CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

9 Months Ended

Jan. 31, 2020

Condensed Financial Information Disclosure [Abstract]

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

NOTE 12: 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 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 January 31, 2020	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	58,231		$	478,704		$	(17,730	)	$	519,205
Cost of revenues	—			35,598			439,061			(12,138		)	462,521
Selling, general and administrative	128			7,132			207,620			(5,592		)	209,288
Total operating expenses	128			42,730			646,681			(17,730		)	671,809
Other income (expense), net	(137,783		)	11,086			8,519			120,057			1,879
Interest expense on borrowings	—			(26,300		)	(5		)	—			(26,305		)
Income (loss) from continuing operations before income tax benefit	(137,911		)	287			(159,463		)	120,057			(177,030		)
Income tax benefit	(8,228		)	(37		)	(40,739		)	—			(49,004		)
Net income (loss) from continuing operations	(129,683		)	324			(118,724		)	120,057			(128,026		)
Net loss from discontinued operations	—			(1,037		)	(620		)	—			(1,657		)
Net loss	(129,683		)	(713		)	(119,344		)	120,057			(129,683		)
Other comprehensive loss	(3,574		)	—			(3,574		)	3,574			(3,574		)
Comprehensive loss	$	(133,257	)	$	(713	)	$	(122,918	)	$	123,631		$	(133,257	)

													(in 000s)
Three months ended January 31, 2019	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	53,461		$	433,144		$	(18,221	)	$	468,384
Cost of revenues	—			34,533			396,672			(10,179		)	421,026
Selling, general and administrative	—			10,347			183,153			(8,042		)	185,458
Total operating expenses	—			44,880			579,825			(18,221		)	606,484
Other income (expense), net	(134,984		)	8,903			348			128,002			2,269
Interest expense on borrowings	—			(22,833		)	—			—			(22,833		)
Loss from continuing operations before income taxes (benefit)	(134,984		)	(5,349		)	(146,333		)	128,002			(158,664		)
Income taxes (benefit)	(8,530		)	75			(30,430		)	—			(38,885		)
Net loss from continuing operations	(126,454		)	(5,424		)	(115,903		)	128,002			(119,779		)
Net loss from discontinued operations	—			(6,675		)	—			—			(6,675		)
Net loss	(126,454		)	(12,099		)	(115,903		)	128,002			(126,454		)
Other comprehensive income	1,238			—			1,238			(1,238		)	1,238
Comprehensive loss	$	(125,216	)	$	(12,099	)	$	(114,665	)	$	126,764		$	(125,216	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS													(in 000s)
Nine months ended January 31, 2020	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	86,515		$	768,544		$	(24,691	)	$	830,368
Cost of revenues	—			45,680			912,272			(12,833		)	945,119
Selling, general and administrative	1,666			15,319			470,631			(11,858		)	475,758
Total operating expenses	1,666			60,999			1,382,903			(24,691		)	1,420,877
Other income (expense), net	(477,932		)	31,578			23,596			436,499			13,741
Interest expense on borrowings	—			(68,656		)	(26		)	—			(68,682		)
Loss from continuing operations before income tax benefit	(479,598		)	(11,562		)	(590,789		)	436,499			(645,450		)
Income tax benefit	(11,669		)	(3,047		)	(173,430		)	—			(188,146		)
Net loss from continuing operations	(467,929		)	(8,515		)	(417,359		)	436,499			(457,304		)
Net loss from discontinued operations	—			(10,005		)	(620		)	—			(10,625		)
Net loss	(467,929		)	(18,520		)	(417,979		)	436,499			(467,929		)
Other comprehensive loss	(4,975		)	—			(4,975		)	4,975			(4,975		)
Comprehensive loss	$	(472,904	)	$	(18,520	)	$	(422,954	)	$	441,474		$	(472,904	)

													(in 000s)
Nine months ended January 31, 2019	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Total revenues	$	—		$	81,751		$	706,775		$	(26,088	)	$	762,438
Cost of revenues	—			46,580			859,759			(12,938		)	893,401
Selling, general and administrative	1,476			16,444			399,747			(13,150		)	404,517
Total operating expenses	1,476			63,024			1,259,506			(26,088		)	1,297,918
Other income (expense), net	(465,085		)	27,748			6,498			442,114			11,275
Interest expense on borrowings	—			(65,082		)	(132		)	—			(65,214		)
Loss from continuing operations before income tax benefit	(466,561		)	(18,607		)	(546,365		)	442,114			(589,419		)
Income tax benefit	(11,161		)	(5,942		)	(132,803		)	—			(149,906		)
Net loss from continuing operations	(455,400		)	(12,665		)	(413,562		)	442,114			(439,513		)
Net loss from discontinued operations	—			(15,887		)	—			—			(15,887		)
Net loss	(455,400		)	(28,552		)	(413,562		)	442,114			(455,400		)
Other comprehensive loss	(3,339		)	—			(3,339		)	3,339			(3,339		)
Comprehensive loss	$	(458,739	)	$	(28,552	)	$	(416,901	)	$	445,453		$	(458,739	)

CONDENSED CONSOLIDATING BALANCE SHEETS											(in 000s)
As of January 31, 2020	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—		$	6,306	$	186,034	$	—		$	192,340
Cash & cash equivalents - restricted	—			—		169,447		—			169,447
Receivables, net	—			410,920		409,026		—			819,946
Prepaid expenses and other current assets	2,811			2,628		114,790		—			120,229
Total current assets	2,811			419,854		879,297		—			1,301,962
Property and equipment, net	—			316		197,253		—			197,569
Operating lease right of use asset	—			257		463,520		—			463,777
Intangible assets, net	—			—		433,074		—			433,074
Goodwill	—			—		838,830		—			838,830
Deferred tax assets and income taxes receivable	3,261			15,953		115,687		—			134,901
Investments in subsidiaries	2,955,158			—		119,213		(3,074,371		)	—
Amounts due from affiliates	—			2,212,575		3,253,034		(5,465,609		)	—
Other noncurrent assets	—			53,975		28,342		—			82,317
Total assets	$	2,961,230		$	2,702,930	$	6,328,250	$	(8,539,980	)	$	3,452,430
Accounts payable and accrued expenses	1,952			14,407		140,407		—			156,766
Accrued salaries, wages and payroll taxes	—			1,676		115,783		—			117,459
Accrued income taxes and reserves for uncertain tax positions	—			1,060		35,182		—			36,242
Current portion of long-term debt	—			649,022		—		—			649,022
Operating lease liabilities	—			153		187,737		—			187,890
Deferred revenue and other current liabilities	—			30,695		159,547		—			190,242
Total current liabilities	1,952			697,013		638,656		—			1,337,621
Long-term debt and line of credit borrowings	—			1,880,589		—		—			1,880,589
Deferred tax liabilities and reserves for uncertain tax positions	24,623			1,486		146,845		—			172,954
Operating lease liabilities	—			108		289,191		—			289,299
Deferred revenue and other noncurrent liabilities	—			4,521		85,825		—			90,346
Amounts due to affiliates	3,253,034			—		2,212,575		(5,465,609		)	—
Total liabilities	3,279,609			2,583,717		3,373,092		(5,465,609		)	3,770,809
Stockholders' equity (deficiency)	(318,379		)	119,213		2,955,158		(3,074,371		)	(318,379		)
Total liabilities and stockholders' equity	$	2,961,230		$	2,702,930	$	6,328,250	$	(8,539,980	)	$	3,452,430

CONDENSED CONSOLIDATING BALANCE SHEETS											(in 000s)
As of January 31, 2019	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—		$	4,722	$	198,504	$	—		$	203,226
Cash & cash equivalents - restricted	—			—		101,903		—			101,903
Receivables, net	—			392,257		365,960		—			758,217
Prepaid expenses and other current assets	2,811			2,637		165,858		—			171,306
Total current assets	2,811			399,616		832,225		—			1,234,652
Property and equipment, net	—			466		220,039		—			220,505
Intangible assets, net	—			—		356,952		—			356,952
Goodwill	—			—		520,005		—			520,005
Deferred tax assets and income taxes receivable	1,794			17,941		121,631		—			141,366
Investments in subsidiaries	2,485,857			—		102,763		(2,588,620		)	—
Amounts due from affiliates	—			1,559,416		2,679,945		(4,239,361		)	—
Other noncurrent assets	—			57,230		38,096		—			95,326
Total assets	$	2,490,462		$	2,034,669	$	4,871,656	$	(6,827,981	)	$	2,568,806
Accounts payable and accrued expenses	$	14,823		$	18,475	$	168,803	$	—		$	202,101
Accrued salaries, wages and payroll taxes	—			1,333		139,569		—			140,902
Accrued income taxes and reserves for uncertain tax positions	—			1,060		47,949		—			49,009
Deferred revenue and other current liabilities	—			28,441		167,193		—			195,634
Total current liabilities	14,823			49,309		523,514		—			587,646
Long-term debt and line of credit borrowings	—			1,876,989		—		—			1,876,989
Deferred tax liabilities and reserves for uncertain tax positions	9,285			3,989		200,943		—			214,217
Deferred revenue and other noncurrent liabilities	—			1,619		101,926		—			103,545
Amounts due to affiliates	2,679,945			—		1,559,416		(4,239,361		)	—
Total liabilities	2,704,053			1,931,906		2,385,799		(4,239,361		)	2,782,397
Stockholders' equity (deficiency)	(213,591		)	102,763		2,485,857		(2,588,620		)	(213,591		)
Total liabilities and stockholders' equity	$	2,490,462		$	2,034,669	$	4,871,656	$	(6,827,981	)	$	2,568,806

CONDENSED CONSOLIDATING BALANCE SHEETS										(in 000s)
As of April 30, 2019	H&R Block, Inc. (Guarantor)		Block Financial (Issuer)		Other Subsidiaries		Eliminations			Consolidated H&R Block
Cash & cash equivalents	$	—	$	4,109	$	1,568,041	$	—		$	1,572,150
Cash & cash equivalents - restricted	—		—		135,577		—			135,577
Receivables, net	—		35,901		103,064		—			138,965
Prepaid expenses and other current assets	2,812		1,695		142,160		—			146,667
Total current assets	2,812		41,705		1,948,842		—			1,993,359
Property and equipment, net	—		552		211,540		—			212,092
Intangible assets, net	—		—		342,493		—			342,493
Goodwill	—		—		519,937		—			519,937
Deferred tax assets and income taxes receivable	3,218		15,953		122,808		—			141,979
Investments in subsidiaries	3,378,009		—		137,733		(3,515,742		)	—
Amounts due from affiliates	—		1,562,958		2,815,617		(4,378,575		)	—
Other noncurrent assets	—		54,976		35,109		—			90,085
Total assets	$	3,384,039	$	1,676,144	$	6,134,079	$	(7,894,317	)	$	3,299,945
Accounts payable and accrued expenses	$	2,272	$	19,735	$	227,518	$	—		$	249,525
Accrued salaries, wages and payroll taxes	—		1,564		194,963		—			196,527
Accrued income taxes and reserves for uncertain tax positions	—		1,060		270,913		—			271,973
Deferred revenue and other current liabilities	—		21,144		183,832		—			204,976
Total current liabilities	2,272		43,503		877,226		—			923,001
Long-term debt	—		1,492,629		—		—			1,492,629
Deferred tax liabilities and reserves for uncertain tax positions	24,623		1,486		171,797		—			197,906
Deferred revenue and other noncurrent liabilities	—		793		144,089		—			144,882
Amounts due to affiliates	2,815,617		—		1,562,958		(4,378,575		)	—
Total liabilities	2,842,512		1,538,411		2,756,070		(4,378,575		)	2,758,418
Stockholders' equity	541,527		137,733		3,378,009		(3,515,742		)	541,527
Total liabilities and stockholders' equity	$	3,384,039	$	1,676,144	$	6,134,079	$	(7,894,317	)	$	3,299,945

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Nine months ended January 31, 2020	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities	$	—		$	(354,155	)	$	(1,113,636	)	$	—		$	(1,467,791	)
Cash flows from investing:
Capital expenditures	—			(12		)	(66,498		)	—			(66,510		)
Payments made for business acquisitions, net of cash acquired	—			—			(450,282		)	—			(450,282		)
Franchise loans funded	—			(32,676		)	(214		)	—			(32,890		)
Payments from franchisees	—			14,135			469			—			14,604
Intercompany borrowings (payments)	—			(649,617		)	(408,952		)	1,058,569			—
Other, net	—			(10,478		)	55,854			—			45,376
Net cash used in investing activities	—			(678,648		)	(869,623		)	1,058,569			(489,702		)
Cash flows from financing:
Repayments of line of credit borrowings	—			(285,000		)	—			—			(285,000		)
Proceeds from line of credit borrowings	—			1,320,000			—			—			1,320,000
Dividends paid	(154,827		)	—			—			—			(154,827		)
Repurchase of common stock, including shares surrendered	(256,199		)	—			—			—			(256,199		)
Proceeds from exercise of stock options	2,074			—			—			—			2,074
Intercompany borrowings (payments)	408,952			—			649,617			(1,058,569		)	—
Other, net	—			—			(14,136		)	—			(14,136		)
Net cash provided by financing activities	—			1,035,000			635,481			(1,058,569		)	611,912
Effects of exchange rates on cash	—			—			(359		)	—			(359		)
Net increase (decrease) in cash, including restricted balances	—			2,197			(1,348,137		)	—			(1,345,940		)
Cash, cash equivalents and restricted cash, beginning of period	—			4,109			1,703,618			—			1,707,727
Cash, cash equivalents and restricted cash, end of period	$	—		$	6,306		$	355,481		$	—		$	361,787

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS													(in 000s)
Nine months ended January 31, 2019	H&R Block, Inc. (Guarantor)			Block Financial (Issuer)			Other Subsidiaries			Eliminations			Consolidated H&R Block
Net cash used in operating activities	$	—		$	(359,101	)	$	(988,355	)	$	—		$	(1,347,456	)
Cash flows from investing:
Capital expenditures	—			(166		)	(79,816		)	—			(79,982		)
Payments made for business acquisitions, net of cash acquired	—			—			(42,428		)	—			(42,428		)
Franchise loans funded	—			(16,198		)	(677		)	—			(16,875		)
Payments from franchisees	—			14,834			315			—			15,149
Intercompany borrowings (payments)	—			(18,579		)	(254,491		)	273,070			—
Other, net	—			(4,746		)	9,623			—			4,877
Net cash used in investing activities	—			(24,855		)	(367,474		)	273,070			(119,259		)
Cash flows from financing:
Repayments of line of credit borrowings	—			(230,000		)	—			—			(230,000		)
Proceeds from line of credit borrowings	—			615,000			—			—			615,000
Dividends paid	(154,866		)	—			—			—			(154,866		)
Repurchase of common stock, including shares surrendered	(102,152		)	—			—			—			(102,152		)
Proceeds from exercise of stock options	2,527			—			—			—			2,527
Intercompany borrowings (payments)	254,491			—			18,579			(273,070		)	—
Other, net	—			(668		)	(19,458		)	—			(20,126		)
Net cash provided by (used in) financing activities	—			384,332			(879		)	(273,070		)	110,383
Effects of exchange rates on cash	—			—			(2,217		)	—			(2,217		)
Net increase (decrease) in cash, including restricted balances	—			376			(1,358,925		)	—			(1,358,549		)
Cash, cash equivalents and restricted cash, beginning of period	—			4,346			1,659,332			—			1,663,678
Cash, cash equivalents and restricted cash, end of period	$	—		$	4,722		$	300,407		$	—		$	305,129