HR Block 2005 Annual Report Download - page 79

Enron debentures in 2001. A hearing for this matter is scheduled These claims and lawsuits include actions by individual plaintiffs,
for May 2006. Two private civil actions subsequently were filed as well as cases in which plaintiffs seek to represent a class of
against HRBFA concerning the matter raised in the NASD’s similarly situated customers. The amounts claimed in these
charges. Both of these private actions subsequently were claims and lawsuits are substantial in some instances, and the
dismissed without prejudice, although one of the actions has ultimate liability with respect to such litigation and claims is
since been refiled. We intend to defend the NASD charges difficult to predict. Some of these claims and lawsuits pertain to
vigorously, although there can be no assurances regarding the RALs, the electronic filing of customers’ income tax returns and
outcome and resolution of the matter. the POM guarantee program. We believe we have meritorious
As part of an industry-wide review, the IRS is investigating tax- defenses to each of these claims, and we are defending or intend
planning strategies that certain RSM clients utilized during fiscal to defend them vigorously, although there is no assurance as to
years 2000 through 2003. Specifically, the IRS is examining these their outcome.
strategies to determine whether RSM complied with tax shelter In addition to the aforementioned types of cases, we are parties
registration and listing regulations and whether such strategies to claims and lawsuits that we consider to be ordinary, routine
were appropriate. If the IRS were to determine that these litigation incidental to our business, including claims and lawsuits
strategies were inappropriate, clients that utilized the strategies (‘‘Other Claims’’) concerning investment products, the
could face penalties and interest for underpayment of taxes. preparation of customers’ income tax returns, the fees charged
Some of these clients are seeking, or may attempt to seek, customers for various products and services, losses incurred by
recovery from RSM. While there can be no assurance regarding customers with respect to their investment accounts,
the outcome of this matter, we do not believe its resolution will relationships with franchisees, denials of mortgage loans,
have a material adverse effect on our operations or consolidated contested mortgage foreclosures, other aspects of the mortgage
financial statements. business, intellectual property disputes, and contract disputes.
As reported in current report on Form 8-K dated December 12, We believe we have meritorious defenses to each of the Other
2003, the SEC informed our outside counsel on December 11, Claims, and we are defending, or intend to defend, them
2003 that the Commission had issued a Formal Order of vigorously. While we cannot provide assurance that we will
Investigation concerning our disclosures, in and before ultimately prevail in each instance, we believe the amount, if any,
November 2003, regarding RAL litigation to which we were and we are required to pay in the discharge of liabilities or
are a party. There can be no assurances as to the outcome and settlements in these Other Claims will not have a material
resolution of this matter. adverse effect on our consolidated financial statements.
We have from time to time been party to claims and lawsuits
not discussed herein arising out of our business operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of fiscal year 2005. Information regarding executive
officers is contained in Item 10 of this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
H&R Block’s common stock is traded principally on the NYSE and is also traded on the Pacific Exchange. The information called for by
this item with respect to H&R Block’s common stock appears in Item 8, note 21 to our consolidated financial statements. The remaining
information called for by this item relating to ‘‘Securities Authorized for Issuance under Equity Compensation Plans’’ is reported in
Item 8, note 13 to our consolidated financial statements. On July 5, 2005, there were 30,909 shareholders of record and the closing stock
price on the NYSE was $29.37 per share.
H&R BLOCK 2005 Form 10K
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