HR Block 2005 Annual Report Download - page 77

ITEM 2. PROPERTIES
We own our corporate headquarters, which are located in Kansas The executive offices of HRBFA are located in leased offices in
City, Missouri. We have leased additional office space for Detroit, Michigan. Branch offices are operated throughout the
corporate, Tax Services and Investment Services personnel, as U.S., in a combination of leased and owned facilities.
necessary, in Kansas City, Missouri. RSM’s executive offices are located in leased offices in
Most of our tax offices, except those in shared locations, are Bloomington, Minnesota. Its administrative offices are located in
operated under leases throughout the U.S. Our Canadian leased offices in Davenport, Iowa. RSM also leases office space
executive offices are located in a leased office in Calgary, Alberta. throughout the U.S.
Our Canadian tax offices are operated under leases throughout We began construction of new corporate headquarters during
Canada. fiscal year 2005, which will allow us to consolidate the majority of
Option One’s executive offices are located in leased offices in our Kansas City-based personnel into one facility. The new
Irvine, California. HRBMC is headquartered in leased offices in building will be located in downtown Kansas City, Missouri and
Lake Forest, California. Option One and HRBMC also lease we expect it to be completed in fiscal year 2007.
offices for their loan origination and servicing centers and branch All current leased and owned facilities are in good repair and
office operations throughout the U.S. adequate to meet our needs.
ITEM 3. LEGAL PROCEEDINGS
The information below should be read in conjunction with the certification. Other cases were settled, with one settlement
information included in Item 8, note 18 to our consolidated resulting in a pretax expense of $43.5 million in fiscal year 2003
financial statements. (the ‘‘Texas RAL Settlement’’).
RAL LITIGATION ⬎⬎⬎ We have been named as a defendant in We believe we have meritorious defenses to the RAL Cases and
numerous lawsuits throughout the country regarding our refund we intend to defend the remaining RAL Cases vigorously. There
anticipation loan programs (collectively, ‘‘RAL Cases’’). Plaintiffs can be no assurances, however, as to the outcome of the pending
in the RAL Cases have alleged, among other things, that RAL Cases individually or in the aggregate. Likewise, there can be
disclosures in the RAL applications were inadequate, misleading no assurances regarding the impact of the RAL Cases on our
and untimely; that the RAL interest rates were usurious and financial statements. We have accrued our best estimate of the
unconscionable; that we did not disclose that we would receive probable loss related to the RAL Cases. The following is updated
part of the finance charges paid by the customer for such loans; information regarding the pending RAL Cases that are class
breach of state laws on credit service organizations; breach of actions or putative class actions:
contract; unjust enrichment; unfair and deceptive acts or Lynne A. Carnegie, et al. v. Household International, Inc.,
practices; violations of the Racketeer Influenced and Corrupt H&R Block, Inc., et al., (formerly Joel E. Zawikowski, et al. v.
Organizations Act; violations of the Fair Debt Collection Beneficial National Bank, H&R Block, Inc., Block Financial
Practices Act; and that we owe, and breached, a fiduciary duty to Corporation, et al.) Case No. 98 C 2178, United States District
our customers in connection with the RAL program. In many of Court for the Northern District of Illinois, Eastern Division,
the RAL Cases, the plaintiffs seek to proceed on behalf of a class instituted on April 18, 1998. In March 2004, the court either
of similarly situated RAL customers, and in certain instances the dismissed or decertified all of the plaintiffs’ claims other than
courts have allowed the cases to proceed as class actions. In part of one count alleging violations of the racketeering and
other cases, courts have held that plaintiffs must pursue their conspiracy provisions of the Racketeer Influenced and Corrupt
claims on an individual basis, and may not proceed as a class Organizations Act. On May 9, 2005, the parties agreed to a
action. The amounts claimed in the RAL Cases have been very settlement, subject to court approval. The settlement agreement
substantial in some instances. provided for (i) the defendants to pay $110 million in cash and
We have successfully defended against numerous RAL Cases, $250 million face value in freely transferable rebate coupons and
although several of the RAL Cases are still pending. Of the RAL (ii) all persons who applied for and obtained a RAL through an
Cases that are no longer pending, some were dismissed on our H&R Block office or certain lenders from January 1, 1987 through
motions for dismissal or summary judgment and others were April 29, 2005 (the ‘‘Carnegie Settlement Class’’) to release all
dismissed voluntarily by the plaintiffs after denial of class claims against us regarding RALs or certain services provided in
H&R BLOCK 2005 Form 10K
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