HR Block 2014 Annual Report Download - page 81

H&R Block, Inc. | 2014 Form 10-K 73
We are self-insured for certain risks, including, employer provided medical benefits, workers' compensation,
property and casualty, professional liability and claims related to our POM program. These programs maintain various
self-insured retentions. In all but our POM program in company-owned offices, commercial insurance is purchased in
excess of the self-insured retentions. We accrue estimated losses for self-insured retentions using actuarial models
and assumptions based on historical loss experience.
We have a deferred compensation plan that permits certain employees to defer portions of their compensation
and accrue income on the deferred amounts. Included in other noncurrent liabilities is $38.1 million and $42.5 million
as of April 30, 2014 and 2013, respectively, reflecting our obligation under these plans.
We maintain compensating balances with certain financial institutions that are creditors in our 2012 CLOC, which
are not legally restricted as to withdrawal. These balances totaled $215.3 million as of April 30, 2014. These balances
may fluctuate significantly over the course of any given fiscal year.
Substantially all of the operations of our subsidiaries are conducted in leased premises. Most of the operating
leases are for periods ranging from three years to five years, with renewal options, and provide for fixed monthly
rentals. Future minimum operating lease commitments as of April 30, 2014, are as follows:
(in 000s)
2015 $ 183,701
2016 119,377
2017 70,447
2018 33,047
2019 11,892
2020 and beyond 5,166
$ 423,630
Rent expense of continuing operations for fiscal years 2014, 2013 and 2012 totaled $203.3 million, $201.0 million
and $218.3 million, respectively.
See notes 17 and 18 to the consolidated financial statements for additional discussion regarding guarantees and
indemnifications.
NOTE 17: LITIGATION AND RELATED CONTINGENCIES
We are a defendant in numerous litigation matters, arising both in the ordinary course of business and otherwise,
including as described below. The matters described below are not all of the lawsuits to which we are subject. In some
of the matters, very large or indeterminate amounts, including punitive damages, are sought. U.S. jurisdictions permit
considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not
to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient
to invoke the jurisdiction of the court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in
amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. We believe that the
monetary relief which may be specified in a lawsuit or a claim bears little relevance to its merits or disposition value
due to this variability in pleadings and our experience in litigating or resolving through settlement of numerous claims
over an extended period of time.
The outcome of a litigation matter and the amount or range of potential loss at particular points in time may be
difficult to ascertain. Among other things, uncertainties can include how fact finders will evaluate documentary
evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the
law. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves
view the relevant evidence and applicable law.
In addition to litigation matters, we are also subject to claims and other loss contingencies arising out of our business
activities, including as described below.
We accrue liabilities for litigation, claims and other loss contingencies and any related settlements (each referred
to, individually, as a "matter" and, collectively, as "matters") when it is probable that a loss has been incurred and the
amount of the loss can be reasonably estimated. Liabilities have been accrued for a number of the matters noted