H&R Block Reports Preliminary Tax Season Results

Apr 30, 2003
Full-Year Earnings Per Share Expected at High-End of Guidance Range

KANSAS CITY, Mo., Apr 30, 2003 /PRNewswire-FirstCall via COMTEX/ -- H&R Block Inc. (NYSE: HRB) said it expects pretax earnings growth of approximately 10 percent in its U.S. Tax Operations, excluding a second quarter charge for a litigation settlement. The expected earnings growth, based on preliminary tax season results through April 15, is due to strength in the company's online and software business, continued success in attracting clients with more complex tax returns, and increased efficiencies in retail tax offices.

H&R Block said it expected company-wide earnings per share for the fiscal year to be at the upper-end of its guidance range.

The company reported $2.1 billion in fees from tax preparation and related services from Jan. 1 through April 15, up 3.2 percent from last year. The average fee per tax return rose 8.2 percent to $119.41. Preliminary results indicate retail tax office operations will improve its operating margins by approximately 50 basis points, excluding the second quarter charge for the litigation settlement.

Total clients served increased 0.3 percent to 18.2 million in tax season 2003. Online and software clients increased 47.9 percent to more than 2 million. Tax professionals in H&R Block offices prepared 15.9 million returns, a decrease of 3.4 percent compared to the same period last year.

"This year, we made substantial progress with our multi-channel strategy, which has increased the relevance of the H&R Block brand to a broader client base," said Mark A. Ernst, chairman and chief executive officer.

"While we are still evaluating results from the tax season, it appears that this year's marketing and advertising programs may not have been effective enough in providing a compelling reason for taxpayers to choose H&R Block's office-based tax services in a year when the public did not perceive significant tax law changes," Ernst said.

H&R Block's earnings guidance is in the range of $3.10 to $3.25 per diluted share, up 34 to 41 percent from fiscal 2002, when H&R Block earned $2.31 per diluted share. Consolidated company-wide revenues will likely exceed the target growth range of 10-to-15 percent for the year.

The company's earnings guidance includes a total of 27 cents in charges for both the litigation settlement and goodwill impairment charges recorded earlier in the company's fiscal year. The analysts' earnings estimates on First Call exclude the charges, which are included in the company's expected GAAP results. Excluding these charges, the company's guidance range would be $3.37 to $3.52 per diluted share, compared to First Call consensus estimates of $3.46 per diluted share.

The company will announce financial results for the fiscal year and provide an analysis of the tax season at its year-end conference call on June 11, 2003, at 5 p.m. EDT.

Except for historical information contained herein, the matters set forth in this press release are forward-looking statements based upon current information and expectations. Such statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that could cause actual results to differ materially from what is expressed, implied or forecast in such forward-looking statements. Such differences could be caused by a number of factors, including, but not limited to, the possibility that the audited financial results of the company or the U.S. Tax Operations segment for the fiscal year ended April 30, 2003, will differ from the preliminary results, guidance and expectations expressed herein; the uncertainty that the company will achieve its revenue, earnings and earnings per share goals for fiscal year 2003; the uncertainty of the actual effect of fourth quarter performance on the final financial results of the company for fiscal year 2003, the uncertainty of the results of the evaluation of the 2003 tax season and the advertising campaign, litigation involving the company and its subsidiaries; changes in economic, political or regulatory environments; and risks described from time to time in reports and registration statements filed by H&R Block Inc. and its subsidiaries with the Securities and Exchange Commission. Readers should take these factors into account in evaluating such forward-looking statements.

About H&R Block

H&R Block Inc. ( www.hrblock.com ) is a diversified company with subsidiaries that deliver tax services and financial advice, investment and mortgage products and services, and business accounting and consulting services. As the world's largest tax services company, H&R Block served nearly 23 million clients during fiscal year 2002. Clients were served at the approximately 10,400 H&R Block retail offices worldwide and through the company's award-winning software, TaxCut(R), and its online tax services. H&R Block is the only major tax and financial services company that focuses primarily on helping middle-income taxpayers achieve their financial goals. Investment services and securities products are offered through H&R Block Financial Advisors Inc., member NYSE, SIPC. H&R Block Inc. is not a registered broker-dealer. H&R Block Mortgage Corp. offers retail mortgage products. Option One Mortgage Corp. offers wholesale mortgage products and a wide range of mortgage services. RSM McGladrey Inc. serves mid-sized businesses with accounting, tax and consulting services.


     H&R Block, Inc.
     Preliminary U.S. Tax Operating Data
     Amounts in thousands, except average fee and number of offices

                                                      Period

                                      1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Tax preparation & related fees
       Fiscal year 2003
            Company owned offices     $287,698  $366,075  $151,434   $142,736
            Franchised offices         173,731   209,522    89,938     73,474
                                      $461,429  $575,597  $241,372   $216,210
       Fiscal year 2002 (A)
            Company owned offices     $260,155  $356,120  $157,205   $146,190
            Franchised offices         148,706   199,176    91,062     72,841
                                      $408,861  $555,296  $248,267   $219,031
       Percent change
            Company owned offices         10.6%      2.8%     -3.7%      -2.4%
            Franchised offices            16.8%      5.2%     -1.2%       0.9%
            Total                         12.9%      3.7%     -2.8%      -1.3%


                                          3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Tax preparation & related fees
        Fiscal year 2003
             Company owned offices         $138,700    $268,667   $1,355,310
             Franchised offices              67,842     128,240      742,747
                                           $206,542    $396,907   $2,098,057
        Fiscal year 2002 (A)
             Company owned offices         $136,474    $274,100   $1,330,244
             Franchised offices              65,222     125,846      702,853
                                           $201,696    $399,946   $2,033,097
        Percent change
             Company owned offices              1.6%       -2.0%         1.9%
             Franchised offices                 4.0%        1.9%         5.7%
             Total                              2.4%       -0.8%         3.2%


                                      1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Tax returns prepared
       Fiscal year 2003
            Company owned offices        2,202     2,702     1,129      1,033
            Franchised offices           1,460     1,764       762        619
                                         3,662     4,466     1,891      1,652
       Fiscal year 2002 (A)
            Company owned offices        2,133     2,877     1,255      1,097
            Franchised offices           1,350     1,811       835        658
                                         3,483     4,688     2,090      1,755
       Percent change
            Company owned offices          3.2%     -6.1%    -10.0%      -5.8%
            Franchised offices             8.2%     -2.6%     -8.7%      -5.9%
            Total                          5.1%     -4.7%     -9.5%      -5.9%


                                          3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Tax returns prepared
        Fiscal year 2003
             Company owned offices              962       1,749        9,777
             Franchised offices                 553         997        6,155
                                              1,515       2,746       15,932
        Fiscal year 2002 (A)
             Company owned offices              979       1,886       10,227
             Franchised offices                 559       1,048        6,261
                                              1,538       2,934       16,488
        Percent change
             Company owned offices             -1.7%       -7.3%        -4.4%
             Franchised offices                -1.1%       -4.9%        -1.7%
             Total                             -1.5%       -6.4%        -3.4%


                                      1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Total clients served
       Fiscal year 2003
            Company owned offices        2,218     2,725     1,137      1,039
            Franchised offices           1,497     1,808       777        632
            E-commerce (B)                 239       596       315        228
                                         3,954     5,129     2,229      1,899
       Fiscal year 2002 (A)
            Company owned offices        2,152     2,907     1,267      1,105
            Franchised offices           1,403     1,872       857        669
            E-commerce (B)                 143       414       219        173
                                         3,698     5,193     2,343      1,947
       Percent change
            Company owned offices          3.1%     -6.3%    -10.3%      -6.0%
            Franchised offices             6.7%     -3.4%     -9.3%      -5.5%
            E-commerce (B)                67.1%     44.0%     43.8%      31.8%
            Total                          6.9%     -1.2%     -4.9%      -2.5%


                                          3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Total clients served
        Fiscal year 2003
             Company owned offices              967       1,752        9,838
             Franchised offices                 561       1,001        6,276
             E-commerce (B)                     223         493        2,094
                                              1,751       3,246       18,208
        Fiscal year 2002 (A)
             Company owned offices              983       1,892       10,306
             Franchised offices                 567       1,057        6,425
             E-commerce (B)                     151         316        1,416
                                              1,701       3,265       18,147
        Percent change
             Company owned offices             -1.6%       -7.4%        -4.5%
             Franchised offices                -1.1%       -5.3%        -2.3%
             E-commerce (B)                    47.7%       56.0%        47.9%
             Total                              2.9%       -0.6%         0.3%


                                      1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Tax returns filed electronically (C)
       Fiscal year 2003
            Company owned offices        2,159     2,599     1,027        895
            Franchised offices           1,441     1,671       656        490
            E-commerce (B)                 167       610       290        237
                                         3,767     4,880     1,973      1,622
       Fiscal year 2002 (A)
            Company owned offices        2,084     2,730     1,111        913
            Franchised offices           1,330     1,671       691        478
            E-commerce (B)                 119       382       214        165
                                         3,533     4,783     2,016      1,556
       Percent change
            Company owned offices          3.6%     -4.8%     -7.6%      -2.0%
            Franchised offices             8.4%      0.0%     -5.1%       2.5%
            E-commerce (B)                40.3%     59.7%     35.5%      43.6%
            Total                          6.6%      2.0%     -2.1%       4.2%


                                          3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Tax returns filed electronically (C)
        Fiscal year 2003
             Company owned offices              800       1,376        8,856
             Franchised offices                 407         662        5,327
             E-commerce (B)                     228         428        1,960
                                              1,435       2,466       16,143
        Fiscal year 2002 (A)
             Company owned offices              775       1,386        8,999
             Franchised offices                 375         607        5,152
             E-commerce (B)                     140         269        1,289
                                              1,290       2,262       15,440
        Percent change
             Company owned offices              3.2%       -0.7%        -1.6%
             Franchised offices                 8.5%        9.1%         3.4%
             E-commerce (B)                    62.9%       59.1%        52.1%
             Total                             11.2%        9.0%         4.6%


     H&R Block, Inc.
     Preliminary U.S. Tax Operating Data
     Amounts in thousands, except average fee and number of offices

                                                       Period

                                       1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Percent filed electronically (D)
        Fiscal year 2003
             Company owned offices       97.3%     95.4%     90.3%      86.1%
             Franchised offices          96.3%     92.4%     84.4%      77.5%
             E-commerce (B)              69.9%    102.3%     92.1%     103.9%
                                         95.3%     95.1%     88.5%      85.4%

        Fiscal year 2002 (A)
             Company owned offices       96.8%     93.9%     87.7%      82.6%
             Franchised offices          94.8%     89.3%     80.6%      71.4%
             E-commerce (B)              83.2%     92.3%     97.7%      95.4%
                                         95.5%     92.1%     86.0%      79.9%


                                         3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Percent filed electronically (D)
        Fiscal year 2003
              Company owned offices         82.7%       78.5%       90.0%
              Franchised offices            72.5%       66.1%       84.9%
              E-commerce (B)               102.2%       86.8%       93.6%
                                            82.0%       76.0%       88.7%

        Fiscal year 2002 (A)
              Company owned offices         78.8%       73.3%       87.3%
              Franchised offices            66.1%       57.4%       80.2%
              E-commerce (B)                92.7%       85.1%       91.0%
                                            75.8%       69.3%       85.1%


                                     1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Average fee per client served
        Fiscal year 2003
             Company owned offices    $129.71   $134.34   $133.19    $137.38
             Franchised offices        116.05    115.89    115.75     116.26
                                      $124.21   $126.98   $126.11    $129.39
        Fiscal year 2002 (A)
             Company owned offices    $120.89   $122.50   $124.08    $132.30
             Franchised offices        105.99    106.40    106.26     108.88
                                      $115.01   $116.20   $116.89    $123.47
        Percent change
             Company owned offices        7.3%      9.7%      7.3%       3.8%
             Franchised offices           9.5%      8.9%      8.9%       6.8%
             Total                        8.0%      9.3%      7.9%       4.8%


                                        3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Average fee per client served
        Fiscal year 2003
              Company owned offices      $143.43     $153.35     $137.76
              Franchised offices          120.93      128.11      118.35
                                         $135.17     $144.17     $130.20
        Fiscal year 2002 (A)
              Company owned offices      $138.83     $144.87     $129.07
              Franchised offices          115.03      119.06      109.39
                                         $130.13     $135.62     $121.52
        Percent change
              Company owned offices          3.3%        5.9%        6.7%
              Franchised offices             5.1%        7.6%        8.2%
              Total                          3.9%        6.3%        7.1%


                                      1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Average fee per tax return (F)
        Fiscal year 2003
             Company owned offices    $106.94   $118.98   $124.95    $132.38
             Franchised offices         97.30    103.24    109.25     112.81
                                      $103.09   $112.76   $118.63    $125.04
        Fiscal year 2002 (A)
             Company owned offices     $97.48   $106.34   $115.12    $126.59
             Franchised offices         87.03     93.16     98.85     104.29
                                       $93.43   $101.24   $108.62    $118.23
        Percent change
             Company owned offices        9.7%     11.9%      8.5%       4.6%
             Franchised offices          11.8%     10.8%     10.5%       8.2%
             Total                       10.4%     11.4%      9.2%       5.8%


                                         3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Average fee per tax return (F)
        Fiscal year 2003
              Company owned offices      $140.29     $151.01     $126.20
              Franchised offices          118.27      126.33      108.63
                                         $132.26     $142.05     $119.41
        Fiscal year 2002 (A)
              Company owned offices      $134.93     $142.13     $117.08
              Franchised offices          111.52      117.25       99.43
                                         $126.42     $133.23     $110.38
        Percent change
              Company owned offices          4.0%        6.2%        7.8%
              Franchised offices             6.1%        7.7%        9.3%
              Total                          4.6%        6.6%        8.2%


                                      1/1-1/31  2/1-2/15  2/16-2/28  3/1-3/15
    Refund anticipation loans (E)
        Fiscal year 2003
             Company owned offices      1,146     1,148       223        124
             Franchised offices           784       742       133         68
             E-commerce (B)                19        29         9          6
                                        1,949     1,919       365        198
        Fiscal year 2002 (A)
             Company owned offices      1,092     1,193       258        138
             Franchised offices           709       753       151         75
             E-commerce (B)                 8        16         6          5
                                        1,809     1,962       415        218
        Percent change
             Company owned offices        5.0%     -3.8%    -13.6%     -10.1%
             Franchised offices          10.6%     -1.5%    -11.9%      -9.3%
             E-commerce (B)             137.5%     81.3%     50.0%      20.0%
             Total                        7.7%     -2.2%    -12.1%      -9.2%


                                         3/16-3/31  4/1-4/15(G)  YTD 4/15(G)
    Refund anticipation loans (E)
        Fiscal year 2003
              Company owned offices           64          61       2,766
              Franchised offices              32          31       1,790
              E-commerce (B)                   4           6          73
                                             100          98       4,629
        Fiscal year 2002 (A)
              Company owned offices           82          75       2,838
              Franchised offices              42          35       1,765
              E-commerce (B)                   3           4          42
                                             127         114       4,645
        Percent change
              Company owned offices        -22.0%      -18.7%       -2.5%
              Franchised offices           -23.8%      -11.4%        1.4%
              E-commerce (B)                33.3%       50.0%       73.8%
              Total                        -21.3%      -14.0%       -0.3%


     Offices                                FY 2003  FY 2002  % Change
             Company owned offices           5,279    5,017      5.2%
             Franchised offices              4,022    3,998      0.6%
                                             9,301    9,015      3.2%


                               H&R Block, Inc.
                     Preliminary U.S. Tax Operating Data
        Amounts in thousands, except average fee and number of offices

    (A) Prior year numbers have been reclassified between company-owned and
        franchise offices for franchise offices acquired during the year.
    (B) Includes on-line completed and paid returns and e-filings for software
        clients.  Excludes returns completed for no fee.
    (C) Includes Federal only.  State returns also electronically filed are
        not included in this total.
    (D) Clients served are based on payment date.  Returns filed
        electronically are based on IRS acceptance date.  As such, percent
        filed electronically may exceed 100% in an interim period.
    (E) Prior year numbers have been restated to include only refund
        anticipation loans processed and funded.
    (F) Includes tax preparation fees only.
    (G) Fiscal year 2002 includes data through April 16, 2002 for some areas
        of the country which observed a legal holiday on April 15th.

SOURCE H&R Block, Inc.

Media Relations, Bob Schneider, +1-816-932-4835,
bschneider@hrblock.com , or Investor Relations, Mark Barnett, +1-816-701-4443,
marbarnett@hrblock.com , both of H&R Block, Inc.
http://www.hrblock.com