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2013 Annual Report
We look at your life through tax…
…and find ways to help

Table of contents

  • Page 1
    We look at your life through tax... ...and find ways to help 2013 Annual Report

  • Page 2
    ... tax professionals â- Issued 2.5 million Emerald Prepaid MasterCards® with $8.7 billion in total deposits In addition to company-owned and franchise retail tax offices worldwide and its H&R Block At Homeâ„¢ desktop and online solutions, the company offers affordable financial products and services...

  • Page 3
    ... our clients' lives through tax and find ways to help. This statement embodies our essence and something that is unique to H&R Block. We achieve our purpose by executing our vision: to be the leading global consumer tax company, bringing tax and related solutions to clients year-round. While having...

  • Page 4
    for new opportunities to serve our clients as the leading global consumer tax company, bringing tax and related solutions to clients year-round. 2013 Performance The 2013 tax season was a challenging one for the industry as a whole and I'm proud that as an organization we showed a tremendous ...

  • Page 5
    2013 Form 10-K

  • Page 6
    ... principal executive offices, including zip code) 44-0607856 (I.R.S. Employer Identification No.) One H&R Block Way, Kansas City, Missouri 64105 (816) 854-3000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name...

  • Page 7
    ... Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services PART IV Item...

  • Page 8
    ... tax return preparation, digital tax solutions and other services and products related to income tax return preparation to the general public primarily in the United States (U.S.) and its territories, Canada and Australia. This segment also offers financial services through H&R Block Bank (HRB Bank...

  • Page 9
    ..., sales of tax preparation software, online tax preparation fees and fees from complementary services. HRB Bank also offers traditional banking services including checking and savings accounts, individual retirement accounts and certificates of deposit. Tax Returns Prepared. During fiscal year 2013...

  • Page 10
    ... our tax preparation software. OTHER OFFERINGS - In addition to our tax services, we also offer clients a number of additional services, including refund anticipation checks that include a fee deduction feature (RACs), H&R Block Emerald Advance® lines of credit (EAs), prepaid debit cards, our...

  • Page 11
    ... electronic filing services in the U.S. We also believe we operate the largest tax return preparation businesses in Canada and Australia. Our DIY tax preparation options include various forms of digital electronic assistance, including online, mobile and desktop software. Many other companies offer...

  • Page 12
    ...) was signed into law on July 21, 2010. This federal statute made extensive changes to the laws regulating federal savings banks, their holding companies and other financial services companies. The Dodd-Frank Act requires various federal agencies to adopt many new implementing rules and regulations...

  • Page 13
    ... Protection Laws. In connection with its lending activities, HRB Bank is subject to federal laws designed to protect borrowers and promote lending, including the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act...

  • Page 14
    ... subject to enforcement action. As of April 30, 2013 and 2012, HRB Bank met the QTL test. Insurance of Accounts. HRB Bank is subject to certain regulations issued by the Federal Deposit Insurance Corporation (FDIC), which insures the deposits of HRB Bank to the maximum extent permitted by law. This...

  • Page 15
    ... the new CFPB with the power to administer and enforce federal financial consumer protection laws. The CFPB may issue regulations that apply to HRB Bank, and to our non-bank subsidiaries that provide consumer financial services and products. The CFPB may examine, and take enforcement actions against...

  • Page 16
    ... use of traditional paper forms and various forms of digital electronic assistance, including online, mobile and desktop software, all of which we offer. Our digital tax solutions services and products also compete with in-office tax preparation services and a number of online and software companies...

  • Page 17
    ... and 767,000 U.S. federal income tax returns in fiscal years 2013, 2012 and 2011, respectively, at no charge through the FFA. We also have free online tax preparation offerings and provided free preparation of Federal 1040EZ forms in fiscal years 2013, 2012 and 2011, and free RACs to certain clients...

  • Page 18
    ..., install and use our H&R Block At Home® tax preparation software on their computers, and access online banking services from their computers and mobile devices. Because our business model relies on our clients' use of their own personal computers, mobile devices and the internet, computer viruses...

  • Page 19
    ... the pre-populated return a more tangible possibility. In the past, the U.S. Department of the Treasury completed a prepaid debit card pilot program designed to facilitate the refund process. HRB Bank also provides this type of service through its H&R Block Prepaid Emerald MasterCard®. Additionally...

  • Page 20
    ... our business. HRB Bank is subject to regulation, examination, supervision, reporting requirements and enforcement by the OCC. The OCC can, among other things, issue cease-and-desist orders, assess civil money penalties and remove bank directors, officers or employees, for violations of banking laws...

  • Page 21
    ... to change each year, and the nature and timing of any such changes are unpredictable. As a part of our business, we must incorporate any changes to tax laws and tax forms into our tax service and product offerings, including our H&R Block At Home® online tax services and tax preparation software...

  • Page 22
    ..., which if we fail to address could materially affect our business and our consolidated financial position, results of operations and cash flows. Our business is highly seasonal, with the substantial portion of our revenue earned in the last four months of our fiscal year, which is the period from...

  • Page 23
    ... and fair value at the time of sale. In addition to mortgage loans, we also extend secured and unsecured credit to other clients, including providing EAs to our tax clients. We may incur significant losses on credit we extend, which in turn could reduce our profitability. 16 H&R Block 2013 Form 10...

  • Page 24
    ... and cash flows. Our international operations are subject to increased risks which may harm our business and our consolidated financial position, results of operations and cash flows. We currently have operations in Canada, Australia, India, and Brazil, and may consider expansion opportunities in...

  • Page 25
    ...'s or certificate holder's interest in the mortgage loan, and the mortgage loan has not been liquidated, although there is limited and conflicting case law on the liquidated loan defense issue. Such claims together with any settlement arrangements related to these losses are collectively referred to...

  • Page 26
    ... in Thornleigh, New South Wales. Our Australian tax offices are operated under leases throughout Australia. HRB Bank is headquartered and its single branch location is located in our corporate headquarters. We own our corporate headquarters, which is located in Kansas City, Missouri. All current...

  • Page 27
    ... 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 the consolidated financial statements. A summary of our purchases of H&R Block common stock during the fourth quarter of fiscal year 2013...

  • Page 28
    ... GRAPH - The following graph compares the cumulative five-year total return provided shareholders on H&R Block, Inc.'s common stock relative to the cumulative total returns of the S&P 500 index and the S&P Diversified Commercial & Professional Services index. An investment of $100, with reinvestment...

  • Page 29
    ... banking services. Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices or virtually via the internet or mobile applications) or prepared and filed by our clients through H&R Block At Home®, either online or using our software or mobile applications...

  • Page 30
    ... benefits of $33.3 million during fiscal year 2013, which was primarily due to the settlement of the majority of the issues related to the examination of our 1999 through 2007 U.S. consolidated federal tax returns. Consolidated Results of Operations Data Year ended April 30, REVENUES: Tax Services...

  • Page 31
    ... Services - Operating Statistics Year ended April 30, TAX RETURNS PREPARED : (in 000s) United States: Company-owned operations Franchise operations Total retail operations Software Online Free File Alliance Total digital tax solutions Total U.S. operations International operations: Canada Australia...

  • Page 32
    ...Services - Financial Results Year ended April 30, Tax preparation fees: U.S. International Royalties Fees from refund anticipation checks Fees from Emerald Card Fees from Peace of Mind® guarantees Interest and fee income on Emerald Advance Other Total revenues Compensation and benefits: Field wages...

  • Page 33
    ... elected to have their refund direct deposited onto an Emerald Card. Emerald Card fees increased $13.7 million, or 15.1%, primarily due to higher transaction volumes resulting from an increase of approximately 24% in prepaid debit cards issued. Interest income earned on EAs decreased $34.6 million...

  • Page 34
    ... year. The lower effective tax rate was primarily due to reserve releases related to the settlement of tax years 1999-2007 with the IRS. The IRS settlement decreased the effective tax rate by 6.2%. FISCAL YEAR 2012 COMPARED TO FISCAL YEAR 2011 Pretax results. Interest income earned on mortgage loans...

  • Page 35
    ... reported Business Services segment and discontinued mortgage operations. Discontinued Operations - Operating Results Year ended April 30, Revenues Pretax income (loss) from operations: RSM and related businesses Mortgage Income taxes (benefit) Net income (loss) from operations Pretax loss on sales...

  • Page 36
    ...'s or certificate holder's interest in the mortgage loan, and the mortgage loan has not been liquidated, although there is limited and conflicting case law on the liquidated loan defense issue. Such claims together with any settlement arrangements related to these losses are collectively referred to...

  • Page 37
    ...in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets. If future losses are in excess of SCC's accrued liability, those losses could have a material adverse effect on our business and our consolidated financial position, results of operations and cash...

  • Page 38
    ... time, will limit variability in our loss estimates. During fiscal year 2012 we changed from recording a specific loan loss allowance for loans 180 days or more past due to charging-off those loans. This change had no income statement impact, but reduced the principal amount of H&R Block 2013 Form...

  • Page 39
    ...the consolidated balance sheets and consolidated statements of cash flows included in Item 8. CAPITAL RESOURCES AND LIQUIDITY - Our sources of capital and liquidity include cash from operations, cash from customer deposits, issuances of common stock and debt. We use capital primarily to fund working...

  • Page 40
    ... of sales of tax offices and short-term revolving loans made to franchisees to fund off-season operations. Company-Owned Life Insurance. During fiscal year 2013 we terminated various company-owned life insurance policies and received cash proceeds totaling $81.1 million. H&R Block 2013 Form 10...

  • Page 41
    ...to a use of cash totaling $26.1 million and $11.4 million in fiscal years 2012 and 2011, respectively. The change over the prior year is primarily due to the delay in the tax season and IRS fundings to debit cards in fiscal year 2013, resulting in higher deposits. These deposits are held by HRB Bank...

  • Page 42
    ...-Frank Act made extensive changes to the laws regulating banks, holding companies and financial services firms, and requires various federal agencies to adopt a broad range of new implementing rules and regulations and prepare numerous studies and reports for Congress. H&R Block 2013 Form 10-K 35

  • Page 43
    ... not limited to, commercial income tax return preparers, income tax courses, the electronic filing of income tax returns, the offering of RACs, loan originations and assistance in loan originations, mortgage lending, privacy, consumer protection, franchising, sales methods and banking. We determine...

  • Page 44
    ... Gain on sales of tax offices Pretax income from continuing operations - adjusted $ (4,579) 3,581 4,785 5,790 (1,272) 8,305 710,316 $ 22,961 11,389 32,474 - (16,601) 50,223 626,293 $ 16,014 22,700 29,598 - (45,101) 23,211 650,914 $ 2013 702,011 $ 2012 576,070 $ 2011 627,703 H&R Block 2013 Form 10...

  • Page 45
    ... rates for fiscal years 2013, 2012 and 2011: (dollars in 000s) Year ended April 30, Average Balance Interest-earning assets: Mortgage loans, net Federal funds sold Credit cards Emerald Advance (1) Available-for-sale securities FHLB stock Cash and due from banks Non-interest-earning assets Total HRB...

  • Page 46
    ... the last two fiscal years: (in 000s) Year ended April 30, Total Change in Interest Income/ Expense Interest income: Loans, net (1) Available-for-sale securities Federal funds sold FHLB stock Cash & due from banks $ Interest expense: Customer deposits FHLB borrowings $ (1) 2013 Change Due to Rate...

  • Page 47
    ... of HRB Bank's mortgage loan portfolio and information on delinquent loans: (in 000s) As of April 30, Residential real estate mortgages Home equity lines of credit $ Loans and TDRs on non-accrual Loans past due 90 days or more Total TDRs Interest income recorded on non-accrual loans $ $ 2013 349,841...

  • Page 48
    ... table shows HRB Bank's average deposit balances and the average rate paid on those deposits for fiscal years 2013, 2012 and 2011: (dollars in 000s) Year ended April 30, 2013 Average Balance Money market and savings Interest-bearing checking accounts IRAs Certificates of deposit Non-interest-bearing...

  • Page 49
    ...the prepayment, the write-offs of mortgage origination costs may result in lower than anticipated yields. Customer Deposits and FHLB Advances. HRB Bank's liabilities consist primarily of transactional deposit relationships, such as prepaid debit card accounts and checking accounts. Other liabilities...

  • Page 50
    ... audited our consolidated financial statements for fiscal years 2013, 2012 and 2011. The audits were conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States). MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible...

  • Page 51
    ... of H&R Block, Inc. Kansas City, Missouri We have audited the accompanying consolidated balance sheets of H&R Block, Inc. and subsidiaries (the "Company") as of April 30, 2013 and 2012, and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows...

  • Page 52
    ... Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended April 30, 2013 of the Company and our report dated June 26, 2013 expressed an unqualified opinion on those financial statements. /s/ Deloitte & Touche LLP Kansas City, Missouri...

  • Page 53
    ...: Service revenues Product and other revenues Interest income OPERATING EXPENSES: Cost of revenues: Compensation and benefits Occupancy and equipment Provision for bad debt and loan losses Interest Depreciation and amortization of property and equipment Other Impairment of goodwill Selling, general...

  • Page 54
    ... Investments in available-for-sale securities Property and equipment, at cost less accumulated depreciation and amortization of $420,318 and $529,841 Intangible assets, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Customer banking deposits Accounts payable...

  • Page 55
    ... from sale of businesses, net 560,499 Franchise loans: Loans funded (70,807) (46,246) (92,455) 83,445 56,591 57,552 Payments received 81,125 Surrender of company-owned life insurance policies - - 19,387 34,349 Other, net (9,769) (110,937) (110,157) Net cash provided by (used in) investing activities...

  • Page 56
    ... 2013 Form 10-K $ Balances at May 1, 2010 Net income Unrealized translation gain Change in net unrealized gain on available-for-sale securities Stock-based compensation Shares issued for: Option exercises Nonvested shares/units ESPP Acquisition of treasury shares Repurchase and retirement of common...

  • Page 57
    ...we offer: assisted tax return preparation; H&R Block At Home® digital do-it-yourself services and products, and certain retail banking services. We also provide tax preparation services in Canada and Australia. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts...

  • Page 58
    ... and utilized year-round. These lines of credit are offered by HRB Bank. Interest income on EAs is calculated using the average daily balance method and is recognized based on the principal amount outstanding until the outstanding balance is paid or becomes delinquent. Loan commitment fees on EAs...

  • Page 59
    ...a new borrower of similar credit risk would be offered. A loan modified in a TDR, including a loan that was current at the time of modification, is placed on nonaccrual status until we determine future collection of principal and interest is reasonably assured, which generally 52 H&R Block 2013 Form...

  • Page 60
    ... income using the interest method, adjusted for anticipated prepayments where applicable. We update our estimates of expected cash flows periodically and recognize changes in calculated effective yields as appropriate. Held-to-Maturity. Our investment in the stock of the Federal Home Loan Bank...

  • Page 61
    ... of the asset over its estimated fair value. See note 7 for discussion of the impairment of goodwill and intangible assets during fiscal years 2013, 2012 and 2011. We capitalize certain allowable costs associated with software developed for internal use. These costs are typically amortized over 36...

  • Page 62
    ...- Service revenues consist primarily of fees for preparation and filing of tax returns, both in offices and through our online programs, fees associated with our Peace of Mind® (POM) guarantee program and interchange income associated with our H&R Block Prepaid Emerald MasterCard® program. Service...

  • Page 63
    ...as incurred. Total advertising costs of continuing operations for fiscal years 2013, 2012 and 2011 totaled $270.8 million, $278.8 million and $243.3 million, respectively. GAINS ON SALES OF TAX OFFICES - We periodically sell company-owned tax offices to franchisees. We offer loans to our franchisees...

  • Page 64
    ... years 2013, 2012 and 2011, respectively, as the effect would be antidilutive. NOTE 3: RECEIVABLES Short-term receivables consist of the following: (in 000s) As of April 30, Loans to franchisees Receivables for tax preparation and related fees CashBack receivables Emerald Advance lines of credit...

  • Page 65
    ..., 2012. CashBack. Refunds advanced under the CashBack program are not subject to credit approval, therefore the primary indicator of credit quality is the age of the receivable amount. CashBack amounts are generally received within 60 days of filing the client's return. As of April 30, 2013 and 2012...

  • Page 66
    ... (70,016) 44,589 75,726 (62,612) 57,703 Other than the new methodology implemented to record the allowance for credit card receivables, there were no changes to our methodology related to the calculation of our allowance for doubtful accounts during fiscal year 2013. H&R Block 2013 Form 10-K 59

  • Page 67
    ... 30, 2012. Activity in the allowance for loan losses for the years ended April 30, 2013, 2012 and 2011 is as follows: (in 000s) 2011 93,535 35,567 272 (37,287) 92,087 Year ended April 30, Balance at beginning of the year Provision Recoveries Charge-offs Balance at end of the year $ $ 2013 26,540...

  • Page 68
    ... loss as a result of changes in real estate values and underlying economic or market conditions related to a particular geographical location. Approximately 57% of our mortgage loan portfolio consists of loans to borrowers located in the states of Florida, California, New York and Wisconsin. Detail...

  • Page 69
    ... 109,409 $ 70,327 14,906 85,233 $ 88,347 16,626 104,973 2013 2012 Information related to impaired loans is as follows: (in 000s) Balance With Allowance As of April 30, 2013: Purchased from SCC Other $ As of April 30, 2012: Purchased from SCC Other $ $ 56,128 7,137 63,265 $ $ 97,591 19,684 117,275...

  • Page 70
    ... year Additions Sales Impairments Balance, end of the year $ $ 2013 14,972 10,357 (9,271) (2,090) 13,968 $ $ 2012 19,532 10,308 (11,976) (2,892) 14,972 $ $ 2011 29,252 16,463 (21,889) (4,294) 19,532 NOTE 5: INVESTMENTS AVAILABLE-FOR-SALE - The amortized cost and fair value of securities classified...

  • Page 71
    ... (in 000s) Fair Value 4,498 482,378 486,876 HELD-TO-MATURITY - HRB Bank is required to maintain a restricted investment in FHLB stock for borrowing availability. The cost of this investment, $1.9 million at April 30, 2013 and 2012, represents its redemption value at each balance sheet date, as this...

  • Page 72
    ... reporting unit in fiscal year 2011. Components of the intangible assets of our Tax Services segment are as follows: (in 000s) As of April 30, Gross Carrying Amount Reacquired franchise rights Customer relationships Internally-developed software Noncompete agreements Franchise agreements Purchased...

  • Page 73
    ... 30, 2013 and 2012 and the related interest expense recorded during the periods are as follows: (in 000s) April 30, 2013 Outstanding Balance Short-term: Money-market deposits Savings deposits Checking deposits: Interest-bearing Non-interest-bearing IRAs and other time deposits: Due in one year IRAs...

  • Page 74
    ...statements of income. In August 2012, we terminated our previous unsecured committed line of credit agreement and we entered into a new five-year, $1.5 billion unsecured committed line of credit governed by a Credit and Guarantee Agreement (2012 CLOC). Funds available under the 2012 CLOC may be used...

  • Page 75
    ... statements at each reporting date. Assets measured on a nonrecurring basis are assets that, as a result of an event or circumstance, were required to be remeasured at fair value after initial recognition in the financial statements at some time during the reporting period. 68 H&R Block 2013 Form...

  • Page 76
    ... (11,094) Level 1 Level 2 Level 3 Losses The following methods were used to estimate the fair value of each class of financial instrument above: Real estate owned - REO includes foreclosed properties securing mortgage loans. Foreclosed assets are recorded at estimated fair value, generally based on...

  • Page 77
    ...from certified appraisers and reviewed internally by HRB Bank's asset management group. The inputs and assumptions used in our discounted cash flow model for TDRs are reviewed and approved by HRB Bank's management team each time the balances are remeasured. Significant changes in fair value from the...

  • Page 78
    ...-interest-bearing demand deposits, checking, money market and savings accounts is equal to the amount payable on demand (Level 1). The fair value of IRAs and other time deposits is estimated by discounting the future cash flows using the rates currently offered by HRB Bank for products with similar...

  • Page 79
    ... at the time of distribution. We grant options from the 2013 Plan or 2003 Plan at a price equal to the fair market value of our common stock on the grant date. Awards granted under the 2013 Plan or 2003 Plan have a maximum contractual term of ten years. Our 2008 Deferred Stock Unit Plan for Outside...

  • Page 80
    ...value of the 15% discount. We expense the grant-date fair value over the six-month vesting period. Prior to January 1, 2013, this plan offered a purchase price of the stock of 90% of the lower of either the fair market value of our common stock on the first trading day of the Option Period or on the...

  • Page 81
    ... on the grant date. We typically estimate the expected volatility using historical volatility for H&R Block, Inc. and selected comparable companies. The dividend yield is calculated based on the current dividend and the market price of our common stock on the grant date. The risk-free interest rate...

  • Page 82
    ...$ 2013 664,966 37,045 702,011 $ $ 2012 547,535 28,535 576,070 $ $ 2011 590,024 37,679 627,703 The components of income tax expense (benefit) for continuing operations are as follows: (in 000s) Year ended April 30, Current: Federal State Foreign Deferred: Federal State Foreign Total income taxes for...

  • Page 83
    ...income taxes, net of federal income tax benefit Permanent differences Uncertain tax positions Net change in valuation allowance Other Effective tax rate 4.0 % (0.1)% (4.1)% (1.0)% (0.1)% 33.7 % 4.2 % 0.5 % (0.6)% 0.2 % 0.6 % 39.9 % 4.4 % (0.6)% 1.2 % (1.4)% (1.1)% 37.5 % 2013 35.0 % 2012 35.0 % 2011...

  • Page 84
    ... year 2011. The total gross interest and penalties accrued as of April 30, 2013, 2012 and 2011 totaled $31.7 million, $38.6 million and $44.1 million, respectively. We file a consolidated federal income tax return in the United States with the Internal Revenue Service (IRS) and file tax returns...

  • Page 85
    ...table shows the components of interest income and expense: (in 000s) Year ended April 30, Interest income: Emerald Advance lines of credit Mortgage loans, net Loans to franchisees AFS securities Credit cards Other $ Interest expense: Borrowings Deposits FHLB advances $ $ 74,297 5,660 - 79,957 $ $ 84...

  • Page 86
    ... as other income in our income statement. NOTE 17: COMMITMENTS AND CONTINGENCIES We offer guarantees under our POM program to tax clients whereby we will assume the cost of additional tax assessments, up to a cumulative per client limit of $5,500, resulting from errors attributable to H&R Block. We...

  • Page 87
    ... into a transaction with the City of Kansas City, Missouri, to provide us with sales and property tax savings on the furniture, fixtures and equipment for our corporate headquarters facility. Under the transaction, the City purchased equipment by issuing $31.0 million in Industrial Revenue Bonds due...

  • Page 88
    ... to have a material effect on our consolidated financial position, results of operations and cash flows. As of April 30, 2013 and 2012, we accrued liabilities of $11.9 million and $79.0 million, respectively. The decline in the balance from the prior year is primarily due to payments made during...

  • Page 89
    ... financial position, results of operations and cash flows. On October 15, 2010, the Federal Home Loan Bank of Chicago (FHLB-Chicago) filed a lawsuit in the Circuit Court of Cook County, Illinois (Case No. 10CH45033) styled Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation...

  • Page 90
    ...impact on our consolidated financial position, results of operations and cash flows. On April 5, 2013, a third lawsuit was filed by Homeward in the District Court for the Southern District of New York against SCC. The suit, styled Homeward Residential, Inc. v. Sand Canyon Corporation (Case No. 13-cv...

  • Page 91
    ... 13, 2009, a wage and hour class action lawsuit was filed against us in the United States District Court for the Central District of California styled Delana Ugas, et al. v. H&R Block Enterprises LLC, et al. (Case No. BC417700). The plaintiffs generally allege failure to compensate tax professionals...

  • Page 92
    ... in these actions purport to represent clients nationwide who filed Form 8863 during tax season 2013 through an H&R Block office or using H&R Block at Home® online tax services or tax preparation software, and allege breach of contract, negligence and violation of state consumer laws in connection...

  • Page 93
    ... and cash flows. We are also a party to claims and lawsuits that we consider to be ordinary, routine litigation incidental to our business, including, but not limited to, claims and lawsuits concerning the preparation of customers' income tax returns, the fees charged customers for various services...

  • Page 94
    ...'s or certificate holder's interest in the mortgage loan, and the mortgage loan has not been liquidated, although there is limited and conflicting case law on the liquidated loan defense issue. Such claims together with any settlement arrangements related to these losses are collectively referred to...

  • Page 95
    ...impact of these indemnification claims on our consolidated financial position, results of operations and cash flows. The accrued liability described above totaling $158.8 million does not include accrued losses, if any, which may arise from these indemnification claims. 88 H&R Block 2013 Form 10-K

  • Page 96
    ... April 30, Revenues Pretax income (loss) from operations: RSM and related businesses Mortgage Income taxes (benefit) Net income (loss) from operations Pretax loss on sales of businesses Income tax benefit Net loss on sales of businesses Net income (loss) from discontinued operations $ $ 1,205 (52...

  • Page 97
    ... Canada, and Australia. Major revenue sources include fees earned for tax preparation services performed at company-owned retail tax offices, royalties from franchise retail tax offices, sales of tax preparation software, online tax preparation fees, fees from RACs, fees related to H&R Block Prepaid...

  • Page 98
    ... 32,619 2,944,980 2013 2012 2011 NOTE 23: QUARTERLY FINANCIAL DATA (UNAUDITED) (in 000s, except per share amounts) Fiscal Year 2013 Revenues Income (loss) from continuing operations before taxes (benefit) Income taxes (benefit) Net income (loss) from continuing operations Net loss from discontinued...

  • Page 99
    ... 25, 2012 and October 26, 2004, our 2012 CLOC, and other indebtedness issued from time to time. These condensed consolidating financial statements have been prepared using the equity method of accounting. Earnings of subsidiaries are, therefore, reflected in the Company's 92 H&R Block 2013 Form 10...

  • Page 100
    ... balances and transactions. CONDENSED CONSOLIDATING INCOME STATEMENTS Year ended April 30, 2013 Total revenues Cost of revenues Selling, general and administrative Total expenses Operating income (loss) Other income (expense), net Income (loss) from continuing operations before taxes (benefit...

  • Page 101
    Year ended April 30, 2011 Total revenues Cost of revenues Selling, general and administrative Total expenses Operating income (loss) Other income, net Income (loss) from continuing operations before taxes (benefit) Income taxes (benefit) Net income (loss) from continuing operations Net income (loss)...

  • Page 102
    As of April 30, 2012 Cash & cash equivalents Cash & cash equivalents - restricted Receivables, net Mortgage loans held for investment, net Intangible assets and goodwill, net Investments in subsidiaries Amounts due from affiliates (1) Other assets Total assets Customer deposits Long-term debt Other ...

  • Page 103
    ...(used in) investing activities Cash flows from financing: Repayments of commercial paper Proceeds from commercial paper Repayments of long-term debt Proceeds from long-term debt Customer banking deposits, net Dividends paid Repurchase of common stock Proceeds from stock options Intercompany advances...

  • Page 104
    ...provided by (used in) investing activities Cash flows from financing: Repayments of commercial paper Proceeds from commercial paper Repayments of other borrowings Customer banking deposits, net Dividends paid Repurchase of common stock Proceeds from stock options Net intercompany advances Other, net...

  • Page 105
    ...provided by (used in) investing activities Cash flows from financing: Repayments of commercial paper Proceeds from commercial paper Repayments of other borrowings Customer banking deposits, net Dividends paid Repurchase of common stock Proceeds from stock options Net intercompany advances Other, net...

  • Page 106
    ... and employees, including our Chief Executive Officer, Chief Financial Officer, principal accounting officer and persons performing similar functions. A copy of the Code of Business Ethics and Conduct is available on our website at www.hrblock.com. We intend to provide information on our website...

  • Page 107
    ... April 30, 2013, in the sections entitled "Employment Agreements, Change-in-Control and Other Arrangements," "Review of Related Person Transactions," and "Corporate Governance," and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information called for by...

  • Page 108
    ... of Income and Comprehensive Income," "Consolidated Balance Sheets," "Consolidated Statements of Cash Flows" and "Consolidated Statements of Stockholders' Equity." 2. Exhibits - The list of exhibits in the Exhibit Index to this report is incorporated herein by reference. H&R Block 2013 Form 10...

  • Page 109
    .... H&R BLOCK, INC. /s/ William C. Cobb William C. Cobb President and Chief Executive Officer June 26, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date...

  • Page 110
    ...reference. Form of Certificate of Designation, Preferences and Rights of Delayed Convertible Preferred Stock of H&R Block, Inc., filed as Exhibit 4(f) to the Company's annual report on Form 10-K for the fiscal year ended April 30, 1995, file number 1-6089, is incorporated herein by reference. * 2013...

  • Page 111
    ...the Company's annual report on Form 10-K for the fiscal year ended April 30, 2011, file number 1-6089, is incorporated herein by reference. * The H&R Block, Inc. 2000 Employee Stock Purchase Plan, as amended and restated effective January 1, 2013, filed as Appendix A to the Company's proxy statement...

  • Page 112
    ... Exhibit 10.1 to the Company's current report on Form 8-K filed August 20, 2012, file number 1-6089, is incorporated herein by reference. 10.38 Advances, Pledge and Security Agreement dated April 17, 2006, between H&R Block Bank and the Federal Home Loan Bank of Des Moines, filed as Exhibit 10.11 to...

  • Page 113
    Corporate Information Headquarters H&R Block Center One H&R Block Way Kansas City, Missouri 64105 816.854.3000 Certifications Filed with the Securities and Exchange Commission Pursuant to the Sarbanes-Oxley Act of 2002 The certifications of the Chief Executive Officer and Chief Financial Officer ...

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    H&R BLOCK, INC. One H&R Block Way Kansas City, MO 64105 816.854.3000 www.hrblock.com