HR Block 2013 Annual Report Download - page 10

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H&R Block 2013 Form 10-K 3
Software. We develop and market H&R Block At Home® income tax preparation software. H&R Block At Home®
offers a simple step-by-step tax preparation interview, data imports from money management software, calculations,
completion of the appropriate tax forms, error checking and electronic filing. Our software may be purchased online,
through third-party retail stores or via direct mail.
Mobile Applications. We develop and offer applications for mobile devices which provide tax and related services
to clients, including online tax preparation and tools that complement 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 Peace of Mind® (POM) guarantee, credit cards, and, for our Canadian clients,
a refund discount (CashBack) program.
Refund Anticipation Checks. RACs allow clients to receive their tax refunds by their chosen method of
disbursement and include a feature allowing clients to deduct tax preparation and service fees from their tax refunds.
Clients may choose to receive their RAC proceeds by direct deposit to a deposit account, by deposit to their H&R Block
Prepaid Emerald MasterCard® or by receiving a check. RACs are available to U.S. clients and are frequently obtained
by those who (1) do not have bank accounts into which the IRS can direct deposit their refunds; (2) like the convenience
of a temporary account for receipt of their refund; or (3) prefer to have their tax preparation fees paid directly out of
their refunds.
H&R Block Emerald Advance® Lines of Credit. EAs are offered to clients in our offices typically from late
November through mid-January, currently in an amount not to exceed $1,000. If the borrower meets certain criteria as
agreed in the loan terms, the line of credit can be utilized year-round. Borrowers may choose to pay down balances on
EAs with their tax refunds.
H&R Block Prepaid Emerald Mastercard®. The H&R Block Prepaid Emerald MasterCard® allows clients to
receive their tax refunds from the IRS directly on a prepaid debit card, or to direct RAC proceeds to the card to avoid
check-cashing fees. The card can be used for everyday purchases, bill payments and ATM withdrawals anywhere
MasterCard® is accepted. Additional funds can be added to the card account year-round through direct deposit or at
participating retail locations.
Peace of Mind® Guarantee. In addition to our standard guarantee, we offer our POM guarantee to U.S. clients,
whereby we (1) represent our clients if they are audited by the IRS, and (2) assume the cost, subject to certain limits,
of additional taxes owed by a client resulting from errors attributable to H&R Block. The POM guarantee has a
cumulative limit of $5,500 in additional taxes assessed with respect to the federal, state and local tax returns we prepared
for applicable clients during the taxable year covered by the guarantee.
Credit Cards. In fiscal year 2013, HRB Bank began offering unsecured credit cards. These credit cards are offered
to selected customers, primarily previous H&R Block clients, based on their credit profile and have a maximum available
credit limit of $2,500.
CashBack Refund Discount Program. During the tax season, our Canadian operations advance refunds due
to certain clients from the Canada Revenue Agency (CRA), for a fee. The fee charged for this service is mandated by
the CRA. The client assigns to us the full amount of the tax refund to be issued by the CRA and the refund amount is
then sent by the CRA directly to us. The number of returns discounted under the CashBack program in fiscal year 2013
was 620,000, compared to 724,000 in 2012 and 821,000 in 2011.
SEASONALITY OF BUSINESS – Because most of our clients file their tax returns during the period from January
through April of each year, substantially all of our revenues from income tax return preparation and related services
and products are earned during this period. As a result, we generally operate at a loss through the first eight months of
the fiscal year.
HRB Bank’s operating results are subject to seasonal fluctuations primarily related to the offering of the H&R Block
Prepaid Emerald MasterCard®, EAs and RACs, and therefore peak in January and February and taper off through the
remainder of the tax season.
COMPETITIVE CONDITIONS – We provide both assisted and DIY tax preparation services and products and
face substantial competition in and across each category. There are a substantial number of tax return preparation firms