HR Block 2016 Annual Report Download - page 74

66 2016 Form 10-K | H&R Block, Inc.
SCC believes it is reasonably possible that future losses related to representation and warranty claims may vary
from amounts accrued for these exposures. SCC currently believes the aggregate range of reasonably estimable
possible losses in excess of amounts accrued is not material. This estimated range is based on the best information
currently available, significant management judgment and a number of factors that are subject to change, including
developments in case law and the factors mentioned above. The actual loss that may be incurred could differ materially
from our accrual or the estimate of reasonably possible losses.
As described more fully in note 15, losses may also be incurred with respect to various indemnification claims or
reserved contribution rights by underwriters, depositors, and securitization trustees in securitization transactions in
which SCC participated. These indemnification claims or reserved contribution rights are frequently not subject to a
stated term or limit. We have not concluded that a loss related to any of these indemnification claims or reserved
contribution rights is probable, have not accrued a liability for these claims or rights and are not able to estimate a
reasonably possible loss or range of loss for these claims or rights. Accordingly, neither the accrued liability described
above totaling $65.3 million, nor the estimated range of reasonably possible losses in excess of the amount accrued
described above, includes any possible losses which may arise from these indemnification claims or reserved
contribution rights. There can be no assurances as to the outcome or impact of these indemnification claims or reserved
contribution rights. In the event of unfavorable outcomes on these claims or rights, the amount required to discharge
or settle them could be substantial and could have a material adverse impact on our business and our consolidated
financial position, results of operations and cash flows.
If the amount that SCC is ultimately required to pay with respect to claims and litigation related to its past sales
and securitizations of mortgage loans, together with payment of SCC's related administration and legal expense,
exceeds SCC's 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. Claimants may also attempt to assert claims
against or seek payment directly from the Company even if SCC's assets exceed its liabilities. SCC's principal assets,
as of April 30, 2016, total approximately $386 million and consist primarily of an intercompany note receivable. 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.
NOTE 17: SEGMENT INFORMATION
Our subsidiaries provide assisted and DIY tax return preparation through multiple channels (including in-person, online
and mobile applications, and desktop software) and distribute the H&R Block-branded financial products and services
of BofI. Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices or
virtually via the internet) or prepared and filed by our clients through our DIY tax solutions.
We operate as a single segment that includes all of our continuing operations, which are designed to enable clients
to obtain tax preparation services seamlessly in our offices or through our tax software.