HR Block 2014 Annual Report Download - page 29

H&R Block, Inc. | 2014 Form 10-K 21
H&R Block has guaranteed the payment of certain limited claims against SCC.
SCC is subject to representation and warranty claims by counterparties to SCC whole loan sales and securitization
transactions, including certificate holders, securitization trustees, monoline insurance companies and subsequent
purchasers of whole loans. In certain limited circumstances described below, H&R Block has outstanding guarantees
of payment if claims are successfully asserted by such counterparties.
These guarantees include representation and warranty claims with respect to a limited number of whole loan sales
by SCC with an aggregate outstanding principal and liquidated amount of approximately $1.4 billion as of January 31,
2013, based on the most recent data available to SCC from the servicer. There have been a total of approximately $35
million of representation and warranty claims with respect to these whole loan sales.
These guarantees also cover limited representation and warranty claims on other outstanding securitization
transactions, with a potential claims exposure of less than $200 million. In addition, as is customary in divestiture
transactions, H&R Block guaranteed the payment of any indemnification claims from the purchaser of SCC's servicing
business, including claims relating to pre-closing services (which closing occurred in 2008).
If SCC were to become insolvent, we could be subject to claims by the unpaid creditors of SCC.
As discussed above, SCC is subject to representation and warranty claims and other claims and litigation related to
its past sales and securitizations of mortgage loans. Additional claims and proceedings may be made in the future. If
the amount that SCC is ultimately required to pay with respect to these claims and litigation, together with related
administration and legal expense, exceeds its net assets, the creditors of SCC, or a bankruptcy trustee if SCC were to
file or be forced into bankruptcy, may attempt to assert claims against us for payment of SCC's obligations. SCC's
principal assets, as of April 30, 2014, total approximately $520 million and consist primarily of an intercompany note
receivable and a deferred tax asset. We believe our legal position is strong on any potential corporate veil-piercing
arguments; however, if this position is challenged and not upheld, it could have a material adverse effect on our
business and our consolidated financial position, results of operations and cash flows. In addition, in certain limited
instances, H&R Block guaranteed amounts as outlined in the above risk factor.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Most of our tax offices are operated under leases or similar agreements throughout the U.S., Canada and Australia.
We own our corporate headquarters, which is located in Kansas City, Missouri, which is also where HRB Bank is
headquartered and operates its single branch location. Our Canadian executive offices are located in a leased office
in Calgary, Alberta. Our Australian executive offices are located in a leased office in Thornleigh, New South Wales.
All current leased and owned facilities are in reasonably good repair and adequate to meet our needs.
ITEM 3. LEGAL PROCEEDINGS
For a description of our material pending legal proceedings, see discussion in Item 8, note 17 to the consolidated
financial statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
MARKET INFORMATION AND HOLDERS - H&R Block's common stock is traded on the New York Stock Exchange (NYSE)
under the symbol HRB. On May 30, 2014, there were 19,825 shareholders of record and the closing stock price on
the NYSE was $29.78 per share.