		542,657		2,167,747		(2,710,404		)	—
Other assets	9,708		144,759		59,520		—			213,987
Total assets	$	2,855,175	$	2,140,092	$	4,092,231	$	(5,572,211	)	$	3,515,287

Commercial paper borrowings	$	—	$	194,984	$	—	$	—		$	194,984
Customer banking deposits	—		807,507		—		(620		)	806,887
Accounts payable, accrued expenses and other current liabilities	669		190,857		328,595		—			520,121
Accrued salaries, wages and payroll taxes	—		1,823		106,760		—			108,583
Accrued income taxes ⁽¹⁾	—		36,058		—		(12,683		)	23,375
Current portion of long-term debt	—		399,824		746		—			400,570
Total current liabilities	669		1,631,053		436,101		(13,303		)	2,054,520
Long-term debt	—		497,542		8,417		—			505,959
Other noncurrent liabilities	—		8,460		259,589		—			268,049
Amounts due to affiliates	2,167,747		—		542,657		(2,710,404		)	—
Total liabilities	2,168,416		2,137,055		1,246,764		(2,723,707		)	2,828,528
Stockholders' equity ⁽¹⁾	686,759		3,037		2,845,467		(2,848,504		)	686,759
Total liabilities and stockholders' equity	$	2,855,175	$	2,140,092	$	4,092,231	$	(5,572,211	)	$	3,515,287


Note:	Amounts have been restated to include the presentation of a classified balance sheet.


⁽¹⁾	Amounts have been restated, including the presentation of deferred tax assets and liabilities and the investment of Other Subsidiaries in Block Financial.



CONDENSED CONSOLIDATING BALANCE SHEETS										(in 000s)
As of April 30, 2014	H&R Block, Inc. (Guarantor)		Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—	$	612,376	$	1,574,031	$	(1,100	)	$	2,185,307
Cash & cash equivalents - restricted	—		67,463		47,856		—			115,319
Receivables, net	—		89,975		101,643		—			191,618
Prepaid expenses and other current assets	—		10,202		188,065		—			198,267
Investments in AFS securities	—		423,495		—		—			423,495
Total current assets	—		1,203,511		1,911,595		(1,100		)	3,114,006
Mortgage loans held for investment, net	—		268,428		—		—			268,428
Investments in AFS securities	—		—		4,329		—			4,329
Property and equipment, net	—		121		304,790		—			304,911
Intangible assets, net	—		—		355,622		—			355,622
Goodwill	—		—		436,117		—			436,117
Investments in subsidiaries	904,331		—		60,902		(965,233		)	—
Amounts due from affiliates	642,101		386,818		397		(1,029,316		)	—
Other assets	11,271		173,168		25,677		—			210,116
Total assets	$	1,557,703	$	2,032,046	$	3,099,429	$	(1,995,649	)	$	4,693,529

Customer banking deposits	$	—	$	770,885	$	—	$	(1,100	)	$	769,785
Accounts payable, accrued expenses and other current liabilities	757		223,677		344,573		—			569,007
Accrued salaries, wages and payroll taxes	—		2,190		164,842		—			167,032
Accrued income taxes	—		71,132		335,523		—			406,655
Current portion of long-term debt	—		399,882		755		—			400,637
Total current liabilities	757		1,467,766		845,693		(1,100		)	2,313,116
Long-term debt	—		497,612		8,225		—			505,837
Other noncurrent liabilities	—		5,766		312,261		—			318,027
Amounts due to affiliates	397		—		1,028,919		(1,029,316		)	—
Total liabilities	1,154		1,971,144		2,195,098		(1,030,416		)	3,136,980
Stockholders' equity	1,556,549		60,902		904,331		(965,233		)	1,556,549
Total liabilities and stockholders' equity	$	1,557,703	$	2,032,046	$	3,099,429	$	(1,995,649	)	$	4,693,529



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Nine months ended January 31, 2015	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities:	$	—		$	(290,104	)	$	(957,096	)	$	—		$	(1,247,200	)
Cash flows from investing:
Purchases of AFS securities	—			—			(100		)	—			(100		)
Maturities of and payments received on AFS securities	—			68,013			—			—			68,013
Principal payments on mortgage loans held for investment, net	—			18,098			—			—			18,098
Capital expenditures	—			(119		)	(98,757		)	—			(98,876		)
Payments made for business acquisitions, net of cash acquired	—			—			(112,163		)	—			(112,163		)
Loans made to franchisees	—			(47,835		)	(178		)	—			(48,013		)
Repayments from franchisees	—			33,927			237			—			34,164
Intercompany payments/investments in subsidiaries	—			(128,713		)	(159,234		)	287,947			—
Other, net	—			(1,925		)	8,104			—			6,179
Net cash used in investing activities	—			(58,554		)	(362,091		)	287,947			(132,698		)
Cash flows from financing:
Repayments of commercial paper and other short-term borrowings	—			(457,576		)	—			—			(457,576		)
Proceeds from commercial paper and other short-term borrowings	—			1,049,062			—			—			1,049,062
Repayments of long-term debt	—			(400,000		)	—			—			(400,000		)
Customer banking deposits, net	—			514,183			—			832			515,015
Dividends paid	(164,905		)	—			—			—			(164,905		)
Proceeds from exercise of stock options	16,026			—			—			—			16,026
Intercompany borrowings	159,234			—			128,713			(287,947		)	—
Other, net	(10,355		)	—			(15,993		)	—			(26,348		)
Net cash provided by (used in) financing activities	—			705,669			112,720			(287,115		)	531,274
Effects of exchange rates on cash	—			—			(15,549		)	—			(15,549		)
Net increase (decrease) in cash and cash equivalents	—			357,011			(1,222,016		)	832			(864,173		)
Cash and cash equivalents at beginning of the period	—			612,376			1,574,031			(1,100		)	2,185,307
Cash and cash equivalents at end of the period	$	—		$	969,387		$	352,015		$	(268	)	$	1,321,134



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Nine months ended January 31, 2014	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities:	$	(309	)	$	(347,188	)	$	(772,825	)	$	—		$	(1,120,322	)
Cash flows from investing:
Purchases of AFS securities	—			(45,158		)	—			—			(45,158		)
Maturities of and payments received on AFS securities	—			72,502			—			—			72,502
Principal payments on mortgage loans held for investment, net	—			35,320			—			—			35,320
Capital expenditures	—			(59		)	(125,595		)	—			(125,654		)
Payments made for business acquisitions, net of cash acquired	—			—			(37,865		)	—			(37,865		)
Proceeds received on notes receivable	—			—			64,865			—			64,865
Loans made to franchisees	—			(62,039		)	—			—			(62,039		)
Repayments from franchisees	—			17,893			—			—			17,893
Intercompany payments/investments in subsidiaries ⁽¹⁾	—			(122,216		)	(142,407		)	264,623			—
Other, net	—			6,384			5,843			—			12,227
Net cash used in investing activities	—			(97,373		)	(235,159		)	264,623			(67,909		)
Cash flows from financing:
Repayments of commercial paper and other short-term borrowings	$	—		$	(80,930	)	$	—		$	—		$	(80,930	)
Proceeds from commercial paper and other short-term borrowings	—			275,914			—			—			275,914
Customer banking deposits, net	—			(127,050		)	—			2,103			(124,947		)
Dividends paid	(164,134		)	—			—			—			(164,134		)
Proceeds from exercise of stock options	28,083			—			—			—			28,083
Intercompany borrowings⁽¹⁾	142,407			—			122,216			(264,623		)	—
Other, net	(6,047		)	—			(29,872		)	—			(35,919		)
Net cash provided by (used in) financing activities	309			67,934			92,344			(262,520		)	(101,933		)
Effects of exchange rates on cash	—			—			(20,016		)	—			(20,016		)
Net decrease in cash and cash equivalents	—			(376,627		)	(935,656		)	2,103			(1,310,180		)
Cash and cash equivalents at beginning of the period	—			558,110			1,192,197			(2,723		)	1,747,584
Cash and cash equivalents at end of the period	$	—		$	181,483		$	256,541		$	(620	)	$	437,404


⁽¹⁾	Amounts have been restated, including the presentation of intercompany borrowings (payments) as either investing or financing activities.

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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