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56 2014 Form 10-K | H&R Block, Inc.
Canadian Cash Back® Program. Refunds advanced under the Cash Back program are not subject to credit approval,
therefore the primary indicator of credit quality is the age of the receivable amount. Cash Back amounts are generally
received within 60 days of filing the client's return. As of April 30, 2014 and 2013, $1.9 million and $1.8 million,
respectively, of Cash Back balances were more than 60 days old.
Allowance for Doubtful Accounts. Activity in the allowance for doubtful accounts for our short-term and long-
term receivables is as follows:
(in 000s)
EAs Loans
to Franchisees Cash Back® All Other Total
Balance as of May 1, 2011 $ 4,400 $ — $ 3,892 $ 39,651 $ 47,943
Provision 28,057 — 1,631 36,974 66,662
Charge-offs (26,257) — (3,244) (40,515) (70,016)
Balance as of April 30, 2012 6,200 — 2,279 36,110 44,589
Provision 28,430 — 4,647 42,649 75,726
Charge-offs (27,240) — (4,157) (31,215) (62,612)
Balance as of April 30, 2013 7,390 — 2,769 47,544 57,703
Provision 24,619 45 3,760 42,634 71,058
Charge-offs (24,479) (45) (3,527) (48,132) (76,183)
Balances as of April 30, 2014 $ 7,530 $ — $ 3,002 $ 42,046 $ 52,578
NOTE 5: MORTGAGE LOANS HELD FOR INVESTMENT
The composition of our mortgage loan portfolio is as follows:
(dollars in 000s)
As of April 30, 2014 2013
Amount % of Total Amount % of Total
Adjustable-rate loans $ 149,480 54% $ 191,093 55%
Fixed-rate loans 127,943 46% 159,142 45%
277,423 100% 350,235 100%
Unamortized deferred fees and costs 2,277 2,868
Less: Allowance for loan losses (11,272) (14,314)
$ 268,428 $ 338,789
Our loan loss allowance as a percent of mortgage loans was 4.1% as of April 30, 2014 and 2013.
Activity in the allowance for loan losses for the years ended April 30, 2014, 2013 and 2012 is as follows:
(in 000s)
Year ended April 30, 2014 2013 2012
Balance as of the beginning of the year $ 14,314 $ 26,540 $ 92,087
Provision 8,271 13,283 24,075
Recoveries 4,040 3,338 292
Charge-offs (15,353) (28,847) (89,914)
Balance as of the end of the year $ 11,272 $ 14,314 $ 26,540
Charge-offs increased during fiscal year 2012 primarily due to a change in practice determined by our regulators,
under which we now charge-off loans 180 days past due.