H&R Block (HRB) 10-Q 9 Dec 09 2010 Q2 Quarterly report Financial data

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands	Oct. 31, 2009	Apr. 30, 2009
Assets
Cash and cash equivalents	$1,432,243	$1,654,663
Cash and cash equivalents restricted	46,072	51,656
Receivables, less allowance for doubtful accounts of $131,438 and $128,541	461,485	512,814
Prepaid expenses and other current assets	361,186	351,947
Total current assets	2,300,986	2,571,080
Mortgage loans held for investment, less allowance for loan losses of $95,993 and $84,073	671,049	744,899
Property and equipment, at cost, less accumulated depreciation and amortization of $640,595 and $625,075	351,288	368,289
Intangible assets, net	378,112	385,998
Goodwill	856,880	850,230
Other assets	409,044	439,226
Total assets	4,967,359	5,359,722
Liabilities:
Customer banking deposits	1,493,726	854,888
Accounts payable, accrued expenses and other current liabilities	608,149	705,945
Accrued salaries, wages and payroll taxes	83,321	259,698
Accrued income taxes	169,004	543,967
Current portion of long-term debt	3,667	8,782
Federal Home Loan Bank borrowings	25,000	25,000
Total current liabilities	2,382,867	2,398,280
Long-term debt	1,032,562	1,032,122
Federal Home Loan Bank borrowings	75,000	75,000
Other noncurrent liabilities	405,833	448,461
Total liabilities	3,896,262	3,953,863
Stockholders equity:
Common stock, no par, stated value $.01 per share, 800,000,000 shares authorized, shares issued of 444,176,510	4,442	4,442
Additional paid-in capital	827,423	836,477
Accumulated other comprehensive income (loss)	66	(11,639)
Retained earnings	2,308,153	2,671,437
Less treasury shares, at cost	(2,068,987)	(2,094,858)
Total stockholders equity	1,071,097	1,405,859
Total liabilities and stockholders equity	$4,967,359	$5,359,722

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data	Oct. 31, 2009	Apr. 30, 2009
Condensed Consolidated Balance Sheets (Parenthetical)
Allowance for doubtful accounts	$131,438	$128,541
Allowance for loan losses	95,993	84,073
Accumulated depreciation and amortization	$640,595	$625,075
Common stock, par value per share	0.01	0.01
Common stock, shares authorized	800,000,000	800,000,000
Common stock, shares issued	444,176,510	444,176,510

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS (USD $)
In Thousands, except Per Share data	3 Months Ended Oct. 31, 2009	3 Months Ended Oct. 31, 2008	6 Months Ended Oct. 31, 2009	6 Months Ended Oct. 31, 2008
Revenues:
Service revenues	$294,958	$316,337	$542,943	$557,057
Interest income	12,113	17,047	24,400	34,894
Product and other revenues	19,010	18,085	34,243	31,427
Total revenue	326,081	351,469	601,586	623,378
Operating expenses:
Cost of revenues	410,949	438,765	797,399	805,085
Selling, general and administrative	129,685	138,036	232,902	255,240
Total operating expenses	540,634	576,801	1,030,301	1,060,325
Operating loss	(214,553)	(225,332)	(428,715)	(436,947)
Other income (expense), net	1,700	(2,121)	4,989	(3,476)
Loss from continuing operations before tax benefit	(212,853)	(227,453)	(423,726)	(440,423)
Income tax benefit	(86,381)	(94,292)	(166,637)	(178,839)
Net loss from continuing operations	(126,472)	(133,161)	(257,089)	(261,584)
Net loss from discontinued operations	(2,115)	(2,713)	(5,132)	(7,009)
Net loss	(128,587)	(135,874)	(262,221)	(268,593)
Basic and diluted loss per share:
Net loss from continuing operations	-0.38	-0.4	-0.77	-0.8
Net loss from discontinued operations	$0	-0.01	-0.01	-0.02
Net loss	-0.38	-0.41	-0.78	-0.82
Basic and diluted shares	335,346	329,810	334,939	328,475
Dividends paid per share	0.15	0.15	0.3	0.29
Comprehensive income (loss):
Net loss	(128,587)	(135,874)	(262,221)	(268,593)
Change in unrealized gain on available-for-sale securities, net	329	(597)	(418)	(2,564)
Change in foreign currency translation adjustments	2,586	(11,472)	12,123	(11,158)
Comprehensive loss	($125,672)	($147,943)	($250,516)	($282,315)

2_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands	6 Months Ended Oct. 31, 2009	6 Months Ended Oct. 31, 2008
Net cash used in operating activities	($786,152)	($665,931)
Cash flows from investing activities:
Principal repayments on mortgage loans held for investment, net	38,693	54,501
Purchases of property and equipment, net	(7,280)	(58,586)
Payments made for business acquisitions, net of cash acquired	(6,606)	(4,709)
Net cash used in investing activities of discontinued operations	0	(48,917)
Other, net	18,473	8,910
Net cash provided by (used in) investing activities	43,280	(48,801)
Cash flows from financing activities:
Repayments of Federal Home Loan Bank borrowings	0	(40,000)
Proceeds from Federal Home Loan Bank borrowings	0	15,000
Repayments of other short-term borrowings	0	(60,000)
Proceeds from other short-term borrowings	0	753,625
Customer banking deposits, net	638,466	(40,595)
Dividends paid	(100,784)	(96,555)
Acquisition of treasury shares	(3,785)	(4,467)
Proceeds from exercise of stock options	8,218	61,699
Proceeds from issuance of common stock, net	0	141,558
Net cash provided by financing activities of discontinued operations	0	4,783
Other, net	(30,884)	8,413
Net cash provided by financing activities	511,231	743,461
Effects of exchange rates on cash	9,221	0
Net increase (decrease) in cash and cash equivalents	(222,420)	28,729
Cash and cash equivalents at beginning of the period	1,654,663	664,897
Cash and cash equivalents at end of the period	1,432,243	693,626
Supplemental Cash Flow Information [Abstract]
Income taxes paid	196,427	99,910
Interest paid on borrowings	37,304	38,713
Interest paid on deposits	4,134	10,441
Transfers of loans to foreclosed assets	$9,212	$62,578

Summary of Significant Accounti

Summary of Significant Accounting Policies
	6 Months Ended Oct. 31, 2009 USD / shares
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated balance sheet as of October 31, 2009, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended October 31, 2009 and 2008, and the condensed consolidated statements of cash flows for the six months ended October 31, 2009 and 2008 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows at October 31, 2009 and for all periods presented have been made. HR Block, the Company, we, our and us are used interchangeably to refer to HR Block, Inc. or to HR Block, Inc. and its subsidiaries, as appropriate to the context. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. In addition, we realigned our segments as discussed in note 12, and accordingly restated segment disclosures for prior periods. These changes had no effect on our results of operations or stockholders equity as previously reported. 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, 2009 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of April 30, 2009 or for the year then ended, are derived from our April 30, 2009 Annual Report to Shareholders on Form 10-K. We have evaluated subsequent events through December 9, 2009, the date of issuance of our condensed consolidated financial statements. 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. 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. Concentrations of Risk Our mortgage loans

Recent Events

Recent Events
	6 Months Ended Oct. 31, 2009 USD / shares
Recent Events [Abstract]
Recent Events	2. Recent Events RSM McGladrey, Inc. (RSM) and McGladrey Pullen LLP (MP), an independent registered public accounting firm, collaborate to provide accounting, tax and consulting services to clients under an alternative practice structure. RSM and MP also share in certain common overhead costs through an administrative services agreement. These services are provided by, and coordinated through, RSM, for which RSM receives a management fee. On July 21, 2009, MP provided 210 days notice of its intent to terminate the administrative services agreement. The effect of the notice will be to terminate the alternative practice structure on February 16, 2010, unless revoked or modified prior to that time. As a protective measure, on September 15, 2009, RSM provided notice of its intent to terminate the administrative services agreement. Absent revocation or modification by RSM, the effect of RSMs notice will be to terminate the alternative practice structure on April 13, 2010 even in the event MP revokes or modifies the MP notice. Since July 23, 2009, RSM and MP have been engaged in arbitration to resolve various disputes regarding their contractual relationship, including the scope and enforceability of restrictive covenants agreed to by MP. On November 24, 2009, the arbitration panel issued a final and binding ruling regarding the enforceability of the covenants. The ruling is confidential. RSM and MP are continuing negotiations to determine if there are mutually agreeable changes to the current arrangements that would allow the alternative practice structure with MP to continue. There are no assurances as to the outcome of these negotiations.

Earnings

Earnings (Loss) Per Share and Stockholders? Equity
	5/1/2009 - 10/31/2009 USD / shares
Earnings (Loss) Per Share and Stockholders' Equity [Abstract]
Earnings (Loss) Per Share and Stockholders' Equity	3. Earnings (Loss) Per Share and Stockholders Equity Basic and diluted loss per share is computed using the two-class method. See note13 for additional information on our adoption of 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 19.3million shares for the three and six months ended October31, 2009, and 23.7million shares for the three and six months ended October31, 2008, as the effect would be antidilutive due to the net loss from continuing operations during each period. The computations of basic and diluted loss per share from continuing operations are as follows: (in 000s, except per share amounts) Three Months Ended October31, Six Months Ended October31, 2009 2008 2009 2008 Net loss from continuing operations attributable to shareholders $ (126,472 ) $ (133,161 ) $ (257,089 ) $ (261,584 ) Amounts allocated to participating securities (nonvested shares) (27 ) 248 340 447 Net loss from continuing operations attributable to common shareholders $ (126,445 ) $ (133,409 ) $ (257,429 ) $ (262,031 ) Basic weighted average common shares 335,346 329,810 334,939 328,475 Potential dilutive shares from stock options and nonvested shares - - - - Convertible preferred stock - - - - Dilutive weighted average common shares 335,346 329,810 334,939 328,475 Earnings (loss) per share from continuing operations attributable to common shareholders: Basic $ (0.38 ) $ (0.40 ) $ (0.77 ) $ (0.80 ) Diluted (0.38 ) (0.40 ) (0.77 ) (0.80 ) The weighted average shares outstanding for the three and six months ended October31, 2009 increased to 335.3million and 334.9million, respectively, from 329.8million and 328.5million for the three and six months ended October31, 2008, respectively, primarily due to the issuance of shares of our common stock in October 2008. During the six months ended October31, 2009 and 2008, we issued 1.6million and 4.5million shares of common stock, respectively, due to the exercise of stock options, employee stock purchases and vesting of nonvested shares. During the six months ended October31, 2009, we acquired 0.2million shares of

Mortgage Loans Held for Investm

Mortgage Loans Held for Investment and Related Assets
	6 Months Ended Oct. 31, 2009 USD / shares
Mortgage Loans Held for Investment and Related Assets [Abstract]
Mortgage Loans Held for Investment and Related Assets	4. Mortgage Loans Held for Investment and Related Assets The composition of our mortgage loan portfolio as of October31, 2009 and April30, 2009 is as follows: (dollars in 000s) October31, 2009 April30, 2009 As of Amount % of Total Amount % of Total Adjustable-rate loans $ 472,292 62 % $ 534,943 65 % Fixed-rate loans 288,824 38 % 286,894 35 % 761,116 100 % 821,837 100 % Unamortized deferred fees and costs 5,926 7,135 Less: Allowance for loan losses (95,993 ) (84,073 ) $ 671,049 $ 744,899 Activity in the allowance for loan losses for the six months ended October31, 2009 and 2008 is as follows: (in 000s) Six Months Ended October 31, 2009 2008 Balance, beginning of the period $ 84,073 $ 45,401 Provision 27,000 38,083 Recoveries 29 3 Charge-offs (15,109 ) (19,835 ) Balance, end of the period $ 95,993 $ 63,652 Our loan loss reserve as a percent of mortgage loans was 12.61% at October31, 2009, compared to 10.23% at April30, 2009. 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 troubled debt restructuring (TDR). TDR loans totaled $159.9million and $160.7million at October31, 2009 and April30, 2009, respectively. The principal balance of impaired loans and real estate owned as of October31, 2009 and April30, 2009 is as follows: (in 000s) As of October31, 2009 April30, 2009 Impaired loans: 60 89days $ 19,976 $ 21,415 90+ days, non-accrual 157,282 121,685 TDR loans, accrual 98,547 60,044 TDR loans, non-accrual 61,318 100,697 337,123 303,841 Real estate owned(1) 38,895 44,533 Total non-performing assets $ 376,018 $ 348,374 (1) Includes loans accounted for as in-substance foreclosures of $18.3million and $27.4million at October31, 2009 and April30, 2009, respectively. Activity related to our real estate owned is as follows: (in 000s) Six Months Ended October 31, 2009 2008 Balance, beginning of the period $ 44,533 $ 350 Additions 9,212 62,578 Sales (10,055 ) (3,787 ) Impairments (4,795 ) (5,938 ) Balance, end of the period $ 38,895 $ 53,203

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	6 Months Ended Oct. 31, 2009 USD / shares
Goodwill and Intangible Assets [Abstract]
Goodwill and Intangible Assets	5. Goodwill and Intangible Assets Changes in the carrying amount of goodwill for the six months ended October31, 2009 consist of the following: (in 000s) April30, 2009 Additions Impairment Other October31, 2009 Tax Services $ 447,591 $ 6,227 $ - $ 1,862 $ 455,680 Business Services 402,639 - - (1,439 ) 401,200 Total $ 850,230 $ 6,227 $ - $ 423 $ 856,880 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 units net assets below its carrying value. We considered the July21, 2009 notice by MP of its intent to terminate the administrative services agreement with RSM to represent a significant change in circumstances requiring an interim evaluation of the fair value of our RSM reporting unit. Goodwill of this reporting unit totaled $371.9million at October31, 2009. The net carrying value of other intangible assets of RSM totaled $92.4million at October31, 2009, including $50.8million for an indefinite-lived trade name asset. We have concluded that, as of October31, 2009, the fair value of this reporting unit exceeds its carrying value and also that the net carrying value of other intangible assets is recoverable. Our conclusion is based on our current assumptions, including, but not limited to, those listed below. We have assumed that our noncompete rights are enforceable. We have assumed that, more likely than not, RSM and MP will continue tocollaborate; or, in the event of a separation, RSM will successfully establish an alliance with other attest firms. We have assumed that ongoing negotiations between RSM and MP will not result in modifications of their relationship that would be materially adverse to the financial interests of RSM. In the event of a separation, we have made various assumptions concerning client retention and post-separation operating margins. In the event of a separation, we have assumed MP would be able to repay its indebtedness to RSM. It is difficult to predict the outcome of the above matters, including the outcome of mitigating factors that we are currently pursuing. Therefore, it is possible that changes in our assumptions, based on future events or circumstances, could result in changes in our fair value estimates and corresponding impairment charges. RSMs subsidiary, RSM EquiCo, Inc. (RSM EquiCo), which assists clients with capital markets transactions, has experienced declining revenues in the current economic environment. If availability of financing for acquisitions in the middle-market remains limited, revenues may continue to fall below our expectations, which could lead us to consider impairment of the $29.3million carrying value of goodwill related to our capital markets business. Intangible assets consist of the following:

Income Taxes

Income Taxes
	6 Months Ended Oct. 31, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	6. Income Taxes We file a consolidated federal income tax return in the United States and file tax returns in various state and foreign jurisdictions. Consolidated tax returns for the years 1999 through 2007 are currently under examination by the Internal Revenue Service. Tax years prior to 1999 are closed by statute. Historically, tax returns in various foreign and state jurisdictions are examined and settled upon completion of the exam. During the six months ended October 31, 2009, we accrued an additional $0.8 million for interest and penalties related to our uncertain tax positions. We had unrecognized tax benefits of $121.9 million and $124.6 million at October 31, 2009 and April 30, 2009, respectively. The unrecognized tax benefits decreased $2.7 million in the current year, due primarily to positions related to prior years. Except as noted below, we have classified the liability for unrecognized tax benefits, including corresponding accrued interest, as long-term at October 31, 2009, which is included in other noncurrent liabilities on the condensed consolidated balance sheets. Based upon the expiration of statutes of limitations, payments of tax and other factors in several jurisdictions, we believe it is reasonably possible that the total amount of reserves for previously unrecognized tax benefits may decrease by approximately $16 million within twelve months of October 31, 2009. This portion of our liability for unrecognized tax benefits has been classified as current and is included in accounts payable, accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Interest Income and Expense

Interest Income and Expense
	6 Months Ended Oct. 31, 2009 USD / shares
Interest Income and Expense [Abstract]
Interest Income and Expense	7. Interest Income and Expense The following table shows the components of interest income and expense of our continuing operations: (in 000s) Three Months Ended October31, Six Months Ended October 31, 2009 2008 2009 2008 Interest income: Mortgage loans $ 8,072 $ 12,098 $ 15,968 $ 25,363 Other 4,041 4,949 8,432 9,531 $ 12,113 $ 17,047 $ 24,400 $ 34,894 Interest expense: Borrowings $ 18,514 $ 21,054 $ 37,471 $ 39,226 Deposits 2,284 3,884 4,333 7,927 FHLB advances 508 1,327 1,017 2,655 $ 21,306 $ 26,265 $ 42,821 $ 49,808

Fair Value

Fair Value
	6 Months Ended Oct. 31, 2009 USD / shares
Fair Value [Abstract]
Fair Value	8. Fair Value 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 October31, 2009: (dollars in 000s) Total Level 1 Level 2 Level 3 Recurring: Available-for-sale securities $ 40,702 $ - $ 40,702 $ - Non-recurring: Impaired mortgage loans held for investment 252,351 - - 252,351 $ 293,053 $ - $ 40,702 $ 252,351 As a percentage of total assets 5.9% -% 0.8% 5.1% There were no significant changes to the unobservable inputs used in determining the fair values of our level2 and level3 financial assets. The carrying amounts and estimated fair values of our financial instruments at October31, 2009 are as follows: (in 000s) Carrying Estimated Amount Fair Value Mortgage loans held for investment $ 671,049 $ 506,622 IRAs and other time deposits 732,355 732,245 Long-term debt 1,032,562 1,106,878

Regulatory Requirements

Regulatory Requirements
	6 Months Ended Oct. 31, 2009 USD / shares
Regulatory Requirements [Abstract]
Regulatory Requirements	9. Regulatory Requirements HR Block Bank (HRB Bank) files its regulatory Thrift Financial Report (TFR) on a calendar quarter basis with the Office of Thrift Supervision (OTS). The following table sets forth HRB Banks regulatory capital requirements at September30, 2009, as calculated in the most recently filed TFR: (dollars in 000s) To Be Well Capitalized For Capital Adequacy Under Prompt Corrective Actual Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio Total risk-based capital ratio(1) $ 287,082 50.1% $ 45,883 8.0% $ 57,354 10.0% Tier1 risk-based capital ratio(2) $ 279,460 48.7% N/A N/A $ 34,412 6.0% Tier1 capital ratio (leverage)(3) $ 279,460 19.4% $ 172,746 12.0% $ 71,977 5.0% Tangible equity ratio(4) $ 279,460 19.4% $ 21,593 1.5% N/A N/A (1) Total risk-based capital divided by risk-weighted assets. (2) Tier1 (core) capital less deduction for low-level recourse and residual interest divided by risk-weighted assets. (3) Tier1 (core) capital divided by adjusted total assets. (4) Tangible capital divided by tangible assets. Block Financial LLC (BFC) typically makes capital contributions to HRB Bank to help it meet itscapital requirements. Capital contributions totaling $245.0million were made by BFC during the fiscal year ended April30, 2009. BFC made capital contributions to HRB Bank of $150.0million during the six months ended October31, 2009 and, in November 2009, BFC made an additional capital contribution to HRB Bank of $85.0million. As of October31, 2009, HRB Banks leverage ratio was 14.6%.

Commitments and Contingencies

Commitments and Contingencies
	6 Months Ended Oct. 31, 2009 USD / shares
Commitments and Contingencies [Abstract]
Commitments and Contingencies	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: (in 000s) Six Months Ended October 31, 2009 2008 Balance, beginning of period $ 146,807 $ 140,583 Amounts deferred for new guarantees issued 1,351 1,148 Revenue recognized on previous deferrals (47,044) (45,826) Balance, end of period $ 101,114 $ 95,905 The following table summarizes certain of our other contractual obligations and commitments: (in 000s) As of October31, 2009 April30, 2009 Franchise Equity Lines of Credit undrawn commitment $ 29,286 $ 38,055 Contingent business acquisition obligations 24,973 24,165 Media advertising purchase obligation 45,768 45,768 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 October31, 2009. Discontinued Operations Sand Canyon Corporation (SCC), formerly Option One Mortgage Corporation, maintains recourse with respect to loans previously sold or securitized under indemnification of loss provisions relating to breach of representations and warranties made to purchasers or insurers. At October31, 2009 and April30, 2009, our loan repurchase reserve totaled $201.2million and $206.6million, respectively. This liability is included in accounts payable, accrued expenses and other current liabilities on our condensed consolidated balance sheets.

Litigation and Related Continge

Litigation and Related Contingencies
	6 Months Ended Oct. 31, 2009 USD / shares
Litigation and Related Contingencies [Abstract]
Litigation and Related Contingencies	11. Litigation and Related Contingencies 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 that a loss is probable and that we can reasonably estimate the amount of any such loss. Amounts accrued, including obligations under indemnifications, totaled $32.9 million and $27.9 million at October 31, 2009 and April 30, 2009, 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. RAL Litigation We have been named as a defendant in numerous lawsuits throughout the country regarding our refund anticipation loan programs (collectively, RAL Cases). The RAL Cases have involved a variety of legal theories asserted by plaintiffs. These theories include allegations that, among other things: disclosures in the RAL applications were inadequate, misleading and untimely; the RAL interest rates were usurious and unconscionable; we did not disclose that we would receive part of the finance charges paid by the customer for such loans; untrue, misleading or deceptive statements in marketing RALs; breach of state laws on credit service organizations; breach of contract, unjust enrichment, unfair and deceptive acts or practices; violations of the federal Racketeer Influenced and Corrupt Organizations Act; violations of the federal Fair Debt Collection Practices Act and unfair competition regarding debt collection activities; and that we owe, and breached, a fiduciary duty to our customers in connection with the RAL program. The amounts claimed in the RAL Cases have been very substantial in some instances, with one settlement resulting in a pretax expense of $43.5 million in fiscal year 2003 (the Texas RAL Settlement) and other settlements resulting in a combined pretax expense in fiscal year 2006 of $70.2 million. We have settled all but one of the RAL Cases. The sole remaining RAL Case is a putative class action entitled Sandra J. Basile, et al. v. HR 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 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 courts 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 P

Segment Information

Segment Information
	6 Months Ended Oct. 31, 2009 USD / shares
Segment Information [Abstract]
Segment Information	12. Segment Information Results of our continuing operations by reportable operating segment are as follows: (in 000s) Six Months Ended Three Months Ended October31, October31, 2009 2008 2009 2008 Revenues: Tax Services $ 109,305 $ 104,734 $ 197,268 $ 186,434 Business Services 206,602 233,045 384,220 407,696 Corporate 10,174 13,690 20,098 29,248 $ 326,081 $ 351,469 $ 601,586 $ 623,378 Pretax income (loss): Tax Services $ (172,188 ) $ (188,125 ) $ (344,162 ) $ (351,782 ) Business Services 174 13,081 1,495 12,786 Corporate (40,839 ) (52,409 ) (81,059 ) (101,427 ) Loss from continuing operations before tax benefit $ (212,853 ) $ (227,453 ) $ (423,726 ) $ (440,423 ) Effective May1, 2009, we realigned certain segments of our business to reflect a new management reporting structure. The operations of HRB Bank, which was previously reported as the Consumer Financial Services segment, have now been reclassified, with activities that support our retail tax network included in the Tax Services segment, and the net interest margin and gains and losses relating to our portfolio of mortgage loans held for investment and related assets included in corporate. Presentation of prior period results reflects the new segment reporting structure. These segment changes also resulted in the reclassification of assets between segments. Identifiable assets by reportable segment at October31, 2009 are as follows: (in 000s) Tax Services $ 2,790,766 Business Services 857,698 Corporate 1,318,895 $ 4,967,359

Accounting Pronouncements

Accounting Pronouncements
	6 Months Ended Oct. 31, 2009 USD / shares
Accounting Pronouncements [Abstract]
Accounting Pronouncements	13. Accounting Pronouncements In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605) Multiple-Deliverable Revenue Arrangements (ASU 2009-13). This guidance amends the criteria for separating consideration in multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (1) vendor-specific objective evidence; (2) third-party evidence; or (3) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. In addition, this guidance significantly expands required disclosures related to a vendors multiple-deliverable revenue arrangements.This guidance is effective prospectively for revenue arrangements entered into or materially modified beginning with our fiscal year 2012. We are currently evaluating the effect of this statement on our consolidated financial statements. In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). SFAS 167 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting or similar rights should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entitys purpose and design and the reporting entitys ability to direct the activities of the other entity that most significantly impact the other entitys economic performance. SFAS 167 will require a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. SFAS 167 will be effective for our fiscal year 2011. We are currently evaluating the effect of this statement on our consolidated financial statements. In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, Accounting for Transfers of Financial Assets (SFAS 166). SFAS 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more disclosure about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a qualifying special purpose entity and changes the requirements for derecognizing financial assets. SFAS 166 will be effective at the beginning of our fiscal year 2011. We are currently evaluating the effect of this statement on our consolidated financial statements. In May 2009, the FASB issued guidance, under Topic 855 Subsequent Events, to establish general standards of accounting for and disclosure of events that occur after the balance sheet

Condensed Consolidating Financi

Condensed Consolidating Financial Statements
	6 Months Ended Oct. 31, 2009 USD / shares
Condensed Consolidating Financial Statements [Abstract]
Condensed Consolidating Financial Statements	14. Condensed Consolidating Financial Statements 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 January11, 2008 and October26, 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 Companys investment in subsidiaries account. The elimination entries eliminate investments in subsidiaries, related stockholders equity and other intercompany balances and transactions. Condensed Consolidating Income Statements (in 000s) Three Months Ended HR Block, Inc. BFC Other Consolidated October31, 2009 (Guarantor) (Issuer) Subsidiaries Elims HR Block Total revenues $ - $ 21,026 $ 305,055 $ - $ 326,081 Cost of revenues - 45,861 365,088 - 410,949 Selling, general and administrative - 2,457 127,228 - 129,685 Total expenses - 48,318 492,316 - 540,634 Operating loss - (27,292 ) (187,261 ) - (214,553 ) Other income (expense), net (212,853 ) (2,607 ) 4,307 212,853 1,700 Loss from continuing operations before tax benefit (212,853 ) (29,899 ) (182,954 ) 212,853 (212,853 ) Income tax benefit (86,381 ) (12,294 ) (74,087 ) 86,381 (86,381 ) Net loss from continuing operations (126,472 ) (17,605 ) (108,867 ) 126,472 (126,472 ) Net loss from discontinued operations (2,115 ) (2,115 ) - 2,115 (2,115 ) Net loss $ (128,587 ) $ (19,720 ) $ (108,867 ) $ 128,587 $ (128,587 ) Three Months Ended HR Block, Inc. BFC Other Consolidated October31, 2008 (Guarantor) (Issuer) Subsidiaries Elims HR Block Total revenues $ - $ 18,326 $ 334,434 $ (1,291 ) $ 351,469 Cost of revenues - 46,744 392,040 (19 ) 438,765 Selling, general and administrative - 17,493 120,639 (96 ) 138,036 Total expenses - 64,237 512,679 (115 ) 576,801 Operating loss - (45,911 ) (178,245 ) (1,176 ) (225,332 ) Other income (expense), net (227,453 ) 460 (2,581 ) 227,453 (2,121 ) Loss from continuing operations before tax benefit (227,453 ) (45,451 ) (180

Document Information

Document Information
	6 Months Ended Oct. 31, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-10-31

Entity Information

Entity Information (USD $)
	6 Months Ended Oct. 31, 2009	Nov. 30, 2009
Entity Information [Line Items]
Entity Registrant Name	H&R BLOCK INC
Entity Central Index Key	0000012659
Current Fiscal Year End Date	--04-30
Entity Filer Category	Large Accelerated Filer
Entity Listings [Table]
Entity Common Stock, Shares Outstanding		335,541,241