UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 24, 2005

H&R BLOCK, INC.

(816) 753-6900

Not Applicable

Table of Contents

Item 2.02 Results of Operations and Financial Condition

On February 24, 2005, H&R Block, Inc. (the “Company”) issued a press release regarding the Company’s results of operations for the fiscal quarter ended January 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

News Release
For Further Information

Media Relations: Linda McDougall, 816-932-7542, lmcdougall@hrblock.com
Investor Relations: Pam Kearney, 816-932-1967, pkearney@hrblock.com

H&R BLOCK REPORTS 55 CENTS PER SHARE THIRD QUARTER PROFIT

FOR RELEASE FEB. 24, 2005, 4 P.M. EST

      KANSAS CITY, Mo. – H&R Block Inc. (NYSE:HRB) today reported net income of $91.7 million, or 55 cents per diluted share, for the third quarter ended Jan. 31, 2005. Revenues in the third quarter were a record $1.03 billion, a 7.2 percent increase over the prior year’s quarter.

      “A strong start to the tax season combined with solid performances from our mortgage and business services segments were highlights of a good quarter,” said Mark A. Ernst, chairman and chief executive officer. “I’m particularly pleased that the strategic actions taken in our tax and mortgage businesses are generating success in their respective markets.”

      Early tax season results through Feb. 15 included a 10.6 percent increase in total tax preparation and related fees over the comparable period last year, paced by 4 percent retail client growth and a 6.3 percent increase in average fees per retail client.

      “The performance thus far is consistent with our expectations for a good tax filing season, supported by strong, new client acquisition, solid retention and increased client satisfaction with our services,” Ernst said.

      Mortgage results included a 56.8 percent increase in loan originations to $8.4 billion over the comparable quarter last year, and a 28.9 percent increase from the previous quarter’s origination levels. Continued aggressive pricing in the mortgage market limited gain-on-sale margins. At the same time, progress was made in the company’s effort to lower overall cost of origination, offsetting a significant share of the gain-on-sale margin reduction.

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H&R Block Third Quarter Release – page 2 of 5

      “We’re very pleased with the performance of our mortgage business, where our strategy to expand service capacity is leading to strong origination volume growth despite the slowing industry,” Ernst said. “In addition, we made considerable progress in lowering the cost of origination, reducing it by 37 basis points in the third quarter alone. This is consistent with our objective to realize a sustained 50 to 75 basis point reduction over the next 12 to 18 months.”

      Third quarter results include $12.5 million, or 5 cents per share, in stock-based compensation expense. The expense was $6.8 million in the previous year. In addition, the results reflect a $16.7 million litigation payment made to H&R Block.

      For the nine months ended Jan. 31, H&R Block reported a net loss of $4.6 million, or 3 cents per diluted share, compared with net income of $122.3 million, or 67 cents per diluted share, in the prior year. The reduction was due primarily to declining income from the mortgage segment as competitive pricing has reduced margins across the industry.

Tax Services

      A 3.7 percent increase in retail tax clients, combined with higher average fees per client, helped drive revenue and income increases in the tax segment for the third quarter. Tax services revenues climbed 11.9 percent to $531.1 million compared with last year, while pretax income improved 4.1 percent to $64.3 million.

      Early tax season results from Jan. 1 through Feb. 15 show that tax preparation and related fees from retail tax offices increased 10.6 percent to $1.2 billion. The average fee per client rose 6.3 percent to $143.90. Retail tax offices served 8.3 million clients through Feb. 15, while total clients served, including digital tax clients, increased 1.4 percent.

      “More than any other factor, the success we’re experiencing can be attributed to the quality of service our tax professionals are providing to our clients,” Ernst said. “Expansion of our office network, operational improvements and successful marketing mean that more consumers are benefiting from that service.”

      H&R Block’s digital tax business, including its award-winning TaxCut® software and online tax services, reported a 9.1 percent decrease in paid clients served through Feb. 15. Modest growth in online clients was offset by a decline in software units sold.

      “Both consumer and competitive changes in the digital tax market have restricted the client growth that we expected this season. However, we will continue to follow a disciplined approach to pricing and marketing our digital services, although it may limit our ability to achieve this year’s client growth objectives,” Ernst said.

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H&R Block Third Quarter Release – page 3 of 5

      For the nine-month period, tax services revenues rose 11.7 percent to $655.6 million, while the pretax loss of $182.6 million was 8.6 percent higher than a year ago.

Mortgage Services

      Mortgage services, which includes Option One Mortgage Corp. and H&R Block Mortgage Corp, recorded third-quarter loan originations of $8.4 billion, a 56.8 percent increase over the prior year. An increase in the number of account executives serving clients was the primary driver of the quarter’s improved performance.

      Despite this increase in sales capacity, as well as continued expansion made in the retail mortgage business in preparation for the seasonally high tax client referral opportunity, the business achieved a 37 basis point reduction in cost of origination.

      Mortgage services revenues declined 4.1 percent to $304.6 million for the third quarter, while pretax earnings were $111.7 million, a 27.7 percent decrease from the previous year. Sequentially from the second quarter, revenues increased 8.2 percent while pretax earnings increased 5.2 percent. For the nine-month period, revenues decreased 10.1 percent to $854.4 million, while pretax earnings declined 38 percent to $311.4 million.

      “Our mortgage operations experienced improved productivity and performed well despite competitive pressures this quarter,” Ernst said. “We plan to continue to focus on aggressively controlling origination costs while maintaining our preferred provider status with the brokers we serve.

      “We are beginning our strongest period seasonally for H&R Block Mortgage with more capacity to serve our tax clients’ needs.”

      Mortgage servicing revenues increased 32.4 percent to $72.9 million for the quarter, compared to last year. The number of loans serviced rose 25.7 percent to 387,619 compared with the previous year.

Business Services

      Business services had another strong quarter, with an 18.3 percent increase in revenues to $132.9 million. Pretax income rose to nearly $6 million from $2 million the previous year. Growth occurred across many of the segment’s activities.

      For the nine-month period, revenues increased 16 percent to $371 million. The pretax loss for the period was $9 million, an increase of 21.4 percent over the prior year.

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H&R Block Third Quarter Release – page 4 of 5

      “We’re seeing our past initiatives pay off in very strong growth,” Ernst said. “RSM McGladrey’s tax and accounting services, business consulting, risk management and payroll services all experienced solid growth.”

Investment Services

      Investment services reported third quarter revenues of $62.1 million, a 7.5 percent increase over the prior year. The pretax loss increased $5.5 million to $18.3 million. For the nine-month period, revenues improved 1.2 percent to $169.4 million, while the pretax loss increased nearly 46 percent to $61.1 million.

      “While we are not satisfied with the performance of this business, the results are consistent with the view discussed during last month’s annual investor conference,” Ernst said. “We’re developing a plan to better align this segment’s cost structure, revenue stream, and strategy for the future.

      “We are seeing strong results from our expanded tax professional/financial advisor teams designed to increase the delivery of financial services to our tax clients,” Ernst said.

Dividend Declared

      H&R Block’s board of directors declared a quarterly cash dividend of 22 cents per share, payable April 1, 2005, to shareholders of record March 11, 2005. This payment will be the company’s 170th consecutive quarterly dividend.

Conference Call

      The company will host a conference call for analysts, institutional investors and shareholders at 5 p.m. EST Feb. 24. Mark Ernst, Jeff Yabuki, executive vice president and chief operating officer, and William Trubeck, executive vice president and chief financial officer, will discuss the quarter and future expectations, as well as respond to analysts’ questions. To access the call, please dial the number approximately five to 10 minutes prior to the scheduled starting time:

      The call will be webcast in a listen-only format for the media and public. The link to the webcast can be found at www.hrblock.com. Supplemental financial and statistical information will be available in connection with the webcast or can be accessed directly on H&R Block’s Investor Relations web site at www.hrblock.com/about/investor following market close.

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H&R Block Third Quarter Release – page 5 of 5

      A replay of the call will be available beginning at 6 p.m. EST Feb. 24 and continuing until 12 a.m. EST March 5 by dialing 800-642-1687 (U.S./Canada) or 706-645-9291 (International). The replay access code is 2751105. A replay of the webcast will also be available at www.hrblock.com through March 31, 2005.

About H&R Block:
Celebrating its 50^th anniversary in 2005, H&R Block is the world’s largest tax services provider, having served more than 400 million clients since 1955. The sixth largest retailer in the world, H&R Block has more than 12,000 locations serving taxpayers primarily in the United States, Canada and Australia.

H&R Block’s subsidiaries deliver tax services and financial advice, investment and mortgage services, and business accounting and consulting services. H&R Block Financial Advisors Inc. offers investment services and securities products. With approximately 1,000 financial advisors serving clients at approximately 270 locations, H&R Block Financial Advisors is a member NYSE, SIPC, a registered broker-dealer and investment advisor. H&R Block Inc. is not a registered broker-dealer and is not a registered investment advisor. H&R Block Mortgage Corp. offers a full range of retail mortgage services. Option One Mortgage Corp. provides mortgage services and offers wholesale mortgages through large financial institutions and a network of 32,000 independent mortgage brokers. RSM McGladrey Business Services Inc. and its subsidiaries serve mid-sized businesses and their owners with tax, accounting and business consulting services, as well as personal wealth management services. H&R Block Small Business Resources is a new business currently operating in 14 U.S. cities that serves the tax, financial and business needs of small business owners. H&R Block Small Business Resources is not a licensed CPA firm. For more information about the company, visit our Online Press Center at www.hrblock.com.

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KEY OPERATING RESULTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 26, 2004 we issued $400.0 million in 5.125% Senior Notes, due in 2014. The proceeds from the notes were used to repay our $250.0 million in 6³/4% Senior Notes, which were due on November 1, 2004. The remaining proceeds were used for working capital, capital expenditures, repayment of other debt and other general corporate purposes.

We adopted Emerging Issues Task Force Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (EITF 00-21) as of May 1, 2003. As a result of the adoption of EITF 00-21, we recorded a cumulative effect of a change in accounting principle of $6.4 million, net of tax benefit of $4.0 million.

Basic earnings per share is based on the weighted average number of shares outstanding. The dilutive effect of potential common shares is included in diluted earnings per share except in those periods with a loss.

Certain reclassifications have been made to prior year amounts to conform to the current period presentation. These reclassifications had no effect on the results of operations or stockholders’ equity as previously reported.

In the first quarter of fiscal year 2005, we redefined our reportable segments. The previously reported International Tax Operations and U.S. Tax Operations segments will now be reported as the Tax Services segment.

SEGMENT FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED INCOME STATEMENTS

⁽¹⁾ Represents non-prime production only.

⁽²⁾ Includes only trades on which commissions are earned (“commissionable trades”).