Condensed Consolidating Financial Statements

9 Months Ended

Jan. 31, 2018

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 2017 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)
Nine months ended January 31, 2018	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	85,056		$	704,762		$	(22,736	)	$	767,082
Cost of revenues	—			46,769			846,685			(9,119		)	884,335
Selling, general and administrative	—			17,614			377,196			(13,617		)	381,193
Total operating expenses	—			64,383			1,223,881			(22,736		)	1,265,528
Other income (expense), net	(538,995		)	20,884			(33,710		)	555,080			3,259
Interest expense on external borrowings	—			(66,873		)	(229		)	—			(67,102		)
Loss from continuing operations before income taxes (benefit)	(538,995		)	(25,316		)	(553,058		)	555,080			(562,289		)
Income taxes (benefit)	(9,217		)	9,987			(44,004		)	—			(43,234		)
Net loss from continuing operations	(529,778		)	(35,303		)	(509,054		)	555,080			(519,055		)
Net loss from discontinued operations	—			(10,721		)	(2		)	—			(10,723		)
Net loss	(529,778		)	(46,024		)	(509,056		)	555,080			(529,778		)
Other comprehensive income	5,925			—			5,925			(5,925		)	5,925
Comprehensive loss	$	(523,853	)	$	(46,024	)	$	(503,131	)	$	549,155		$	(523,853	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS													(in 000s)
Nine months ended January 31, 2017	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	80,428		$	641,322		$	(13,351	)	$	708,399
Cost of revenues	—			47,514			786,946			(8,895		)	825,565
Selling, general and administrative	—			14,905			389,923			(4,456		)	400,372
Total operating expenses	—			62,419			1,176,869			(13,351		)	1,225,937
Other income (expense), net	(379,767		)	17,011			(24,601		)	392,305			4,948
Interest expense on external borrowings	—			(69,420		)	(606		)	—			(70,026		)
Loss from continuing operations before tax benefit	(379,767		)	(34,400		)	(560,754		)	392,305			(582,616		)
Income tax benefit	(5,360		)	(14,695		)	(196,908		)	—			(216,963		)
Net loss from continuing operations	(374,407		)	(19,705		)	(363,846		)	392,305			(365,653		)
Net loss from discontinued operations	—			(8,733		)	(21		)	—			(8,754		)
Net loss	(374,407		)	(28,438		)	(363,867		)	392,305			(374,407		)
Other comprehensive loss	(4,130		)	—			(4,130		)	4,130			(4,130		)
Comprehensive loss	$	(378,537	)	$	(28,438	)	$	(367,997	)	$	396,435		$	(378,537	)

CONDENSED CONSOLIDATING BALANCE SHEETS											(in 000s)
As of January 31, 2017	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—		$	4,272	$	216,900	$	—		$	221,172
Cash & cash equivalents - restricted	—			8,052		62,114		—			70,166
Receivables, net	—			422,034		365,831		—			787,865
Income taxes receivable	—			—		38,032		—			38,032
Prepaid expenses and other current assets	—			3,217		82,382		—			85,599
Total current assets	—			437,575		765,259		—			1,202,834
Property and equipment, net	—			81		282,277		—			282,358
Intangible assets, net	—			—		434,720		—			434,720
Goodwill	—			—		483,320		—			483,320
Deferred tax assets and income taxes receivable	3,330			54,777		13,532		—			71,639
Investments in subsidiaries	1,370,585			—		80,699		(1,451,284		)	—
Amounts due from affiliates	—			2,168,620		2,166,873		(4,335,493		)	—
Other noncurrent assets	—			67,619		35,141		—			102,760
Total assets	$	1,373,915		$	2,728,672	$	4,261,821	$	(5,786,777	)	$	2,577,631
Accounts payable and accrued expenses	$	1,941		$	15,051	$	222,093	$	—		$	239,085
Accrued salaries, wages and payroll taxes	—			461		122,996		—			123,457
Accrued income taxes and reserves for uncertain tax positions	—			—		7,537		—			7,537
Current portion of long-term debt	—			—		942		—			942
Deferred revenue and other current liabilities	—			33,872		149,744		—			183,616
Total current liabilities	1,941			49,384		503,312		—			554,637
Long-term debt and line of credit borrowings	—			2,586,744		5,878		—			2,592,622
Deferred tax liabilities and reserves for uncertain tax positions	5,917			10,786		92,854		—			109,557
Deferred revenue and other noncurrent liabilities	—			1,059		120,572		—			121,631
Amounts due to affiliates	2,166,873			—		2,168,620		(4,335,493		)	—
Total liabilities	2,174,731			2,647,973		2,891,236		(4,335,493		)	3,378,447
Stockholders' equity (deficiency)	(800,816		)	80,699		1,370,585		(1,451,284		)	(800,816		)
Total liabilities and stockholders' equity	$	1,373,915		$	2,728,672	$	4,261,821	$	(5,786,777	)	$	2,577,631

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	—			1,487,389		5,628		—			1,493,017
Deferred tax liabilities and 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)
Nine months ended January 31, 2018	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities	$	—		$	(353,081	)	$	(1,004,620	)	$	—		$	(1,357,701	)
Cash flows from investing:
Capital expenditures	—			(794		)	(77,071		)	—			(77,865		)
Payments made for business acquisitions, net of cash acquired	—			—			(39,397		)	—			(39,397		)
Franchise loans funded	—			(20,080		)	(146		)	—			(20,226		)
Payments received on franchise loans	—			13,058			333			—			13,391
Intercompany borrowings (payments)	—			(427,473		)	(129,736		)	557,209			—
Other, net	—			(9,039		)	10,563			—			1,524
Net cash used in investing activities	—			(444,328		)	(235,454		)	557,209			(122,573		)
Cash flows from financing:
Repayments of line of credit borrowings	—			(40,000		)	—			—			(40,000		)
Proceeds from line of credit borrowings	—			830,000			—			—			830,000
Dividends paid	(150,258		)	—			—			—			(150,258		)
Repurchase of common stock, including shares surrendered	(7,746		)	—			—			—			(7,746		)
Proceeds from exercise of stock options	28,268			—			—			—			28,268
Intercompany borrowings (payments)	129,736			—			427,473			(557,209		)	—
Other, net	—			(662		)	(28,260		)	—			(28,922		)
Net cash provided by financing activities	—			789,338			399,213			(557,209		)	631,342
Effects of exchange rates on cash	—			—			1,792			—			1,792
Net decrease in cash, cash equivalents and restricted cash	—			(8,071		)	(839,069		)	—			(847,140		)
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	$	—		$	4,475		$	265,924		$	—		$	270,399

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Nine months ended January 31, 2017	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities	$	—		$	(420,319	)	$	(989,540	)	$	—		$	(1,409,859	)
Cash flows from investing:
Principal payments on mortgage loans and sale of real estate owned, net	—			207,174			—			—			207,174
Capital expenditures	—			(14		)	(73,910		)	—			(73,924		)
Payments made for business acquisitions, net of cash acquired	—			—			(52,825		)	—			(52,825		)
Franchise loans funded	—			(31,568		)	(220		)	—			(31,788		)
Payments received on franchise loans	—			20,605			211			—			20,816
Intercompany borrowings (payments)	—			(891,350		)	(461,916		)	1,353,266			—
Other, net	—			(10,233		)	5,522			—			(4,711		)
Net cash provided by (used in) investing activities	—			(705,386		)	(583,138		)	1,353,266			64,742
Cash flows from financing:
Repayments of line of credit borrowings	—			(445,000		)	—			—			(445,000		)
Proceeds from line of credit borrowings	—			1,545,000			—			—			1,545,000
Dividends paid	(141,537		)	—			—			—			(141,537		)
Repurchase of common stock, including shares surrendered	(322,782		)	—			—			—			(322,782		)
Proceeds from exercise of stock options	2,403			—			—			—			2,403
Intercompany borrowings (payments)	461,916			—			891,350			(1,353,266		)	—
Other, net	—			—			373			—			373
Net cash provided by financing activities	—			1,100,000			891,723			(1,353,266		)	638,457
Effects of exchange rates on cash	—			—			(2,913		)	—			(2,913		)
Net decrease in cash, cash equivalents and restricted cash	—			(25,705		)	(683,868		)	—			(709,573		)
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	$	—		$	12,324		$	279,014		$	—		$	291,338