H&R Block (HRB) 8-K Completion of Acquisition or Disposition of Assets

CONDENSED CONSOLIDATED BALANCE SHEETS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands

	July 31, 2008
	As Reported			Amounts Transferred to Discontinued Operations		As Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	355,998		($110,535	)	$	245,463
Cash and cash equivalents - restricted		221,338		(219,000	)		2,338
Receivables from customers, brokers, dealers and clearing organizations, net		401,859		(401,859	)		—
Receivables, net		383,224		(16,223	)		367,001
Prepaid expenses and other current assets		438,872		(23,756	)		415,116
Assets of discontinued operations, held for sale		—		1,005,238			1,005,238
Total current assets		1,801,291		233,865			2,035,156
Mortgage loans held for investment, net		868,603		—			868,603
Property and equipment, net		380,804		(17,329	)		363,475
Intangible assets, net		142,533		—			142,533
Goodwill, net		1,006,207		(173,954	)		832,253
Other assets		704,044		(42,582	)		661,462
Total assets	$	4,903,482		$               —		$	4,903,482
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Customer deposits	$	777,080		$               —		$	777,080
Accounts payable to customers, brokers and dealers		592,688		(592,688	)		—
Accounts payable, accrued expenses and other current liabilities		665,973		(38,485	)		627,488
Accrued salaries, wages and payroll taxes		142,690		(25,004	)		117,686
Accrued income taxes		263,784		—			263,784
Current portion of long-term debt		108,839		—			108,839
Liabilities of discontinued operations, held for sale		—		670,932			670,932
Total current liabilities		2,551,054		14,755			2,565,809
Long-term debt		1,034,117		—			1,034,117
Other noncurrent liabilities		481,589		(14,755	)		466,834
Total liabilities		4,066,760		—			4,066,760
Stockholders’ equity:
Common stock		4,359		—			4,359
Additional paid-in capital		686,802		—			686,802
Accumulated other comprehensive income		833		—			833
Retained earnings		2,204,940		—			2,204,940
Less cost of shares of common stock in treasury		(2,060,212	)	—			(2,060,212	)
Total stockholders’ equity		836,722		—			836,722
Total liabilities and stockholders’ equity	$	4,903,482		$               —		$	4,903,482

Note: The unaudited condensed consolidated balance sheets present the assets and liabilities of HRB Financial Corporation as assets and liabilities of discontinued operations, held for sale. The amounts transferred to Discontinued Operations represent the reclassification of these assets and liabilities.

CONDENSED CONSOLIDATED BALANCE SHEETS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands

	April 30, 2008
	As Reported			Amounts Transferred to Discontinued Operations		As Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	726,845		($61,948	)	$	664,897
Cash and cash equivalents - restricted		219,031		(212,000	)		7,031
Receivables from customers, brokers, dealers and clearing organizations, net		438,899		(438,899	)		—
Receivables, net		552,871		(18,642	)		534,229
Prepaid expenses and other current assets		443,934		(23,196	)		420,738
Assets of discontinued operations, held for sale		—		987,592			987,592
Total current assets		2,381,580		232,907			2,614,487
Mortgage loans held for investment, net		966,301		—			966,301
Property and equipment, net		380,738		(17,074	)		363,664
Intangible assets, net		147,368		—			147,368
Goodwill, net		1,005,268		(173,954	)		831,314
Other assets		742,170		(41,879	)		700,291
Total assets	$	5,623,425		$               —		$	5,623,425
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	25,000		$               —		$	25,000
Customer deposits		785,624		—			785,624
Accounts payable to customers, brokers and dealers		559,658		(559,658	)		—
Accounts payable, accrued expenses and other current liabilities		782,280		(42,393	)		739,887
Accrued salaries, wages and payroll taxes		393,148		(27,436	)		365,712
Accrued income taxes		439,380		—			439,380
Current portion of long-term debt		111,286		—			111,286
Liabilities of discontinued operations, held for sale		—		644,446			644,446
Total current liabilities		3,096,376		14,959			3,111,335
Long-term debt		1,031,784		—			1,031,784
Other noncurrent liabilities		507,447		(14,959	)		492,488
Total liabilities		4,635,607		—			4,635,607
Stockholders’ equity:
Common stock		4,359		—			4,359
Additional paid-in capital		695,959		—			695,959
Accumulated other comprehensive income		2,486		—			2,486
Retained earnings		2,384,449		—			2,384,449
Less cost of shares of common stock in treasury		(2,099,435	)	—			(2,099,435	)
Total stockholders’ equity		987,818		—			987,818
Total liabilities and stockholders’ equity	$	5,623,425		$               —		$	5,623,425

Note: The unaudited condensed consolidated balance sheets present the assets and liabilities of HRB Financial Corporation as assets and liabilities of discontinued operations, held for sale. The amounts transferred to Discontinued Operations represent the reclassification of these assets and liabilities.

CONDENSED CONSOLIDATED BALANCE SHEETS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands

	April 30, 2007
	As Reported			Amounts Transferred to Discontinued Operations		As Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	921,838		($104,921	)	$	816,917
Cash and cash equivalents - restricted		332,646		(329,000	)		3,646
Receivables from customers, brokers, dealers and clearing organizations, net		410,522		(410,522	)		—
Receivables, net		556,255		(22,560	)		533,695
Prepaid expenses and other current assets		208,564		(18,696	)		189,868
Assets of discontinued operations, held for sale		1,746,959		1,126,856			2,873,815
Total current assets		4,176,784		241,157			4,417,941
Mortgage loans held for investment, net		1,358,222		—			1,358,222
Property and equipment, net		379,066		(19,608	)		359,458
Intangible assets, net		181,413		(21,365	)		160,048
Goodwill, net		993,919		(173,954	)		819,965
Other assets		454,646		(26,230	)		428,416
Total assets	$	7,544,050		$               —		$	7,544,050
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	1,567,082		$               —		$	1,567,082
Customer deposits		1,129,263		—			1,129,263
Accounts payable to customers, brokers and dealers		633,189		(633,189	)		—
Accounts payable, accrued expenses and other current liabilities		519,372		(56,614	)		462,758
Accrued salaries, wages and payroll taxes		307,854		(23,173	)		284,681
Accrued income taxes		439,472		—			439,472
Current portion of long-term debt		9,304		—			9,304
Liabilities of discontinued operations, held for sale		615,373		727,946			1,343,319
Total current liabilities		5,220,909		14,970			5,235,879
Long-term debt		537,134		—			537,134
Other noncurrent liabilities		371,508		(14,970	)		356,538
Total liabilities		6,129,551		—			6,129,551
Stockholders’ equity:
Common stock		4,359		—			4,359
Additional paid-in capital		676,766		—			676,766
Accumulated other comprehensive income		(1,320	)	—			(1,320	)
Retained earnings		2,886,440		—			2,886,440
Less cost of shares of common stock in treasury		(2,151,746	)	—			(2,151,746	)
Total stockholders’ equity		1,414,499		—			1,414,499
Total liabilities and stockholders’ equity	$	7,544,050		$               —		$	7,544,050

Note: The unaudited condensed consolidated balance sheets present the assets and liabilities of HRB Financial Corporation as assets and liabilities of discontinued operations, held for sale. The amounts transferred to Discontinued Operations represent the reclassification of these assets and liabilities.

CONDENSED CONSOLIDATED INCOME STATEMENTS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands, except per share data

	Three Months Ended July 31, 2008
	As reported			Amounts Transferred to Discontinued Operations		As Adjusted
Revenues:
Service revenues	$	301,521		($60,801	)	$	240,720
Other revenues:
Interest income		25,238		(7,391	)		17,847
Product and other revenues		12,879		463			13,342
		339,638		(67,729	)		271,909
Operating expenses:
Cost of services		369,606		(52,033	)		317,573
Cost of other revenues		42,823		(258	)		42,565
Selling, general and administrative		140,470		(17,084	)		123,386
		552,899		(69,375	)		483,524
Operating loss		(213,261	)	1,646			(211,615	)
Other income, net		(1,355	)	-			(1,355	)
Loss from continuing operations before tax benefit		(214,616	)	1,646			(212,970	)
Income tax benefit		(85,247	)	700			(84,547	)
Net loss from continuing operations		(129,369	)	946			(128,423	)
Net loss from discontinued operations		(3,350	)	(946	)		(4,296	)
Net loss		($132,719	)	$                 -			($132,719	)
Basic and diluted earnings (loss) per share:
Net loss from continuing operations		($0.40	)	$            0.01			($0.39	)
Net loss from discontinued operations		(0.01	)	(0.01	)		(0.02	)
Net loss		($0.41	)	$                 -			($0.41	)
Basic and diluted shares		327,141		327,141			327,141

Note: The unaudited condensed consolidated income statements present the results of operations of HRB Financial Corporation as discontinued operations. The amounts transferred to Discontinued Operations represent the reclassification of these results of operations, as adjusted for eliminations and overhead costs which were previously allocated to this business, totaling $2.0 million.

CONDENSED CONSOLIDATED INCOME STATEMENTS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands, except per share data

	Twelve Months Ended April 30, 2008
	As reported			Amounts Transferred to Discontinued Operations		As Adjusted
Revenues:
Service revenues	$	3,663,636		($269,730	)	$	3,393,906
Other revenues:
Product and other revenues		541,387		(221	)		541,166
Interest income		198,854		(47,296	)		151,558
		4,403,877		(317,247	)		4,086,630
Operating expenses:
Cost of services		2,489,726		(209,248	)		2,280,478
Cost of other revenues		312,826		(5,111	)		307,715
Selling, general and administrative		881,886		(92,988	)		788,898
		3,684,438		(307,347	)		3,377,091
Operating income		719,439		(9,900	)		709,539
Interest expense - acquisition debt		(2,019	)	-			(2,019	)
Other income, net		27,801		(250	)		27,551
Income from continuing operations before taxes		745,221		(10,150	)		735,071
Income taxes		290,745		(1,621	)		289,124
Net income from continuing operations		454,476		(8,529	)		445,947
Net loss from discontinued operations		(763,123	)	8,529			(754,594	)
Net loss		($308,647	)	$                  -			($308,647	)
Basic earnings (loss) per share:
Net income from continuing operations	$	1.40		($0.03	)	$	1.37
Net loss from discontinued operations		(2.35	)	0.03			(2.32	)
Net loss		($0.95	)	$                  -			($0.95	)
Basic shares outstanding		324,810		324,810			324,810
Diluted earnings (loss) per share:
Net income from continuing operations	$	1.39		($0.03	)	$	1.36
Net loss from discontinued operations		(2.33	)	0.03			(2.30	)
Net loss		($0.94	)	$                  -			($0.94	)
Diluted shares outstanding		327,468		327,468			327,468

Note: The unaudited condensed consolidated income statements present the results of operations of HRB Financial Corporation as discontinued operations. The amounts transferred to Discontinued Operations represent the reclassification of these results of operations, as adjusted for eliminations and overhead costs which were previously allocated to this business, totaling $11.5 million.

CONDENSED CONSOLIDATED INCOME STATEMENTS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands, except per share data

	Twelve Months Ended April 30, 2007
	As reported			Amounts Transferred to Discontinued Operations		As Adjusted
Revenues:
Service revenues	$	3,356,418		($248,083	)	$	3,108,335
Other revenues:
Product and other revenues		529,835		(1,060	)		528,775
Interest income		135,021		(61,769	)		73,252
		4,021,274		(310,912	)		3,710,362
Operating expenses:
Cost of services		2,340,395		(182,557	)		2,157,838
Cost of other revenues		182,262		(9,606	)		172,656
Selling, general and administrative		838,755		(110,215	)		728,540
		3,361,412		(302,378	)		3,059,034
Operating income		659,862		(8,534	)		651,328
Interest expense - acquisition debt		(46,920	)	-			(46,920	)
Other income, net		22,856		(3	)		22,853
Income from continuing operations before taxes		635,798		(8,537	)		627,261
Income taxes		261,461		(3,660	)		257,801
Net income from continuing operations		374,337		(4,877	)		369,460
Net loss from discontinued operations		(807,990	)	4,877			(803,113	)
Net loss		($433,653	)	$                  -			($433,653	)
Basic earnings (loss) per share:
Net income from continuing operations	$	1.16		($0.02	)	$	1.14
Net loss from discontinued operations		(2.50	)	0.02			(2.48	)
Net loss		($1.34	)	$                  -			($1.34	)
Basic shares outstanding		322,688		322,688			322,688
Diluted earnings (loss) per share:
Net income from continuing operations	$	1.15		($0.02	)	$	1.13
Net loss from discontinued operations		(2.48	)	0.02			(2.46	)
Net loss		($1.33	)	$                  -			($1.33	)
Diluted shares outstanding		326,154		326,154			326,154

Note: The unaudited condensed consolidated income statements present the results of operations of HRB Financial Corporation as discontinued operations. The amounts transferred to Discontinued Operations represent the reclassification of these results of operations, as adjusted for eliminations and overhead costs which were previously allocated to this business, totaling $11.8 million.

CONDENSED CONSOLIDATED INCOME STATEMENTS ADJUSTED FOR HRB FINANCIAL CORPORATION DISCONTINUED OPERATIONS

Unaudited, amounts in thousands, except per share data

	Twelve Months Ended April 30, 2006
	As reported			Amounts Transferred to Discontinued Operations		As Adjusted
Revenues:
Service revenues	$	3,013,005		($222,730	)	$	2,790,275
Other revenues:
Product and other revenues		492,245		(4,430	)		487,815
Interest income		69,503		(60,795	)		8,708
		3,574,753		(287,955	)		3,286,798
Operating expenses:
Cost of services		2,078,097		(183,358	)		1,894,739
Cost of other revenues		77,253		(6,643	)		70,610
Selling, general and administrative		882,389		(118,792	)		763,597
		3,037,739		(308,793	)		2,728,946
Operating income		537,014		20,838			557,852
Interest expense - acquisition debt		(49,059	)	-			(49,059	)
Other income, net		22,527		-			22,527
Income from continuing operations before taxes		510,482		20,838			531,320
Income taxes		212,941		7,568			220,509
Net income from continuing operations		297,541		13,270			310,811
Net loss from discontinued operations		192,867		(13,270	)		179,597
Net income	$	490,408		$                  -		$	490,408
Basic earnings per share:
Net income from continuing operations	$	0.91		$            0.04		$	0.95
Net loss from discontinued operations		0.58		(0.04	)		0.54
Net income	$	1.49		$                  -		$	1.49
Basic shares outstanding		328,118		328,118			328,118
Diluted earnings per share:
Net income from continuing operations	$	0.89		$            0.04		$	0.93
Net loss from discontinued operations		0.58		(0.04	)		0.54
Net income	$	1.47		$                  -		$	1.47
Diluted shares outstanding		333,187		333,187			333,187

Note: The unaudited condensed consolidated income statements present the results of operations of HRB Financial Corporation as discontinued operations. The amounts transferred to Discontinued Operations represent the reclassification of these results of operations, as adjusted for eliminations and overhead costs which were previously allocated to this business, totaling $12.0 million.