12659--6/29/2009--H&R_BLOCK

related topics

{regulation, change, law}

{system, service, information}

{financial, litigation, operation}

{condition, economic, financial}

{regulation, government, change}

{capital, credit, financial}

{product, market, service}

{loss, insurance, financial}

{control, financial, internal}

Our businesses may be adversely affected by economic conditions generally, including the current economic recession. Our access to liquidity may be negatively impacted if disruptions in credit markets occur, if credit rating downgrades occur or if we fail to meet certain covenants. Funding costs may increase, leading to reduced earnings. The industries in which we operate face substantial litigation, and such litigation may damage our reputation or result in material liabilities and losses. Failure to comply with laws and regulations that protect our customers personal and financial information could result in significant fines, penalties and damages and could harm our brand and reputation. We are subject to operational risk and risks associated with our controls and procedures, which may result in incurring financial and reputational losses. Government initiatives that simplify tax return preparation could reduce the need for our services as a third-party tax return preparer. In addition, changes in government regulations or processes regarding the preparation and filing of tax returns may increase our operating costs or reduce our revenues. Federal and state legislators and regulators have increasingly taken an active role in regulating financial products such as RALs. In addition, we are dependent on third-party financial institutions to provide certain of these financial products to our clients and these institutions could cease or significantly reduce the offering of such products. These trends or potential developments could impede our ability to facilitate these financial products, reduce demand for our services and harm our business. Increased competition for tax preparation clients in our retail offices and our online and software channels could adversely affect our current market share and profitability, and could limit our ability to grow our client base. Offers of free tax preparation services could adversely affect our revenues and profitability. The RSM alternative practice structure involves relationships with Attest Firms that are subject to regulatory restrictions and other constraints. Failure to comply with these restrictions, or operational difficulties involving the Attest Firms, could damage our brand reputation, lead to reduced earnings and impair our investment in RSM. RSM receives a significant portion of its revenues from clients that are also clients of the Attest Firms. A termination of the alternative practice structure between RSM and the Attest Firms could result in a material loss of revenue to RSM and an impairment of our investment in RSM. We are subject to extensive government regulation, including banking rules and regulations. If we fail to comply with applicable banking laws, rules and regulations, we could be subject to disciplinary actions, damages, penalties or restrictions that could significantly harm our business. Economic conditions that negatively affect housing prices and the job market may result in deterioration in credit quality of our loan portfolio, and such deterioration could have a negative impact on our business and profitability. Significant changes have been proposed relating to the regulation of financial institutions. Although the ultimate impact of pending proposals is uncertain at this time, increased regulation could impact operating activities of our bank. SCC is subject to potential litigation stemming from discontinued mortgage operations, which may result in significant financial losses. We are subject to potential contingent liabilities related to loan repurchase obligations, which may result in significant financial losses.

Full 10-K form ▸

12659--6/29/2009--H&R_BLOCK_INC