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hrb:TwoThousandFiveMember 2008-05-01 2008-07-31 0000012659 2008-05-01 2008-07-31 0000012659 hrb:CaturanoCompanyIncMember 2010-10-31 0000012659 2010-08-01 2010-10-31 0000012659 2009-08-01 2009-10-31 0000012659 2009-05-01 2009-10-31 0000012659 hrb:TaxServicesMember 2010-10-31 0000012659 hrb:BusinessServicesMember 2010-10-31 0000012659 2010-10-31 0000012659 hrb:TaxServicesMember 2010-04-30 0000012659 hrb:BusinessServicesMember 2010-04-30 0000012659 2010-04-30 0000012659 2010-11-30 0000012659 2010-05-01 2010-10-31 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares false --04-30 Q2 2011 2010-10-31 10-Q 0000012659 305110195 Large Accelerated Filer H&R BLOCK INC 17188000 15000000 2188000 17188000 15000000 2188000 0.6 0.59 84000000000 334939000 335346000 313247000 306804000 <div> <div> Basis of Presentation The condensed consolidated balance sheet as of October 31, 2010, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended October 31, 2010 and 2009, and the condensed consolidated statements of cash flows for the six months ended October 31, 2010 and 2009 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows at October 31, 2010 and for all periods presented have been made. <a name="OLE_LINK65"> </a><a name="OLE_LINK64"> </a> "H&R Block," "the Company," "we," "our" and "us" are used interchangeably to refer to H&R Block, Inc. or to H&R Block, Inc. and its subsidiaries, as appropriate to the context.      Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our April 30, 2010 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of April 30, 2010 or for the year then ended, are derived from our April 30, 2010 Annual Report to Shareholders on Form 10-K.</div> </div> 29800000 5890000 14 <div> <div>                                                                                                                                                                                                                                                                                              (in millions) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                                                                      Fiscal Year 2009                                                           Fiscal Year 2010                                   Fiscal Year 2011                     <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                  Q1                 Q2                  Q3                 Q4                  Q1                 Q2                  Q3                 Q4                  Q1                 Q2            Total</div>                                                                                                                                                                                                                                                                                                 Loan Origination Year:    2005                                           $      40         $       21         $          1         $          -         $          -         $       15         $          -         $          -         $         6         $          1         $      84    2006                                                   89                   10                 111                      7                     2                   57                     4                   45                100                   15               440    2007                                                     43                   10                   85                   15                     4                   11                      7                      -                      3                      5                183    Total                                          $    172         $       41         $    197         $      22         $         6         $       83         $       11         $       45         $    109         $       21                707 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>  </div> </div> 172000000 40000000 43000000 89000000 707000000 84000000 183000000 440000000 41000000 21000000 10000000 10000000 197000000 1000000 85000000 111000000 22000000 0 15000000 7000000 6000000 0 4000000 2000000 83000000 15000000 11000000 57000000 11000000 0 7000000 4000000 45000000 0 0 45000000 109000000 6000000 3000000 100000000 21000000 1000000 5000000 15000000 121000000 24000000 97000000 1300000 185000000 0.3 0.15 0.3 0.15 340000 -27000 -7000 -26000 <div> <div> 3. Earnings (Loss) Per Share and Stockholders' Equity   <a name="OLE_LINK1">Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. The dilutive effect of potential common shares is included in diluted earnings per share except in those periods with a loss from continuing operations. Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 15.6 million shares and 19.3 million shares for the three and six months ended October 31, 2010, respectively and 19.3 million shares for the three and six months ended October 31, 2009, as the effect would be antidilutive due to the net loss from continuing operations during each period. </a>      The computations of basic and diluted loss per share from continuing operations are as follows:                                                                                                                  (in 000s, except per share amounts) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                        Three months ended October 31,           Six months ended October 31, <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                    2010                    2009                      2010                      2009</div>                                                                                                                                                 Net loss from continuing operations    attributable to shareholders              $           (106,812)        $    (126,472)        $      (234,450)          $    (257,089)           Amounts allocated to participating    securities (nonvested shares)                                 (26)                         (27)                             (7)                          340            Net loss from continuing operations    attributable to common shareholders$       (106,786)        $    (126,445)        $      (234,443)          $    (257,429)             Basic weighted average common shares       306,804                 335,346                   313,247                   334,939            Potential dilutive shares                                                   -                               -                              -                                -                 Dilutive weighted average    common shares                                                306,804                  335,346                   313,247                   334,939              Earnings (loss) per share from continuing   operations attributable to common shareholders:    Basic                                                               $        (0.35)          $        (0.38)         $          (0.75)           $        (0.77)    Diluted                                                                       (0.35)                    (0.38)                      (0.75)                     (0.77)            <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoHeader">  </div>        The weighted average shares outstanding <a name="OLE_LINK18">for the three and six months ended</a> October 31, 2010 decreased to 306.8 million and 313.2 million, respectively, from 335.3 million and 334.9 million for the three and six months ended October 31, 2009, respectively. During the six months ended October 31, 2010, we purchased and immediately retired 19.0 million shares of our common stock at a cost of $279.9 million. We may continue to repurchase and retire common stock or retire shares held in treasury from time to time in the future. The cost of shares retired during the period was allocated to the components of stockholders' equity as follows:                                                                                                                                                     (in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyText">  </div> Common stock                                                               $                      190                  Additional paid-in capital                                                                 11,370                  Retained earnings                                                                         268,387                                                                                     $                     279,947 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; margin-left: 0in; border-top: medium none; margin-right: -9.35pt; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: left; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2" align="left">  </div>        During the six months ended October 31, 2010 and 2009, we issued 1.0 million and 1.6 million shares of common stock, respectively, due to the exercise of stock options, employee stock purchases and vesting of nonvested shares.      During the six months ended October 31, 2010, we acquired 0.2 million shares of our common stock at an aggregate cost of $3.5 million, and during the six months ended October 31, 2009, we acquired 0.2 million shares at an aggregate cost of $3.8 million. Shares acquired during these periods represented shares swapped or surrendered to us in connection with the vesting of nonvested shares and the exercise of stock options.      During the six months ended October 31, 2010, we granted 2.1 million stock options and 0.6 nonvested shares and units in accordance with our stock-based compensation plans. The weighted average fair value of options granted was $2.25 for management options. These awards vest over a four year period with one-fourth vesting each year. Stock-based compensation expense of our continuing operations totaled $2.7 million and $6.2 million for the three and six months ended October 31, 2010, respectively, and $4.8 million and $12.1 million for the three and six months ended October 31, 2009, respectively. At October 31, 2010, unrecognized compensation cost for options totaled $6.4 million, and for nonvested shares and units totaled $16.4 million. </div> </div> 6400000 75000000 75000000 75000000 75000000 75132000 0.054 0.006 0.048 0.059 0.007 0.053 0.4 0.41 857635000 403751000 453884000 884605000 429118000 455487000 -7463000 -2288000 -5175000 <div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: left; border-left: medium none; padding-bottom: 0in; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent" align="left">(dollars in 000s) </div>                                                                                                                                                                                                                                                                              To Be Well Capitalized                                                                                                                     For Capital Adequacy        Under Prompt Corrective                                                                                               Actual                                    Purposes                          Action Provisions      <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">                                                                  Amount               Ratio               Amount            Ratio               Amount            Ratio</div>   Total risk-based capital ratio (1)      <a name="OLE_LINK43">$ </a>387,993            77.4%           $    40,101            8.0%           $    50,127          10.0% Tier 1 risk-based capital ratio (2)       $ 381,315            76.1%                       N/A               N/A           $    30,076            6.0% Tier 1 capital ratio (leverage) (3)     $ 381,315            29.7%           $ 154,031          12.0%           $    64,179            5.0% Tangible equity ratio (4)                     $ 381,315            29.7%           $    19,254            1.5%                        n/a                n/a <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>   <a name="OLE_LINK13"> </a><a name="OLE_LINK6">(1)</a>   Total risk-based capital divided by risk-weighted assets. (2)     Tier 1 (core) capital less deduction for low-level recourse and residual interest divided by risk-weighted assets. (3)     Tier 1 (core) capital divided by adjusted total assets. (4)     Tangible capital divided by tangible assets. </div> 50000000 12500000 9400000 1207879000 1207879000 1240741000 1240741000 4134000 3828000 490993000 488890000 0.137 0.141 330000 1366000 1055225000 26548000 26548000 0.6 -5382000 -3478000 <div> <div> Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the determination of our allowance for loan losses, potential losses from loan repurchase and indemnity obligations associated with our discontinued mortgage business, contingent losses associated with pending litigation, fair value of reporting units, reserves for uncertain tax positions and related matters. We revise our estimates when facts and circumstances dictate. However, future events and their effects cannot be determined with absolute certainty. As such, actual results could differ materially from those estimates.</div> </div> 120 60 317183000 249549000 249549000 226837000 226837000 -4795000 -2076000 0.51 14600000 183042000 89577000 -272619000 15851000 423572000 -439423000 -89577000 89577000 -423572000 423572000 -0.78 -0.38 -0.77 -0.36 -0.77 -0.38 -0.75 -0.35 -0.01 -0.02 -0.01 340113000 310070000 36806000 30683000 11867000 13847000 -1980000 30851000 -40237000 71088000 3785000 3785000 283470000 283470000 0.84 0.01 0.88 0.76 0.24 292655000 324014000 <div> <div>                                                                                                                                                                                                                                                                                                      (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                                                                                                                     2010                                                                        2009</div>   Balance, beginning of period                                                                                                    $                          188,200                                    $                          206,595 Provisions                                                                                                                                                                                        -                                                                                  -     Losses on repurchase and indemnifications                                                                                                   (3,478)                                                                   (5,382) Balance, end of period                                                                                                                   $                           184,722                                    $                           201,213 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>  </div> </div> <div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <div> <div> <div> <div>                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                               2010                                         2009</div>   Balance, beginning of the period                            $            93,535                         $            84,073 Provision                                                                                     16,300                                       27,000 Recoveries                                                                                         86                                               29 Charge-offs                                                                               (22,354)                                    (15,109) Balance, end of the period                                    $                87,567                         $            95,993</div></div></div></div></div> </div> <div> <div>                                                                                                                                                                                                                                                                                                     (in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div> Customer relationships (1)                                                           $                                 6,733 Non-compete agreements (2)                                                                                         2,766 Attest firm affiliation (3)                                                                                                      7,629 Goodwill                                                                                                                            27,289 Fixed assets                                                                                                                       2,500 Other assets                                                                                                                          831 Other liabilities                                                                                                                 (1,640) Unfavorable leasehold (2)                                                                                              (5,890 Total purchase price                                                                       $                             40,218 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal"> </div>   (1)    Estimated life of 12 years. (2)    Estimated life of 7 years. (3)  Estimated life of 18 years. Represents the benefits to be received from the Alternative Practice Structure arrangement and Administrative Services Agreement with the attest firm of Caturano. <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal"> </div>  </div> </div> <div> <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <div> <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">Condensed Consolidating Balance Sheets                                                                  (in 000s) </div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                             H&R Block, Inc.         BFC                Other                                    Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Cash & cash equivalents              $          -          $    810,258      $     149,499      $          (11)     $     959,746 Cash & cash equivalents – restricted         -                     140               35,333                 -                   35,473 Receivables, net                                     -               223,131             193,202                 -                 416,333 Mortgage loans held for investment          -               537,226                   -                     -                 537,226 Intangible assets and goodwill, net                       -                     -                       1,240,741         -                             1,240,741 Investments in subsidiaries              2,722,826                 -                       234        (2,722,826)                  234 Other assets                                     15,022           243,462             859,545                 -              1,118,029    Total assets                            $ 2,737,848      $ 1,814,217      $   2,478,554      $ (2,722,837)     $   4,307,782   Customer deposits                      $          -          $    929,909      $           -          $          (11)     $     929,898 Long-term debt                                     -               998,785               45,725                 -              1,044,510 FHLB borrowings                                   -                 75,000                   -                     -                   75,000 Short-term borrowings                           -                 39,517                   -                     -                   39,517 Other liabilities                                      123           125,343          1,213,586                 -              1,339,052 Net intercompany advances            1,857,920          (404,933)        (1,452,987)                -                       -    Stockholders' equity                        879,805             50,596          2,672,230        (2,722,826)            879,805    Total liabilities and                                                                                                                                      stockholders' equity               $ 2,737,848      $ 1,814,217      $   2,478,554      $ (2,722,837)     $   4,307,782 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>   <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                             H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">April 30, 2010                             (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Cash & cash equivalents                  $           -         $    702,021     $ 1,102,135     $          (111)    $   1,804,045 Cash & cash equivalents – restricted               -                 6,160            28,190                 -                 34,350 Receivables, net                                            57          105,192          412,737                 -               517,986 Mortgage loans held for investment, net          -              595,405                -                     -               595,405 Intangible assets and goodwill, net                 -                   -            1,207,879                 -             1,207,879 Investments in subsidiaries                    3,276,597               -                     231        (3,276,597)                231 Other assets                                            19,014          332,782          722,626                 -             1,074,422    Total assets                                 $   3,295,668     $ 1,741,560     $ 3,473,798     $  (3,276,708)    $   5,234,318   Customer deposits                          $           -         $    852,666     $         -          $          (111)    $     852,555 Long-term debt                                           -              998,605            36,539                 -             1,035,144 <a name="OLE_LINK91"> </a><a name="OLE_LINK88">FHLB borrowings                                         -                75,000               -                      -                 75,000</a> Other liabilities                                        48,775          153,154       1,629,060                 -             1,830,989 Net intercompany advances                  1,806,263         (431,696)     (1,374,567)                -                    -     Stockholders' equity                            1,440,630            93,831       3,182,766        (3,276,597)        1,440,630    Total liabilities and                                                                                                                                     stockholders' equity                    $   3,295,668     $ 1,741,560     $ 3,473,798     $  (3,276,708)    $   5,234,318 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>    </div></div> </div> <div>   <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">Condensed Consolidating Statements of Cash Flows                                                             (in 000s)</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                         H&R Block, Inc.         BFC               Other                                 Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                             (Guarantor)          (Issuer)         Subsidiaries        Elims               H&R Block  </div>                                                                                                                                                 Net cash used in operating activities:  $      (46,961)    $    (15,379)    $   (485,661)    $           -         $    (548,001) Cash flows from investing:   Mortgage loans originated for    investment, net                                        -                30,829                -                     -                 30,829   Purchase property & equipment                   -                    -               (35,005)                -                (35,005)   Payments made for business    acquisitions, net                                       -                    -               (43,310)                -                (43,310)   Net intercompany advances                   423,572                -                    -              (423,572)                -      Other, net                                                 -               (40,237)           71,088                  -                  30,851 Net cash provided by (used in)   investing activities                                423,572             (9,408)            (7,227)          (423,572)            (16,635) Cash flows from financing:                                                                                                   Repayments of short-term borrowings                     -                    (75,000)          -                     -                             (75,000)   Proceeds from short-term borrowings                     -                    114,490          -                     -                             114,490   Customer banking deposits                          -                76,923                -                     100             77,023   Dividends paid                                     (95,068)               -                    -                      -                (95,068) <a name="OLE_LINK41"> </a><a name="OLE_LINK40">  Repurchase of common stock               (283,470)               -                    -                     -              (283,470)</a>   Proceeds from exercise of    stock options                                        1,493                -                    -                     -                   1,493   Net intercompany advances                         -                15,851         (439,423)          423,572                 -      Other, net                                                 434                760           (22,546)                 -                 (21,352) Net cash provided by (used in)    financing activities                             (376,611)         133,024         (461,969)           423,672           (281,884) Effects of exchange rates on cash                   -                   -                   2,221                  -                   2,221 Net increase (decrease) in cash                      -              108,237         (952,636)                100          (844,299) Cash – beginning of period                           -              702,021        1,102,135                 (111)        1,804,045 Cash – end of period                       $           -         $    810,258     $    149,499     $            (11)    $     959,746   <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">   </div> <div> <div>   <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">Condensed Consolidating Income Statements                                                                            (in 000s)</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Three months ended                 H&R Block, Inc.         BFC                Other                                    Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block  </div>                                                                                                                                                 Total revenues                           $         -           $     17,320      $     305,569      $          -          $     322,889   Cost of revenues                                  -                  35,959             356,991                  -                392,950 Selling, general and administrative                       -                     9,379                99,564             -                             108,943   Total expenses                                    -                  45,338             456,555                  -                501,893 Operating loss                                      -                 (28,018)           (150,986)                 -               (179,004) Other income (expense), net            (175,119)              4,890               (1,005)          175,119                3,885 Loss from continuing    operations before tax benefit           (175,119)           (23,128)           (151,991)          175,119            (175,119) Income tax benefit                           (68,307)             (7,654)             (60,653)            68,307              (68,307) Net loss from continuing operations                    (106,812)         (15,474)             (91,338)           106,812                   (106,812) Net loss from discontinued   operations                                       (2,237)             (1,330)                 (907)              2,237               (2,237) Net loss                                    $   (109,049)     $    (16,804)     $      (92,245)     $    109,049      $    (109,049) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent"><a name="OLE_LINK24"> </a><a name="OLE_LINK7"> </a> </div>                <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Three months ended                 H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2009                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Total revenues                           $         -           $     21,026      $     305,055      $           -         $     326,081   Cost of revenues                                  -                  45,861             365,088                  -                410,949 Selling, general and administrative                       -                     2,457                127,228           -                             129,685   Total expenses                                    -                  48,318             492,316                  -                540,634 Operating loss                                      -                 (27,292)           (187,261)                 -               (214,553) Other income (expense), net            (212,853)             (2,607)               4,307           212,853                1,700 Loss from continuing operations    before tax benefit                        (212,853)           (29,899)           (182,954)          212,853            (212,853) Income tax benefit                           (86,381)           (12,294)             (74,087)            86,381              (86,381) Net loss from continuing operations  (126,472)           (17,605)           (108,867)          126,472            (126,472) Net loss from discontinued   operations                                       (2,115)             (2,115)                  -                   2,115               (2,115) Net loss                                    $   (128,587)     $    (19,720)     $    (108,867)     $    128,587      $    (128,587) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>                  <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                     H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Total revenues                           $         -           $     38,320      $     559,043      $           -         $     597,363   Cost of revenues                                  -                  74,987             685,979                  -                760,966 Selling, general and administrative                       -                     11,469               214,503           -                             225,972   Total expenses                                    -                  86,456             900,482                  -                986,938 Operating loss                                      -                 (48,136)           (341,439)                 -               (389,575) Other income (expense), net            (382,436)              5,272                1,867           382,436                7,139 Loss from continuing operations    before tax benefit                        (382,436)           (42,864)           (339,572)          382,436            (382,436) Income tax benefit                         (147,986)           (15,495)           (132,491)          147,986            (147,986) Net loss from continuing operations                    (234,450)         (27,369)             (207,081)         234,450                   (234,450) Net loss from discontinued   operations                                       (5,280)             (4,334)                 (946)              5,280               (5,280) Net loss                                    $   (239,730)     $    (31,703)     $    (208,027)     $    239,730      $    (239,730) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>                  <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                     H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2009                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Total revenues                           $         -           $     44,222      $     557,420      $          (56)     $     601,586   Cost of revenues                                  -                  91,421             705,978                  -                797,399 Selling, general and administrative                       -                     4,955                228,003           (56)                         232,902   Total expenses                                    -                  96,376             933,981                  (56)         1,030,301 Operating loss                                      -                 (52,154)           (376,561)                 -               (428,715) Other income (expense), net            (423,726)             (3,840)               8,829           423,726                4,989 Loss from continuing operations   before tax benefit                          (423,726)           (55,994)           (367,732)          423,726            (423,726) Income tax benefit                         (166,637)           (22,986)           (143,651)          166,637            (166,637) Net loss from continuing operations                    (257,089)         (33,008)             (224,081)         257,089                   (257,089) Net loss from discontinued   operations                                       (5,132)             (5,132)                  -                   5,132               (5,132) Net loss                                    $   (262,221)     $    (38,140)     $    (224,081)     $    262,221      $    (262,221)</div> </div> <div> <div>                                                                                                        (in 000s, except per share amounts) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                 Three months ended October 31,           Six months ended October 31, <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                    2010                    2009                      2010                      2009</div>                                                                                                                                                 Net loss from continuing operations    attributable to shareholders              $           (106,812)        $    (126,472)        $      (234,450)          $    (257,089)           Amounts allocated to participating    securities (nonvested shares)                                 (26)                         (27)                             (7)                          340            Net loss from continuing operations    attributable to common shareholders$       (106,786)        $    (126,445)        $      (234,443)          $    (257,429)             Basic weighted average common shares       306,804                 335,346                   313,247                   334,939            Potential dilutive shares                                                   -                               -                              -                               -                 Dilutive weighted average    common shares                                                306,804                  335,346                   313,247                   334,939              Earnings (loss) per share from continuing   operations attributable to common shareholders:    Basic                                                               $        (0.35)          $        (0.38)         $          (0.75)           $        (0.77)    Diluted                                                                       (0.35)                    (0.38)                      (0.75)                     (0.77)   </div> </div> <div> <div> <div> <div> <div> <div> <div>                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                                October 31, 2010                             April 30, 2010</div>   Impaired loans:   30 - 59 days                                                       $                1,366                       $                 330   60 - 89 days                                                                       12,398                                     11,851   90+ days, non-accrual                                                   149,040                                   153,703   TDR loans, accrual                                                         111,249                                  113,471   TDR loans, non-accrual                                                   10,440                                    31,506                                                                                                 284,493                                  310,861 Real estate owned (1)                                                         25,577                                     29,252 Total non-performing assets                             $           310,070                        $        340,113 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>     (1) Includes loans accounted for as in-substance foreclosures of $9.4 million and $12.5 million at October 31, 2010 and April 30, 2010, respectively. </div></div></div></div></div></div> </div> <div>                                                                                                               (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                                            Three months ended October 31,       Six months ended October 31, <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                                                          2010                 2009                 2010                 2009</div>   Interest income:    Mortgage loans held for investment            $         6,525      $         8,072      $       12,848      $       15,968      Other                                                               4,110                4,041                8,089                8,432                                                                  $       10,635       $       12,113       $       20,937       $       24,400    Interest expense:    Borrowings                                             $       20,891      $       18,514      $       41,534      $       37,471      Deposits                                                           1,947                2,284                3,870                4,333      FHLB advances                                                     396                   508                   792                1,017                                                                  $       23,234       $       21,306       $       46,196       $       42,821    <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>   </div> <div> <div> <div> <div> <div>                                                                                                                                         (dollars in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                                            October 31, 2010                                         April 30, 2010</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                             Amount           % of Total                        Amount           % of Total</div>   Adjustable-rate loans                            $       365,262                   59%         $             411,122                   60% Fixed-rate loans                                               254,995                   41%                         272,562                  40%                                                                             620,257                 100%                         683,684                100% Unamortized deferred fees and costs             4,536                                                         5,256 Less: Allowance for loan losses                   (87,567)                                                     (93,535)                                                                     $      537,226                                             $      595,405 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>    </div></div></div></div> </div> <div> Common stock                                                               $                      190                  Additional paid-in capital                                                                 11,370                  Retained earnings                                                                         268,387                                                                                     $                     279,947 </div> <div> <div> Seasonality of Business Our operating revenues are seasonal in nature with peak revenues occurring in the months of January through April. Therefore, results for interim periods are not indicative of results to be expected for the full year.</div> </div> 2.25 14500000 11500000 1 1 113471000 111249000 31506000 10440000 4000000000 2900000000 6300000000 <div> <div> <div> <div> 10. Variable Interests In June 2009, the Financial Accounting Standards Board (FASB) issued revised authoritative guidance associated with the consolidation of variable interest entities (VIEs). The revised guidance replaced the previous quantitative-based assessment for determining whether an enterprise is the primary beneficiary of a VIE and focuses primarily on a qualitative assessment. This assessment requires identifying the enterprise that has (1) the power to direct the activities of the VIE that can most significantly impact the entity's performance; and (2) the obligation to absorb losses and the right to receive benefits from the VIE that could potentially be significant to such entity. The revised guidance also requires that the enterprise continually reassess whether it is the primary beneficiary of a VIE rather than conducting a reassessment only upon the occurrence of specific events. We implemented this guidance on May 1, 2010 and evaluated our financial interests to determine if we had interests in VIEs and if we are the primary beneficiary of the VIE. The following is a description of our financial interests in VIEs which we consider significant or where we are the sponsor. For these VIEs we have determined that we are not the primary beneficiary and, therefore have not consolidated the VIEs. Prior to implementation of this new guidance we did not consolidate these entities. §McGladrey & Pullen LLP – The administrative services agreement with McGladrey & Pullen, LLP (M&P) and compensation arrangements between RSM McGladrey (RSM) and their managing directors represent a variable interest in M&P. These agreements are described more fully in our 2010 Annual Report to Shareholders on Form 10-K. We have concluded that RSM is not the primary beneficiary of M&P and, therefore, we have not consolidated M&P. RSM does not have an equity interest in M&P, nor does it have the power to direct any activities of M&P and does not receive any of its income. We have no assets or liabilities included in our condensed consolidated balance sheets related to our variable interests. We believe RSM's maximum exposure to economic loss, resulting from various agreements with M&P, relates primarily to shared office space from operating leases under the administrative services agreement equal to approximately $106.3 million, and variability in our operating results due to the compensation agreements with RSM managing directors. We do not provide any support that is not contractually required. §Securitization Trusts – Sand Canyon Corporation (SCC) holds an interest in and is the sponsor (issuer) of 56 REMIC Trusts and 14 NIM Trusts (collectively, "Trusts") related to previously originated mortgage loans that were securitized. These Trusts are variable interest entities. The REMIC Trusts hold static pools of sub-prime residential mortgage loans. The NIM Trusts hold beneficial interests in certain REMIC Trusts. The Trusts were designed to collect and pass through to the beneficial interest holders the cash flows of the underlying mortgage loans. The REMIC Trusts were financed with bonds and equity. The NIM Trusts were financed with notes and equity. All bonds and notes are held by third-party investors. Our identification of the primary beneficiary of the Trusts was based on a determination that the servicer of the underlying mortgage loans has the power to direct the most significant activities of the Trusts because the servicer handles all of the loss mitigation activities for the mortgage loans. SCC is not the servicer of the mortgage loans underlying the REMIC Trusts. Therefore, SCC is not the primary beneficiary of the REMIC Trusts because it does not have the power to direct the most significant activities of the REMIC Trusts, which is the servicing of the underlying mortgage loans. SCC does have the exclusive right to appoint a servicer when certain conditions have been met for specific loans related to two of the NIM Trusts. As of October 31, 2010, those conditions have been met for a minority portion of the loans underlying those Trusts. As this right pertains only to a minority of the loans, we have concluded that SCC does not have the power to direct the most significant activities of these two NIM Trusts, as the servicer has the power to direct significant activities over the majority of the mortgage loans. In the remaining NIM Trusts, SCC has a shared right to appoint a servicer under certain conditions. For these NIM Trusts, we have concluded that SCC is not the primary beneficiary because the power to direct the most significant activities, which is the servicing of the underlying mortgage loans, is shared with other unrelated parties. At October 31, 2010, we had no significant assets or liabilities included in our condensed consolidated balance sheets related to SCC's variable interests in the Trusts. We have a liability, as discussed in note 11, and a deferred tax asset recorded in our condensed consolidated balance sheets related to obligations for representations and warranties SCC made in connection with the transfer of mortgage loans, including mortgage loans held by the securitization trusts. We have no remaining exposure to economic loss arising from impairment of SCC's beneficial interest in the Trusts. If SCC receives cash flows in the future as a holder of beneficial interests we would record gains as other income in our income statement. Neither we nor SCC has liquidity arrangements, guarantees or other commitments for the Trusts, nor has any support been provided that was not contractually required.</div></div></div> </div>

517986000

105192000

57000

412737000

416333000

223131000

193202000

459175000

151708000

756577000

660999000

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683537000

1678000

2757000

832604000

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115505000

29000

86000

15109000

22354000

14400000

7500000

14200000

7300000

19300000

15600000

5234318000

1741560000

-3276708000

3295668000

3473798000

4307782000

1814217000

-2722837000

2737848000

2478554000

2649036000

1735566000

20697000

22154000

32600000

287500000

40218000

7629000

6733000

2766000

27289000

831000

1640000

2500000

<div> <div> 2. Business Combinations Effective July 20, 2010, our Business Services segment acquired certain non-attest assets and liabilities of Caturano & Company, Inc. (Caturano), a Boston-based accounting firm, for an aggregate purchase price of $40.2 million. We expect this acquisition to expand our presence in the Boston market. We made cash payments of $32.6 million, including $29.8 million at closing. Payment of the remaining purchase price is deferred and will be paid over 14 years. The following table summarizes the fair value of identifiable assets acquired and liabilities assumed and the resulting goodwill as of October 31, 2010:                                                                                                                                                                                                                                                                                                        (in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div> Customer relationships (1)                                                           $                                 6,733 Non-compete agreements (2)                                                                                         2,766 Attest firm affiliation (3)                                                                                                      7,629 Goodwill                                                                                                                            27,289 Fixed assets                                                                                                                       2,500 Other assets                                                                                                                          831 Other liabilities                                                                                                                 (1,640) Unfavorable leasehold (2)                                                                                              (5,890) Total purchase price                                                                       $                             40,218 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal"> </div>   (1)    Estimated life of 12 years. (2)    Estimated life of 7 years. (3)  Estimated life of 18 years. Represents the benefits to be received from the Alternative Practice Structure arrangement and Administrative Services Agreement with the attest firm of Caturano. <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal"> </div>       <div>     In connection with the acquisition a deferred compensation plan, an employee retention program and a performance bonus plan were put in place for eligible employees. Expenses related to these plans will be treated as compensation and will be expensed as incurred. We incurred expenses totaling $1.3 million under these plans during the six months ended October 31, 2010.    In October 2010, we signed a definitive merger agreement to acquire all of the outstanding shares of 2SS Holdings, Inc., developer of TaxACT digital tax preparation solutions, for $287.5 million in cash. Completion of the transaction is subject to the satisfaction of customary closing conditions, including regulatory approval.</div></div> </div>

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<div> <div> <div> <div> <div> <div> <div> <div> 11. Commitments and Contingencies Changes in deferred revenue balances related to our Peace of Mind (POM) program, the current portion of which is included in accounts payable, accrued expenses and other current liabilities and the long-term portion of which is included in other noncurrent liabilities in the condensed consolidated balance sheets, are as follows: <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <div>                                                                                                                                                                                                                                                                                                      (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                                                                                                                        2010                                                                        2009</div>   Balance, beginning of period                                                                                                    $                                                                                                       141,542                                    $                           146,807 Amounts deferred for new guarantees issued                                                                                              1,422                                                                        1,351 Revenue recognized on previous deferrals                                                                                                 (48,358)                                                                (47,044) Balance, end of period                                                                                                                   $                                                                                                                 94,066                                   $                            101,114 </div></div>   In addition to amounts accrued for our POM guarantee, we had accrued $11.5 million and $14.5 million at October 31, 2010 and April 30, 2010, respectively, related to our standard guarantee which is included with our standard tax preparation services. The following table summarizes certain of our other contractual obligations and commitments:                                                                                                                                                                                                                                                                                                        (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                                                                                                                                    October 31, 2010                                                    April 30, 2010</div>   Franchise Equity Lines of Credit – undrawn commitment                                $                              30,683                                    $                             36,806 Contingent business acquisition obligations                                                                                                22,154                                                                    20,697 Media advertising purchase obligation                                                                                                           26,548                                                                    26,548 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; margin-left: 0in; border-top: medium none; margin-right: -9.35pt; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: left; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'CenturyITC TT','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2" align="left">  </div>        We routinely enter into contracts that include embedded indemnifications that have characteristics similar to guarantees. Guarantees and indemnifications of the Company and its subsidiaries include obligations to protect counterparties from losses arising from the following: (1) tax, legal and other risks related to the purchase or disposition of businesses; (2) penalties and interest assessed by federal and state taxing authorities in connection with tax returns prepared for clients; (3) indemnification of our directors and officers; and (4) third-party claims relating to various arrangements in the normal course of business. Typically, there is no stated maximum payment related to these indemnifications, and the terms of the indemnities may vary and in many cases are limited only by the applicable statute of limitations. The likelihood of any claims being asserted against us and the ultimate liability related to any such claims, if any, is difficult to predict. While we cannot provide assurance we will ultimately prevail in the event any such claims are asserted, we believe the fair value of guarantees and indemnifications relating to our continuing operations is not material as of October 31, 2010. <div> <a name="OLE_LINK36">Discontinued Operations </a> Sand Canyon Corporation ("SCC", previously known as Option One Mortgage Corporation) ceased originating mortgage loans in December 2007 and, in April 2008, sold its servicing assets and discontinued its remaining operations. The sale of servicing assets did not include the sale of any mortgage loans. In connection with the securitization and sale of loans, SCC made certain representations and warranties, including, but not limited to, representations relating to matters such as ownership of the loan, validity of lien securing the loan, and the loan's compliance with SCC's underwriting criteria. Representations and warranties in whole loan sale transactions to institutional investors included a "knowledge qualifier" which limits SCC liability for borrower fraud to those instances where SCC had knowledge of the fraud at the time the loans were sold. In the event that there is a breach of a representation and warranty and such breach materially and adversely affects the value of a mortgage loan, SCC may be obligated to repurchase a loan or otherwise indemnify certain parties for losses incurred as a result of loan liquidation. Generally, these representations and warranties are not subject to a stated term, but would be subject to statutes of limitation applicable to the contractual provisions. Claims received by SCC have primarily related to alleged breaches of representations and warranties related to a loan's compliance with the underwriting standards established by SCC at origination, borrower fraud and credit exceptions without sufficient compensating factors. Claims received since May 1, 2008 follows:                                                                                                                                                                                                                                                                                              (in millions) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                                                                      Fiscal Year 2009                                                           Fiscal Year 2010                                   Fiscal Year 2011                     <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                  Q1                 Q2                  Q3                 Q4                  Q1                 Q2                  Q3                 Q4                  Q1                 Q2            Total</div>                                                                                                                                                                                                                                                                                                 Loan Origination Year:    2005                                           $      40         $       21         $          1         $          -         $          -         $       15         $          -         $          -         $         6         $          1         $      84    2006                                                   89                   10                 111                      7                     2                   57                     4                   45                100                   15               440    2007                                                     43                   10                   85                   15                     4                   11                      7                      -                      3                      5                183    Total                                          $    172         $       41         $    197         $      22         $         6         $       83         $       11         $       45         $    109         $       21                707 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'CenturyITC TT','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>   For those claims determined to be valid, SCC has complied with its obligations by either repurchasing the mortgage loans or REO properties, providing for the reimbursement of losses in connection with liquidated REO properties, or reaching other settlements. SCC has denied approximately 84% of all claims received, excluding resolution reached under other settlements. Counterparties could reassert claims that SCC has denied. Of claims determined to be valid, approximately 24% resulted in loan repurchases, and 76% resulted in indemnification or settlement payments. Losses on loan repurchase, indemnification and settlement payments totaled approximately $58 million for the period May 1, 2008 through October 31, 2010. Loss severity rates on repurchases and indemnification have approximated 60% and SCC has not observed any material trends related to average losses by counterparty. Repurchased loans are considered held for sale and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The net balance of all mortgage loans held for sale by SCC was $14.6 million at October 31, 2010. SCC generally has 60 to 120 days to respond to representation and warranty claims and performs a loan-by-loan review of all repurchase claims during this time. SCC has completed its review of all claims, with the exception of claims totaling approximately $121 million, which remained subject to review as of October 31, 2010. Of the claims still subject to review, approximately $97 million are from private-label securitizations, related to rescissions of mortgage insurance, and $24 million are from monoline insurers. All claims asserted against SCC since May 1, 2008 relate to loans originated during calendar years 2005 through 2007, of which, approximately 88% relate to loans originated in calendar years 2006 and 2007. During calendar year 2005 through 2007, SCC originated approximately $84 billion in loans, of which less than 1% were sold to government sponsored entities. SCC is not subject to loss on loans that have been paid in full, repurchased, or were sold without recourse. The majority of claims asserted since May 1, 2008, which have been determined by SCC to represent a valid breach of its representations and warranties, relate to loans that became delinquent within the first two years following the origination of the mortgage loan. SCC believes the longer a loan performs prior to an event of default, the less likely the default will be related to a breach of a representation and warranty. The balance of loans originated in 2005, 2006 and 2007 which defaulted in the first two years is $4.0 billion, $6.3 billion and $2.9 billion, respectively, at October 31, 2010. SCC estimates losses relating to representation and warranty claims by estimating loan repurchase and indemnification obligations on both known claims and projections of future claims. Projections of future claims are based on an analysis that includes a combination of reviewing repurchase demands and actual defaults and loss severities by counterparty, inquiries from various third-parties, the terms and provisions of related agreements and the historical rate of repurchase and indemnification obligations related to breaches of representations and warranties. SCC's methodology for calculating this liability considers the probability that individual counterparties (whole-loan purchasers, private label securitization trustees and monoline insurers) will assert future claims. SCC has recorded a liability for estimated contingent losses related to representation and warranty claims as of October 31, 2010, of $184.7 million, which represents SCC's best estimate of the probable loss that may occur. This overall liability amount includes $49.7 million, which was established under an indemnity agreement dated April 2008 with a specific counterparty in exchange for a full and complete release of such party's ability to assert representation and warranty claims. This indemnity agreement was given as part of obtaining the counterparty's consent to SCC's sale of its mortgage servicing business in 2008. Though disbursements related to this agreement have not been significant, SCC believes that the full amount under this indemnity agreement will ultimately be paid. While SCC uses the best information available to it in estimating its liability, probable losses are inherently difficult to estimate and require considerable management judgment. There may be a wide range of reasonably possible losses in excess of the recorded liability that cannot be estimated, primarily due to difficulties inherent in estimating the level of future claims that will be asserted and the percentage of those claims that are ultimately determined to be valid. Although net losses on settled claims since May 1, 2008 have been within initial loss estimates, to the extent that valid claim volumes or the value of residential home prices differ in the future from current estimates, future losses may be greater than the current estimates and those differences may be significant. A rollforward of our liability for losses on repurchases for the six months ended October 31, 2010 and 2009 is as follows:                                                                                                                                                                                                                                                                                                      (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                                                                                                                     2010                                                                        2009</div>   Balance, beginning of period                                                                                                    $                          188,200                                    $                          206,595 Provisions                                                                                                                                                                                        -                                                                                  -     Losses on repurchase and indemnifications                                                                                                   (3,478)                                                                   (5,382) Balance, end of period                                                                                                                   $                           184,722                                    $                           201,213 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'CenturyITC TT','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>   The repurchase liability is included in accounts payable, accrued expenses and other current liabilities on our condensed consolidated balance sheets. There have been no provisions for additional losses included in the income statement since April 30, 2008; however, loss provisions would be recorded net of tax in discontinued operations. </div></div></div></div></div></div></div></div> </div>

<div>                                                                                                                                                     (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                                                                            October 31, 2010                       April 30, 2010</div>   Franchise Equity Lines of Credit undrawn commitment        $                  30,683                  $             36,806 Contingent business acquisition obligations                                               22,154                                 20,697 Media advertising purchase obligation                                                          26,548                                 26,548 </div>

0.01

800000000

431390599

412440599

4314000

4124000

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<div> <div class="MetaData"> Concentrations of Risk Our mortgage loans held for investment include concentrations of loans to borrowers in certain states, which may result in increased exposure to loss as a result of changes in real estate values and underlying economic or market conditions related to a particular geographical location. Approximately 51% of our mortgage loan portfolio consists of loans to borrowers located in the states of Florida, California and New York.</div> </div>

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3407000

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234000

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<div>                                                                                                                                                   (in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                     Carrying                                  Estimated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                      Amount                                 Fair Value                        </div>   Mortgage loans held for investment                        $            537,226                       $          317,183 IRAs and other time deposits                                               490,993                                   488,890 Long-term debt                                                              1,044,510                                 1,055,225 FHLB advances                                                                   75,000                                     75,132 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>   </div>

<div> <div> 8. Fair Value <a name="OLE_LINK11">We use the following valuation methodologies for assets and liabilities measured at fair value and the general classification of these instruments pursuant to the fair value hierarchy. </a> <div> •Available-for-sale securities – Available-for-sale securities are carried at fair value on a recurring basis. When available, fair value is based on quoted prices in an active market and as such, would be classified as Level 1. If quoted market prices are not available, fair values are estimated using quoted prices of securities with similar characteristics, discounted cash flows or other pricing models. Available-for-sale securities that we classify as Level 2 include certain agency and non-agency mortgage-backed securities, U.S. states and political subdivisions debt securities and other debt and equity securities. •Impaired mortgage loans held for investment – The fair value of impaired mortgage loans held for investment are generally based on the net present value of discounted cash flows for TDR loans or the appraised value of the underlying collateral for all other loans. These loans are classified as Level 3. The following methods were used to determine the fair values of our other financial instruments: •Cash equivalents, accounts receivable, demand deposits, accounts payable, accrued liabilities and the current portion of long-term debt – The carrying values reported in the balance sheet for these items approximate fair market value due to the relative short-term nature of the respective instruments. •Mortgage loans held for investment – The fair value of mortgage loans held for investment is generally determined using a pricing model based on current market information obtained from origination data, and bids received from time to time. The fair value of certain impaired loans held for investment is primarily based on the appraised value of the underlying collateral less estimated selling costs. •IRAs and other time deposits – The fair value is calculated based on the discounted value of contractual cash flows. •Long-term debt – The fair value of borrowings is based on rates currently available to us for obligations with similar terms and maturities, including current market rates on our Senior Notes. <div> <div>   </div></div></div>The following table presents for each hierarchy level the financial assets that are measured at fair value on both a recurring and non-recurring basis at October 31, 2010 and April 30, 2010:</div>                                                                                                                                         (dollars in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                               Total               Level 1                  Level 2                     Level 3</div>   As of October 31, 2010:   Recurring:    Available-for-sale securities           $       28,834         $       -                 $    28,834            $          -       Non-recurring:    Impaired mortgage loans        held for investment                         226,837                  -                          -                        226,837                                                    $     255,671         $       -                 $    28,834            $     226,837   As a percentage of total assets                     5.9%                 -   %                    0.7%                       5.3%   As of April 30, 2010:   Recurring:    Available-for-sale securities           $       31,948         $       -                 $    31,948            $          -       Non-recurring:    Impaired mortgage loans        held for investment                         249,549                  -                          -                        249,549                                                    $     281,497         $       -                 $    31,948            $     249,549   As a percentage of total assets                     5.4%                 -   %                    0.6%                       4.8% <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>   There were no significant changes to the unobservable inputs used in determining the fair values of our level 2 and level 3 financial assets. The carrying amounts and estimated fair values of our financial instruments at October 31, 2010 are as follows:                                                                                                                                                   (in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                     Carrying                                  Estimated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                      Amount                                 Fair Value                        </div>   Mortgage loans held for investment                        $            537,226                       $          317,183 IRAs and other time deposits                                               490,993                                   488,890 Long-term debt                                                              1,044,510                                 1,055,225 FHLB advances                                                                   75,000                                     75,132 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>   </div>

31948000

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<div>                                                                                                                                         (dollars in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                               Total               Level 1                  Level 2                     Level 3</div>   As of October 31, 2010:   Recurring:    Available-for-sale securities           $       28,834         $       -                 $    28,834            $          -       Non-recurring:    Impaired mortgage loans        held for investment                         226,837                  -                          -                        226,837                                                    $     255,671         $       -                 $    28,834            $     226,837   As a percentage of total assets                     5.9%                 -   %                    0.7%                       5.3%   As of April 30, 2010:   Recurring:    Available-for-sale securities           $       31,948         $       -                 $    31,948            $          -       Non-recurring:    Impaired mortgage loans        held for investment                         249,549                  -                          -                        249,549                                                    $     281,497         $       -                 $    31,948            $     249,549   As a percentage of total assets                     5.4%                 -   %                    0.6%                       4.8% <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>     </div>

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<div> <div> <div> <div> 5. Goodwill and Intangible Assets Changes in the carrying amount of goodwill for the six months ended October 31, 2010 consist of the following:                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                              Tax Services             Business Services                              Total</div>   Balance at April 30, 2010:   Goodwill                                         $           453,884            $           403,751            $           857,635        Accumulated impairment losses                         (2,188)                         (15,000)                         (17,188)                                                                        451,696                         388,751                         840,447      Changes:   Acquisitions                                                     6,778                           27,655                           34,433   Disposals and other                                         (5,175)                          (2,288)                          (7,463)   Impairments                                                      -                                   -                                   -          Balance at October 31, 2010:   Goodwill                                                      455,487                         429,118                         884,605        Accumulated impairment losses                         (2,188)                         (15,000)                         (17,188)                                                           $           453,299            <a name="OLE_LINK19"> </a><a name="OLE_LINK4">$</a> 414,118            $           867,417      <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>        We test goodwill for impairment annually at the beginning of our fourth quarter, or more frequently if events occur which could, more likely than not, reduce the fair value of a reporting unit's net assets below its carrying value. No events indicating possible impairment of goodwill were identified during the six months ended October 31, 2010.</div>       Intangible assets consist of the following:                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                    October 31, 2010                                     April 30, 2010</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                Gross                                                   Gross                <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                              Carrying     Accumulated                         Carrying     Accumulated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                              Amount     Amortization         Net            Amount     Amortization         Net</div>   Tax Services:   Customer relationships        $     75,270      $ (37,009)     $ 38,261         $  67,705     $   (33,096)       $  34,609   Noncompete agreements            22,508         (21,685)              823             23,062          (21,278)               1,784   Reacquired franchise rights      219,665           (8,167)       211,498          223,773            (6,096)           217,677   Franchise agreements                 19,201           (2,453)          16,748            19,201            (1,813)             17,388   Purchased technology                  14,500           (7,381)            7,119            14,500            (6,266)                8,234   Trade name                                      1,325               (500)               825              1,325                (400)                   925 Business Services:                   Customer relationships            151,882       (124,601)          27,281         145,149        (120,037)              25,112   Noncompete agreements           35,818         (23,341)       12,477           33,052           (22,118)              10,934   Attest firm affiliation                         7,629              (106)             7,523                 -                            -                   -       Trade name – amortizing              2,600           (2,600)                   -                 2,600            (2,600)                  -       Trade name – non-amortizing   55,637           (4,868)           50,769            55,637            (4,868)                50,769                                                   $    606,035      $ (232,711)   $ 373,324         $ 586,004   $ (218,572)        $ 367,432 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div> <div>      Amortization of intangible assets for the three and six months ended October 31, 2010 was $7.3 and $14.2 million respectively, and $7.5 million and $14.4 million for the three and six months ended October 31, 2009, respectively. Estimated amortization of intangible assets for fiscal years 2011 through 2015 is $30.1 million, $27.7 million, $23.2 million, $19.8 million and $14.5 million, respectively.      In connection with the acquisition of Caturano, as discussed in note 2, we recorded a liability related to unfavorable operating lease terms in the amount of $5.9 million, which will be amortized over the remaining contractual life of the operating lease.</div></div></div> </div>

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<div> <div> 6. Income Taxes We file a consolidated federal income tax return in the United States and file tax returns in various state and foreign jurisdictions. The U.S. Federal consolidated tax returns for the years 1999 through 2007 are currently under examination by the Internal Revenue Service, with the 1999-2005 years currently at the appellate level. Federal returns for tax years prior to 1999 are closed by statute. Historically, tax returns in various foreign and state jurisdictions are examined and settled upon completion of the exam. During the six months ended October 31, 2010, we accrued additional gross interest and penalties of $2.7 million related to our uncertain tax positions. We had gross unrecognized tax benefits of $130.5 million and $129.8 million at October 31, 2010 and April 30, 2010, respectively. The gross unrecognized tax benefits increased $0.7 million in the current year, due to accruals of tax and interest on positions related to prior years. Except as noted below, we have classified the liability for unrecognized tax benefits, including corresponding accrued interest, as long-term at October 31, 2010, and included this amount in other noncurrent liabilities on the condensed consolidated balance sheet. Based upon the expiration of statutes of limitations, payments of tax and other factors in several jurisdictions, we believe it is reasonably possible that the gross amount of reserves for previously unrecognized tax benefits may decrease by approximately $21.1 million within twelve months of October 31, 2010. This portion of our liability for unrecognized tax benefits has been classified as current and is included in accounts payable, accrued expenses and other current liabilities on the condensed consolidated balance sheets. </div> </div>

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<div> <div> <div> <div> 4. Mortgage Loans Held for Investment and Related Assets   The composition of our mortgage loan portfolio as of October 31, 2010 and April 30, 2010 is as follows:                                                                                                                                           (dollars in 000s) <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                                            October 31, 2010                                         April 30, 2010</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                             Amount           % of Total                        Amount           % of Total</div>   Adjustable-rate loans                            $       365,262                   59%         $             411,122                   60% Fixed-rate loans                                               254,995                   41%                         272,562                  40%                                                                             620,257                 100%                         683,684                100% Unamortized deferred fees and costs             4,536                                                         5,256 Less: Allowance for loan losses                   (87,567)                                                (93,535)                                                                     $      537,226                                            $      595,405 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>        Activity in the allowance for loan losses for the six months ended October 31, 2010 and 2009 is as follows:                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                               2010                                         2009</div>   Balance, beginning of the period                            $            93,535                         $            84,073 Provision                                                                                     16,300                                       27,000 Recoveries                                                                                         86                                               29 Charge-offs                                                                              (22,354)                                     (15,109) Balance, end of the period                                    $                87,567                         $            95,993 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>   Our loan loss reserve as a percent of mortgage loans was 14.1% at October 31, 2010 compared to 13.7% at April 30, 2010.        In cases where we modify a loan and in so doing grant a concession to a borrower experiencing financial difficulty, the modification is considered a <a name="jump_exp_1"> </a>troubled <a name="jump_exp_2"> </a>debt restructuring (TDR). TDR loans totaled $121.7 million and $145.0 million at October 31, 2010 and April 30, 2010, respectively. The principal balance of non-performing assets as of October 31, 2010 and April 30, 2010 is as follows:                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                                October 31, 2010                             April 30, 2010</div>   Impaired loans:   30 - 59 days                                                       $                1,366                       $                330   60 - 89 days                                                                       12,398                                     11,851   90+ days, non-accrual                                                   149,040                                   153,703   TDR loans, accrual                                                         111,249                                  113,471   TDR loans, non-accrual                                                   10,440                                     31,506                                                                                                 284,493                                  310,861 Real estate owned (1)                                                         25,577                                     29,252 Total non-performing assets                             $           310,070                        $        340,113 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">  </div>     (1) Includes loans accounted for as in-substance foreclosures of $9.4 million and $12.5 million at October 31, 2010 and April 30, 2010, respectively.        Activity related to our real estate owned is as follows:                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                               2010                                         2009</div>   Balance, beginning of the period                            $            29,252                         $            44,533 Additions                                                                                    11,185                                         9,212 Sales                                                                                         (12,784)                                   (10,055) Writedowns                                                                                (2,076)                                       (4,795) Balance, end of the period                                    $               25,577                         $            38,895</div></div></div> </div>

-10055000

-12784000

9212000

11185000

511231000

808704000

93406000

-95457000

-295422000

-281884000

133024000

423672000

-376611000

-461969000

43280000

53086000

-89577000

89577000

-9806000

-16635000

-9408000

-423572000

423572000

-7227000

-786152000

-548001000

-262221000

-38140000

262221000

-262221000

-224081000

-128587000

-19720000

128587000

-128587000

-108867000

-239730000

-31703000

239730000

-239730000

-208027000

-109049000

-16804000

109049000

-109049000

-92245000

-257429000

-126445000

-234443000

-106786000

4989000

-3840000

423726000

-423726000

8829000

1700000

-2607000

212853000

-212853000

4307000

7139000

5272000

382436000

-382436000

1867000

3885000

4890000

175119000

-175119000

-1005000

-428715000

-52154000

-376561000

-214553000

-27292000

-187261000

-389575000

-48136000

-341439000

-179004000

-28018000

-150986000

1074422000

332782000

19014000

722626000

1118029000

243462000

15022000

859545000

436528000

466368000

12123000

2586000

1376000

5396000

-418000

329000

-639000

-333000

1830989000

153154000

48775000

1629060000

1339052000

125343000

123000

1213586000

412053000

445182000

34243000

19010000

32868000

16115000

-38693000

-30829000

-18473000

-30851000

100784000

95068000

6606000

43310000

7280000

-546000

7826000

35005000

42000000

114490000

-30884000

-8975000

894000

-22803000

-21352000

760000

434000

-22546000

8218000

1493000

345470000

327881000

27000000

16300000

26.2

<div> <div> <div> <div> <div> <div> <div>                                                                                                                                                   (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 10pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">Six months ended October 31,                                               2010                                         2009</div>   Balance, beginning of the period                            $             29,252                         $            44,533 Additions                                                                                     11,185                                         9,212 Sales                                                                                          (12,784)                                     (10,055) Writedowns                                                                                (2,076)                                         (4,795) Balance, end of the period                                    $                25,577                         $             38,895</div></div></div></div></div></div> </div>

<div> <div> <div> <div>                                                                                                                                                 (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                            Three months ended October 31,       Six months ended October 31, <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                          2010                 2009                 2010                 2009</div>   Revenues:                                                                                                                      Tax Services                                             $     110,921      $     109,305      $     202,566      $     197,268     Business Services                                         203,426             206,602              378,136             384,220     Corporate                                                              8,542               10,174                16,661                20,098                                                                        $       322,889      $   326,081      $       597,363       $    601,586    Pretax income (loss):   Tax Services                                             $    (154,355)     $   (172,188)     $    (328,979)     $    (344,162)    Business Services                                              8,397                      174                   7,964                  1,495     Corporate                                                           (29,161             (40,839              (61,421             (81,059  <div>   Loss from continuing operations    before tax benefit                                    $    (175,119)     $    (212,853)     $    (382,436)     $    (423,726)  <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; margin-left: 0in; border-top: medium none; margin-right: -9.35pt; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: left; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2" align="left">  </div>  </div></div></div></div> </div>

431696000

-1806263000

1374567000

404933000

-1857920000

1452987000

75000000

34350000

6160000

28190000

35473000

140000

35333000

2658586000

2104050000

601586000

44222000

-56000

557420000

326081000

21026000

305055000

597363000

38320000

559043000

322889000

17320000

305569000

542943000

294958000

543558000

296139000

<div> 15. Condensed Consolidating Financial Statements Block Financial LLC (BFC) is an indirect, wholly-owned consolidated subsidiary of the Company. BFC is the Issuer and the Company is the Guarantor of the Senior Notes issued on January 11, 2008 and October 26, 2004, our unsecured committed lines of credit (CLOCs) 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.     <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">Condensed Consolidating Income Statements                                                                            (in 000s)</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Three months ended                 H&R Block, Inc.         BFC                Other                                    Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block  </div>                                                                                                                                                 Total revenues                           $         -           $     17,320      $     305,569      $          -          $     322,889   Cost of revenues                                  -                  35,959             356,991                  -                392,950 Selling, general and administrative                       -                     9,379                99,564             -                             108,943   Total expenses                                    -                  45,338             456,555                  -                501,893 Operating loss                                      -                 (28,018)           (150,986)                 -               (179,004) Other income (expense), net            (175,119)              4,890               (1,005)          175,119                3,885 Loss from continuing    operations before tax benefit           (175,119)           (23,128)           (151,991)          175,119            (175,119) Income tax benefit                           (68,307)             (7,654)             (60,653)            68,307              (68,307) Net loss from continuing operations                    (106,812)         (15,474)             (91,338)           106,812                   (106,812) Net loss from discontinued   operations                                       (2,237)             (1,330)                 (907)              2,237               (2,237) Net loss                                    $   (109,049)     $    (16,804)     $      (92,245)     $    109,049      $    (109,049) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent"><a name="OLE_LINK24"> </a><a name="OLE_LINK7"> </a> </div>                <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Three months ended                 H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2009                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Total revenues                           $         -           $     21,026      $     305,055      $           -         $     326,081   Cost of revenues                                  -                  45,861             365,088                  -                410,949 Selling, general and administrative                       -                     2,457                127,228           -                             129,685   Total expenses                                    -                  48,318             492,316                  -                540,634 Operating loss                                      -                 (27,292)           (187,261)                 -               (214,553) Other income (expense), net            (212,853)             (2,607)               4,307           212,853                1,700 Loss from continuing operations    before tax benefit                        (212,853)           (29,899)           (182,954)          212,853            (212,853) Income tax benefit                           (86,381)           (12,294)             (74,087)            86,381              (86,381) Net loss from continuing operations  (126,472)           (17,605)           (108,867)          126,472            (126,472) Net loss from discontinued   operations                                       (2,115)             (2,115)                  -                   2,115               (2,115) Net loss                                    $   (128,587)     $    (19,720)     $    (108,867)     $    128,587      $    (128,587) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>                  <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                     H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Total revenues                           $         -           $     38,320      $     559,043      $           -         $     597,363   Cost of revenues                                  -                  74,987             685,979                  -                760,966 Selling, general and administrative                       -                     11,469               214,503           -                             225,972   Total expenses                                    -                  86,456             900,482                  -                986,938 Operating loss                                      -                 (48,136)           (341,439)                 -               (389,575) Other income (expense), net            (382,436)              5,272                1,867           382,436                7,139 Loss from continuing operations    before tax benefit                        (382,436)           (42,864)           (339,572)          382,436            (382,436) Income tax benefit                         (147,986)           (15,495)           (132,491)          147,986            (147,986) Net loss from continuing operations                    (234,450)         (27,369)             (207,081)         234,450                   (234,450) Net loss from discontinued   operations                                       (5,280)             (4,334)                 (946)              5,280               (5,280) Net loss                                    $   (239,730)     $    (31,703)     $    (208,027)     $    239,730      $    (239,730) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>                  <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                     H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2009                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Total revenues                           $         -           $     44,222      $     557,420      $          (56)     $     601,586   Cost of revenues                                  -                  91,421             705,978                  -                797,399 Selling, general and administrative                       -                     4,955                228,003           (56)                         232,902   Total expenses                                    -                  96,376             933,981                  (56)         1,030,301 Operating loss                                      -                 (52,154)           (376,561)                 -               (428,715) Other income (expense), net            (423,726)             (3,840)               8,829           423,726                4,989 Loss from continuing operations   before tax benefit                          (423,726)           (55,994)           (367,732)          423,726            (423,726) Income tax benefit                         (166,637)           (22,986)           (143,651)          166,637            (166,637) Net loss from continuing operations                    (257,089)         (33,008)             (224,081)         257,089                   (257,089) Net loss from discontinued   operations                                       (5,132)             (5,132)                  -                   5,132               (5,132) Net loss                                    $   (262,221)     $    (38,140)     $    (224,081)     $    262,221      $    (262,221)                       <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">Condensed Consolidating Balance Sheets                                                                  (in 000s) </div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                             H&R Block, Inc.         BFC                Other                                    Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                        (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Cash & cash equivalents              $          -          $    810,258      $     149,499      $          (11)     $     959,746 Cash & cash equivalents – restricted         -                     140               35,333                 -                   35,473 Receivables, net                                     -               223,131             193,202                 -                 416,333 Mortgage loans held for investment          -               537,226                   -                     -                 537,226 Intangible assets and goodwill, net                       -                     -                       1,240,741         -                             1,240,741 Investments in subsidiaries              2,722,826                 -                       234        (2,722,826)                  234 Other assets                                     15,022           243,462             859,545                 -              1,118,029    Total assets                            $ 2,737,848      $ 1,814,217      $   2,478,554      $ (2,722,837)     $   4,307,782   Customer deposits                      $          -          $    929,909      $           -          $          (11)     $     929,898 Long-term debt                                     -               998,785               45,725                 -              1,044,510 FHLB borrowings                                   -                 75,000                   -                     -                   75,000 Short-term borrowings                           -                 39,517                   -                     -                   39,517 Other liabilities                                      123           125,343          1,213,586                 -              1,339,052 Net intercompany advances            1,857,920          (404,933)        (1,452,987)                -                       -    Stockholders' equity                        879,805             50,596          2,672,230        (2,722,826)            879,805    Total liabilities and                                                                                                                                      stockholders' equity               $ 2,737,848      $ 1,814,217      $   2,478,554      $ (2,722,837)     $   4,307,782 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; text-indent: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent">  </div>   <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                             H&R Block, Inc.         BFC                Other                                    Consolidated</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">April 30, 2010                             (Guarantor)          (Issuer)          Subsidiaries           Elims               H&R Block</div>                                                                                                                                                 Cash & cash equivalents                  $           -         $    702,021     $ 1,102,135     $          (111)    $   1,804,045 Cash & cash equivalents – restricted               -                 6,160            28,190                 -                 34,350 Receivables, net                                            57          105,192          412,737                 -               517,986 Mortgage loans held for investment, net          -              595,405                -                     -               595,405 Intangible assets and goodwill, net                 -                   -            1,207,879                 -             1,207,879 Investments in subsidiaries                    3,276,597               -                     231        (3,276,597)                231 Other assets                                            19,014          332,782          722,626                 -             1,074,422    Total assets                                 $   3,295,668     $ 1,741,560     $ 3,473,798     $  (3,276,708)    $   5,234,318   Customer deposits                          $           -         $    852,666     $         -          $          (111)    $     852,555 Long-term debt                                           -              998,605            36,539                 -             1,035,144 <a name="OLE_LINK91"> </a><a name="OLE_LINK88">FHLB borrowings                                         -                75,000               -                      -                 75,000</a> Other liabilities                                        48,775          153,154       1,629,060                 -             1,830,989 Net intercompany advances                  1,806,263         (431,696)     (1,374,567)                -                    -     Stockholders' equity                            1,440,630            93,831       3,182,766        (3,276,597)        1,440,630    Total liabilities and                                                                                                                                     stockholders' equity                    $   3,295,668     $ 1,741,560     $ 3,473,798     $  (3,276,708)    $   5,234,318 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 4pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div> <div>   <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">Condensed Consolidating Statements of Cash Flows                                                             (in 000s)</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                         H&R Block, Inc.         BFC               Other                                 Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2010                             (Guarantor)          (Issuer)         Subsidiaries        Elims               H&R Block  </div>                                                                                                                                                 Net cash used in operating activities:  $      (46,961)    $    (15,379)    $   (485,661)    $           -         $    (548,001) Cash flows from investing:   Mortgage loans originated for    investment, net                                        -                30,829                -                     -                 30,829   Purchase property & equipment                   -                    -               (35,005)                -                (35,005)   Payments made for business    acquisitions, net                                       -                    -               (43,310)                -                (43,310)   Net intercompany advances                   423,572                -                    -              (423,572)                -      Other, net                                                 -               (40,237)           71,088                  -                  30,851 Net cash provided by (used in)   investing activities                                423,572             (9,408)            (7,227)          (423,572)            (16,635) Cash flows from financing:                                                                                                   Repayments of short-term borrowings                     -                    (75,000)          -                     -                             (75,000)   Proceeds from short-term borrowings                     -                    114,490          -                     -                             114,490   Customer banking deposits                          -                76,923                -                     100             77,023   Dividends paid                                     (95,068)               -                    -                      -                (95,068) <a name="OLE_LINK41"> </a><a name="OLE_LINK40">  Repurchase of common stock               (283,470)               -                    -                     -              (283,470)</a>   Proceeds from exercise of    stock options                                        1,493                -                    -                     -                   1,493   Net intercompany advances                         -                15,851         (439,423)          423,572                 -      Other, net                                                 434                760           (22,546)                 -                 (21,352) Net cash provided by (used in)    financing activities                             (376,611)         133,024         (461,969)           423,672           (281,884) Effects of exchange rates on cash                   -                   -                   2,221                  -                   2,221 Net increase (decrease) in cash                      -              108,237         (952,636)                100          (844,299) Cash – beginning of period                           -              702,021        1,102,135                 (111)        1,804,045 Cash – end of period                       $           -         $    810,258     $    149,499     $            (11)    $     959,746 <div style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; line-height: 6pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">  </div>   <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">Six months ended                         H&R Block, Inc.         BFC               Other                                 Consolidated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">October 31, 2009                             (Guarantor)          (Issuer)         Subsidiaries        Elims               H&R Block  </div>                                                                                                                                                 Net cash provided by (used in)    operating activities:                       $         5,880     $    (14,655)    $   (777,377)    $           -         $    (786,152) Cash flows from investing:   Mortgage loans originated for    investment, net                                        -                38,693                -                     -                 38,693   Purchase property & equipment                   -                    546            (7,826)                -                  (7,280)   Net intercompany advances                     89,577                -                    -                (89,577)                -      Other, net                                                 -                13,847             (1,980)                 -                  11,867 Net cash provided by (used in)   investing activities                                  89,577            53,086             (9,806)            (89,577)             43,280 Cash flows from financing:                                                                                                   Customer banking deposits                          -              634,637                -                   3,829           638,466   Dividends paid                                   (100,784)               -                    -                     -              (100,784)   Acquisition of treasury shares                   (3,785)               -                    -                     -                  (3,785)   Proceeds from stock options                     8,218                -                    -                     -                   8,218   Net intercompany advances                         -              183,042         (272,619)            89,577                 -      Other, net                                                 894             (8,975)          (22,803)                 -                 (30,884) Net cash provided by (used in)   financing activities                                 (95,457)         808,704         (295,422)             93,406            511,231 Effects of exchange rates on cash                   -                   -                   9,221                  -                   9,221 Net increase (decrease) in cash                      -              847,135      (1,073,384)              3,829          (222,420) Cash – beginning of period                           -              241,350        1,419,535              (6,222)        1,654,663 Cash – end of period                       $           -         $ 1,088,485     $    346,151     $        (2,393)    $   1,432,243   <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">  </div> </div>

<div>                                                                                                                                                  (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">As of                                                    October 31, 2010                                     April 30, 2010</div> <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                Gross                                                   Gross                <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                              Carrying     Accumulated                         Carrying     Accumulated <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Arial','sans-serif'; font-size: 9pt; border-top: medium none; border-right: medium none; padding-top: 0in;">                                              Amount     Amortization         Net            Amount     Amortization         Net</div>   Tax Services:   Customer relationships        $     75,270      $ (37,009)     $ 38,261        $  67,705     $   (33,096)       $  34,609   Noncompete agreements            22,508         (21,685)          823             23,062         (21,278)            1,784   Reacquired franchise rights        219,665           (8,167)     211,498           223,773           (6,096)         217,677   Franchise agreements                 19,201           (2,453)      16,748             19,201           (1,813)           17,388   Purchased technology                14,500           (7,381)        7,119             14,500           (6,266)            8,234   Trade name                                1,325             (500)          825               1,325             (400)               925 Business Services:                   Customer relationships              151,882       (124,601)      27,281           145,149       (120,037)           25,112   Noncompete agreements            35,818         (23,341)      12,477             33,052         (22,118)           10,934   Attest firm affiliation                    7,629             (106)        7,523                 -                  -                   -       Trade name – amortizing              2,600           (2,600)         -                    2,600           (2,600)              -       Trade name – non-amortizing                     55,637          (4,868)          50,769         55,637             (4,868)                50,769                                          $    606,035      $ (232,711)  $ 373,324         $ 586,004     $ (218,572)       $ 367,432 <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>   </div>

<div>                                                                                                                                                                                                                                                                                                 (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                                                                             Tax Services                             Business Services                                                           Total</div>   Balance at April 30, 2010:    Goodwill                                                                                   $                          453,884                        $                           403,751                        $                           857,635               Accumulated impairment losses                                                            (2,188)                                                    (15,000)                                                     (17,188)                                                                                                                                                   451,696                                                      388,751                                                     840,447            Changes:    Acquisitions                                                                                                               6,778                                                        27,655                                                         34,433    Disposals and other                                                                                           (5,175)                                                       (2,288)                                                        (7,463)    Impairments                                                                                                                   -                                                                      -                                                                      -             Balance at October 31, 2010:    Goodwill                                                                                                                455,487                                                      429,118                                                     884,605               Accumulated impairment losses                                                            (2,188)                                                    (15,000)                                                     (17,188)                                                                                                                      $                          453,299                         <a name="OLE_LINK19"> </a><a name="OLE_LINK4">$</a> 414,118                         $                           867,417             <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: medium none; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: justify; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2">  </div>   </div>

<div> <div> <div> <div> 13. Segment Information Results of our continuing operations by reportable operating segment are as follows:                                                                                                                                                 (in 000s) <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; border-top: windowtext 1pt solid; border-right: medium none; padding-top: 1pt;"> <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                            Three months ended October 31,       Six months ended October 31, <p style="border-bottom: medium none; border-left: medium none; padding-bottom: 0in; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Century Schoolbook','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoNormal">                                                                          2010                 2009                 2010                 2009</div>   Revenues:                                                                                                                      Tax Services                                             $     110,921      $     109,305      $     202,566      $     197,268     Business Services                                         203,426             206,602              378,136             384,220     Corporate                                                              8,542               10,174                16,661                20,098                                                                        $       322,889      $   326,081      $       597,363      $    601,586   Pretax income (loss):   Tax Services                                             $    (154,355)     $   (172,188)     $    (328,979)     $    (344,162)    Business Services                                              8,397                      174                   7,964                  1,495     Corporate                                                           (29,161)             (40,839)              (61,421)             (81,059)  <div>  Loss from continuing operations    before tax benefit                                    $    (175,119)     $    (212,853)     $    (382,436)     $    (423,726)  <div style="border-bottom: windowtext 1pt solid; border-left: medium none; padding-bottom: 1pt; padding-left: 0in; padding-right: 0in; margin-left: 0in; border-top: medium none; margin-right: -9.35pt; border-right: medium none; padding-top: 0in;"> <p style="border-bottom: medium none; text-align: left; border-left: medium none; padding-bottom: 0in; line-height: 2pt; margin: 0in 0in 0pt; padding-left: 0in; padding-right: 0in; font-family: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2" align="left">  </div>  </div></div></div></div> </div>

1495000

-81059000

-344162000

174000

-40839000

-172188000

7964000

-61421000

-328979000

8397000

-29161000

-154355000

601586000

384220000

20098000

197268000

326081000

206602000

10174000

109305000

597363000

378136000

16661000

202566000

322889000

203426000

8542000

110921000

232902000

4955000

-56000

228003000

129685000

2457000

127228000

225972000

11469000

214503000

108943000

9379000

99564000

12100000

4800000

6200000

2700000

600000

2100000

<div> <div> <div> 1. Summary of Significant Accounting Policies   <div> Basis of Presentation The condensed consolidated balance sheet as of October 31, 2010, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended October 31, 2010 and 2009, and the condensed consolidated statements of cash flows for the six months ended October 31, 2010 and 2009 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows at October 31, 2010 and for all periods presented have been made. <a name="OLE_LINK65"> </a><a name="OLE_LINK64"> </a> "H&R Block," "the Company," "we," "our" and "us" are used interchangeably to refer to H&R Block, Inc. or to H&R Block, Inc. and its subsidiaries, as appropriate to the context.      Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our April 30, 2010 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of April 30, 2010 or for the year then ended, are derived from our April 30, 2010 Annual Report to Shareholders on Form 10-K.</div>  </div></div>     <div> Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the determination of our allowance for loan losses, potential losses from loan repurchase and indemnity obligations associated with our discontinued mortgage business, contingent losses associated with pending litigation, fair value of reporting units, reserves for uncertain tax positions and related matters. We revise our estimates when facts and circumstances dictate. However, future events and their effects cannot be determined with absolute certainty. As such, actual results could differ materially from those estimates.</div>     <div> Seasonality of Business Our operating revenues are seasonal in nature with peak revenues occurring in the months of January through April. Therefore, results for interim periods are not indicative of results to be expected for the full year.</div>     <div class="MetaData"> Concentrations of Risk Our mortgage loans held for investment include concentrations of loans to borrowers in certain states, which may result in increased exposure to loss as a result of changes in real estate values and underlying economic or market conditions related to a particular geographical location. Approximately 51% of our mortgage loan portfolio consists of loans to borrowers located in the states of Florida, California and New York.</div> <div class="MetaData"> <div>  </div></div> </div>

1440630000

93831000

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1440630000

3182766000

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50596000

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2672230000

1600000

1000000

19000000

279947000

11370000

190000

268387000

200000

3800000

3500000

379758000

18561000

0.015

0.307

379758000

148485000

0.12

61869000

0.05

0.307

379758000

28606000

0.06

0.797

9212000

11185000

2056552000

2041529000

5256000

4536000

129800000

130500000

21100000

2700000

700000

106300000

334939000

335346000

313247000

306804000

334939000

335346000

313247000

306804000

Estimated life of 7 years. Estimated life of 18 years. Represents the benefits to be received from the Alternative Practice Structure arrangement and Administrative Services Agreement with the attest firm of Caturano. Estimated life of 12 years. Total risk-based capital divided by risk-weighted assets. Includes loans accounted for as in-substance foreclosures of $9.4 million and $12.5 million at October 31, 2010 and April 30, 2010, respectively. Tangible capital divided by tangible assets. Tier 1 (core) capital divided by adjusted total assets. Tier 1 (core) capital less deduction for low-level recourse and residual interest divided by risk-weighted assets.