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36 H&R Block 2013 Form 10-K
See discussion in Item 1, “Regulation and Supervision - Bank and Holding Companies,” and in Item 1A, “Risk
Factors,” for additional information on regulatory capital requirements for SLHCs, including the proposed new capital
requirements for SLHCs published by the Federal Reserve in August 2012.
All savings associations are subject to regulatory capital requirements. As of March 31, 2013, our most recent Call
Report filing with the OCC, HRB Bank was a “well capitalized” institution. See Item 1, “Regulation and Supervision
- Bank and Holding Companies,” and Item 8, note 21 to the consolidated financial statements, for additional discussion
of HRB Bank's regulatory capital requirements.
H&R Block, Inc. is a legal entity separate and distinct from its indirect subsidiary, HRB Bank. Various federal and
state statutory and regulatory provisions limit the amount of dividends HRB Bank may pay without regulatory approval.
The ability of HRB Bank to pay dividends in the future is currently, and could be further, influenced by bank regulatory
policies and capital guidelines. See Item 1, “Regulation and Supervision - Bank and Holding Companies,” for a more
detailed discussion of restrictions on payment of dividends.
The federal government, various state, local, provincial and foreign governments, and some self-regulatory
organizations have enacted statutes and ordinances, or adopted rules and regulations, regulating aspects of our business.
These aspects include, but are 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 the applicability of such
statutes, ordinances, rules and regulations (collectively, Laws) and work to comply with those Laws that are applicable
to us or our services or products.
From time to time in the ordinary course of business, we receive inquiries from governmental and self-regulatory
agencies regarding the applicability of Laws to our services and products. In response to past inquiries, we have
demonstrated that we comply with such Laws, convinced the authorities that such Laws were not applicable or that
compliance already exists, or modified our activities in the applicable jurisdiction to avoid the application of all or
certain parts of such Laws. We believe the past resolution of such inquiries and our ongoing compliance with Laws has
not had a material effect on our consolidated financial statements. We cannot predict what effect future Laws, changes
in interpretations of existing Laws or the results of future regulator inquiries with respect to the applicability of Laws
may have on our consolidated financial position, results of operations and cash flows. See additional discussion of legal
matters in Item 8, note 18 to the consolidated financial statements.
NON-GAAP FINANCIAL INFORMATION
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. Because these measures are not measures of financial performance
under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures in
other companies.
We consider non-GAAP financial measures to be a useful metric for management and investors to evaluate and
compare the ongoing operating performance of our business on a consistent basis across reporting periods, as it eliminates
the effect of items that are not indicative of our core operating performance.
The following are descriptions of adjustments we make for our non-GAAP financial measures:
We exclude from our non-GAAP financial measures litigation charges we incur and favorable reserve
adjustments. This does not include legal defense costs.
We exclude from our non-GAAP financial measures non-cash charges to adjust the carrying values of goodwill,
intangible assets, other long-lived assets and investments to their estimated fair values.
We exclude from our non-GAAP financial measures severance and other restructuring charges in connection
with the termination of personnel, closure of facilities and related costs.
We exclude from our non-GAAP financial measures the gains and losses on business dispositions, including
investment banking, legal and accounting fees.
We exclude from our non-GAAP financial measures the gains and losses on extinguishment of debt.