Condensed Consolidating Financial Statements

3 Months Ended

Jul. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

NOTE 11: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Block Financial LLC (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, our 2016 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 STATEMENTS OF OPERATIONS													(in 000s)
Three months ended July 31, 2017	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	17,556		$	123,094		$	(2,848	)	$	137,802
Cost of revenues	—			7,860			219,970			(115		)	227,715
Selling, general and administrative	—			3,206			94,776			(2,733		)	95,249
Total operating expenses	—			11,066			314,746			(2,848		)	322,964
Other income (expense), net	(132,264		)	6,073			(2,418		)	129,829			1,220
Interest expense on external borrowings	—			(21,204		)	(73		)	—			(21,277		)
Loss from continuing operations before tax benefit	(132,264		)	(8,641		)	(194,143		)	129,829			(205,219		)
Income tax benefit	(1,697		)	(4,623		)	(71,081		)	—			(77,401		)
Net loss from continuing operations	(130,567		)	(4,018		)	(123,062		)	129,829			(127,818		)
Net loss from discontinued operations	—			(2,748		)	(1		)	—			(2,749		)
Net loss	(130,567		)	(6,766		)	(123,063		)	129,829			(130,567		)
Other comprehensive income	2,462			—			2,462			(2,462		)	2,462
Comprehensive loss	$	(128,105	)	$	(6,766	)	$	(120,601	)	$	127,367		$	(128,105	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS													(in 000s)
Three months ended July 31, 2016	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	15,504		$	109,800		$	(119	)	$	125,185
Cost of revenues	—			8,606			202,599			(119		)	211,086
Selling, general and administrative	—			2,480			96,343			—			98,823
Total operating expenses	—			11,086			298,942			(119		)	309,909
Other income (expense), net	(124,662		)	826			(9,630		)	136,107			2,641
Interest expense on external borrowings	—			(21,314		)	(152		)	—			(21,466		)
Loss from continuing operations before tax benefit	(124,662		)	(16,070		)	(198,924		)	136,107			(203,549		)
Income tax benefit	(989		)	(5,794		)	(75,740		)	—			(82,523		)
Net loss from continuing operations	(123,673		)	(10,276		)	(123,184		)	136,107			(121,026		)
Net loss from discontinued operations	—			(2,646		)	(1		)	—			(2,647		)
Net loss	(123,673		)	(12,922		)	(123,185		)	136,107			(123,673		)
Other comprehensive loss	(3,571		)	—			(3,571		)	3,571			(3,571		)
Comprehensive loss	$	(127,244	)	$	(12,922	)	$	(126,756	)	$	139,678		$	(127,244	)

CONDENSED CONSOLIDATING BALANCE SHEETS											(in 000s)
As of July 31, 2016	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—		$	3,902	$	302,969	$	—		$	306,871
Cash & cash equivalents - restricted	—			29,000		93,025		—			122,025
Receivables, net	—			72,865		30,560		—			103,425
Prepaid expenses and other current assets	—			7,114		68,938		—			76,052
Total current assets	—			112,881		495,492		—			608,373
Mortgage loans held for investment, net	—			192,375		—		—			192,375
Property and equipment, net	—			116		283,998		—			284,114
Intangible assets, net	—			—		419,909		—			419,909
Goodwill	—			—		470,942		—			470,942
Deferred tax assets and income taxes receivable	—			60,312		30,186		—			90,498
Investments in subsidiaries	1,611,887			—		96,216		(1,708,103		)	—
Amounts due from affiliates	—			1,282,286		1,794,655		(3,076,941		)	—
Other noncurrent assets	—			58,311		39,020		—			97,331
Total assets	$	1,611,887		$	1,706,281	$	3,630,418	$	(4,785,044	)	$	2,163,542
Accounts payable and accrued expenses	$	10,551		$	7,671	$	138,863	$	—		$	157,085
Accrued salaries, wages and payroll taxes	—			1,889		41,627		—			43,516
Accrued income taxes and reserves for uncertain tax positions	—			52,976		163,414		—			216,390
Current portion of long-term debt	—			—		864		—			864
Deferred revenue and other current liabilities	—			52,420		138,884		—			191,304
Total current liabilities	10,551			114,956		483,652		—			609,159
Long-term debt and line of credit borrowings	—			1,485,426		6,364		—			1,491,790
Reserves for uncertain tax positions	6,488			8,577		101,644		—			116,709
Deferred revenue and other noncurrent liabilities	—			1,106		144,585		—			145,691
Amounts due to affiliates	1,794,655			—		1,282,286		(3,076,941		)	—
Total liabilities	1,811,694			1,610,065		2,018,531		(3,076,941		)	2,363,349
Stockholders' equity (deficiency)	(199,807		)	96,216		1,611,887		(1,708,103		)	(199,807		)
Total liabilities and stockholders' equity	$	1,611,887		$	1,706,281	$	3,630,418	$	(4,785,044	)	$	2,163,542

CONDENSED CONSOLIDATING BALANCE SHEETS											(in 000s)
As of April 30, 2017	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—		$	4,486	$	1,006,845	$	—		$	1,011,331
Cash & cash equivalents - restricted	—			8,060		98,148		—			106,208
Receivables, net	—			61,250		101,525		—			162,775
Prepaid expenses and other current assets	—			2,280		63,445		—			65,725
Total current assets	—			76,076		1,269,963		—			1,346,039
Property and equipment, net	—			78		263,749		—			263,827
Intangible assets, net	—			—		409,364		—			409,364
Goodwill	—			—		491,207		—			491,207
Deferred tax assets and income taxes receivable	5,587			30,743		47,398		—			83,728
Investments in subsidiaries	2,158,234			—		113,714		(2,271,948		)	—
Amounts due from affiliates	—			1,493,195		2,194,294		(3,687,489		)	—
Other noncurrent assets	—			51,829		48,114		—			99,943
Total assets	$	2,163,821		$	1,651,921	$	4,837,803	$	(5,959,437	)	$	2,694,108
Accounts payable and accrued expenses	$	2,086		$	14,218	$	200,724	$	—		$	217,028
Accrued salaries, wages and payroll taxes	—			851		183,005		—			183,856
Accrued income taxes and reserves for uncertain tax positions	—			—		348,199		—			348,199
Current portion of long-term debt	—			—		981		—			981
Deferred revenue and other current liabilities	—			26,759		162,457		—			189,216
Total current liabilities	2,086			41,828		895,366		—			939,280
Long-term debt and line of credit borrowings	—			1,487,389		5,628		—			1,493,017
Reserves for uncertain tax positions	28,324			8,037		122,724		—			159,085
Deferred revenue and other noncurrent liabilities	—			953		162,656		—			163,609
Amounts due to affiliates	2,194,294			—		1,493,195		(3,687,489		)	—
Total liabilities	2,224,704			1,538,207		2,679,569		(3,687,489		)	2,754,991
Stockholders' equity (deficiency)	(60,883		)	113,714		2,158,234		(2,271,948		)	(60,883		)
Total liabilities and stockholders' equity	$	2,163,821		$	1,651,921	$	4,837,803	$	(5,959,437	)	$	2,694,108

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Three months ended July 31, 2017	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities:	$	—		$	(9,721	)	$	(399,394	)	$	—		$	(409,115	)
Cash flows from investing:
Capital expenditures	—			(2		)	(13,092		)	—			(13,094		)
Payments made for business acquisitions, net of cash acquired	—			—			(1,440		)	—			(1,440		)
Loans made to franchisees	—			(4,527		)	—			—			(4,527		)
Repayments from franchisees	—			4,524			203			—			4,727
Intercompany borrowings (payments)	—			13,952			(29,995		)	16,043			—
Other, net	—			(1,223		)	2,594			—			1,371
Net cash provided by (used in) investing activities	—			12,724			(41,730		)	16,043			(12,963		)
Cash flows from financing:
Dividends paid	(49,905		)	—			—			—			(49,905		)
Repurchase of common stock, including shares surrendered	(7,508		)	—			—			—			(7,508		)
Proceeds from exercise of stock options	27,418			—			—			—			27,418
Intercompany borrowings (payments)	29,995			—			(13,952		)	(16,043		)	—
Other, net	—			—			2,545			—			2,545
Net cash provided by financing activities	—			—			(11,407		)	(16,043		)	(27,450		)
Effects of exchange rates on cash	—			—			149			—			149
Net decrease in cash, cash equivalents and restricted cash	—			3,003			(452,382		)	—			(449,379		)
Cash, cash equivalents and restricted cash, beginning of period	—			12,546			1,104,993			—			1,117,539
Cash, cash equivalents and restricted cash, end of period	$	—		$	15,549		$	652,611		$	—		$	668,160

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Three months ended July 31, 2016	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities:	$	—		$	(57,943	)	$	(400,021	)	$	—		$	(457,964	)
Cash flows from investing:
Principal payments on mortgage loans and sale of real estate owned, net	—			9,573			—			—			9,573
Capital expenditures	—			(5		)	(6,241		)	—			(6,246		)
Payments made for business acquisitions, net of cash acquired	—			—			(1,635		)	—			(1,635		)
Loans made to franchisees	—			(2,202		)	(17		)	—			(2,219		)
Repayments from franchisees	—			6,305			168			—			6,473
Intercompany borrowings (payments)	—			40,217			(92,187		)	51,970			—
Other, net	—			(1,072		)	204			—			(868		)
Net cash provided by (used in) investing activities	—			52,816			(99,708		)	51,970			5,078
Cash flows from financing:
Dividends paid	(48,514		)	—			—			—			(48,514		)
Repurchase of common stock, including shares surrendered	(45,312		)	—			—			—			(45,312		)
Proceeds from exercise of stock options	1,639			—			—			—			1,639
Intercompany borrowings (payments)	92,187			—			(40,217		)	(51,970		)	—
Other, net	—			—			(24,779		)	—			(24,779		)
Net cash used in financing activities	—			—			(64,996		)	(51,970		)	(116,966		)
Effects of exchange rates on cash	—			—			(2,163		)	—			(2,163		)
Net decrease in cash, cash equivalents and restricted cash	—			(5,127		)	(566,888		)	—			(572,015		)
Cash, cash equivalents and restricted cash, beginning of period	—			38,029			962,882			—			1,000,911
Cash, cash equivalents and restricted cash, end of period	$	—		$	32,902		$	395,994		$	—		$	428,896