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hrb:TaxServicesMember 2010-07-31 0000012659 hrb:BusinessServicesMember 2010-07-31 0000012659 2010-07-31 0000012659 hrb:TaxServicesMember 2010-04-30 0000012659 hrb:BusinessServicesMember 2010-04-30 0000012659 2010-04-30 0000012659 2010-08-31 0000012659 2010-05-01 2010-07-31 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares false --04-30 Q1 2011 2010-07-31 10-Q 0000012659 308513594 Large Accelerated Filer H&R BLOCK INC -17188000 -15000000 -2188000 -17188000 -15000000 -2188000 0.6 0.59 <div> <div class="MetaData"> <div class="MetaData">   Basis of Presentation The condensed consolidated balance sheet as of July 31, 2010, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended July 31, 2010 and 2009, and the condensed consolidated statements of cash flows for the three months ended July 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 July 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. <a name="OLE_LINK14">Certain reclassifications have been made to prior year amounts to conform to the current year presentation. These changes had no effect on our results of operations or stockholders' equity as previously reported. </a>      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> 185000000 -367000 -20000 <div> 2.     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 14.7 million shares and 19.4 million shares for the three months ended July 31, 2010 and 2009, respectively, 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 July 31,                                                                                                      2010                                   2009</div>                                                                                                                                                                                                 Net loss from continuing operations attributable to shareholders                     $       (127,638)                $         (130,617) Amounts allocated to participating securities (nonvested shares)                                        (20)                                    (367) Net loss from continuing operations attributable to common shareholders   $          (127,658)                $         (130,984)   Basic weighted average common shares                                                                             319,690                             334,533 Potential dilutive shares                                                                                                                     -                                           -        Dilutive weighted average common shares                                                                       319,690                                    334,533   Earnings (loss) per share from continuing operations:     Basic                                                                                                                          $                (0.40)                $               (0.39)     Diluted                                                                                                                                         (0.40)                                 (0.39) <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 months ended</a> July 31, 2010 decreased to 319.7 million from 334.5 million for the three months ended July 31, 2009. During the three months ended July 31, 2010, we purchased and immediately retired 15.5 million shares of our common stock at a cost of $235.7 million. Cash payments of $161.0 million were made during the quarter for the share purchases with settlement of the remaining $74.7 million occurring in August. We may continue to repurchase and retire common stock or retire shares held in treasury 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                                                                                    $                    155                         Additional paid-in capital                                                                                       9,300                       Retained earnings                                                                                                226,220                                                                                                                  $          235,675         During the three months ended July 31, 2010 and 2009, we issued 0.9 million and 1.4 million shares of common stock, respectively, due to the exercise of stock options, employee stock purchases and vesting of nonvested shares.      During the three months ended July 31, 2010, we acquired 0.2 million shares of our common stock at an aggregate cost of $3.4 million, and during the three months ended July 31, 2009, we acquired 0.2 million shares at an aggregate cost of $3.5 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.      At July 31, 2010 and April 30, 2010, we had accrued but unpaid dividends totaling $46.5 million and $48.7 million, respectively. These amounts are included in accounts payable, accrued expenses and other current liabilities on the condensed consolidated balance sheets.      During the three months ended July 31, 2010, we granted 1.0 million stock options and 4,521 nonvested shares and units in accordance with our stock-based compensation plans. The weighted average fair value of options granted was $2.51 for management options. Stock-based compensation expense of our continuing operations totaled $3.4 million and $7.3 million for the three months ended July 31, 2010 and 2009, respectively. At July 31, 2010, unrecognized compensation cost for options totaled $11.3 million, and for nonvested shares and units totaled $5.1 million. </div> 11300000 75000000 75000000 75000000 75000000 75149000 0.054 0.006 0.048 0.061 0.007 0.054 0.4 0.41 857635000 403751000 453884000 892985000 434654000 458331000 -478000 -478000 <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> 12500000 11600000 1207879000 1207879000 1249353000 1249353000 1318000 1915000 435635000 436228000 0.137 0.137 330000 1251000 1137881000 26548000 26548000 0.6 <div> <div class="MetaData"> <div class="MetaData"> 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> </div> 334011000 249549000 249549000 237272000 237272000 -1241000 -643000 0.51 18058000 45536000 -63594000 35507000 188324000 -223831000 -45536000 45536000 -188324000 188324000 340113000 320095000 36806000 36422000 4856000 6803000 -1947000 18239000 13672000 4567000 3483000 3483000 164369000 164369000 292655000 325932000 0.01 0.34 <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">Three months ended July 31,                                                                2010                                                       2009</div>   Balance, beginning of the period                                    $                93,535                                 $                84,073 Provision                                                                                                   8,000                                                   13,600 Recoveries                                                                                                      33                                                           28 Charge-offs                                                                                           (13,172)                                                  (6,010) Balance, end of the period                                                $                 88,396                                 $               91,691 <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 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;">  </div>                                                             H&R Block, Inc.            BFC                     Other                                               Consolidated <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> </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; 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">July 31, 2010                                       (Guarantor)             (Issuer)            Subsidiaries              Elims                   H&R Block</div>                                                                                                                                                                                                 Cash & cash equivalents                 $              -            $     604,527        $       494,429        $           (346)       $   1,098,610 Cash & cash equivalents restricted             -                           324                   36,685                         -                       37,009 Receivables, net                                                 -                     96,867                 280,062                         -                     376,929 Mortgage loans held for investment              -                   563,090                           -                             -                     563,090 Intangible assets and goodwill, net                -                             -                 1,249,353                  -                      1,249,353 Investments in subsidiaries                2,874,038                         -                           209          (2,874,038)                        209 Other assets                                                14,552               348,407                 736,005                         -                  1,098,964     Total assets                                    $ 2,888,590        $ 1,613,215        $   2,796,743        $ (2,874,384)       $   4,424,164   Customer deposits                            $              -            $     731,759        $                -            $           (346)       $       731,413 Long-term debt                                                   -                   998,695                   45,531                         -                  1,044,226 FHLB borrowings                                               -                     75,000                           -                             -                       75,000 Other liabilities                                          121,145               125,317              1,301,916                         -               1,548,378 Net intercompany advances               1,742,298              (396,112)           (1,346,186)                       -                               -    Stockholders' equity                             1,025,147                 78,556              2,795,482          (2,874,038)             1,025,147     Total liabilities and                                                                                                                                                                                stockholders' equity                    $ 2,888,590        $ 1,613,215        $   2,796,743        $ (2,874,384)       $   4,424,164 </div> <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">July 31, 2009                                             (Guarantor)             (Issuer)          Subsidiaries          Elims                   H&R Block  </div>                                                                                                                                                                                                 Net cash used in operating activities:  $               868      $        (4,881)     $   (450,564)     $                -          $     (454,577) Cash flows from investing:   Mortgage loans originated for     investment, net                                                       -                   19,264                       -                             -                     19,264   Purchase property & equipment                           -                           -                    (8,760)                       -                      (8,760)   Net intercompany advances                          45,536                       -                           -                    (45,536)                       -      Other, net                                                                   -                      6,803                (1,947)                        -                        4,856 Net cash provided by (used in)   investing activities                                            45,536               26,067              (10,707)               (45,536)                15,360 Cash flows from financing:                                                                                                                                   Customer banking deposits                                   -                (148,861)                     -                        5,662              (143,199)   Dividends paid                                                 (50,287)                     -                           -                             -                    (50,287)   Repurchase of common stock                        (3,483)                     -                           -                             -                      (3,483)   Proceeds from exercise of     stock options                                                      6,651                       -                           -                             -                        6,651   Net intercompany advances                                  -                   18,058              (63,594)                45,536                         -      Other, net                                                                 715                (8,838)             (17,765)                        -                    (25,888) Net cash provided by   financing activities                                          (46,404)           (139,641)             (81,359)                51,198              (216,206) Effects of exchange rates on cash                         -                          -                       7,063                         -                        7,063 Net decrease in cash                                                -                (118,455)          (535,567)                  5,662              (648,360) Cash beginning of period                                     -                 241,350          1,419,535                  (6,222)           1,654,663 Cash end of period                              $                -          $     122,895      $     883,968      $             (560)     $   1,006,303 </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;">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">July 31, 2010                                             (Guarantor)             (Issuer)          Subsidiaries          Elims                   H&R Block  </div>                                                                                                                                                                                                 Net cash used in operating activities:  $         22,849      $      (43,301)     $   (327,799)     $                -          $     (348,251) Cash flows from investing:   Mortgage loans originated for     investment, net                                                       -                   17,618                       -                             -                     17,618   Purchase property & equipment                           -                           -                    (8,634)                       -                      (8,634)   Payments made for business     acquisitions, net                                                     -                           -                  (33,226)                       -                    (33,226)   Net intercompany advances                        188,324                       -                           -                  (188,324)                       -      Other, net                                                                   -                   13,672                  4,567                         -                     18,239 Net cash provided by (used in)   investing activities                                          188,324               31,290              (37,293)             (188,324)                 (6,003) Cash flows from financing:                                                                                                                                   Customer banking deposits                                   -                (121,166)                     -                          (235)            (121,401)   Dividends paid                                                 (48,692)                     -                           -                             -                    (48,692) <a name="OLE_LINK41"> </a><a name="OLE_LINK40">  Repurchase of common stock                   (164,369)                     -                           -                             -                  (164,369)</a>   Proceeds from exercise of     stock options                                                      1,500                       -                           -                             -                        1,500   Net intercompany advances                                  -                   35,507            (223,831)              188,324                         -      Other, net                                                                 388                     176              (16,551)                        -                    (15,987) Net cash used in financing activities           (211,173)             (85,483)           (240,382)              188,089              (348,949) Effects of exchange rates on cash                         -                          -                     (2,232)                        -                      (2,232) Net decrease in cash                                                -                  (97,494)          (607,706)                    (235)            (705,435) Cash – beginning of period                                     -                 702,021          1,102,135                      (111)           1,804,045 Cash – end of period                              $                -          $     604,527      $     494,429      $             (346)     $   1,098,610</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; 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">July 31, 2009                                       (Guarantor)             (Issuer)            Subsidiaries              Elims                   H&R Block</div>                                                                                                                                                                                                 Total revenues                                   $             -             $       23,196        $       252,365        $              (56)       $       275,505   Cost of revenues                                               -                      45,560                 340,890                          -                    386,450 Selling, general and administrative            -                         2,498                 100,775                       (56)                  103,217   Total expenses                                                -                      48,058                 441,665                        (56)                489,667 Operating income (loss)                                  -                     (24,862)              (189,300)                        -                   (214,162) Other income (expense), net                (210,873)                 (1,233)                     4,522               210,873                      3,289 Loss from continuing    operations before tax benefit             (210,873)               (26,095)              (184,778)              210,873                (210,873) Income taxes (benefit)                             (80,256)               (10,692)                 (69,564)                80,256                  (80,256) Net loss from     continuing operations                        (130,617)               (15,403)              (115,214)              130,617                (130,617) Net loss from discontinued   operations                                                   (3,017)                 (3,017)                          -                        3,017                    (3,017) Net loss                                               $   (133,634)       $      (18,420)       $     (115,214)       $     133,634        $     (133,634) </div> <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">July 31, 2010                                        (Guarantor)             (Issuer)            Subsidiaries              Elims                   H&R Block  </div>                                                                                                                                                                                                 Total revenues                                   $             -             $       21,000        $       253,474        $              -            $       274,474   Cost of revenues                                               -                      39,028                 328,988                          -                    368,016 Selling, general and administrative           -                          2,090                 114,939                          -                    117,029   Total expenses                                                -                      41,118                 443,927                          -                    485,045 Operating income (loss)                                  -                     (20,118)              (190,453)                        -                   (210,571) Other income (expense), net                (207,317)                      382                      2,872               207,317                      3,254 Loss from continuing    operations before tax benefit             (207,317)               (19,736)              (187,581)              207,317                (207,317) Income taxes (benefit)                             (79,679)                 (7,841)                 (71,838)                79,679                  (79,679) Net loss from     continuing operations                        (127,638)               (11,895)              (115,743)              127,638                (127,638) Net loss from discontinued   operations                                                   (3,043)                 (3,004)                         (39)                   3,043                    (3,043) Net loss                                               $   (130,681)       $      (14,899)       $     (115,782)       $     130,681        $     (130,681) </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 July 31,                                                                                                      2010                                   2009</div>                                                                                                                                                                                                 Net loss from continuing operations attributable to shareholders                     $       (127,638)                $         (130,617) Amounts allocated to participating securities (nonvested shares)                                        (20)                                    (367) Net loss from continuing operations attributable to common shareholders   $          (127,658)                $         (130,984)   Basic weighted average common shares                                                                             319,690                             334,533 Potential dilutive shares                                                                                                                     -                                           -        Dilutive weighted average common shares                                                                       319,690                                    334,533   Earnings (loss) per share from continuing operations:     Basic                                                                                                                          $                (0.40)                $               (0.39)     Diluted                                                                                                                                         (0.40)                                 (0.39) <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> </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">                                                                                                      July 31, 2010                                       April 30, 2010</div>     30 - 59 days                                                                       $                  1,251                                      $                 330   60 - 89 days                                                                                         11,205                                                    11,851   90+ days, non-accrual                                                                     148,056                                                  153,703   TDR loans, accrual                                                                          115,805                                                  113,471   TDR loans, non-accrual                                                                     17,469                                                    31,506                                                                                                                   293,786                                                  310,861 Real estate owned (1)                                                                           26,309                                                     29,252 Total non-performing assets                                            $             320,095                                $                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 $11.6 million and $12.5 million at July 31, 2010 and April 30, 2010, respectively.</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 July 31,                                                                                  2010                                       2009                 </div>   Interest income:     Mortgage loans, net                                                                        $                   6,323                $                   7,896                    Other                                                                                                                        3,979                                      4,391                                                                                                                                $                 10,302                $                 12,287                Interest expense:     Borrowings                                                                                       $                 20,643                $                 18,957                <a name="OLE_LINK9">    Deposits                                                                                                                  1,923                                      2,049                </a>     FHLB advances                                                                                                        396                                         509                                                                                                                                                                                                                                                                                $                 22,962                $                 21,515                </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">                                                                                            July 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                              $         382,986                  59%               $                 411,122                        60% Fixed-rate loans                                                    263,745                  41%                                  272,562                        40%                                                                                   646,731                100%                                  683,684                     100% Unamortized deferred fees and costs                   4,755                                                                 5,256 Less: Allowance for loan losses                         (88,396)                                                             (93,535)                                                                        $         563,090                                                       $    595,405 </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; 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                                                                                    $                    155                         Additional paid-in capital                                                                                       9,300                       Retained earnings                                                                                                226,220                                                                                                                  $          235,675  </div> <div> <div class="MetaData"> <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> </div> 2.51 1 1 113471000 115805000 31506000 17469000 11300000000 <div> 9.     Variable Interests In June 2009, the 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 $103.3 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 July 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 July 31, 2010 we had no significant assets or liabilities included in our condensed consolidated balance sheets related to our variable interests in the Trusts. We have a reserve, as discussed in note 10, and a deferred tax asset recorded in our condensed consolidated balance sheets related to the securitization trusts. We have no remaining exposure to economic loss arising from impairment of our beneficial interest in the Trusts. If we receive cash flows in the future as a holder of beneficial interests we would record gains as other income in our income statement. As of June 30, 2010 mortgage loans underlying the REMIC and NIM Trusts had an unpaid principal balance of approximately $11.3 billion. We have no liquidity arrangements, guarantees or other commitments for the Trusts and have not provided any support that was not contractually required. </div>

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0.08

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<div> <div> <div> <div> 10.     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>                                                                                                                                                                                                    (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 July 31,                                                                                  2010                                               2009</div>   Balance, beginning of period                                                           $               141,542                        $               146,807 Amounts deferred for new guarantees issued                                                       654                                                 583 Revenue recognized on previous deferrals                                                     (28,547)                                         (27,913) Balance, end of period                                                                    $               113,649                        $               119,477 <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>   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                                                                                                              July 31, 2010                               April 30, 2010</div>   Franchise Equity Lines of Credit – undrawn commitment          $                 36,422                        $                 36,806 Contingent business acquisition obligations                                                    21,908                                           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: 'Times New Roman','serif'; font-size: 12pt; border-top: medium none; border-right: medium none; padding-top: 0in;" class="MsoBodyTextIndent2" align="left">  </div>      <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 July 31, 2010.   Discontinued Operations <div> Sand Canyon Corporation (SCC) completed its exit from the loan origination and loan servicing business effective April 30, 2008. At that time, the outstanding unpaid principal balance of loans originated and transferred totaled $50.4 billion, including loans previously transferred through private-label securitization transactions of $17.2 billion and whole loan sales of $33.2 billion of which 1% were with government sponsored enterprises (FNMA and FHLMC). The outstanding unpaid principal balance at June 30, 2010, (as reported by the servicer of those loans) totaled $33.2 billion, a decline of 34% from April 30, 2008. Outstanding loan principal at June 30, 2010 included $11.3 billion relating to loan securitizations and $21.9 billion relating to whole loan sales. SCC made certain representations and warranties with respect to the transfer of such loans. In the event that there is a material adverse effect on the purchaser's, investor's or insurer's interest in a loan which resulted from a valid breach of a representation and warranty, SCC may be obligated to repurchase the loan or otherwise indemnify those parties for losses incurred as a result of loan liquidation. SCC records a reserve for contingent losses relating to representation and warranty claims by estimating loan repurchase volumes and indemnification obligations based on both known claims and projections of future claims. Projections of future claims are based on an analysis that includes a combination of reviewing historical repurchase trends, recent repurchase activity, actual defaults and loss expectations, inquiries from various third parties and the probability that a future claim will be a valid breach of a representation and warranty. At July 31, 2010, SCC had recorded a reserve for loan repurchase and indemnification obligations pertaining to claims of breach of representations and warranties of $188.1 million. This reserve represents our estimate of probable loss for both asserted and unasserted claims, which in the case of a repurchase of loans, would be net of the estimated value of collateral upon liquidation. Based on recent liquidations, loss severity rates have approximated 60%. The gross principal balance of claims asserted by third parties for alleged breach of representations and warranties for the 27-month period from May 1, 2008 through July 31, 2010 totaled approximately $686 million. SCC has completed its review of claims totaling approximately $550 million and rejected the claim, or settled the claim through repurchase of loans or payment of loss. Net losses incurred on claim settlements during this period totaled approximately $55 million. Claims totaling $136 million (gross principal amount) remain under review by SCC at July 31, 2010. Net losses on settled claims since April 30, 2008 have been within initial loss estimates. As such, these settlements have been recorded as a reduction to our initial reserve and no provisions for additional loss have been recorded subsequent to April 30, 2008. To the extent that valid claim volumes in the future exceed current estimates, or residential home values decline, our actual losses may be greater than our current estimates and those differences may be significant.</div></div></div></div></div></div> </div>

0.15

0.01

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<div> <div class="MetaData"> <div> <a name="OLE_LINK30">Concentrations of Risk</a> 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> </div>

386450000

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<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: 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                               $                563,090                               $              334,011 IRAs and other time deposits                                                              435,635                                               436,228 Long-term debt                                                                                   1,044,226                                            1,137,881 FHLB advances                                                                                       75,000                                                 75,149</div></div></div> </div>

<div> <div> <div> 7.     Fair Value <div> <div> 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. <table style="line-height: 115%; width: 100%; font-family: 'Calibri','sans-serif'; font-size: 11pt;" class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td style="padding-bottom: 0in; padding-left: 0in; width: 6%; padding-right: 0in; padding-top: 0in;" width="6%"> </td> <td style="padding-bottom: 0in; padding-left: 0in; width: 2%; padding-right: 0in; padding-top: 0in;" width="2%"> </td> <td style="padding-bottom: 0in; padding-left: 0in; width: 92%; padding-right: 0in; padding-top: 0in;" width="92%"> </td></tr> <tr><td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top">  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> •  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> 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. </td></tr> <tr><td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top">  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> •  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> 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. </td></tr></table> The following methods were used to determine the fair values of our other financial instruments: <table style="line-height: 115%; width: 100%; font-family: 'Calibri','sans-serif'; font-size: 11pt;" class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td style="padding-bottom: 0in; padding-left: 0in; width: 6%; padding-right: 0in; padding-top: 0in;" width="6%"> </td> <td style="padding-bottom: 0in; padding-left: 0in; width: 2%; padding-right: 0in; padding-top: 0in;" width="2%"> </td> <td style="padding-bottom: 0in; padding-left: 0in; width: 92%; padding-right: 0in; padding-top: 0in;" width="92%"> </td></tr> <tr><td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top">  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> •  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> 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. </td></tr> <tr><td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top">  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> •  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> 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. </td></tr> <tr><td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> •  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> IRAs and other time deposits – The fair value is calculated based on the discounted value of contractual cash flows. </td></tr> <tr><td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top">  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> •  </td> <td style="padding-bottom: 0in; padding-left: 0in; padding-right: 0in; background: white; padding-top: 0in;" valign="top"> 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. </td></tr></table></div>   <a name="OLE_LINK11">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 July 31, 2010 and April 30, 2010:</a>                                                                                                                                                                                     (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 July 31, 2010:   Recurring:     Available-for-sale securities             $         30,913            $           -                     $     30,913                $               -       Non-recurring:     Impaired mortgage loans          held for investment                                 237,272                          -                                   -                              237,272                                                                     $       268,185            $           -                     $     30,913                $       237,272   As a percentage of total assets                           6.1%                        -   %                           0.7%                               5.4%   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.</div> <div> The carrying amounts and estimated fair values of our financial instruments at July 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                               $                563,090                               $              334,011 IRAs and other time deposits                                                              435,635                                               436,228 Long-term debt                                                                                   1,044,226                                            1,137,881 FHLB advances                                                                                       75,000                                                 75,149 <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>

31948000

30913000

<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 July 31, 2010:   Recurring:     Available-for-sale securities             $         30,913            $           -                     $     30,913                $               -       Non-recurring:     Impaired mortgage loans          held for investment                                 237,272                          -                                   -                              237,272                                                                     $       268,185            $           -                     $     30,913                $       237,272   As a percentage of total assets                           6.1%                        -   %                           0.7%                               5.4%   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>

25000000

50000000

281497000

31948000

249549000

268185000

30913000

237272000

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-2600000

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<div> <div> 4<a name="OLE_LINK42">.     Goodwill and Intangible Assets</a> Changes in the carrying amount of goodwill for the three months ended July 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        <div> Changes:   Acquisitions                                                                      4,925                                   30,903                                   35,828   Other                                                                                    (478)                                        -                                           (478)   Impairments                                                                         -                                               -                                               -           Balance at July 31, 2010:   Goodwill                                                                       458,331                                 434,654                                 892,985          Accumulated impairment losses                               (2,188)                                 (15,000)                                 (17,188)                                                                                  $               456,143  <a name="OLE_LINK19"> </a>              <a name="OLE_LINK4">$                    </a>419,654                  $               875,797 </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. <a name="OLE_LINK27"> </a><a name="OLE_LINK25">     Effective July 20, 2010, our Business Services segment acquired certain assets and liabilities of a Boston-based accounting firm for an aggregate purchase price of $40.5 million, subject to adjustments. We made cash payments of $29.8 million at closing. Amounts recorded for intangible assets and goodwill as of July 31, 2010 are preliminary.</a>      Intangible assets consist of the following: <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">                                                              July 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          $       68,474        $  (34,987)       $ 33,487           $   67,705      $    (33,096)         $   34,609   Noncompete agreements               23,200            (21,479)          1,721                 23,062            (21,278)                1,784   Reacquired franchise rights         223,773              (7,172)       216,601              223,773              (6,096)            217,677   Franchise agreements                    19,201              (2,133)        17,068                 19,201              (1,813)              17,388   Purchased technology                     14,500              (6,823)          7,677                 14,500              (6,266)                8,234   Trade name                                         1,325                  (450)              875                    1,325                  (400)                    925 Business Services:                      Customer relationships                 153,439          (122,310)        31,129               145,149          (120,037)              25,112   Noncompete agreements               36,909            (22,680)        14,229                 33,052            (22,118)              10,934   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 Total intangible assets             $     599,058        $ 225,502    $ 373,556            $ 586,004      $ (218,572)         $ 367,432 </div>        Amortization of intangible assets for the three months ended July 31, 2010 and 2009 was $6.9 million. Estimated amortization of intangible assets for fiscal years 2011 through 2015 is $28.6 million, $25.5 million, $21.1 million, $17.6 million and $12.4 million, respectively. </div> </div>

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<div> <div> <div> <div> 3.     Mortgage Loans Held for Investment and Related Assets The composition of our mortgage loan portfolio as of July 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">                                                                                            July 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                              $         382,986                  59%               $                 411,122                        60% Fixed-rate loans                                                    263,745                  41%                                  272,562                        40%                                                                                   646,731                100%                                  683,684                     100% Unamortized deferred fees and costs                   4,755                                                                 5,256 Less: Allowance for loan losses                         (88,396)                                                             (93,535)                                                                        $         563,090                                                       $    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 three months ended July 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">Three months ended July 31,                                                                2010                                                       2009</div>   Balance, beginning of the period                                    $                93,535                                 $                84,073 Provision                                                                                                   8,000                                                   13,600 Recoveries                                                                                                      33                                                           28 Charge-offs                                                                                           (13,172)                                                  (6,010) Balance, end of the period                                                $                 88,396                                 $               91,691 <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 13.7% at July 31, 2010, and 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 $133.3 million and $145.0 million at July 31, 2010 and April 30, 2010, respectively. The principal balance of non-performing assets as of July 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">                                                                                                      July 31, 2010                                       April 30, 2010</div>   Impaired loans:  </div></div></div>   30 - 59 days                                                                       $                  1,251                                      $                 330   60 - 89 days                                                                                         11,205                                                    11,851   90+ days, non-accrual                                                                     148,056                                                  153,703   TDR loans, accrual                                                                          115,805                                                  113,471   TDR loans, non-accrual                                                                     17,469                                                    31,506                                                                                                                   293,786                                                  310,861 Real estate owned (1)                                                                           26,309                                                     29,252 Total non-performing assets                                            $             320,095                                $                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 $11.6 million and $12.5 million at July 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">Three months ended July 31,                                                                2010                                                       2009</div>   Balance, beginning of the period                                    $                29,252                                 $                44,533 Additions                                                                                                  6,527                                                      3,797 Sales                                                                                                        (8,827)                                                     (4,348) Writedowns                                                                                               (643)                                                    (1,241) Balance, end of the period                                                $                 26,309                                 $                42,741 </div>

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<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">Three months ended July 31,                                                                2010                                                       2009</div>   Balance, beginning of the period                                    $                29,252                                 $                44,533 Additions                                                                                                  6,527                                                      3,797 Sales                                                                                                        (8,827)                                                     (4,348) Writedowns                                                                                               (643)                                                    (1,241) Balance, end of the period                                                $                 26,309                                 $                42,741</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 July 31,                                                                  2010                                                            2009</div>   Revenues:                                                                                                                                                           Tax Services                                                                           $             91,645                                           $            87,963   Business Services                                                                              174,710                                                      177,618   Corporate                                                                                                  8,119                                                           9,924                                                                                                     $           274,474                                           $         275,505 Pretax income (loss):   Tax Services                                                                           $         (174,624)                                         $        (171,974)   Business Services                                                                                     (433)                                                          1,321   Corporate                                                                                              (32,260)                                                      (40,220)   Loss from continuing operations before tax benefit    $              (207,317)                                    $ (210,873) </div>

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<div> 14.     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">July 31, 2010                                        (Guarantor)             (Issuer)            Subsidiaries              Elims                   H&R Block  </div>                                                                                                                                                                                                 Total revenues                                   $             -             $       21,000        $       253,474        $              -            $       274,474   Cost of revenues                                               -                      39,028                 328,988                          -                    368,016 Selling, general and administrative           -                          2,090                 114,939                          -                    117,029   Total expenses                                                -                      41,118                 443,927                          -                    485,045 Operating income (loss)                                  -                     (20,118)              (190,453)                        -                   (210,571) Other income (expense), net                (207,317)                      382                      2,872               207,317                      3,254 Loss from continuing    operations before tax benefit             (207,317)               (19,736)              (187,581)              207,317                (207,317) Income taxes (benefit)                             (79,679)                 (7,841)                 (71,838)                79,679                  (79,679) Net loss from     continuing operations                        (127,638)               (11,895)              (115,743)              127,638                (127,638) Net loss from discontinued   operations                                                   (3,043)                 (3,004)                         (39)                   3,043                    (3,043) Net loss                                               $   (130,681)       $      (14,899)       $     (115,782)       $     130,681        $     (130,681) <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">July 31, 2009                                       (Guarantor)             (Issuer)            Subsidiaries              Elims                   H&R Block</div>                                                                                                                                                                                                 Total revenues                                   $             -             $       23,196        $       252,365        $              (56)       $       275,505   Cost of revenues                                               -                      45,560                 340,890                          -                    386,450 Selling, general and administrative            -                         2,498                 100,775                       (56)                  103,217   Total expenses                                                -                      48,058                 441,665                        (56)                489,667 Operating income (loss)                                  -                     (24,862)              (189,300)                        -                   (214,162) Other income (expense), net                (210,873)                 (1,233)                     4,522               210,873                      3,289 Loss from continuing    operations before tax benefit             (210,873)               (26,095)              (184,778)              210,873                (210,873) Income taxes (benefit)                             (80,256)               (10,692)                 (69,564)                80,256                  (80,256) Net loss from     continuing operations                        (130,617)               (15,403)              (115,214)              130,617                (130,617) Net loss from discontinued   operations                                                   (3,017)                 (3,017)                          -                        3,017                    (3,017) Net loss                                               $   (133,634)       $      (18,420)       $     (115,214)       $     133,634        $     (133,634) <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 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">   <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">July 31, 2010                                       (Guarantor)             (Issuer)            Subsidiaries              Elims                   H&R Block</div>                                                                                                                                                                                                 Cash & cash equivalents                 $              -            $     604,527        $       494,429        $           (346)       $   1,098,610 Cash & cash equivalents – restricted           -                           324                   36,685                         -                       37,009 Receivables, net                                                 -                     96,867                 280,062                         -                     376,929 Mortgage loans held for investment             -                   563,090                           -                             -                     563,090 Intangible assets and goodwill, net                -                             -                 1,249,353                  -                      1,249,353 Investments in subsidiaries                2,874,038                         -                           209          (2,874,038)                        209 Other assets                                                14,552               348,407                 736,005                         -                  1,098,964     Total assets                                    $ 2,888,590        $ 1,613,215        $   2,796,743        $ (2,874,384)       $   4,424,164   Customer deposits                            $              -            $     731,759        $                -            $           (346)       $       731,413 Long-term debt                                                   -                   998,695                   45,531                         -                  1,044,226 FHLB borrowings                                               -                     75,000                           -                             -                       75,000 Other liabilities                                          121,145               125,317              1,301,916                         -               1,548,378 Net intercompany advances               1,742,298              (396,112)           (1,346,186)                       -                               -    Stockholders' equity                             1,025,147                 78,556              2,795,482          (2,874,038)             1,025,147     Total liabilities and                                                                                                                                                                                stockholders' equity                    $ 2,888,590        $ 1,613,215        $   2,796,743        $ (2,874,384)       $   4,424,164   <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;">  </div>                                                             H&R Block, Inc.            BFC                     Other                                               Consolidated <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">   <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;"> <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">July 31, 2010                                             (Guarantor)             (Issuer)          Subsidiaries          Elims                   H&R Block  </div>                                                                                                                                                                                                 Net cash used in operating activities:  $         22,849      $      (43,301)     $   (327,799)     $                -          $     (348,251) Cash flows from investing:   Mortgage loans originated for     investment, net                                                       -                   17,618                       -                             -                     17,618   Purchase property & equipment                           -                           -                    (8,634)                       -                      (8,634)   Payments made for business     acquisitions, net                                                     -                           -                  (33,226)                       -                    (33,226)   Net intercompany advances                        188,324                       -                           -                  (188,324)                       -      Other, net                                                                   -                   13,672                  4,567                         -                     18,239 Net cash provided by (used in)   investing activities                                          188,324               31,290              (37,293)             (188,324)                 (6,003) Cash flows from financing:                                                                                                                                   Customer banking deposits                                   -                (121,166)                     -                          (235)            (121,401)   Dividends paid                                                 (48,692)                     -                           -                             -                    (48,692) <a name="OLE_LINK41"> </a><a name="OLE_LINK40">  Repurchase of common stock                   (164,369)                     -                           -                             -                  (164,369)</a>   Proceeds from exercise of     stock options                                                      1,500                       -                           -                             -                        1,500   Net intercompany advances                                  -                   35,507            (223,831)              188,324                         -      Other, net                                                                 388                     176              (16,551)                        -                    (15,987) Net cash used in financing activities           (211,173)             (85,483)           (240,382)              188,089              (348,949) Effects of exchange rates on cash                         -                          -                     (2,232)                        -                      (2,232) Net decrease in cash                                                -                  (97,494)          (607,706)                    (235)            (705,435) Cash – beginning of period                                     -                 702,021          1,102,135                      (111)           1,804,045 Cash – end of period                              $                -          $     604,527      $     494,429      $             (346)     $   1,098,610 <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;">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">July 31, 2009                                             (Guarantor)             (Issuer)          Subsidiaries          Elims                   H&R Block  </div>                                                                                                                                                                                                 Net cash used in operating activities:  $               868      $        (4,881)     $   (450,564)     $                -          $     (454,577) Cash flows from investing:   Mortgage loans originated for     investment, net                                                       -                   19,264                       -                             -                     19,264   Purchase property & equipment                           -                           -                    (8,760)                       -                      (8,760)   Net intercompany advances                          45,536                       -                           -                    (45,536)                       -      Other, net                                                                   -                      6,803                (1,947)                        -                        4,856 Net cash provided by (used in)   investing activities                                            45,536               26,067              (10,707)               (45,536)                15,360 Cash flows from financing:                                                                                                                                   Customer banking deposits                                   -                (148,861)                     -                        5,662              (143,199)   Dividends paid                                                 (50,287)                     -                           -                             -                    (50,287)   Repurchase of common stock                        (3,483)                     -                           -                             -                      (3,483)   Proceeds from exercise of     stock options                                                      6,651                       -                           -                             -                        6,651   Net intercompany advances                                  -                   18,058              (63,594)                45,536                         -      Other, net                                                                 715                (8,838)             (17,765)                        -                    (25,888) Net cash provided by   financing activities                                          (46,404)           (139,641)             (81,359)                51,198              (216,206) Effects of exchange rates on cash                         -                          -                       7,063                         -                        7,063 Net decrease in cash                                                -                (118,455)          (535,567)                  5,662              (648,360) Cash – beginning of period                                     -                 241,350          1,419,535                  (6,222)           1,654,663 Cash – end of period                              $                -          $     122,895      $     883,968      $             (560)     $   1,006,303 <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;"> </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">                                                              July 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          $       68,474        $  (34,987)       $ 33,487           $   67,705      $    (33,096)         $   34,609   Noncompete agreements               23,200            (21,479)          1,721                 23,062            (21,278)                1,784   Reacquired franchise rights         223,773              (7,172)       216,601              223,773              (6,096)            217,677   Franchise agreements                    19,201              (2,133)        17,068                 19,201              (1,813)              17,388   Purchased technology                     14,500              (6,823)          7,677                 14,500              (6,266)                8,234   Trade name                                         1,325                  (450)              875                    1,325                  (400)                    925 Business Services:                      Customer relationships                 153,439          (122,310)        31,129               145,149          (120,037)              25,112   Noncompete agreements               36,909            (22,680)        14,229                 33,052            (22,118)              10,934   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 Total intangible assets             $     599,058        $ 225,502    $ 373,556            $ 586,004      $ (218,572)         $ 367,432 </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">                                                                                 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        <div> Changes:   Acquisitions                                                                      4,925                                   30,903                                   35,828   Other                                                                                    (478)                                        -                                           (478)   Impairments                                                                         -                                               -                                               -           Balance at July 31, 2010:   Goodwill                                                                       458,331                                 434,654                                 892,985          Accumulated impairment losses                               (2,188)                                 (15,000)                                 (17,188)                                                                                  $               456,143  <a name="OLE_LINK19"> </a>              <a name="OLE_LINK4">$                    </a>419,654                  $               875,797 </div></div> </div>

<div> <a name="OLE_LINK36">11.     Litigation and Related Contingencies</a> We are party to investigations, legal claims and lawsuits arising out of our business operations. As required, we accrue our best estimate of loss contingencies when we believe a loss is probable and we can reasonably estimate the amount of any such loss. Amounts accrued, including obligations under indemnifications, totaled $24.0 million and $35.5 million at July 31, 2010 and April 30, 2010, respectively. Litigation is inherently unpredictable and it is difficult to predict the outcome of particular matters with reasonable certainty and, therefore, the actual amount of any loss may prove to be larger or smaller than the amounts reflected in our consolidated financial statements.   <a name="OLE_LINK12"> </a><a name="OLE_LINK10"> </a><a name="OLE_LINK2">RAL </a>Litigation We have been named in multiple lawsuits as defendants in litigation regarding our refund anticipation loan program in past years. All of those lawsuits have been settled or otherwise resolved, except for one. The sole remaining case is a putative class action styled Sandra J. Basile, et al. v. H&R Block, Inc., et al., April Term 1992 Civil Action No. 3246 in the Court of Common Pleas, First Judicial District Court of Pennsylvania, Philadelphia County, instituted on April 23, 1993. The plaintiffs allege inadequate disclosures with respect to the RAL product and assert claims for violation of consumer protection statutes, negligent misrepresentation, breach of fiduciary duty, common law fraud, usury, and violation of the Truth In Lending Act. Plaintiffs seek unspecified actual and punitive damages, injunctive relief, attorneys' fees and costs. A Pennsylvania class was certified, but later decertified by the trial court in December 2003. The trial court's decertification decision is currently on appeal. We believe we have meritorious defenses to this case and intend to defend it vigorously. There can be no assurances, however, as to the outcome of this case or its impact on our consolidated results of operations.   Peace of Mind Litigation We are defendants in lawsuits regarding our Peace of Mind program (collectively, the "POM Cases"), under which our applicable tax return preparation subsidiary assumes liability for additional tax assessments attributable to tax return preparation error. The POM Cases are described below. Lorie J. Marshall, et al. v. H&R Block Tax Services, Inc., et al., Case No. 08-CV-591 in the U.S. District Court for the Southern District of Illinois, is a putative class action case originally filed in the Circuit Court of Madison County, Illinois on January 18, 2002. The plaintiffs allege that the sale of POM guarantees constitutes (1) statutory fraud by selling insurance without a license, (2) an unfair trade practice, by omission and by "cramming" (i.e., charging customers for the guarantee even though they did not request it or want it), and (3) a breach of fiduciary duty. The plaintiffs seek unspecified damages, injunctive relief, attorneys' fees and costs. The Madison County court ultimately certified a class consisting of all persons residing in 13 states who paid a separate fee for POM from January 1, 1997 to the date of a final judgment from the court. We subsequently removed the case to federal court in the Southern District of Illinois, where it is now pending. In November 2009, the federal court issued an order vacating the state court's class certification ruling and allowing plaintiffs time to file a renewed motion for class certification under the federal rules. Plaintiffs filed a new motion for class certification seeking certification of an 11-state class. Oral argument on plaintiffs' motion occurred in April 2010 and the parties are awaiting a ruling. A trial date has been set for November 2010. There is one other putative class action pending against us in Texas that involves the POM guarantee. This case, styled Desiri L. Soliz v. H&R Block, et al. (Cause No. 03-032-D), was filed on January 23, 2003 in the District Court of Kleberg County, Texas. This case involves the same plaintiffs' attorneys that are involved in the Marshall litigation in Illinois and contains allegations similar to those in the Marshall litigation. The plaintiff seeks actual and treble damages, equitable relief, attorneys' fees and costs. No class has been certified in this case.      We believe we have meritorious defenses to the claims in the POM Cases, and we intend to defend them vigorously. The amounts claimed in the POM Cases are substantial, however, and there can be no assurances as to the outcome of these pending actions or their impact on our consolidated results of operations, individually or in the aggregate.   Express IRA Litigation On March 15, 2006, the New York Attorney General filed a lawsuit in the Supreme Court of the State of New York, County of New York (Index No. 06/401110) styled The People of New York v. H&R Block, Inc. and H&R Block Financial Advisors, Inc., et al. asserting claims against the Express IRA product. Thereafter, a number of civil actions were filed against HRBFA and us concerning the product. Except for two cases pending in state court, all of the civil actions were consolidated by the panel for Multi-District Litigation into a single action styled In re H&R Block, Inc. Express IRA Marketing Litigation (Case No. 06-1786-MD-RED) in the United States District Court for the Western District of Missouri. To avoid the cost and inherent risk associated with litigation, we reached an agreement to settle these cases. The settlement became final in May 2010. We previously recorded a sufficient liability for the loss associated with the settlement. One other lawsuit relating to the Express IRA product remains pending. This lawsuit was filed on January 2, 2008 by the Mississippi Attorney General in the Chancery Court of Hinds County, Mississippi First Judicial District (Case No. G 2008 6 S 2) and is styled Jim Hood, Attorney for the State of Mississippi v. H&R Block, Inc., et al. The complaint alleges fraudulent business practices, deceptive acts and practices, common law fraud and breach of fiduciary duty with respect to the sale of the product in Mississippi and seeks equitable relief, disgorgement of profits, damages and restitution, civil penalties and punitive damages. The defendants have filed a motion to dismiss. We believe we have meritorious defenses to the claims in this case, and we intend to defend this case vigorously, but there can be no assurances as to its outcome or its impact on our consolidated results of operations. Although we sold HRBFA effective November 1, 2008, we remain responsible for any liabilities relating to the Express IRA litigation through an indemnification agreement.   RSM McGladrey Litigation RSM EquiCo, its parent and certain of its subsidiaries and affiliates, are parties to a class action filed on July 11, 2006 and styled Do Right's Plant Growers, et al. v. RSM EquiCo, Inc., et al., Case No. 06 CC00137, in the California Superior Court, Orange County. The complaint contains allegations relating to business valuation services provided by RSM EquiCo, including allegations of fraud, negligent misrepresentation, breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty and unfair competition. Plaintiffs seek unspecified actual and punitive damages, in addition to pre-judgment interest and attorneys' fees. On March 17, 2009, the court granted plaintiffs' motion for class certification on all claims. The defendants filed two requests for interlocutory review of the decision, the last of which was denied by the Supreme Court of California on September 30, 2009. A trial date has been set for January 2011. The certified class consists of RSM EquiCo's U.S. clients who signed platform agreements and for whom RSM EquiCo did not ultimately market their business for sale. The fees paid to RSM EquiCo in connection with these agreements total approximately $185 million, a number which substantially exceeds the equity of RSM EquiCo. We intend to defend this case vigorously. The amount claimed in this action is substantial and could have a material adverse impact on our consolidated results of operations. There can be no assurance regarding the outcome of this matter. On December 7, 2009, a lawsuit was filed in the Circuit Court of Cook County, Illinois (2009-L-014920) against M&P, RSM and H&R Block styled Ronald R. Peterson ex rel. Lancelot Investors Fund, L.P., et al. v. McGladrey & Pullen LLP, et al. The case was removed to the United States District Court for the Northern District of Illinois on December 28, 2009, where it remains pending (Case No. 1:10-CV-00274). The complaint, which was filed by the trustee for certain bankrupt investment funds, seeks unspecified damages and asserts claims against RSM for vicarious liability and alter ego liability and against H&R Block for equitable restitution relating to audit work performed by M&P. The amount claimed in this case is substantial. We believe we have meritorious defenses to the claims against RSM and H&R Block in this case and intend to defend it vigorously, but there can be no assurances as to its outcome or its impact on our consolidated results of operations. RSM and M&P operate in an alternative practice structure. Accordingly, certain claims and lawsuits against M&P could have an impact on RSM. More specifically, any judgments or settlements arising from claims and lawsuits against M&P that exceed its insurance coverage could have a direct adverse effect on M&P's operations. Although RSM is not responsible for the liabilities of M&P, significant M&P litigation and claims could impair the profitability of the APS and impair the ability to attract and retain clients and quality professionals. This could, in turn, have a material adverse effect on RSM's operations and impair the value of our investment in RSM. There is no assurance regarding the outcome of any claims or litigation involving M&P.   Litigation and Claims Pertaining to Discontinued Mortgage Operations Although mortgage loan origination activities were terminated and the loan servicing business was sold during fiscal year 2008, SCC remains subject to investigations, claims and lawsuits pertaining to its loan origination and servicing activities that occurred prior to such termination and sale. These investigations, claims and lawsuits include actions by state attorneys general, other state and federal regulators, municipalities, individual plaintiffs, and cases in which plaintiffs seek to represent a class of others alleged to be similarly situated. Among other things, these investigations, claims and lawsuits allege discriminatory or unfair and deceptive loan origination and servicing practices, public nuisance, fraud, and violations of the Truth in Lending Act, Equal Credit Opportunity Act and the Fair Housing Act. In the current non-prime mortgage environment, the number of these investigations, claims and lawsuits has increased over historical experience and is likely to continue at increased levels. The amounts claimed in these investigations, claims and lawsuits are substantial in some instances, and the ultimate resulting liability is difficult to predict. In the event of unfavorable outcomes, the amounts SCC may be required to pay in the discharge of liabilities or settlements could be substantial and, because SCC's operating results are included in our consolidated financial statements, could have a material adverse impact on our consolidated results of operations. On June 3, 2008, the Massachusetts Attorney General filed a lawsuit in the Superior Court of Suffolk County, Massachusetts (Case No. 08-2474-BLS) styled Commonwealth of Massachusetts v. H&R Block, Inc., et al., alleging unfair, deceptive and discriminatory origination and servicing of mortgage loans and seeking equitable relief, disgorgement of profits, restitution and statutory penalties. In November 2008, the court granted a preliminary injunction limiting the ability of the owner of SCC's former loan servicing business to initiate or advance foreclosure actions against certain loans originated by SCC or its subsidiaries without (1) advance notice to the Massachusetts Attorney General and (2) if the Attorney General objects to foreclosure, approval by the court. An appeal of the preliminary injunction was denied. A trial date has been set for June 2011. We believe the claims in this case are without merit, and we intend to defend this case vigorously. There can be no assurances, however, as to its outcome or its impact on our consolidated results of operations.   Other Claims and Litigation We have been named in several wage and hour class action lawsuits throughout the country, respectively styled Alice Williams v. H&R Block Enterprises LLC, Case No.RG08366506 (Superior Court of California, County of Alameda, filed January 17, 2008); Arabella Lemus v. H&R Block Enterprises LLC, et al., Case No. CGC-09-489251 (United States District Court, Northern District of California, filed June 9, 2009); Delana Ugas v. H&R Block Enterprises LLC, et al., Case No. BC417700 (United States District Court, Central District of California, filed July 13, 2009); Barbara Petroski v. H&R Block Eastern Enterprises, Inc., et al., Case No. 10-CV-00075 (United States District Court, Western District of Missouri, filed January 25, 2010); Lance Hom v. H&R Block Enterprises LLC, et al., Case No. 10CV0476 H (United States District Court, Southern District of California, filed March 4, 2010); Stacy Oyer v. H&R Block Eastern Enterprises, Inc., et al., Case No. 10-CV-00387-WMS (United States District Court, Western District of New York, filed May 10, 2010); and Li Dong Ma v. RSM McGladrey TBS, LLC, et al., Case No. C-08-01729 JF (United States District Court, Northern District of California, filed February 28, 2008). These cases involve a variety of legal theories and allegations including, among other things, failure to compensate employees for all hours worked; failure to provide employees with meal periods; failure to provide itemized wage statements; failure to pay wages due upon termination; failure to compensate for mandatory off-season training; and/or misclassification of non-exempt employees. The plaintiffs seek actual damages, in addition to statutory penalties, pre-judgment interest and attorneys' fees. We believe we have meritorious defenses to the claims in these cases and intend to defend them vigorously. The amounts claimed in these matters are substantial in some instances, however, and the ultimate liability with respect to these matters is difficult to predict. There can be no assurances as to the outcome of these cases or their impact on our consolidated results of operations, individually or in the aggregate.      In addition, we are from time to time party to investigations, claims and lawsuits not discussed herein arising out of our business operations. These investigations, claims and lawsuits include actions by state attorneys general, other state regulators, individual plaintiffs, and cases in which plaintiffs seek to represent a class of others similarly situated. Some of these investigations, claims and lawsuits pertain to RALs, the electronic filing of customers' income tax returns, the POM guarantee program, and other products and services. We believe we have meritorious defenses to each of these investigations, claims and lawsuits, and we are defending or intend to defend them vigorously. The amounts claimed in these matters are substantial in some instances, however, the ultimate liability with respect to such matters is difficult to predict. In the event of an unfavorable outcome, the amounts we may be required to pay in the discharge of liabilities or settlements could have a material adverse impact on our consolidated results of operations.       We are also party to claims and lawsuits that we consider to be ordinary, routine litigation incidental to our business, including claims and lawsuits (collectively, "Other Claims") concerning the preparation of customers' income tax returns, the fees charged customers for various products and services, relationships with franchisees, intellectual property disputes, employment matters and contract disputes. While we cannot provide assurance that we will ultimately prevail in each instance, we believe the amount, if any, we are required to pay in the discharge of liabilities or settlements in these Other Claims will not have a material adverse impact on our consolidated results of operations. </div>

<div> <div> <div> 12.     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 July 31,                                                                  2010                                                            2009</div>   Revenues:                                                                                                                                                           Tax Services                                                                           $             91,645                                           $            87,963   Business Services                                                                              174,710                                                      177,618   Corporate                                                                                                  8,119                                                           9,924                                                                                                     $           274,474                                           $         275,505 Pretax income (loss):   Tax Services                                                                           $         (174,624)                                         $        (171,974)   Business Services                                                                                     (433)                                                          1,321   Corporate                                                                                              (32,260)                                                      (40,220)   Loss from continuing operations before tax benefit    $              (207,317)                                    $ (210,873) <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>

1321000

-40220000

-171974000

-433000

-32260000

-174624000

275505000

177618000

9924000

87963000

274474000

174710000

8119000

91645000

103217000

2498000

-56000

100775000

117029000

2090000

114939000

7300000

3400000

4521

1000000

<div> <div> 1.     Summary of Significant Accounting Policies <div class="MetaData"> <div class="MetaData">   Basis of Presentation The condensed consolidated balance sheet as of July 31, 2010, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended July 31, 2010 and 2009, and the condensed consolidated statements of cash flows for the three months ended July 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 July 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. <a name="OLE_LINK14">Certain reclassifications have been made to prior year amounts to conform to the current year presentation. These changes had no effect on our results of operations or stockholders' equity as previously reported. </a>      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 class="MetaData"> <div class="MetaData"> 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> <div class="MetaData"> <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>   <div class="MetaData"> <div> <a name="OLE_LINK30">Concentrations of Risk</a> 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></div> <div class="MetaData"> <div>  </div></div> </div>

1440630000

93831000

-3276597000

1440630000

3182766000

1025147000

78556000

-2874038000

1025147000

2795482000

1400000

900000

15500000

235675000

9300000

155000

226220000

200000

3500000

3400000

381315000

19254000

0.015

0.297

381315000

154031000

0.12

64179000

0.05

0.297

381315000

30076000

0.06

0.761

3797000

6527000

2056552000

2042638000

5256000

4755000

129800000

130400000

75500000

1500000

600000

103300000

334533000

319690000

334533000

319690000

Total risk-based capital divided by risk-weighted assets. Includes loans accounted for as in-substance foreclosures of $11.6 million and $12.5 million at July 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.